Appendix San Diego County Water Authority Excerpts from Public Records Request Appendix Contents Section I: Generating Media Coverage Critical of the Governor and CA Water Fix 3 - 6 a. External Consultants arrange meetings with LA Times and Sac Bee Page 4 b. LA Times piece on July 8, 2015 from George Skelton Page 5 c. Dan Newman applauds Skelton piece in an email Page 5 d. Glenn Farrell excitedly emails piece to Maureen Stapleton and Cushman Page 6 Section II: Coordinating with Patricia Schifferle to Assist in Activities Critical of the Project ..Pages 7-37 a. Email chain between Schifferle and Paul Rogers, SJ Mercury News Pages 8-13 b. Water Authority Staff request Schifferle?s expertise initiating PRRs Pages 14-25 i. Pages 14-15: Espe requests names of contractors more ii. Pages 16-20: Schifferle admits request at opening of email Pages 21-25: Espe requests copy of Kern County WA audit from Schifferle c. Schifferle edits SDCWA memo and notes confidentiality Page 26 d. Schifferle provides long criticism of CA Water Fix EIR Page 28 Section Coordination with NRDC Resulted in Criticisms of Governor And Project ..Pages 38-56 a. Staff devote time and resources to strengthen proposed portfolio Pages 39-40 b. Sta pleton joins coalition with other BDCP opponents, letter Pages 42-44 c. NRDC approaches Cushman re: CA Water 21 coalition, argues BDCP is problem Pages 45-51 d. Staff interactions with NRDC attorney, Obegi Page 52-53 e. Farrel enjoyed news of funding concerns from Senate subcommittee Page 54 f. Obegi interacts with staff after July committee meeting Page 55-56 Section I: Generating Media Coverage Critical of the Governor and CA Water Fix a. External Consultants arrange meetings with LA Times and Sac Bee b. LA Times piece on July 8, 2015 from George Skelton c. Dan Newman applauds Skelton piece in an email d. Glenn Farrell excitedly emails piece to Maureen Stapleton and Cushman Page 4 Page 5 Page 5 Page 6 From: Cushman, Dennis To: Ea?al?lenn. Cc: LeeI Mike Subject: FW: July 7 Date: Thursday. July 02. 2015 10:26:00 AM Attachments: FYI. From: Dan Newman Sent: Wednesday, July 01, 2015 11:42 AM To: Cushman, Dennis; Vedder, Denise Cc: Ace Smith Subject: July 7 Dennis, Attached are collections of relevant pieces by the Bee's ed board and Skelton. Bee meeting is 9-10, Skelton is 10:30. Paid external consultants Bee is 2100 street and Dan Morain's info is: schedule meetings for Dennis Of?ce Cushman with George Skelton cell of LA Times and Dan Morain of Wm Sacramento Bee. Skelton is (916) 321-4414, . He's in the Esquire 13th K. Rm 1750. Actual address is 1215 St. Thanks, Dan From To: WELLS. Cc: Smith Subject: Re: George Skelton"s column Date: Thursday, July 09, 2015 3:15:06 PM Left him a message. On Jul 9, 2015, at 3:05 PM, Cushman, Dennis wrote: Yes. Bee went well from our perspective. Is it worth you calling Morain and asking what he thought of the meeting and what might they be interested in weighing in on? DennE On Jul 9, 2015, at 2:53 PM, "Dan Newman" wrote: Great job! This will ring loudly. Did Bee go well too? Dan Newman of SCN Strategies celebrating the critical comments within the Skelton article. On Jul 8, 2015, at 10:36 PM, Cushman, Dennis wrote: Here is tomorrow?s column: Will local water projects lose out to Brown's tunnel Vision? George Skeltol?l From: Earmi?iem To: Qushmadmmis. Subject: George Skelton Article Date: Thursday, July 09, 2015 7:53:43 AM Importance: High You certainly got his Glen Farrel responding to column critical of administration and BDCP. Will local water projects lose out to Brown's tunnel vision? San Diego water officials have some cogent questions for Gov. Jerry Brown. First, about those costly, monster tunnels he wants to dig under the Sacramento-San Joaquin River Delta: Wouldn't it be smarter to use that money at least a good chunk of it to build local water projects? Yes, delta plumbing needs to be fixed, maybe even redesigned, they acknowledge. But really? Two 40-foot-wide, 35-mile tunnels? Something smaller perhaps, combined with local recycling or desalination facilities that could produce more water? Who's going to pay for it? And we need to know how the water would be allocated. So far, it's looking like we'd get less water and be paying more.? Mark Weston, chairman of the San Diego County Water Authority board, referring to Gov. Jerry Brown's delta water project plan Second, the San Diego region for two decades has been on the cutting edge of reducing water use and building facilities for the future. That includes what the county water authority calls "the nation's largest, most technologically advanced and energy-efficient seawater desalination plant.? So why are some of its water agencies being hit with steep, mandatory consumption cutbacks? It's not fair, they protest. These are questions also being asked by other water officials in California. In fact, the city of Riverside, which considers itself water-independent and doesn't import, is suing the state over its ordered 28% cuts. San Diego officials aren't expecting an answer from the governor. Two years ago, they and some San Francisco Bay Area water agencies wrote the Brown and Obama administrations, raising serious concerns about the ambitious tunnel plan. Replies "ranged from ignoring us to castigating us,? says Dennis Cushman, assistant general manager of the San Diego County Water Authority. Section II: Coordinating with Patricia Schifferle to Assist in Activities Critical of the Project a. Email chain between Schifferle and Paul Rogers, SJ Mercury News b. Water Authority Staff request Schifferle?s expertise initiating PRRs i. Pages 12-13: Espe requests names of contractors more ii. Pages 14-18: Schifferle admits request at opening of email Pages 19-20: Espe requests copy of Kern County WA audit from Schifferle c. Schifferle edits SDCWA memo and notes confidentiality d. Schifferle provides long criticism of CA Water Fix EIR Pages 6-11 Pages 12-20 Page 24 Page 25 From: To: Subject: MWD Property Taxes Collateral New Bonds for $1.2 Costs Date: Friday, April 25, 2014 9:20:51 AM Attachments: JP Moman Response to State Water Proiect Cont.pdf Moman Stanlev"s Response to the State Water P.pclf RJ Response to SWPCA RFP.pdf. Patricia Schifferle submitting documents obtained via PRA to Dear Debble, DCWA Staff, Greetings Debbie, I obtained the attached documents through a Public Records Act request. I was not sure if San Diego Water Authority was aware of the ?new? MWD of So Cal debt that will be issued using property tax revenues as the backstop. The financing authority being considered is through the State Water Project contractors for their 50% share. Below are excerpts showing how basically MWD and Santa Clara would be the primary state contractors to back the 50% share of the needed $1.2 billion to continue the project. The request for proposals from the State Water Project Contractors Authority which was formed basically to fund the BDCP have a number of opinions regarding the use of ad valorem taxes. MWD believes they have no limit [Prop 13] and any rate increase is not subject to the voting provisions of Prop 218 because the MWD Board votes and that is the governing body and such rates are passed by a majority board vote. Also attached from a DWR PRA request shows that and SWPCA anticipate going out to the debt market by June 2014 for the additional $1.2 Billion [split potentially 50-50]. One problem among is no BDCP Implementation Agreement. By law the public is allowed a 60 day comment period. The Implementation Agreement determines in writing who is going to participate and who is going to fund the on the dotted line so to speak. If this was going to run concurrently with the BDCP comment period of June is late by better than a week. Attached are the bond proposals from JP Morgan, Morgan Stanley, Raymond James. I have another from Wells Fargo. Below are some excerpts as to how taxes would be used. Documents show the federal partners backed by Westlands? 100% contractual default assurances, are behind in their contribution and given both the lack of water and the intermittent nature of their water service contract, they seem like a risky partner. You will recall Mark Borba of Westlands aptly put it at their meeting 1-15-2014: Q.- [from Mark Borba, a Westlands grower in the audience]: ?Back to the dollars and cents. I have two questions. With regard to the $1.23, and I guess our share is just about half?that?s roughly $1,100 an acre debt on every acre in the Westlands Water District just to prepare the documents?just to prepare the documents, get the engazeering done, and we haven ?t turned a teaspoon of dirt Let me know if you would like the Drop Box link to the entire set of documents. Regards, Patricia Regarding the use of property taxes as collateral for the debt under the state contractors funding arrangements: As is currently contemplated, the contractors would finance and own their share of the project through the San Luis Delta?Mendota Water Authority (or other public agency). However, this assumption is predicated on the credit structure of the ?nancing vehicle being able to support the debt load as currently projected without, for example, direct Bureau ownership, which would raise issues with respect to tax? exemption of the debt. We think there may be merit to exploring alternative long?term financing vehicles that further integrate the funding sources and materially reduces execution risk over the term of the project. There are a number of alternatives that are possible, including: The State and Federal Water Contractors Authority (SF WCA has the authority to undertake capital projects on behalf of 8 WP and contractors and represents another potential financing vehicle should the contractors be unable to support the projected construction phase debt issuance. While we acknowledge that this structure is not under consideration at this point, it is important to note that we would not expect integration issues from a SF WCA take? out of the SWPCA interim financing. It seems that the key issue with utilizing the SF WCA is the inability to place passed through costs onto the partiCipants? tax rolls, which is a critical point of viability. Any ability to do this would require a vote of the impacted residents. Finally, due to the lack of ad valorem tax support and dilution of the credit quality of the combined contractors, we believe financing through the SF WCA would increase the cost offinancing for the State Contractors vs. the DWR option. This incremental cost, however, might be acceptable ifit provides a greater degree of execution certainty. Overview of Proposed Structure. Based on our understanding of the proposed interim structure, the ?nancing will be guaranteed by MWD, and potentially one other contractor. As such, the credit analysis will primarily focus on credit strength as well as the credit of and any other guarantor(s). Assuming there is no step-up, the credit of the other guarantor(s) will factor into the analysis. The nature of where the obligation falls relative to other obligations of the guarantors will be a critical point of discussion from a credit standpoint as well as from a structural standpoint as highlighted previously. WW ?nancing instrument and the lower the cost of borrowing. Additionally, a stronger security structure will provide more ef?cient access to the capital markets through different products, which is critical given the interim nature of the preconstruction cost ?nancing. It is our understanding that currently Metropolitan and would both agree to secure a share of the borrowing, likely based upon their relative Table A amounts, with potentially one or two other contractors still considering their participation. As Metropolitan?s revenue bonds are currently rated and water revenue bonds are rated both Participants enjoy very strong senior lien bond ratings. As a result, assuming that a lower rated, non-credit enhanced SC does not participate, the ?nancing will benefit from the combination of two very creditworthy obligors. Each of these Participants will need to decide how to secure its share of the debt service, which could theoretically be sourced as an payment, an additional debt obligation on parity with existing senior lien debt or on a subordinate basis to such debt. In case, it could simply be from property taxes levied to pay for its State Water Project costs, however the choice of repayment