By Lois Henry, SJV Water
Residents of a development hundreds of miles north of Kern County on Saturday approved a massive water rate hike in hopes of appeasing a local agency that has provided them water for the past 24 years under a convoluted exchange deal.
They will go from paying about $200 a month for the base connection fee to $568 a month. The money will go to the Western Hills Water District so it can repay the Kern County Water Agency a debt of $13 million that KCWA says it owes in unpaid water charges.
KCWA had said it would cut off supplies to Western Hills, which serves the Diablo Grande development in the foothills west of Patterson, by June 30 if residents didn’t agree to the rate hike.
But on June 26, KCWA board members, apparently in closed session, extended that deadline to Sept. 30 to allow Western Hills to “develop an alternate supply,” according to a letter KCWA sent Western Hills on June 27.
The 600-home development has no other source of water. It has been in discussions with the Patterson Irrigation District, but a Western Hills spokesman said that supply is a “long shot” and years away, at best. He declined to comment further on the situation with KCWA.
Meanwhile, KCWA is sticking with plans to terminate its contract with Western Hills and stop water deliveries by Dec. 31 – regardless of whether Western Hills pays off the $13 million.
KCWA says the debt accumulated because of unpaid reimbursements to KCWA for state transportation/operations and maintenance costs associated with the water sent to Western Hills.
Western Hills stopped reimbursing KCWA for the charges in 2019, racking up about $10 million, to which KCWA added $3 million in interest for a total past due balance of $13 million, according to information provided by KCWA.
Now, KCWA wants out.
“To protect the economic interests of its constituents, the Agency will not renegotiate the contract,” the letter states.
The Brown Act and “closed session”
The Kern County Water Agency did not list the Western Hills contract and water delivery shut-off deadline on its regular, nor its closed session, agendas for its June 26 meeting.
And it said it had no “reportable action” following closed session.
But board members did discuss Western Hills and the board did “direct staff” to send a letter to Western Hills extending the shut-off deadline, which it made public the following day via press release.
KCWA staff said the discussion and direction were done under a closed session item labeled “potential litigation.”
How does that square with the Brown Act?
Per California’s open meeting law, public agencies can privately discuss initiating or defending against possible legal action.
The intent is not to alert potential adversaries about strategy, or facts and circumstances the other side may not know.
In the case of Western Hills, however, “The situation is already known and well-reported,” said David Loy, an attorney for the First Amendment Coalition.
Unless the deadline extension was done in consideration of settling a potential lawsuit, it was actually a policy decision by the KCWA board, Loy noted.
“Arguably that should have been done in open session,” Loy said.
“The general principle of the Brown Act is to err on the side of transparency. Agencies should not be pushing the envelope on what they can do in closed session.”
Western Hills’ history
Kern County, and specifically KCWA, got involved with Diablo Grande back in 2000.
The Berrenda Mesa Water District in western Kern county sold Western Hills its State Water Project contract for 8,000 acre feet a year for $8 million.The plan was for Western Hills to serve Diablo Grande, which was supposed to eventually include 5,000 luxury homes and two golf courses.
DWR, which runs the State Water Project, though, didn’t want to add a new contractor to the system.
That’s when KCWA stepped in.
KCWA administers the State Water Project contract on behalf of 13 local agricultural water districts, so it took over Berrenda Mesa’s contract for the 8,000 acre feet.
But it still couldn’t deliver it directly to Western Hills because state water is tied to the contractor’s physical location – or “place of use.”
So, KCWA made a deal to sell its recently purchased Kern River water to Western Hills “by exchange.”
Meaning, Western Hills would take its supplies off the California Aqueduct in actual state water and here, in Kern County, KCWA would debit a like amount of its Kern River water stored in the Pioneer Groundwater Bank.
But Western Hills never needed the full 8,000 acre feet. After the 2008 real estate crash, bankruptcies and ownership changes, the development stalled at just 600 homes and both golf courses were shuttered.
The most Western Hills ever took of its state supplies in one year was 1,258 acre feet. But it was on the hook to repay KCWA for the full state transportation/operations and maintenance charges attached to that water, which ranged from $400,000 to $1.2 million a year.
Diablo Grande residents eventually took over Western Hills Water District from its corporate owners, which had been subsidizing the state charges. Residents, however, didn’t have the means to continue paying those charges.
Accounting unclear
Throughout all of the years of this complicated deal, excess Western Hills water flowed into Kern County.
KCWA sold a large chunk of it, about 62,000 acre feet.
SJV Water asked how much KCWA earned from those sales and which local districts bought the water, but was told that information would take time to compile.
None of the money KCWA reaped from selling Western Hills’ water was used toward the state charges that Western Hills was paying, according to KCWA.
Western Hills was able to bank some of its excess water, about 4,600 acre feet, which is still in Kern County ground under Western Hills’ ownership.
But with the ongoing dispute, it’s unclear to local water managers if that water can be sold, moved or traded on Western Hills’ behalf. All state water movement into or out of Kern County must be approved by KCWA.
“We are working to find a solution,” said Sheridan Nicholas, manager of the Wheeler Ridge-Maricopa Water Storage District, which had been part of the Western Hills banking agreement.
