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Infrastructure The County Water Authority turns to litigation to ensure San Diego’s water supply



Pursues Change in Preferential Rights to

Guarantee Supply

The County Water Authority is pinning its hopes on litigation to settle a years-old dispute over how much water it’s entitled to from the Metropolitan Water District of Southern California. But what that lawsuit would do is not clear.

The water authority filed the lawsuit Jan. 30 in the San Diego Superior Court. The lawsuit is intended to end decades of uncertainty over the issue of “preferential rights” to water from the MWD.

Preferential rights refers to the amount of water to which any city or public works authority is automatically entitled. Under the current structure, San Diego has a preferential right to less than 15 percent of the MWD’s water but provides MWD with 22 percent of its total revenue, said the water authority’s assistant to the general manager, Bob Campbell.

Campbellsaid the lawsuit would end the ongoing disparity.

The problem started in the 1930s. The MWD was formed in 1927, but because it took time to set up the infrastructure, the district didn’t deliver its first water supplies until 1941. In the meantime, the state Legislature came up with the formula for allocating water rights among the MWD’s customers based on the amount of property tax revenues raised by those member agencies, he said.


No Change In Formula

Although that was a reasonable approach back then, 70 years later the formula for allocation is more or less intact, while the MWD’s revenue comes less and less from taxes, Campbell said.

The MWD began to sell more water over time, but the city of Los Angeles, which was supporting the lion’s share of the MWD’s budget by the 1950s, was using very little of the department’s water because it was getting the bulk of its water from the Owens Valley. L.A. officials requested more of the burden be shifted to water users, and in 1960, the MWD did, he said.

“It was noted at that time that this would have an impact on preferential rights, and the rights should change. In fact, there was a memorandum of understanding signed between Los Angeles and San Diego that at some future date they would change that preferential rights formula. That never came about,” Campbell said.

In the early 1970s and 1980s, Los Angeles once again sought to put more of the burden on water users. That shifted the payment structure again, but still the allocation of preferential rights did not change, he said.

In fact, every attempt by the MWD to change the preferential formula during the 1980s was blocked by Los Angeles, Campbell said.

“(They) effectively now had the best of both worlds,” he said. “They have moved the water rate and taxation policies at Metropolitan over to where the water user was bearing most of the costs, and L.A. buys very little water. But the preferential rights were based on the old taxation formula, which gave L.A. the most rights.”

Since San Diego County bears more of the costs, that means it has helped finance much of the MWD’s infrastructure, while Los Angeles, which doesn’t have to pay as much into the system, gets a free ride, Campbell said.

Campbell likened it to a customer being allowed to wait until the day he has a car wreck before he has to buy car insurance, while everyone else has to pay all year.

Worse, there’s the possibility San Diego may lose its source of water. Since Los Angeles doesn’t use much of its water allocation, San Diego currently snaps up the leftovers. San Diego County, in fact, buys about 28 percent of the MWD’s water, making it the water agency’s largest customer, Campbell said.

That water supply could be cut off at any time. In fact, that nearly happened during the drought of the late ’80s and early ’90s, he said.

Los Angeles was able to demand more water from the MWD and still remain below its preferential rights cap. That meant less water for the San Diego region, which lost about 31 percent of its supply, Campbell said.


‘Miracle March’

The only thing that saved San Diego back then were the “miracle March” rainstorms in 1991. Had those storms not happened, the region would have faced 50 percent cutbacks, which would have been devastating for agriculture and business.

Another water shortage could set the stage for a future exodus, said County Water Authority spokesman Gregg Hartung.

Although the issue of preferential rights has been debated back and forth for a long time, it was only last year that it really came to a head. That was when the MWD started offering contracts for water, Campbell said.

But the County Water Authority was unsure of how valid those contracts would be with the threat of preferential rights hanging over them. There was talk of waiving preferential rights, but only talk, he said.

So the water authority has decided to go to court to ask that the law be clarified, Campbell said.

The local water authority hopes to prevail in court, but even if it doesn’t, the area will still be better off, since right now the water authority is laboring under uncertainty, Hartung said.

“If the court rules in our favor, great. If it rules against us, it tells us we have to go out and find other sources of water,” he said. “It’s difficult when you’re tasked with providing a reliable water supply for San Diego County, to know what you need to get, if you don’t know what’s there for you in the first place.”

One item not mentioned in the lawsuit is recovery of costs during the time when San Diego was paying Los Angeles’ share of MWD’s investment in infrastructure. The suit only looks to increase the county’s preferential rights, Campbell said.


A Different Story

Bob Muir, an MWD spokesman, had a different story. For one thing, San Diego’s lawsuit would block the district from setting up its new rate structure based on contracts with member agencies, he said.

The contracts, however, are MWD’s way of getting away from preferential rights. There’s no basis to San Diego’s fear that preferential rights would trump the contracts, Muir said.

“What’s rather ironic is that the San Diego County lawsuit would halt the rate structure intended to resolve the preferential rights issue,” he said. “The proposed new rate structure is designed to enhance water supply reliability, create new water supplies, and increase conservation, while avoiding the debate on preferential rights.”

Under the new rate structure, San Diego could decide how much water it would contract for. Payments would be commensurate with the amount of water the member agency receives, Muir said.


Skewed Figures

Muir also called the water authority’s figures misleading, since they compare water use by San Diego County with Los Angeles , not Los Angeles County.

Once other cities in Los Angeles County are added to the mix, an entirely different picture emerges. In the entire history of the MWD, Los Angeles County has purchased a total of 25 million acre-feet of water, while San Diego County bought 16.5 million acre-feet, he said.

To pay for all that water, Los Angeles County has paid MWD almost $10 billion total in water revenues and property taxes. San Diego County has paid a total of about $4 billion, Muir said.

As to the issue of taking water away from San Diego, the MWD has never reverted back solely to preferential rights , even during times of severe shortage, Muir said.

During the drought from 1987 to 1993, the MWD cut water supplies to member agencies across the board , Los Angeles as well as San Diego, he said.

“In the past 70 years, despite several prolonged droughts and Southern California’s unprecedented growth, Metropolitan has only reduced deliveries in two years: 1977 and 1991. In each case of cutback, water was not allocated according to preferential rights,” Muir said.

What Muir called the “bottom line” is that the County Water Authority is not seeking to remove preferential rights by the lawsuit, but trying to benefit by continuing the system, he said.

“(The water authority) is seeking a system of preferential rights to purchase Metropolitan water in dry years more favorable to itself , by recalculating priorities and contributions under a different formula,” Muir said.

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