source and/or lien will impact the credit ratings and we elaborate in greater detail on credit issues in our response to Question 3.5.a. For purposes of the interim ?nancing, we assume a construct that will result in at least a AA rating, as indicated in the RFP. Metropolitan: Metropolitan?s primary credits include its strong current and projected debt service coverage (which also provides debt service capacity should the proposed ?nancing not be re?nanced at the start of the construction period), its role as an essential water provider to a large and diverse service territory, and its high levels of stored water which can meet nearly two years of demand. Furthermore, Metropolitan has strong leadership with a demonstrated ability to manage a large and complex debt portfolio with multiple varieties of short and long-term debt. 10 Santa Clara Valley Water District: Similar to Metropolitan, has a strong ?nancial position highlighted by a low debt burden. In addition, is an essential service provider for a large and diverse service area which provides a stable revenue stream and has long-term take or pay contracts with eight of its fifteen largest customers through 2051. Additionally, we note uses a strong voter approved property tax levy to repay capital and operating costs related to imported water from the State Water Project. We assume that this levy has been used for past BDCP planning costs and that it could also be used for preconstruction costs as well. Securing the Credit. As noted above, given their size and credit strength, Metropolitan and are excellent Participants to secure the credit of the proposed offering. In addition, both Metropolitan and are experienced issuers of municipal debt, making them most likely to generate investor confidence and attract a wide range of high quality investors. That said, a primary consideration will be from where in its financial structure which ??lien?) Santa Clara Valley Water District: as noted above, uses its voter approved property taxes to pay for its state water project costs and began accounting for those taxes and costs in a separate fund in FY2010- 11. We assume that could simply levy for additional state water contract costs in the form of amortized costs for preconstruction (as opposed to pay as you go) and that these levies would provide a very strong credit quality, perhaps in the AA category given the large base on which levies are made. However, to the extent that pledge requires additional support from its water utility system to reach AA category ratings, should also have a choice of lien levels. As its revenue bond debt has ratings consistent with the AA category that SWPCA would like to achieve for the proposed financing, could simply use a parity lien to current water utility debt service and easily achieve this level given the minor burden of amortized cost projected to resulting from the interim financing. However, it may also be able to secure payments on the interim f1nancing as either an Operations and Maintenance expense, which would easily raise the rating though at some risk of future senior lien debt service coverage impacts or (ii) subordinate to its revenue COPs, which would protect senior lien coverage and would likely help support a rating near AA if property taxes were not sufficient on their own. In Exhibit D, we provide a table to illustrate the potential impact on debt service coverage for each of these alternatives should it become obligated to pay its share of financing costs once capitalized interest expires and assuming the debt is not ref1nanced, however we anticipate that the property tax levy for state water project costs could be suf?cient to secure the desired ratings on their own. 11 Raymond James excerpts Due to the timing and complexity of the pre-construction activities, a ?exible ?nancing program would best serve the State Water Project contractors and the Central Valley Project contractors. As indicated in the RFP, financing is needed for $1.2 billion of pre -construction activities over the next two to three years. While the short-term rates and flexibility of a commercial paper program would serve as an efficient financing vehicle for the pre-construction activities, the market does not currently have capacity for this level of new paper. Annual debt service payments are estimated to reach $1.0 billion by 2055. Additionally, costs are estimated at $3 6 million per year. According to the BDCP water exports will increase from 1.3 million to 1. 7 million AF per year on average. Assuming 1.25 times debt service coverage, 8 WP and VP contractors will need to generate $1.295 billion in annual revenues. This produces a range 0f$ 762 to $996 price per AF, a significant increase over current prices. Depending on the timing of the anticipated DWR financing, these price levels must be realized near the completion of construction to ensure coverage levels are su?cient to issue bonds under the General Bond Resolution. The majority of the cost increase to the SWP and CVP contractors will be debt service, an item that will not vary with the amount of water delivered or sold. A major challenge will be the ability of the agencies reliant on the SWP and CVP contractors to raise rates in advance of debt service requirements and not look to alternative water sources to mitigate the increased costs. The current SWP water supply contracts include provisions which provide protection future SWP contractor defaults, and require contractors to make payments, regardless of water deliveries. If a contractor is unable to raise sufficient funds by other means, the water supply contracts require each contractor to levy on all property in the contractor?s territory not exempt from taxation a tax or assessment sufficient to cover costs under the water supply contracts. The ability to trigger a taxation provides an extra layer of security, but the rating agencies will be weary of a process that is not streamlined or requires voter approval Political Risk. will need to clearly convey the contingency plan for funding the BDCP if voters do not approve the Water Bonds on the ballot in November and the risk of Legislative appropriation. This risk includes both the ability to issue DWR bonds but also the state funding component. The state funding represents 17% of the overall financing plan and 91% of that funding is anticipated from future statewide bond issues. While it is generally accepted that the SWP and CVP contractors will back-stop these funds, the challenge of willingness and ability to Pay come into effect. The current contracts between DWR and the water contractors contain terms that ensure that contractors pay the full cost of SVVP. However, the contracts for water supply will have to be renegotiated in order to fund the tunnels and there is no guarantee that these terms will be continued. Investors will be concerned about the extension of those terms through the life of the bonds 12 From: Paul Rogers Paul Rogers of San Jose Mercury Sent: Thursday, April 24, 2014 3:43 PM . . . To: Patricia Schifferle News used Information obtained by Subject: Re; AdditionaI Docs Schifferle to write an article that was critical ofthe BDCP. Paul Rogers San Jose Mercury News Resources and Environment Writer 408-920-5045 Twitter: On Thu, Apr 24, 2014 at 3:39 PM, Patricia Schifferle aci?cadvocates hotmail.com> wrote: Paul Iwill look and get back to you. Everything I have seen so far is hypothetical [draft] and from the State Water Project Contractors and some specifically from Santa Clara Valley Water authority [Maher]. lam in a meeting right now so it will be after 4:30. Regards, Patricia From: Paul Rogers Sent: Thursday, April 24, 2014 11:39 AM To: Patricia Schifferle Subject: Re: Additional Docs Thanks. Is there a reference in any of these documents to property taxes in the Bay Area or LA being used as a backstop for financing? I'm not seeing it. There was a mention of "ad valorem? taxes in several places in the Goldman Sachs proposal to Kern, but I expect government folks can simply say "that was their idea, it wasn't our document.? Do we have anything more concrete from a government agency talking about property taxes as a ?nancing option? Best, Paul Paul Rogers San Jose Mercury News Resources and Environment Writer 408-920-5045 13 From: T0: Subject: RE: CVP Contractors Date: Tuesday, January 27, 2015 10:30:24 AM Attachments: BDCP Interim Financincr General Januar'v 15 2014 v4 loncr.DDtx Finance April 1. 2014 SWP Cost Allocation SWC.PDF, MWD00001424--Business Case Needed. Suool Water Fed -State Issues MWD00001491--SWP Contractors Cost Allocation Approach Nov 2013.Ddf MWD00001517 Brian Thomas 9-2011 BDCP Affordable -Assessed Valuation.bdf MWD00001771-B.Thomas Cost of Out?ow $1.5 Assumed Feds Pav2-24-2014.pdf MWD00001993--Brian Thomas Re BDCP Cost Est Bill Est Water Cost Allocation Soenarios March 25. 2014.pdf MWD00002319--DWR Business Meetino Oct 2013.0de MWD00000070.odf 2nd 2013 PRA WWD REOUEST DOCUMENTS.PDF Dear Debbie, Here are the documents I received specifically from MWD regarding the costs and allocation of the SWP costs. These were obtained through a Public Records Request, which I can dig up if needed. The numbers refer to PRA numbers?the descriptive titles are mine. While old?the 9-2011 Brian Thomas document is informative. Also recall that I obtained copies of the Goldman Sachs, JP Morgan, Wells Fargo documents in response to the SWPCA RFP. Each document responds to the same set of conditions and facts. One can see from those documents the various contingencies including the issuance of all the debt by MWD with pay back by the districts. Hope this helps. Might be I decided to send them anyway. From SDWA perspective take a look at the cost allocation document March 25, 2014. The last document shows the amount of property taxes needed per SWP agency Rega rds, Patricia 530 550 0219 From: Espe, Debbie Sent: Tuesday, January 27, 2015 7:48 AM To: Patricia Schifferle (pacificadvocates@hotmail.com) SDCWA Staff Member Debbie Espe subJeCt? CVP contractors asking Patricia Schifferle to locate information on her behalf. Patricia Happy New Year! I missed you (at the first session of Phase 2 of the SWP Contractors? negotiations). Perhaps, I?ll see you at the upcoming meeting in February? I wondered if you know where I can find who among the CVP Contractors have been contributing to the BDCP pre-funding work ($240 million) along with Westlands and Santa Clara Valley Water. And if possible, how much of the share do they pay. I?ve searched various documents and cannot 14 find anything definitive. I did read that Restore the Delta uncovered information, but there were no details on the breakdown was seeking. Let me know if you know where the information could be found. Tha you. Debbie Debbie S. Discar rEspe Senior Water Resources Specialist San Diego County Water Authority 4677 Overland Avenue San Diego, CA 92123 Tel: (858) 52245734 Fax: (858) 522/6565 Wm 15 From: - - - To, delivering Subject: FW: Westlands" Debts documents Espe Date: Thursday, January 29, 2015 4:02:32 PM Attachments: Of?cial Report Westland Bond.bdf requeSted_ In an Of?lne FitchReport RE Westlands San Luis Debt Issuan 09.ndf CO nversatlon. Dear Debbie, As we discussed here are some historical documents with regard to WWD payments and backstop for the in debt to pay for the federal portion the official debt statement there is a list of Westlands? outstanding debt?including amounts owed to taxpayers for capital etc. have some more up to date info but I am on another deadline. Let me know if it would be helpful and lwill track it down. Patricia Background: Attached you will find the prospectus for the debt issued to fund the first of the peripheral tunnels?called the Habitat Conservation and Conveyance Program. Starting at page 65 of the document is the information on Westlands. In accordance with SEC rules this information must be filed each year around November. The item highlighted in yellow?the rate increase did go thru. The information required to be generated and disclosed pursuant to prop 218 is very informative. 1. More recent information indicates that for 2014, WWD irrigators paid between $1000 and $800 an acre foot for ?transferred? water. 2. There is a new water rate charge that will be considered at the February 171]:1 Board meeting retroactive to March 2014. 