There’s been a lot of intrigue lately over Tesoro Del Valle, that northern SCV community that’s changed their development plans in the last year and is now in a battle to secure water for more homes than were originally planned for the area. The Signal has done some reporting on it but it’s still far from clear what’s really going on.
That’s where SCVTalk reader CoastalSage steps in. Already familiar with water and development players in town, she’s got an interesting read on the situation. Why does CLWA say Tesoro may not be in their jurisdiction? Why is the Newhall County Water District making a play in the area? And does this have anything to do with Newhall Ranch, the mammoth development planned a few miles downstream of the Santa Clara River, west of I-5?
Read on to find out.
Santa Clarita has 3 water “retailers” who sell water to the public: Newhall County Water District (a public agency with elected Directors); Valencia Water Company (owned by Newhall Land and “barely” regulated by the California Public Utilities Commission); and Santa Clarita Water Division (owned by Castaic Lake Water Agency aka CLWA). Each of those 3 water retailers obtains about 50% of its customers’ drinking water from ground water wells [whose overall production is declining due to contamination from Bermite, allegedly due to increased water usage upstream in Agua Dulce (a disputed fact), and due to dry cycles in California's climate].
In Santa Clarita, the flow of underground water generally follows the flow of the Santa Clara River (east to west) and its tributaries: the South Branch of the Santa Clara River (south to north) and San Francisquito Creek (north to south). The more water wells drilled upstream to extract underground water, the less underground water is available for existing and new well user downstream.
Theoretically, each of the 3 water retailers can drill new wells to extract more ground water to supply their customers. That’s where the conflict between Newhall County Water District and Valencia Water Company arises. The unbuilt phases of Tesoro de Valle are upstream of unbuilt Newhall Ranch. A bare majority (3/2) of Newhall County Water District’s Directors want to serve Tesoro de Valle’s future homeowners by having that developer finance the digging, construction and operation of ground water wells. The taking of MORE large quantities of ground water upstream from Newhall Ranch would mean that there would be significantly less ground water for Valencia Water Company to extract, by wells, to serve the future residents of Newhall Ranch, owned by VWC’s parent company Newhall Land.
The conflict between the interests of those two water retailers is real, because large new housing developments cannot be built without a scientifically prepared “water supply assessment” proving long term availability of drinking water for a project.
In the case of Tesoro del Valle, because they are asking Los Angeles County to approve amendments to previously approved project development approvals (e.g. lot or house size), under California law Tesoro del Valle’s developer has to re-prove to the Board of Supervisors that a reliable water supply is available for that project. That proof is made in the project’s new Environmental Impact Report, or in a Subsequent EIR or Supplemental EIR.
Meanwhile, Newhall Land is seeking further approvals from the Board of Supervisors for its Newhall Ranch project, which is supposed to be served water by Valencia Water Company obtained from ground water wells and recycled water. To the extent that Newhall County Water District reports to the County that it is going to serve well water to the future Tesoro del Valle residents, Valencia Water Company and Newhall Land will lose ground water it had counted on for its project.
Castaic Lake Water Agency’s General Manager Dan Masnada used to work for Valencia Water Company. Castaic Lake Water Agency’s Board of Directors has historically been allied with Valencia Water Company’s interests. As a result, Dan Masnada has claimed that Newhall County Water District cannot serve well water to the future residents of Tesoro del Valle without CLWA’s consent, which Mr. Masnada indicates will not be given.
The curious legal fact is that under the special law by which the Legislature created Castaic Lake Water Agency, the agency was NOT given the power to allocate the use of ground water under ordinary circumstances. As a result, Tesoro del Valle’s owners, and the 3/2 majority of Newhall County Water District’s Board, take the position that CLWA and Masnada have no legal authority, under the CLWA Act, or under general California water law, to tell them they cannot build new water wells to serve the future residents of Tesoro del Valle. [I will not comment on who is right legally, because my opinion doesn't matter. Only the Court of Appeals' opinion matters as to the scope of CLWA's powers.]
