On Tuesday, under the guise of “mutual benefits,” the Board of Commissioners of our Department of Water and Power approved a Memorandum of Agreement with Department of Public Works / Bureau of Sanitation where DWP will invest $15 million of Ratepayer cash in five stormwater capture projects in the San Fernando Valley. These projects, consisting of dry wells, bioswales and infiltration galleries, are designed to capture almost 500 acre feet of stormwater a year, enough water to serve over 1,000 households.
But this Agreement stinks to high hell because it is does not make economic sense for DWP and the Ratepayers.
The $15 million investment for 500 acre feet of water a year represents a capitalized cost of $30,000 per acre foot, a price that exceeds the going rate for water rights of $10,000 by almost three times. It is more than 50 times the current cost of $582 per acre foot charged by the Metropolitan Water District of Southern California for full service, untreated Tier 1 water. It even exceeds the capital costs for desalinated water by a hefty premium.
The annual debt service (interest and principal) on the $15 million investment over the next thirty years is more than $3,000 per acre foot of water. This is even higher than the projected cost of MWD water in thirty years! And it does not include any operating, maintenance, or transport costs for DWP.
Sanitation claims that it is investing $15 million, an amount equal to DWP’s cash investment.
Baloney.
Rather, Sanitation is putting up very little, if any, upfront cash. Sanitation’s “investment” includes charges of $3 million for a 10% Design Fee and a 10% Construction Management Fee and $12 million in Operation and Maintenance Costs spread over the next 30 years.
Underlying this City Hall orchestrated rip off of the Ratepayers are the efforts by our Elected Elite to offload the financial burden of the City’s multibillion dollar Stormwater Master Plan onto DWP and the Ratepayers. But DWP and the Ratepayers are not responsible for the “mutual benefits” associated with stormwater runoff, flood control, peak flow attenuation of the Los Angeles River and it tributary streams, or the quality of the water that flows into Santa Monica Bay. Rather, these obligations are the responsibility of the Bureau of Sanitation, the Department of Public Works, the City of Los Angeles, and ultimately, the City’s General Fund.
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While City Hall and the environmental community are touting the many “mutual benefits” associated with this Agreement, including those for Recreation and Parks and Mayor Garcetti’s Great Streets initiative, DWP’s allocation must be based on benefits received.
In the case of DWP and the Ratepayers, benefit based funding implies an investment of no more than $5 million, or about $10,000 an acre foot. As a result, the City needs to pony up at least $10 million.
Unfortunately, this one sided Agreement is part of the strategy to stick it to Ratepayers as Herb Wesson and Eric Garcetti are fearful of asking the City’s skeptical voters for a massive tax increase to fund its Stormwater Capture Master Plan.
This bogus Agreement between Sanitation and DWP is just another rip off of the Ratepayers, adding to the lack of trust and confidence in Mayor Eric Garcetti, City Council President Herb Wesson and the rest of the fiscally irresponsible City Council, the politically appointed DWP Board of Commissioners, and the Ratepayers Advocate.
Rather than proceeding with this ill-conceived Agreement, DWP and the Board of Commissioners need to deep six this financially flawed arrangement and start over, beginning with the concept that DWP and the City need to respect the Ratepayers and their hard earned money. Otherwise, there will be hell to pay in November of 2016 as Ratepayers will flat out reject any proposed tax increases by the City, County, and State.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected])
-cw
CityWatch
Vol 13 Issue 50
Pub: Jun 19, 2015