3. A portion of the 2010 Charge was imposed upon property owners to produce monies to pay amounts due to the Authority under a San Luis Delta Mendota Water Authority Delta Habitat Conservation and Conveyance Program Activity Agreement (the ?Westlands Water District Activity Agreement?), dated as of March 1, 2009, by and between the District and the Authority. Starting at pg 84 is a discussion of outstanding indebtedness. But even this does not seem to be complete because there are also notes of participation, loans that are owed the state, the federal amounts owed are listed at times annually so it is difficult to get the total debt. ..and the drainage amounts are not clearly identified. . .there is approximately $37 listed but the cost and what they will owe is much more at least to federal taxpayers for capital costs of the project. At page 18 of the attached PDF the Bond prospectus admits WWD has insufficient capital to pay the principal on the notes: Failure to Issue Refunding Bonds or Notes As further discussed in Appendix hereto, Westlands Water District does not currently have, and does not currently project having on the maturity date of the Notes, su??icient unrestricted reserves to pay the principal of the Notes at maturity. See Appendix CONCERNING WEST LANDS WATER DISTRICT ?Investment of District Funds. As a result, the Authority ?s ability to pay principal on the Notes is dependent on the Authority?s ability to issue and sell refunding obligations prior to the maturity of the Notes. As background attached is the FitchReport on the original it also has some good background. Also See page 23 in the 2009 Bond prospectus for the percentages paid by other federal contractors. 16 WWD is the guarantor and is thus obligated to repay the full amount in the event the other irrigators do not, however, share is just over 60%. Regards, Patricia In 2011 after complaints Westlands and SLDWA amended their prospectus here is their continuing disclosure document. ht emma.msrb.or EP585299-EP458479-EP8584-94. df Also in 2013 Westlands and refinanced the debt: Published: Tuesday, May. 14, 2013 Updated: Tuesday, May. 14, 2013 03:57 PM Fitch Rates San Luis 8: Delta Mendota WaterAuth, CA Refunding Revs Outlook Stable AUSTIN, Texas Fitch Ratings assigns an rating to the following San Luis 8: Delta Mendota WaterAuthority, CA the authority) bonds: --Approximately $42.5 million refunding revenue bonds Development Project), series 2013A. The bands will be sold via negotiation the week of May 27. Bond proceeds will be used to refinance the authority's 2009 medium?term revenue notes over 30 years, to fund a debt service reserve, and to pay the cost of issuance. The 2009 note proceeds were used to fund the district's share of planning, design, and environmental study costs related to the proposed conveyance pipeline (Delta Habitat Conservation and Conveyance Program, or to build underground tunnels to deliver water south of the Bay Delta instead of sending the water through the Bay Delta, as is currently done. In addition, Fitch affirms the following authority notes at "550 million revenue notes Development Project) series 2009 (pre?refunding). The notes are expected to be defeased in full on Dec. 31, 2013. Fitch also affirms the 'AA??rating on the following Westlands Water District (WWD, or the district) outstanding parity bonds: $209.5 million revenue certificates of participation $26 million revenue COPs, series 2008A (bank bonds); $80 million revenue refunding bonds. The Rating Outlook is Stable. SECURITY The San Luis 8: Delta?Mendota Water District (SLDM WA) revenue bonds and notes are secured by an unconditional contractual obligation from WWD. Although there are multiple participants in the project, WWD provides a 100% guaranty of the full payment, including the 20% of the series 2013 bands that are expected to be paid by the eight other participating water districts. The WWD certificates and bonds are secured by a pledge of and first lien on net revenue of the district's water system. KEY RATING DRIVERS WESTLANDS WATER DISTRICT GUARANTY: The rating on SLDM WA bonds reflects WWD's obligation to pay 100% of debt service to the trustee. WWD is entitled to subsequent repayment from the other eight districts, which makes up about 20%, or approximate 58 million, of the total obligation. SLDM WA obligation is paid as an operating expense by WWD. 17 FINANCIAL SUPPORT: WWD has maintained solid financial operations with adequate debt service coverage despite declines in water sales in recent years. The implementation of fixed? rate land?based charges and increased cost of service rates have preserved financial margins. AMPLE WATER ENTITLE ME NTS: WWD 's entitlement to a substantial amount of water (1.19 million acre feet) is used to serve the region 's irrigation needs. CONCENTRA TED USER BASE: The service area is made up of a small, concentrated customer base. Water customers are also district landowners and voters. FL UCTUATION OF SUPPLY: Although WWD has ample water entitlements, allocations of Central Valley Project (C VP) water can vary widely from year to year. In years with low allocations the district purchases additional supplemental water and increases ground water pumping which in turn increase costs. INTRICATE RELATIONSHIP WITH OTHER AGENCIES: Water entitlements and allocation issued between the district, the state of California, and the Federal government are complex and long? standing. LARGE FUTURE CAPITAL PLANS: WWD anticipates potential large capital needs related to the proposed conveyance pipeline, which could strain rate flexibility and financial margins. RATING SENSITIVITY CHANGES IN WWD CREDIT QUALITY: The rating reflects the credit quality of WWD. Any changes to the credit characteristics of WWD would impact the credit quality of SLDM WA. SIGNIFICANT LE VERA GIN G: The addition of a significant amount of debt to support the proposed conveyance pipeline could pressure the district's finances and result in negative rating action. CREDIT PROFILE LARGE, UNQIUE IRRIGATION DISTRICT WWD is governed by a nine?member board of directors elected from district land owners and is responsible for district governance and policies. The district maintains full independent rate?setting authority as well as the ability to place a lien on property if water bills are unpaid. WWD covers 614,700 acres in Fresno and Kings County on the west side of the San Joaquin Valley. It is the largest irrigation district in the US. by acreage and responsible for administering the delivery of water from the United States Bureau of Reclamation (USBR) Central Valley Project (CVP). WWD PROVIDES BACKSTOP TO SLDM WA BONDS SLDM WA was established in January of 1992 and consists of 29 water agencies representing approximately 1,200,000 acres of federal and exchange water service contractors within the western San Joaquin Valley and in San Benito and Santa Clara counties. It was established to assume the operation and maintenance responsibilities of certain United States Bureau of Reclamation (USBR) CVP facilitiesmember participants of the SLDM WA and has water entitlements to around 40% of the total 2.9 million acre?feet (MAF) available to In 2009 SLDM WA issued $50 million in revenue notes to fund development costs related to the Delta Habitat Conservation and Conveyance Project Seventeen members participated in the 2009 revenue note financing while the other participating members contributed cash for their portion. However, WWD is the ultimate obligor. During the 2013 refinancing, participating members had the option to cash?fund their share of the notes and a total of eight members elected that option. The remaining nine members elected to finance their share of the activity costs with 30?year bonds. WWD's allocable percent of the 2013 bond debt service is just under 80%, or the equivalent of approximately 52.2 18 million in annual debt service, with the other participant's share at just over $500,000 annually. The district will make the full debt service payment to the trustee and will then be reimbursed by the other participating districts, as outlined by the lndenture and Activity Agreements. ACTIVE PARTICIPATION WITH BAY DELTA CONSERVATION PROJECT The is a program consisting of joint efforts by agencies of the federal government and the state of California and local agencies to fund and plan habitat conservation and water supply activities in the Sacramento San Joaquin River Del ta/San Francisco Bay Estuary the Bay Delta), including Bay Delta water conveyance options, commonly referred to as the Bay Delta Conservation Plan (BDCP). Pursuant to a Memorandum of Agreement, the SLDM WA, the California Department of Water Resources (DWR), the USSR, the Santa Clara Valley Water District a member of SLDM WA), the State Water Project Contractors Authority (SWPCA), the Metropolitan Water District of Southern California (MWD) and the Kern County Water Agency (KCWA (each a member of the SWPCA), and WWD have agreed to undertake the planning, the preliminary design and environmental compliance activities with respect to the Proposed Conveyance Pipeline The state has proposed a conveyance pipeline that would include two underground tunnels to deliver water around the Bay Delta instead of through it. The construction cost of the DH CCP project is currently uncertain, with latest estimates being over $14 billion. Moreover, the ultimate source of funding for such a massive undertaking is yet to be determined. lf built, it could provide greater reliability to the SWP and CVP deliveries across the state which would greatly benefit the district. Significant further leverage by the WWD could apply downward pressure to the ratings. AMPLE ENTITLEMENTS, VARYING ALLOCATIONS WWD 's CVP water entitlement totals 1.19 million acre feet (AF) as compared to total annual usage of 991,203 AF in 2012?2013. The water is purchased from the USSR and sold to users at prices designed to cover cost. Actual deliveries of VP water to WWD averaged 662,000 AF (approximately 60% of the entitlement) from fiscals 2007?2012. There was a notable decline in CVP water usage in 2009 and 2010. CVP water usage averaged just 264,000 (29% of the entitlement) for those two years due to drought conditions in the state between 2007 and 2009 and regulatory limitations on water pumping in the Bay Delta. Following a year of above average VP allocation of 70% in 2011 ?2012, allocations for the current 2013?2014 year are currently at a conservative 20% allocation. When allocations are low the district is forced to purchase supplemental water on the open market which can be costly. CONCENTRATION OF AGRICULTURAL CUSTOMERS The district serves a small concentrated customer base comprised of approximately 600 connections for irrigation services and another 200 for municipal and industrial connections. lrrigation water sales accounted for 88% of the district's operating revenues in 2012, while municipal and industrial sales accounted for approximately 1 Offsetting the ra tepayer concentration risk somewhat is the high value of the cash crops farmed in the district (over $1 billion in calendar 2012), the absence of alternative/equivalent supplies or infrastructure to deliver water, and the potential value of the district's water supplies to non?district customers. The demand for water in Southern California and the San Francisco Bay Area by users with connectivity to the CVP is very high. 19 STABLE FINANCES WWD has multiple rates and charges designed to recoup its costs, including, among others, VP contract rates, acreage charges, supplemental water charges, and power surcharge charges, as well as land?based charges and assessments. Historical water enterprise financial operations are favorable, with positive annual results, good liquidity levels and designated reserves, and adequate debt service coverage. Financial projections through fiscal 201 7 reflect coverage ratios averaging 1.3x, similar to historical norms. Liquidity levels as measured by days of cash on hand registered 223 days for 2012, a noticeable increase from a low of 144 in 2011. ln December 201 0, WWD instituted land?based operating and maintenance charges in an effort to add stability to the district's rate structure. These new land?based charges, as well as higher surface water deliveries, resulted in a significant increase to revenues in 2011. The additional land?based charges, coupled with increased water rate charges