As a “first result”, the time and place for Castaic Lake Water Agency to assert its right to decide who may build water wells in the Santa Clarita Valley, or to otherwise argue that there is not enough ground water to accommodate Tesoro del Valle, is in a fight over the water supply assessment in the Environmental Impact Report (or similar) for the amendments to the Tesoro del Valle project. (An old appellate court decision, coincidentally against Newhall County Water District, says that plaintiffs like CLWA or Newhall Land or the Sierra Club cannot attack the “water supply assessment” for NCWD in any other context.)
There are two potential results from such an attack at the Board of Supervisors level: The County will decide that there is “not enough ground water” for more development at Tesoro del Valle, disapprove the amendments to the project, and Tesoro’s owners will have to sue the County. Alternatively, the County will decide that “there is enough ground water” for more development at Tesoro del Valle, and if Newhall Land doesn’t like that decision they will have to sue the County and prove their superior right to that ground water. In such a case by Newhall Land against the County, Castaic Lake Water Agency will be free to join in and assert that they get to decide which of the 3 water retailers can drill water wells, where they can be drilled, when they can be drilled and how much ground water can be extracted from each new well on an annual basis. Quite obviously, CLWA and Newhall Land are hoping that the County will not put them to the test of proving their rights in court.
The bottom line will be that if Newhall Land and CLWA do not challenge Tesoro del Valle’s water assessment, then the water wells at Tesoro can be drilled and Newhall Land will have to “subtract” that ground water used by NCWD/Tesoro from Valencia Water Company’s own future “water supply assessment”, potentially leaving Newhall Land short of drinking water to build out all of Newhall Ranch.
Obviously, any other future developers of projects needing a Water Supply Assessment are simply “out of luck” if the review of their Environmental Impact Report hasn’t happened, or if a Subsequent EIR or Supplemental EIR is needed for project changes, because ultimately the water supply assessments for future projects are going to saw and show that there isn’t enough drinking water to go around, for all approved unbuilt residential and commercial/industrial projects, plus serve existing water users.
However, the complicated drinking water situation does not end there. The 3 water retailers obtain the “other” roughly 50% of the water they sell from Castaic Lake Water Agency, which buys it from the “State Water Project”. (The quantity of water available to purchase from the State Water Project is also declining, due to drought in the Western Sierras, and due to Federal court decisions.)
State Water Project Water is not supposed to be used for or sold to property owners outside the boundaries of Castaic Lake Water Agency’s service area. Under the Castaic Lake Water Agency Act, those boundaries cannot be changed without the Legislature enacting specific future legislation to change the boundaries.
Given that State Water Project Water is in very short supply for current water users inside CLWA’s boundaries, if any of the water retailers start using State Water Project Water to serve customers outside the CLWA boundary, the “aggrieved parties” can bring legal action to stop those sales.
Because the “actually available” State Water Project Water for the Santa Clarita Valley has already been fully allocated for use at existing Santa Clarita Valley properties and to protect endangered species in the Santa Clara watershed, according to the County’s preliminary land use approvals for Newhall Ranch, Valencia Water Company is not supposed to deliver any State Water Project Water to Newhall Ranch. That principle is the “Holy Grail” of Santa Clarita water law, established through County land use entitlement terms. As a result, Newhall Land says it is going to obtain potable water for Newhall Ranch from (1) water wells, (2) recycled water and (3) water purchased by Newhall Land in the Central Valley (another problem, discussed below).
The unbuilt portions of Tesoro del Valle are outside of the boundaries of CLWA’s territory. As a result, if Newhall County Water District begins to surreptitiously serve State Water Project Water to Tesoro del Valle, NCWD is also subject to being sued by an army of those who are interested in keeping State Water Project Water available for current customers and future projects inside CLWA’s territory. So far, Newhall County Water District has not given any indication that it will surreptitiously serve State Water Project Water to Tesoro del Valle. Obviously such an occurrence can easily be detected if NCWD and Tesoro’s owner start to build a water pipeline connecting the future phases of Tesoro del Valle to NCWD’s main water supply pipelines which distribute State Water Project Water.