implemented in December 2010, raised revenues by 43% over fiscal 2010. This increase in revenue allowed the district to keep pace with the higher cost of supplemental water, which resulted in operating expenses increasing by a corresponding about 50%. Fiscal 2012 coverage registered a stronger 1.7x, the result of a return to normal water deliveries and higher CVP allocation of over 70%. WWD '5 future capital needs continue to be focused on obtaining additional water entitlements and to firm up delivery of existing entitlements. Capital improvements in the district have averaged just over $2 million a year for the last four years. However, debt financing by the district could increase if additional water supplies come available for sale. Longer term capital costs related to the conveyance pipeline remain uncertain. Additional information is available at 20 From: T0: Subject: RE: Westlands Kern Docs Date: Wednesday, July 01, 2015 12:22:00 PM Attachments: Westlands General report 6-16-2015.Ddf Tunnels Buddet Timing-Kern KCWA150625 - June Board Packet - Public.pde Hi Debbie, lgot lost in computer problems. So I did receive the complete Kern Board package. It is large and have it on dropbox. I will look again for the independent audit information. Attached though is the update from them regarding the BDCP. The latest have heard is DWR is going to issue ?commercial paper? to fund the next stage of the tunnels. That lowers the bar and adds costs. Curious have you heard of this approach. I thought either MWD or SWPCA were going to issue the debt. Regards, Patricia From: Espe, Debbie Sent: Tuesday, June 23, 2015 3:31 PM To: Patricia Schifferle Espe requesting an independent audit that Subject: RE: Westlands Kern Docs be Obtained by the agency producing it for a copy. Instead, she asks Patricia, Schifferle to get her a copy. Thanks. On Kern?s agenda see that they have an item to authorize entering into an agreement for an independent audit of the SWP for fiscal year 2015-2016. I wonder when the report is complete, if we?ll be able to get a copy (I use to get it when I attended the SWC meetings). Also, I checked out Central Coast?s agenda (attached). Central Coast actually attached the objectives for 2015- 2016 (see page 60-64). debbie From: Patricia Schifferle Sent: Tuesday, June 23, 2015 3:01 PM To: Espe, Debbie Subject: Westlands Kern Docs Hi Debbie, My computer crashed so I have been scrambling. Attached are some documents from the Westlands Board Meeting last week. Also attached is the Agenda for the Kern County meeting this week. Regards, 21 Patricia No virus found in this message. Checked by AVG - Version: 2015.0.6037 Virus Database: 4365/10122 - Release Date: 06/29/15 22 From: To: MILE. Subject: Doug"s Blog Date: Tuesday, September 30, 2014 4:09: 10 PM Hi Debbie, wanted to follow up regarding Doug Obegi?s blog. As you know a number of groups including PCL have urged that a full range ofalternatives plus the costs be considered and this includes the single tunnel portfolio approach because it provides especially Southern California users with additional security. There are a number of benefits in addition to lowering the costs from the "portfolio approach? and it deserves analysis. From the SD Water Authority?s perspective, there will be a significant range of costs from the existing system. As discussed these have not been clearly provided under the proposed AIP. Instead there is an extended repayment period for some vague costs that are not disclosed. Knowing the costs of the existing project [without expansion] is critical. Otherwise the contract extension becomes a virtual blank check. For example there are substantial costs to the California Aqueduct which is reportedly subsiding as irrigators pull out "ground water? right next to it. Regards, Patricia Here are a couple of articles that you may have missed regarding the meeting and Cowin?s presentation. No one has picked up on the tunnels realignment yet. ca itolweekl .net twin-tunnels-delta- ro ress and here Maven gives a detailed transcript of what Cowin and others said at the MET meeting - From: Espe, Debra - - - Sent: Monday, September 29, 2014 1:20 PM ESpe revealmg She was} from To: patricia Schifferle SWP Contractors meetings for Subject: RE: Re CCWA's Meeting Thurs undisclosed reasons, limiting her access to documents from other water Patricia, agencies_ Yes, in the past, I received the agenda packet (attached is this month?s). I imagine, with the latest development (the un-invite), will no longer be receiving these. But as you look through the information discussed at these SWP Contractors? meetings and this is Debbie (not the Water Authority) speaking it is a shame that these discussions are less transparent and now basically 23 closed. As for your other question, in the attached packet, page 69 shows the status of the extension as of the presentation date (September 18). According to the slide, three SWP Contractors did not sign the AIP (Butte, Plumas and Coastal), and 11 are pending. Your news of 8 refusing to sign, is liker more up-to-date. One thing MWD mentioned, even if a SWP Contractor did not sign the AIP, they may still sign the resulting contract changes. On a side note, any thoughts on Doug Obeji?s article at: ate.com inion enforum article Fixin -the-state-s-flawed-Ba -Delta- 5781486th? Thanks, Debbie From: Patricia Schifferle Sent: Monday, September 29, 2014 12:35 PM To: Espe, Debra Subject: RE: Re CCWA's Meeting Thurs Thanks for this clarification. There is a meeting scheduled at the Tsakopoulos Galleria Library on October 16th. checked with the Library and the room is rented. Prior to you being ?uninvited? was there an agenda? Also it has been reported that 8 contractors have refused to sign the AIP?meaning they do not agree with the ?definition of the project.? It would appear these most recent power point presentations indicate the project definition for the proposed CEQA document is too narrow or some could argue ?piece-mealed? and incomplete because the contract extension anticipates another round of changes to accommodate costs differences, project impact differences etc. Did you ever get a list of those contractors who did not sign the Thanks again, Patricia From: Espe, Debra Wang] Sent: Monday, September 29, 2014 11:40 AM To: Patricia Schifferle Subject: RE: Re CCWA's Meeting Thurs Thanks for the presentation! The committee meetings was referring to earlier are held under the State Water Contractors umbrella with Terry Erlewine. These are typically held at building with a call-in number. However, I do not participate in these meetings because the invite list had been limited. 24 The meeting where the BDCP cost allocation presentation was given by Brian Thomas some months back was the SWPCA led by Marylou Cotton. -Debbie From: Patricia Schifferle Sent: Monday, September 29, 2014 11:32 AM To: Espe, Debra Subject: FW: Re CCWA's Meeting Thurs Hi Debbie, Here is the Central Coast?s powerpoint presentation. By the way, are the meetings being held under the SWP umbrella or the SWPCA umbrella? I thought Terry headed up the State Water Project Contractors so are the meetings held under the SWP umbrella? Thanks, Patricia Schifferle 530 550 0219 25 From: T0: Subject: Correction to the Bay Delta Funding Information Document Re Federal CVP oontractors Date: Monday, March 16, 2015 9:16:53 AM Attachments: Annual Disclosure 2014 CUSIP (new) 798544BH4 798544AM4 WWD Jan 7 2009 BOD Mto Re WWD et al Adv OM 2009- 2013.Ddf WWD BOD Mto Dec 16. 2014 Attachments .odf WWD BOD Mto Dec 16. 2014 Minutes.odf Evidence that Westlands violated its Debt Covenants Discussion.doc. Dear Debbie, I had a chance to review the February 18, 2015 Memo Re SWPCA Bay Delta Funding Information Schifferle attempting to shape Water You might want to revise the following statement: pOSltlon ?nancmg 0f the On the federal side, the funding mechanism was to be administered through the San Luis Delta endota Water Authority also a JPA. Westlands Water District ?s largest member agency, has provided the majority of the federal contractors? funding including issuing bonds,'4 it also agreed to backstop 100 percent of the federal contractors? share of costs.5 It may just be semantics but here are some observations to tighten up the language. issued the debt with a 100% guarantee by Westlands: 1. issued the debt. Westlands is the 100% guarantor for the debt. Originally in 2009, in debt was issued under CUSIP 79844AM4. It has since been re?nanced and there are two new CUSIP numbers see the attached 2014 disclosure statement. They can be found at 58787 Here is the description from CUSIP 79844AM4 Pg 20 from 2012 Disclosure Statement by Auditor Note San Luis Delta-Mendota Water Authority Revenue Notes: On April 1, 2009, San luis Delta-Mendota Water Authority issued $50,000,000 Revenue Notes, Series 2009A, to fund Delta Habitat Conservation and Conveyance Program activity. Certain members of the Authority, including the District, have entered into agreements with the Authority and will be obligated to pay development costs pursuant to the Department of Water Resources (DWR) funding agreement and the activity agreement with the Authority. Notwithstanding the percentage share of the debt service on the notes for the various financing participants, Westlands Water District is obligated to pay 100% of the principal of and interest on the notes when due under its activity agreement with the Authority. The Trustee will apply payments of principal and interest received through the Authority from the other financing participants to reimburse the District. Semi- annual interest payments of $1,125,000 are due each March 1 and September 1 beginning September, 2010, through September, 2013. On the maturity date of March 1, 2014, a final principal and interest payment of $51,125,000 is due. The other financing participants are expected to reimburse the District 37.04% of the total of each payment. in the event that the Authority has not received from the financing participants amounts 26 sufficient to pay the principai of and interest on the Notes 90 days prior to the maturity date, the Authority has agreed to use commerciaiiy reasonabie efforts to effectuate the saie and deiivery of bonds, notes or other obiigations to refund the principai portion of the Notes in excess of amounts received from financing participants prior to the maturity date 2. In addition to issuing revenue bonds 100% backed by Westlands, the participating CVP contractors [which have been shrinking] have been advancing operation and maintenance payments to Reclamation with the understanding they will receive reduced water charges and/ or operation and maintenance credits. [See the attached WWD documents obtained through PRA requests.] 3. Finally, Reclamation also credited back to the CVP contractors payments made for the Delta Mendota Canal-California Aqueduct Intertie Project [Intertie Project in 20 12]. [Note: Originally the CVP contractors were to pay for the project. Instead Interior spent $15.8 million of ARRA funds for the completion of the Delta-Mendota Canal California Aqueduct Intertie Project. CALFED funding for the Intertie is $8.8 million. The remaining funding has come from contributed funds and Reclamation?s Water and Related Resources funding. Federal costs are to be recovered from bene?tting water contractors according to Reclamation ratesetting policy due in full by 2030. Reclamation returned the $22.4 million of the contributed funds to the individual contributors. Some of the CVP contractors, e.g. Santa Clara utilized their portion to pay for the Delta water tunnels planning] I am trying to get the updated CVP contractor advance payment ?gures for March 2015. The WWD Dec Minutes [attached] and minutes for February indicate additional advance operation and maintenance payments from the participating federal contractors [they have shrunk to just Westlands, Panoche, San Luis and Santa Clara] Finally, In reviewing the ?nancial disclosure documents provided to the SEC from WWD, there are some signi?cant accounting irregularities. These are summarized and notated in the attached draft and provided to you confidentially, not for attribution. If true, the observations suggest WWD may be even a more risky financing partner than previously contemplated. You might want your bond experts to take a look. Regards? Schifferle attempting to conceal her involvement in the refinement of Water Pamela Authority documents. Director Pacific Advocates 530 550 0219 27 H. Schifferle attempting to shape Water Subject: FW: California WaterFix DOSltlon her Date: friday, July 17,2015 5:27:48 AM opinion and analysis on the ?heme?: Recirculated Environmental Impact Report for the California Water Fix imaqeOOSanq: before the Water Authority's Imported imac?3006'pnq- Water Committee began their analysis. imaoe007.onq imaoe008.onq imaoe009.onq imaonlOpnci, 2014-07-28 WA GM StaDIeton Itr to NMFS re Draft Imolementinq Aareement for BDCP EIR 2014-05-30 WA GM BDCP Comment to Hi Debbie, Apologies for my tardy response. lam getting out of town for several weeks and off the grid. I don?t think much has changed. BTW congratulations on the ratepayer case. I think the case brings into sharp focus the specific problems with the massive tunnels project. They will take decades, cost billions and produce little more than some large engineering construction contracts. The main issues remain the same: 1. They do not consider a full range of alternatives and especially as your comment letters point out, some alternatives that would provide much more water at a significantly lower cost 2. It is doubtful the documents will meet the legal and environmental flaws already highlighted by the EPA and ACE 3. The cost benefit ratio is still absent and has only gotten worse. Bottom line, San Diego ratepayers and LA ratepayers will pay the bulk of the costs while Westlands and Kern will likely seek most of the imaginary water benefits. Just spending a fraction of the billions required for this project, if spent locally in LA to fix existing infrastructure or projects in San Diego that produce real water, these efforts would produce more water and jobs and are less expensive. Here are some observations. Apologies for the length: In addition to the nonvoting ratepayers and property taxpayers who will be paying along with agricultural interests like Kern or urbans like San Diego, there are many who question the wisdom of spending billions for this tunnel vision project. Last go around the documents were ruled legally insufficient and failed basic environmental protection standards required under the Clean Water Act and other federal and state protection laws. Now the slimmed down version has lowered the bar to mitigating only what is presently required under the State and Federal ESA statutes, and even that compliance is questionable. As you noted San Diego was recently in town to promote spending scarce ratepayer dollars on local projects that 28 would produce more water and jobs calo inion.com 2015 07 eor e-skelton-will-local- It seems no other alternatives will actually be considered in the latest attempt at public comments. It appears the Governor and allies believe they can just steam roller this through. This is potentially costly with many who will challenge it. At stake are the fresh water flows that keep the SF Bay healthy along with its?fishing industry, tourist industry, real estate dynasty and the drinking water for the surrounding regions. Once built it is unlikely, as the present drought has shown, that the pa per protections for water quality and the fishing industry will not be enforced. Here are some of the areas of the Gov?s new ?fix it massive water tunnels export plan that raise serious questions are some of the challenges. Before the public comment process is even completed it appears from PRA documents DWR and the specific contractors are initiating the contracting process to build the project in segments. Already they have their Design Construction Enterprise staffed and contracted?they also have most of the initial tunneling plans ready hoping the project will be approved. In theory there is no project yet, but a whole lot of ratepayer and taxpayer dollars have been spent. And the Governor has already chosen his Design Construction Enterprise Program Director?Chuck Gardner and his 3 person support staff have obtained a 511.455 contract. All to someone who has never experience managing or constructing a major water project! Sources indicate the qualifications was his friendship with Jeff Kightlinger. Significant challenges remain for the Governor?s chosen tunnel vision path. In addition to the water quality and environmental challenges, there are technical and engineering challenges that can be found in their own documents. A lot of unanswered questions and yet it seems the Governor and DWR already have chosen a specific project alternative?the massive water tunnels only diversion plan. Under the new approach three agencies will need to issue take permits and issue new biological opinions under the Federal ESA and California ESA codes: 1. USFWS- Smelt and others 2. NMFS?Salmon, steelhead etc. 3. Cal Department of Fish and wildlife White Tail Kite; Sandhill Crane and Black Rail among others It is highly likely none of these biological assessments will be available for public review and comment. The project beneficiaries indicate in their documents the Record of Decision will be issued by Jan 2016. See below for the challenges in meeting state and federal law. Rega rds, Patricia 530 550 0219 29 Here are but some of the problem areas as presented by the tunnel prom oters? followed by problems meeting federal and state law: Tunnel Planning Efforts Tu noel Con?guration I Site Access and Logistics - Hp proachos to Tun nel Contracting lContract Packages planned for Tunnels Drilling, Equipment, Energy and Logistics Tunnel Portions of Program Hide:- IaclIZI-loul tunnels I: shalt laid-footwnnol E. she'll: penchant - Fa b I .nl l-r-hr . - Hon-lib? -, shaft: 1? mimic! packages "Id ..I l-hl .1 a H?il?wm? in. mm ng?h NW1 Ul-IIFn-ho . ?ful?l-P- - n?uu- a --..- p'v 1.: "qr- -- I'l- . - u?ll?A m. a- .- Site logistics?bridge replacements, highway interchanges, barges, power facilities Site Logistics Land access Bridge replacements Highway interchanges Water access Water side barge landings Land side barge unloading Construction Power Shaft pro-consolidation work Are Tunnel Eoring Machines available? How will heayy haul equipment arrive? a a a Equrprnent and Materlal Deiilrerwr - Use of CA Legal trucks L3 Segments pier trUEk 60': Average tripsfdav" - Use of ha rges Large quantity deliveries - Reduce road traffic *E?stlm ated taps oer dual launch shaft site Construction Power at Shaft Sites - 25 MW per TEM SD MW per tunnel drive shaft location - Multi year planning effort A Earl-,1 atarr - Mu itiple power providers involved Temporary installations Helm-L"- I-unm-l- an! r-z-mrilnre- Power demand and building in access to supplies 31 Procurement and ~?9ntrecting Challenges 32 lCompetition for tunneling machines to tunnel some 13!] to 15!] feet deep and substantial distances: Tunnel Demand Forecast [Satin-e: Society of Mining. alien} i . St?i?l Infll'." Ll!? Width URI Tl I . ?mums-rem m. can 3 am ups-unis: LA.me Eli Trial 31% a) 331.4 mm Lemmas-imam? a? unsure-syn Lecterns-o ac sic-m 12am to ems Lila-urchin: ac runny runs: 452?s: ems [new on em ram 2 acts treads-am mmn?wm on Sun arm in ans Linea-lg: 15., a 335 MW amour-r?me ca. rum an as ans ups-cum annoyances? in Twin! assoc 22 ans man-g1 access-rm on me can 3 am ocean: Lh?oWHicE?ari-mma a mm 3917 mm spasms-s on we: ssacnc as ms ours-m Technical design issues boring tunnels in variable pealt and soils under major rivers and ship channels anti?" Tunnel Design Issues Boring Machines (Er-Feat Excavated Diameter Pressunmd Balance Machine or Slurry} Up to 5 Bars External - intervention - Concrete segment Design High external loads. [Ground H-rdrostatscl High Internal pressure I Hoop tension on concrete ioints - Leakage through concrete segment Leakage control Gasket and segment 33 Tunnel Profiles I: 5.9mm" 511?: I lillm. I hunt i rl fhnn?'l ?3 I A m; urn-u.- Stockton 5th thech Iron o1 mod-tron {crumb-{Ion uli?ly "casing: to did-El The problem --There are a num ber of inconsistencies with state and federal laws. The latest FHA documents from Kern County Water Authority show the SF Bay- Delta Estuary Tunnels Project is running out of money yet again. Supposedly federal funds are due to arrive this week or in July 2?15 sometime. Funny state law requires the project be paid by the bene?ciaries?basically the majority of the water would go to justS co ntractors--l{ern and MET El Westlands. Why are the federal taxpayers paying with ?sh and restoration money for a project EPA and others contend will harm the water quality and the ecosystem? Docum ents show these 3 contractors and the lCoyemor are going to seek a penn it to kill or take endangered species pursuant to the federal and State of California Endangered Species programs. There are signi?cant problems. No independent scientists have found that taking much of the rem aining freshwater from the SF Bay-Delta Estuary will, [as required by both federal and state law] ?protect, restore and enhance? the SF Bay-Delta Estuary Ecosystem. [see below] Further no independent scientists agree that taking this vital freshwater from the ecosystem will meet the water quality protections required under the Federal Clean Water Act to ensure millions of Californian?s drinking water is not too salty or contaminated. Fully Protected Species Under California Law Cannot Be Issued Take Permits There has been considerable discussion as to whether this ?new project? approach ofjust grabbing the water meet these less stringent protections under the federal ESA withoutjeopardizing the species. But few if any of the tunnel promoters have paid attention to 3 speci?c California Endangered Species?The White Tail Hite; Sandhill Crane and Black Rail?Under California law these are ?fully protected species?. Thus, there are no take permits. Federal law requires compliance with California State law typically unless Congress speci?cally says otherwise. Kern 34 dccuments [see attached] repcrt cn discusses compliance with federal law: The Caiifcrnia Water prcceed under Secticn cf the Endangered Species Act which estahiishes a icwer standard fer icing-tern:I en yircnn'ientai ccinn'iitinents than was required for the EDCP, which was being de yeicped under Secticn 'it'i cf the ESA. The Caiifcrnia Water Fix he eiigihie fer en yircninentai permits that are much shorter in duraticn than the ?ll-year permits sc ught fer the EDCP. Additicnaiiy, the hahitat restcraticn eien'ients cf the EDGP nc. icnger he part cf the Caiifcrnia Water Fix, and instead become a separate as Caiifcrnia Ecc Restcre. The specific ccnyacnents cf the BEEP, inciuding the pipeiines, aiignn'ients, and fcrehays remain the same, but might he operated differentiy. 