So what is Tesoro del Valle’s owner to do if they are prevented from using State Water Project Water for their subsequent phases of development, and if their well water is not enough to serve their project’s new residents? Tesoro’s owners will have to (1) obtain new legislation from the Legislature to amend the CLWA boundaries to include their project, (2) buy water rights from Central California farmers (a nearly impossible task, given the shortage of water there) and then (3) give those new water rights to CLWA, so CLWA can arrange to have the water brought over the Grapevine in the State aqueduct. The interesting wrinkle is that the State Water Project, as owners of the aqueduct, refuse to pump “privately owned water” over the Grapevine. As a result, after giving CLWA those water rights, Tesoro’s owners would have to quickly build out their project, because once CLWA becomes the owner of new water rights, it can and will use that water for ALL of its customers. In other words, if Tesoro didn’t build its houses quickly, and get their water service turned on, any water they purchase from Central California could be lost to use by others. Theoretically, CLWA could require Newhall County Water District to deny Tesoro use of State Water Project Water, even though Tesoro would have been amended into CLWA’s territory by act of the Legislature, because under the Castaic Lake Water Agency Act, CLWA has the power to ration the use of State Water Project Water during a “drought”. CLWA is the party which determines when a “drought” is occurring and determines who does or does not get State Water Project Water in those circumstances.
Which brings us to the final piece of the puzzle. In order to claim in its water supply assessment that it has enough potable water for its Newhall Ranch project, several years ago Newhall Land went out and bought Central Valley water rights. In its Chapter 11 bankruptcy schedules, Newhall Land’s management valued those Central Valley water rights in the thirties of millions of dollars. Newhall Land is in a sticky situation similar to that which Tesoro would face if it bought Central Valley water rights. The State Water Project will not pump Newhall Land’s water “over the Grapevine” unless a publicly owned water agency owns the water. First, it is unclear whether privately owned Valencia Water Company would be allowed to own that water and have it pumped over the Grapevine. If Newhall Land gives those water rights to Castaic Lake Water Agency, it would not “own” the water associated with those water rights. Instead, CLWA could use the water for whichever of its customers it wanted, theoretically including supplying that water to Newhall County Water District for use by Tesoro del Valle’s future occupants if Tesoro was legislatively annexed into CLWA. As a result, logically Newhall Land does not want to hand over those Central Valley water rights “too early” in its own development process.
As a result, Tesoro del Valle’s water predicament presents an unusual opportunity for conflict between “pro-development” members of NCWD’s Board and “pro-development” Castaic Lake Water Agency’s Board and its General Manager.
This problem is simply a prelude to other future conflicts, because there are “land use entitements” for roughly 35,000 single family homes to be build outside Newhall Ranch, plus untolled acres of commercial and industrial projects which will use water. The demand on the potable water supply for Santa Clarita has, in many intelligent people’s view reached its limit, with more conflict to come as each huge new project (like the 1,200 home Pardee project approved by the County or the 1,000 acre Bermite Project) begin to need “real” as opposed to “paper” water to supply their projects. Every time a new housing project or new commercial/industrial project is approved by the County or the City, the shortage of potable water for the Santa Clarita Valley becomes all the more severe.
All 3 water retailers are trying to encourage water conservation, by forcing their existing customers to use less water, so future development can be accommodated. The encouraging of water conservation is done by raising the monthly charges for water usage, and by introducing “tiered water rates” meaning the more water you use the higher your per-gallon charge. Ultimately, the 3 water retailers can require all Santa Claritans to tear out their lawns, remove their water-thirsty bushes and trees, and to install “drought tolerant landscaping” at each home and business owner’s expense, to make sure there is enough potable water for every house, condo, apartment, office and industrial building approved for construction by the City Council or Board of Supervisors.
Think about it. The Council and Supervisors are spending your money to insure that other people can continue to build in the Santa Clarita Valley.
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