5c it is net clear the new massiye water diyersicn tunnels dubbed ?Califcrnia Fix It? will with federal and state laws. It will be interesting tc see the PR campaigns thread this needle! And the Secretary cf Intericr will with bath federal and state laws?hcth spending and en yircnm ental prctecticn statutes. Dr whether federal and state scientists will cnce again he hashed hy the industrial irrigatcrs want tc jun1 tc the cfthe water line. See the federal statute prcyisicns helcw. lt wculd be interesting tc see if any NMFS cr UEFWS scientists wculd discussthis ?water diyersicn tunnels cnly? prcject with federal [see excerpt helcw] and state laws. Here are cf the Fully Prctected- nc take species impacted by the prcject: The White Tail HZite; Sandhill Crane and Black Rail 35 E:-:cerpts Federal Law Requiring mcney spent must include measures tc prctect, restcre and en hancethe Delta eccsy stem nc just talte mcre water: 125 STAT. PUBLIC LAW 23, SUN SEC. EDS. The Federal pclicy addressing Dalifcrnia?s water supply and enyircnm ental issues related tc the Bay-Delta shall he ccnsistent with State law, including the cc-egual gcals cf prcyiding a mcre reliable water supply the State cf lSalil?crnia and prctecting, restcring, and enhancing the Delta The Secretary cf the lntericr, the Secretary cf Scmm erce, the Army cf Engineers and the Enyircnmental F'rctecticn Agency Administratcr shall jcintly the effc its cf the releyant agencies and with the State cf Dalifcrnia and ether staltehclders tc and issue the Bay Delta Scnseryaticn Plan Final Enyircnmental lm pact Statement nc later than February 15,3313. thhing herein mcdi?es existing requirements cf Federal law. Frnm: Espe, Debbie [rnailhanEspetEsdcwaprg] Sent: Wednesday; July 15, EDIE 8:3? am Espe Sehifferle ta send Tu: F'airicia Schifferle her analf?lg [3f the C-allfc'mla Subject: Cali?jmia WaterFir-t Wateer petere the Irnperted Hi Patricia analysis Water Cernrnittee began their Our team is gearing Lip fer a whirlwind review cf the released RDEIRISD El S. the Ught I?d ta uch base with ycu and see if ycu had any initial ycu are willing tc share? us, we will be specifically Iceltir'g at haw this dc curnent respc the cancernswe raised in cur letters {which I?ye attached}. Debbie S. Discar rEspe Senior Water Resources Specialist San Diego County Water Authority 4677 Overland Avenue San Diego, CA 92123 Tel: (858) 52245734 Fax: (858) 522/6565 37 Section Coordination with NRDC Resulted in Criticisms of Governor And Project a. Staff devote time and resources to strengthen proposed portfolio b. Stapleton joins coalition with other BDCP opponents, letter c. NRDC approaches Cushman re: CA Water 21 coalition, argues BDCP is problem d. Staff interactions with NRDC attorney, Obegi e. Farrel enjoyed news of funding concerns from Senate subcommittee f. Obegi interacts with staff after July committee meeting Pages 39-40 Pages 42-44 Pages 45-51 Pages 52-53 Page 54 Pages 55-56 38 Friehauf, Dana From: Andrews, Heather [handrews@nrdc.org] Sent: Thursday, January 03, 2013 5:22 PM To: Friehauf, Dana Cc: Yamada, Robert; Nelson, Barry Subject: RE: Request to peer review BDCP Conceptual Alternative Draft of alternative water supplies Dana, Thank you very much for your comments, especially over the holiday period. They are very helpful. I inserted speci?c responses below in green to give you an initial response before our conversation on the and I look forward to discussing these items with you further. Water Authority Staff worked over holiday period Happy New Yeart? You 35 We". to help refine the portfolio alternative on behalf of the NRDC, a frequent and vocal critic of the Heather BDCR From: Friehauf, Dana Sent: Friday, December 28, 2012 3:05 PM To: Andrews, Heather Cc: Yamada, Robert Subject: RE: Request to peer review BDCP Conceptual Alternative Draft of alternative water supplies Heather, Thank you for the opportunity to conduct a technical review of the analysis. Great job gathering all the data into a single document. My responses to your questions are below, along with additional observations. I look forward to discussing the analysis with you more on January 1. The methodology used to calculate the cost estimate for recycled water project capital costs differs from the standard project unit cost calculation. I?ll use the Orange County water recycling project presented in the LAEDC report as an example. In the analysis, it appears that the to_tal capital cost {$480 million) was divided by the annual yield of the project to derive the unit capital cost. This unit cost appears too high. The total capital cost of $430 million is not going to just produce but over the project life. In order to accurately derive the unit cost of the project, the annualized cost should be divided by the annual yield. As discussed on page 3, paragraph 3 of the LAEDC report, they derived the annualized capital cost by amortizing it over a 30-year period at a rate of 5.00%. This equates to approximately $400 to for the unit capital costs of the Orange County project, which is about half of the total unit cost {according to LAEDC report). To publish the could cause some confusion and not be consistent with standard unit cost analysis. It would also be inconsistent with the conservation unit costs included in the analysis. For example, in the 2006 CALFED Water Use Ef?ciency evaluation they use a levelized unit cost, which is a similar concept to the annualized unit costs. This is really helpful thank you for walking through the LAEDC number. We were struggling with presenting the recycling and water conservation numbers separately, and this helps to illustrate a better way to present the numbers. 2. I have a follow-up question regarding the - how was this average derived from the numbers? It appears a little high. I would like to discuss more on Jan is the average of the low end of the costs presented [$69/afl and the high end of the costs presented We are concerned actually that $875faf is too high, and look forward to hearing more of your feedback. 3. In San Diego County, we do have a thriving agricultural industry, primarily nurseries and tree crops {avocados and citrus). The agricultural water usage within the service areas was approximately in FY 2011. This is down from a high of approximately in 2007. The drop is due primarily to severe cutbacks during the last drought and rising water rates. Because of the high water costs, most farmers are already using water very 1 39 efficiently. I?m not aware of any studies evaluating the potential for additional agricultural water savings and associated costs in San Diego County. Thanks for the comment. Additional observations: I The following statement is contained at the top of page 5: "Based upon these data sources, 323,000 acre-feet of recycled water is well within the potential yield of potential recycled water in California." Is the 323,000 acre-feet being identi?ed as the additional recycled water in California by 2030? If this is the case, I believe that number would be much higher. If you use the current recycled water use figure from the 2009 Municipal Wastewater Recycling Survey subtracted from the projections contained in the 2003 Task Force Study {1.85 to 2.2 MAF), the additional recycled water use is closer to 1 to 1.6 MAF. The is referenced in the CA Water Plan Update 2013 (early draft) and her is a link to the 2009 survey: ov water issues ro rams rants loans water rec clin I am glad to hear that you agree that 323,00 AF is achievable. This yield was determined by using our unit cost, and inputting how much money we are suggesting should be spent on recycled water projects. This is not to represent the full potential of recycled water, just the yield for an investment of $2 B. The analysis states that recycled water capital project costs are based on projects across California {page Recycled projects are going to get more expensive in the future and using costs based on existing projects may be low. f. Mia-f" lime, We also believe that efficiencies in technology could be gained, that would offset increasing project costs. i would like to discuss this further on Monday to get your perspective. 0 Another factor often taken into account in evaluating project costs, is that dollar values be calculated to the same year. For example, the conservation costs included in the CALFED analysis are in 2004 dollars, the conservation costs from LADWP 2010 UWMP might be 2009 dollars. The costs from the Recycled Water Task Force are likely in 2001 or 2002 dollars. To accurately compare and analyze costs, they should generally be converted to the same year. Thank you for the suggestion -this is a good point and something that I had meant to do. I can bring all of the estimates up to 2012 dollars using a U5 Inflation calculator. Beyond 2012, we are speculating on inflation rates, and there are different projects lifetimes, so I am more reticent to speculate beyond 2012. Thank you again for the opportunity to review. Please let me know if you have any questions regarding my observations. We can discuss in more detail on January 7th at 3:00pm. Happy New Year! Dana Elana. frie?auf Principal Water Resource Specialist San Diego County Water Authority dfriehauf@sdcwa.org 853?522?6749 (work) From: Andrews, Heather ma?l :handre . Sent: Wednesday, December 19, 2012 11:09 AM To: Friehauf, Dana Subject: Request to peer review BDCP Conceptual Altemative Draft of alternative water supplies 2 Dana, Dennis Cushman passed on your contact information and mentioned that you are willing to peer review our alternative water analysis. Thank you in advance for being willing to provide feedback on our document. My colleague, Barry Nelson and myself, have been working on an alternative proposal to the BDCP large facility being planned. Our proposal is composed of a portfolio of alternatives, including a smaller facility, investments in levee maintenance, storage, and investment in water recycling and water efficiency programs. We are trying to help decision- makers make apples-to?apples comparisons regarding alternative water supply investments between the BDCP project and alternative water sources. We would greatly appreciate your feedback on the recycled water and water ef?ciency program analysis. Attached is the water alternative section, plus the appendix that further describes the cost estimates of the confidential draft. In total, it is 11 pages that include tables. Due to time constraints, we have focused our analysis on a review of published cost estimates in industry reports, rather than calculate the costs of programs directly. A peer review from someone such as yourself will help us to validate, or point out issues with our cost estimates in general. The three speci?c questions that we are hoping you can provide feedback upon are: 1. The cost estimates for the average recycled water project capital costs (56,200) are much greater than the average estimates for urban water efficiency program capital costs Does this seem valid based upon your experience. 2. We are using a cost estimate of $375/af to generate a yield of 1.7MAF based upon an investment of $1.5 billion in urban water ef?ciency programs. Water agencies are likely to implement less expensive urban water ef?ciency programs first (low hanging fruit programs), and then implement programs with higher and higher program costs as they want to continue to save greater yields of water. There is a great amount of untapped water efficiency potential though, and we suggest that there are enough lower cost programs to generate 1.7MAF. Does it seem valid to use $375faf as the average cost to generate the full yield of 1.7MAF from our suggested investment. 3. I found very few data sources indicating agricultural efficiency program costs, and for the 2 sources that i found, the average cost is $470/af. I appreciate that there is probably very little to no agriculture in San Diego's service area, but wanted to see if you might have some familiarity with agricultural water efficiency programs. Does this estimate seem valid, or do you have suggestions of additional data sources. I appreciate that we are almost upon the Christmas holidays, and your availability is likely limited. Would it be possible for you to provide initial reactions to the estimates this week, and then for us to speak for 30 minutes by phone on January 3'd or January tilth to get your full feedback? Our timing is tight as we are working to release the full draft the week of January so that we can release the draft prior to the next release of BDCP. If this suggested timing for a peer review does not work with your schedule, please let me know what type of timefra me would be more manageable. Thank you, Heather Andrews Water Program Natural Resources Defense Council 415-875-8230 41 January 16, 2013 DNTRA 03711 WATER warmer i COUNTY WATER Weller Elgar? EBMUD The Honorable Ken Salazar The Honorable John Laird Secretary Secretary U. S. Department of the Interior California Natural Resources Agency 1849 Street, N. W. 1416 Ninth Street, Suite 1311 Washington, DC 20240 Sacramento, CA 95814 Dr. Jerry Meral The Honorable Michael L. Connor Deputy Secretary Commissioner California Natural Resources Agency U. S. Department of the Interior 1416 Ninth Street, Suite 1311 1849 Street, N. W. Sacramento, CA 95814 Washington, DC 20240 Coalition letter General Manager Maureen Stapleton advocating Dear Secretary Salazar, Secretary Laird, Deputy Secretary Meral, for NRDC's Portfolio alternative and Commissioner Connor: We are writing to you in advance of the planned release of the public review dra? of the Bay Delta Conservation Plan (BDCP), out of a deep concem over the status of this effort. We are united in a desire for a successful project that can be supported by project proponents, Delta stakeholders, and the public. That chance for success is substantially diminished as a result of the altematives analysis that we have seen thus far. Up to now, the BDCP process has been strongly focused on advancing a large capacity conveyance which, along with the suite of associated conservation measures, will be burdened with large uncertainties and for which a solid business case has not yet been made. These unquanti?ed risks include impacts on listed species, impacts on the Delta landforrn, hydrology and water quality, open-ended costs to direct water users and to the public, political controversy, and potentially litigation. 42 Secretary Salazar, Secretary Laird, Deputy Secretary Meral, and Commissioner Connor January 16, 2013 Page 2 Absent so far has been a portfolio-based alternative that features a smaller conveyance facility with additional, complementary investments in local water supply sources, regional coordination, south of Delta storage, levee improvements, and habitat restoration (see attachment) as advanced in the coalition letter sent by other organizations today. We believe that it is critical to evaluate in detail a conveyance as small as 3,000 cfs, as it would provide considerable water supply benefits to the export community while better protecting broader interests in the Delta. Such a facility would also realize significant financial savings in comparison with a larger conveyance facility, face fewer legal and political challenges, and potentially be completed sooner. With accompanying investments in proven, cost-effective regional water strategies, this approach could increase export area water supplies and reduce the vulnerability of water supplies and Delta infrastructure to disruption from earthquakes and other disasters. We urge that this conceptual alternative be seriously considered in the BDCP process, including the required analyses and the Clean Water Act Section 404 alternatives analysis. A portfolio approach could produce superior benefits at a similar or lower cost to water users and the public, and at reduced levels of environmental impacts. It has the potential to be consistent with the best available science and, as a result, may be more readily permittable and capable of delivering benefits more rapidly. It would appear that a solid business case can be made for such an alternative; in any event, the business case must be made before any project proceeds. We fully appreciate the magnitude of the challenges facing the Delta, and urge a comprehensive solution that is both affordable and science-based. We recognize the enormous effort you have undertaken toward this end, and hope that this conceptual alternative will continue to advance the discussion. Sincerely, Jerry Brown Maureen A. Stapleton General Manag -- General Manager Contra Costa Water District 33? Diego county Water Authority 43 Secretary Salazar, Secretary Laird, Deputy Secretary Meral, and Commissioner Connor January 16, 2013 Page 3 Mix/L Walter L. Wadlow General Manager Alameda County Water District Michael P. Carlin Deputy General Manager San Francisco Public Utilities Commission dump?? Em/ Alexander R. Coate General Manager Mark Watton East Bay Municipal Utility District General Manager Otay Water District 596 Fm Bob Filner Mayor City of San Diego Attachment 44 05/131201! 10:56 Page:l - Fax Transmission TO: Dennis Cushman From: Barry Nelson Fax: 1 8585226562 Date: 5! 1 3201 3 E: Strategy Memo Pages: 14 Comments: Dennis - Here is the memo I mentioned. I hope we can discuss it soon. I'd be happy to sit down with you. either in Northern California or in San Diego. 33"? Dennis Cushman and Barry Nelson of the NRDC engaged in an offline conversation regarding a new advocacy organization that identi?es the administration and the BDCP as "Obstacles" to progress. U5f13/2313 10:56 Page: 2 CONFIDENTIAL California Water 21 -A New Alliance for Water Solutions Summary: This memo proposes the creation of a broad, strategically-developed alliance to support the ambitious implementation of a range of local water solutions that are widely recognized as a key to meeting California?s future water needs. Unfortunately, today, these tools are not top priorities for many important state and federal decision- makers. Instead, they are o?en ignored, downplayed or even undermined by state and federal agencies and in high?priority water policy forums. This focus undermines efforts to provide water supplies for a growing economy and creates unnecessary con?icts among stakeholders, agencies and others. This proposed alliance is designed to put these 215' century solutions at the center of the California water policy debate, to reduce current unproductive con?icts and promote proven, practical water supply strategies. New Century - New Solutions: In the previous century, most high-pro?le water supply development efforts were focused on traditional large-scale water infrastructure and on diverting additional water from distant rivers. Over the past decade, however, the priorities of many far-sighted California urban water agencies have changed signi?cantly. A growing number of urban agencies are now placing a high priority on tools and strategies that can decrease reliance on imported water (particularly purchases from MW) and increase local self-reliance and control. Tools and strategies that appear with increasing frequency in the of urban agencies include: Water use e?iciency Water recycling Groundwater clean-up, storage and conjunctive use Stormwater capture Desalination Reoperation and modi?cation of existing infrastr'ucmi'e Increased collaboration among agencies Market-based strategies A recent HEW summarizes the efforts of ?ve leading Southern California agencies to diversify their supplies- Attachment A includes a broad summary of this state wide trend toward supply diversi?cation, particularly through investments in local supplies. Collectively, these new water management tools can generate large amounts of new, cost- e??eetive water supply. Former DWR Director and Resources Secretary Lester Snow has ?S/l3f2013 The California Water21 Coalition identifying the Governor, MWD and the BDCP process as "The Problem" and "Ohstacies to Progress" 10:55 Page: 3 Con?dential California Water 2013 May 16, 2013 Page 2 of 13 that this new generation of water solutions can produce at least six million acre feet of new supplies for California communities. This potential, which is substantially more than California exports from the Bay-Delta or receiVes from the Colorado River, suggests the opportunity to focus the California water policy debate on a new generation of water solutions. The Problem: Although a dramatic transformation in priorities has taken place at the local and regional level, the California water policy debate has not yet caught up with this change. As a result, the energy of many state and federal agencies, high pro?le planning efforts, senior elected of?cials and the legislature is often not focused on the most promising water solutions. Indeed, at times, major water policy fonrms BDCP), stakeholders MWD) and decision-makers several California governors and Senator Feinstein) actively undermine this new generation of water solutions. Several examples of this problem are included in Appendix B: Obstacles to Progrs: There are many reasons why the California water policy debate has not kept pace with changes in the past decade. Refocusing the water policy debate requires a recognition of the obstacles that have slowed progress. These obstacles include: History. Many decision?makers have retained a focus on traditional water development because of the prominent role these projects have played in the history of Western development and because of the ?legacies? such projects have earned for decision-makers (cg. Presidents Hoover and Roosevelt and Governor Pat Brown.) Dams and canals are highly visible and easily grasped by the public and decision-makers. In contrast, water use ef?ciency, wastewater recycling and groundwater clean up are less visible and understandable to the public. mm. The language used to describe the new generation of water solutions (eg. conjunctive use, low impact development, IRWMP) is often highly technical and inaccessible to the public and many elected leaders. DWR and BOR were created to construct traditional in?astructure and remain far less adept at developing innovative new projects. mum: Agriculture retains a disproportional in?uence in the water policy debate, in large part because that community is well-organized around water issues. MED: Despite its public support for local supply deveIOpment, business model requires it to focus on selling imported water. As a result, in forums like BDCP, MWD tends to advocate a focus on naditiona] imported supplies, rather than investments to reduce reliance on imported water. 4? lSl13/2?13 10:56 70:13535226552 Page: 4 Con?dential California Water 2013 May 16, 2013 Page 3 of 13 Common Ground Regarding New Solutions: A wide range of stakeholder interests have recognized the potential represented by a new generation of local water supply investments, including: Urban water agencies and cities Business groups Environmental groups Labor Latino community groups- Academics Commercial and recreational ?shermen Delta interests In?uential water funders California Water Foundation, Bechtel Foundation) Attachment includes examples of the positions of the above interests. Unfortunately, the breadth of the agreement about these solutions is not well known among elected decision-makers. Together, these voices span most of the state and represent a remarkably broad range of interests. Most importantly, working together, these interests represent most of the state economy and most of its voters. Working together, these interests can overcome the obstacles summarized above and ensure a more productive focus in the California water policy debate. Past Successes: Given the complexity of water issues and the lack of institutional knowledge resulting from term limits, decision-makers increasingly look to stakeholders for leadership and solutions. For example, the gm resulted, to a large extent, from the fact that it was developed through a collaboration among a diverse group of interests. Many elected oi?cials, members of the media and others, concluded that solutions backed by such a diverse and in?uential coalition must be worth pursuing. Other recent examples of the e?'ectiveness of broad collaborative efforts on water, include the and the 2009 water reform package. All of these efforts, however, were short-term, one-time efforts that were not conceived to overcome the fundamental obstacles to a more productive water policy debate. Each of these efforts were effective in the short-term, but were not sustained efforts. (There are many examples of such broad collaborations on other high pro?le issues, including climate ghange and WW.) ?Sf13/2013 10:56 Page: 5 Con?dential California Water 2013 May 16, 2013 Page 4 of 13 This memo proposes an e?'ort to build on the above isolated examples of progress to produce a more dramatic and long-lasting change in the California water policy debate. For the groups that collaborated in developing the portfolio approach, this memo proposes a simple but important question: ?What is the next step in the effort that developed the portfolio approach?? California Water 21 - A New Alliance: This memo proposes the creation of a new alliance among a wide range of interests that support a core set of tools (variously known as local Virtual Riven'integrated regional planning) as keys to providing the water supply necessary to maintain a thriving California economy and environment in the 21? century. The alliance would be designed to refocus the California water policy debate, state and federal agencies and elected of?cials in a more productive direction and to produce tangible on-the-gronnd bene?ts. The broad collective political strength of those who support this new generation of water solutions could signi?cantly increase the prospects for progress on high priority issues in state and federal agencies, in the legislature and in Congress. Signi?cantly, this alliance has the potential to dramatically increase the leadership on key issues from state and federal elected officials. For example, members of the state legislature and congress ?'om California?s urban areas are likely to he more responsive to such a broad coalition than to the positions of Central Valley agriculture. This alliance would also strengthen the ability of water agencies to make key investments and rate decisions at the local level. These decisions are particularly dif?cult in the current economic climate. This challenge could be lessened, with the support of a broad coalition focused on shared priority tools and strategies. Although this alliance would build on the ?portfolio alternative" effort, organizing support for this alliance could be signi?cantly easier, because it is designed to build on extensive common ground and avoid the complex and divisive debate in the Delta. This new alliance should be developed through a phased approach that re?ects, to a signi?cant extent, the approach used to develop the portfolio approach (as opposed to the public approach used by the Coalition to Support Delta Projects). This e??ort could include the following steps Initial scoping (with an early focus on bringing together LADWP and SDCWA.) Drafting Involving academic institutions Recruiting broad stakeholder support 49 05/13f2013 19:56 Page: 6 Con?dential California Water 2013 May 16, 2013 Page 5 of13 Message development Outreach, education and early actions Implementing a broad policy agenda The last taro steps here are particularly important Even where they ?nd common ground, diverse water interests seldom take the time to implement a broad public and decision-maker outreach strategy. Such an effort is necessary to begin to increase public and decision-maker awareness of the strong support for a new generation of water solutions. At the end of the day, the most important outcome of this alliance would be its ability to focus the policy debate in more productive areas and to deliver on?the-ground results. These shared policy priorities would be developed through the dra?ing process, although they could include the following: Regulatory progress on water recycling issues Creation of a Southern California storage market Improving collaboration among Bay Area water agencies Protecting funding for priority tools in any future water bond Refocusing major state water policy forums on these local solutions, or creating a new state-level forum regarding this opportunity. The next step in this effort would be the development of a phased approach to the creation of this alliance. Keys to Success: The following is a brief discussion of opportunities and challenges that represent important keys to the success of this proposed new alliance. A new alliance cannot and should not be designed to address all water issues in California Some important issues are already being addressed in other forums Bay-Delta issues.) This alliance, for example, should acknowledge the importance of solutions in the Bay-Delta and other key areas; however, it would remain focused on the solutions discussed above. One wayr to ensure that Bay-Delta issues are handled e?ec?vely would be to involve agencies such as Sonoma County WD that do not rely on Bay-Delta water. gs Ed San Diego: Uniting San Diego and Los Angeles around a shared high priority water agenda could be ?game changer" in Southern California. Therefore, overcoming or avoiding the tensions between LA and San Diego regarding the rate litigation and other MWD issues is one of the most important keys to success. This effort ?SflJ/E?ll 10:56 Page: Con?dential California Water 2013 May 16, 2013 Page 6 of 13 should begin with a strategy to bring together LA and San Diego, perhaps including a conversation between the mayors. mm: It will be important to create forums that represent a safe environment to explore common ground and prevent controversies over other issues from detailing e?'orts to collaborate. One possible solution might be work with an academic institution to convene a forum to explore these issues. Such an effort should avoid academic institutions that are deeply involved in Bay-Delta issues (cg. UC Berkeley and UC Davis) in favor of Southern California institutions that could help unite LA and San Diego UCLA, USC or UC Santa Barbara.) WW: Although the portfolio approach attracted important business support, many in?uential business organizations did not join that effort and remain very focused on the Bay-Delta. Uniting LA and San Diego, and involving one Bay-Delta water agencies, should help in attracting support from important business organizations (cg. the SVLG, Bay Area Council and SCLC.) Ifthe BDCP e?ort bogs down, there may be an added opportunity to increase business involvement in the proven solutions discussed here. Framing the focus of this alliance on providing the water needed for economic growth in California will help attract business support. MW: Determining whether and how to involve MWD, and a small number of other urban water districts will be an important issue to resolve. Likewise, it will be important to decide how and if CUWA should be involved in this e?'ort. Am: The agricultural community routinely advocates for solutions that provide few, if any, bene?ts for most of California ?5 economy and residents g. Temperance Flat Dam.) Central Valley leaders also regularly propose that urban residents subsidize investments designed primarily for agriculture. However, no one criticizes agriculture for advocating the solutions that they support. They have every right to do so. In many ways, this memo proposes a broad coalition representing California '5 cities and most of its economy, which is where most of California?s growth takes place. It is entirely appropriate for urban interests to advocate for their shared priorities. However, care should be taken to avoid any impression that this is an anti-agriculture coalition. It is not. In fact, most agricultural interests strongly support e?'orts to increase water self-reliance of urban communities. Logistics and Funding: Hill) 51 Kyle Griffith From: Chen, Amy Sent: Tuesday, November 12,2013 7:26 PM To: Cushman, Dennis; Farrel, Glenn Cc: Stapleton, Maureen Subject: RE: State made a $33 error in the Portfolio Alternative cost estimate 12/Revised Capital Cost for 3 000 Single Bore Tunne .aspx Revised Capital Cost for 3,000 Single Bore Tunnel November 12, 2013 By Richard Stapler, California Natural Resources Agency The Department of Water Resources has revised its estimate of the cost to construct a 3,000 cubic?feet? per?second, single bore tunnel that some stakeholders have proposed be incorporated into proposals to restore the ecosystem and water supply reliability in the Delta. In 2012 dollars, that capital cost of such a facility is estimated at $8.6 billion. This cost also reflects the change in tunnel alignment to reduce impacts on local communities in the Delta announced in August of 2013. The California Natural Resources Agency will use this information to better understand the potential costs and benefits of combining a facility of this size and specification with other investments in water reliability as a means to secure California's water future. For comparison purposes, the revised construction cost estimate for the 3,000 cubic?feet?per?second, dual bore tunnel is $10.8 billion in 2012 dollars. The updated capital cost estimate for the 9,000 cubic?feet?per?second dual bore tunnel is $14.5 billion, also in 2012 dollars. From: Cushman, Dennis Sent: Tuesday, November 12, 2013 7:21 PM To: Farrel, Glenn Cc: Chen, Amy; Stapleton, Maureen Subject: Re: State made a $38 error in the Portfolio Alternative cost estimate I wonder if Maureen will get a reply to her letter to Laird tomorrow, a day before he appears before our board? Please monitor BDCP's web site for a "quiet" posting of an updated response to Maureen. Thank you. Dennb 52 On Nov 12, 2013, at 6:34 PM, "Farrel, Glenn" Farrel@sdcwa.org> wrote: The corrected version of the corrected version - credibility is becoming an issue at the same time they Want 'Etters Ofsupport'" Glen Farrel questioning credibility of the State after Doug Obegi informed Water Authority Staff of an error in estimating the cost of the NRDC's portfolio alternative. Sent?oninwiPhone On Nov 12, 2013, at 6:30 PM, "Chen, Amy" wrote: Let?s wait until the state issue the correction. Until thenm From: Obegi, Doug [mailtozdobegi@nrdc.org] Sent: Tuesday, November 12, 2013 4:27 PM To: Chen, Amy Subject: State made a error in the Portfolio Alternative cost estimate Hey Amy, Wanted to let you know that I caught a major mistake in the State's letter to SDCNA about the Portfolio Alternative. After subsequent conversations with DNR and Resources, the state has admitted that a single tunnel 3,000 facility costs about $6 billion less than the state's proposal (not the $3 billion cited in the letter to the Authority the state had been using the cost estimate for a dual tunnel 3,000 facility, not a single tunnel facility). Oops. The state says they will issue a correction today. Not sure what it will say yet, but as soon as I get it I will forward it to you. Figured it was pretty relevant to the Authority's analysis of alternatives. Best, Doug 53 From: EaLraJJIem To: Web; we Subject: Senate Budget Subcommittee on Resources Date: Wednesday, May 20, 2015 2:41:36 PM Attachments: SenBudqetSubZ - 5-21-15.Ddf This is just an FYI ?thought you might enjoy the Senate Budget Subcommittee analysis on BDCP funding in tomorrow?s budget subcommittee agenda begins on page 10. This quote is on page 12: ?Sta? is concerned that the Administration is funding restoration and mitigation projects for the delta tunnels project with funds identifiedfor other purposes.? Glenn. Glen Farrel enjoying funding concerns in a Glenn Farrel Senate budget subcommittee. Government Relations Manager San Diego County Water Authority O?ice: (916) 492-6074 Cell: (916) 216- 1747 Wang 54 From: mum To: ChemAmx Subject: RE: Tomorrow"s presentation for MWD BDCP special committee Date: Tuesday, July 28, 2015 2:10:16 PM Attachments: Fio 4.3.1.26 SWPS Delta Ait4A.odf Interesting discussion at the MWD board today nice of MWD to make my argument that the BDCP modeling does not accurately assess the environmental impacts of WaterFix, since MWD is claiming that water exports will be higher than modeled (which means that Delta outflow and water quality will be lower, causing significant impacts to listed species). In contrast to the graphics that MWD presented today, check out Figure 4.3.1-26 from the SDEIS showing SWP deliveries in the future Table A gets cut back substantially compared to today in the dry years and is lower than today on average according to this modelling (compare the gray line with the black dashed line), whereas CVP SOD deliveries are about the same on average (figure From: Chen, Amy Sent: Monday, July 27, 2015 9:55 AM To: Obegi, Doug Subject: RE: Tomorrow's presentation for MWD BDCP special committee Just printed out. Will take a look. Thanks for the heads up From: Obegi, Doug Sent: Monday, July 27, 2015 9:04 AM To: Chen, Amy Subject: Tomorrow's presentation for MWD BDCP special committee Have you looked at this yet? view id=12&event id=93&meta id=107201 NRDC Staff Lawyer Doug Obegi providing What a crock. It?s totally misleading. critiques ofthe California WaterFix. Slide 17 shows that with Water Fix, total Delta water exports are the same or higher on average Slide 18 shows that with Water Fix, total Delta water exports are lower or the same in critical and dry years, and the same or higher in average years (and higher in wet years) But slide 20 shows that they estimate INCREASED exports in recent dry and critically dry years? That only happens if they waive the environmental standards under the permits. What assumptions do they make on operations during these years? Are they assuming that Delta outflow and salinity requirements are waived, then adding a new intake to take even more water?? presentation is confirming exactly what conservation groups and Delta interests suspect? WaterFix/BDCP is going to take even more water in the dry years, even though the rules say the Water Fix will take less water in the dry years, by waiving the rules (as they have done during the drought to increase water exports). In addition, in 2011 the projects could not have taken more than 2.5MAF of additional exports San 55 Luis Reservoir storage was full for much of the year, and there was not any place to put the water. And of course, Slide 17 includes the statement that there would be minimal exports 1.5 to 3 years after earthquake; that?s not accurate, as I understand it even Mark Cowin has been talking about weeks or months after an outage, not years. DOUG (.iifi?iif?l Senior Attorney* Water Program NATURAL RESOURCES DEFENSE COUNCIL 111SUTTER ST., 20TH FLOOR SAN FRANCISCO, CA 94104 415.875.6100 Please save paper. Think before printing. *Admitred to practice in California