Customers could pay for city-Modesto Irrigation District lawsuit

11/26/2013 5:01 PM

11/26/2013 5:02 PM

Modesto water customers could be forced to pay more because of a legal dispute between City Hall and the Modesto Irrigation District over the botched expansion of a water-treatment plant.

The agencies, which are partners in the project, collected about $15 million from contractors faulted for shoddy work, but that’s about $9 million short of what’s needed to finish the expansion. Modesto and MID each think the other should pay the extra.

MID warned in August, when it filed a lawsuit against the city, that further delays could double the disputed amount to $18 million. Court documents submitted since repeatedly state that costs could be passed on to customers if MID loses the lawsuit and is forced to seek more loans.

The district says it makes no profit transforming canal water from the Tuolumne River into tap water at its treatment plant near Waterford, which began operating in 1994. Modesto mixes that surface water with about an equal amount of well water and sends it to taps in Modesto; it also has water customers in Empire, Salida, Waterford, Hickman, Grayson, Del Rio and small parts of Ceres and Turlock.

Modesto and MID agreed in 2005 to more than double plant capacity from 30 million gallons of water per day to 66 million gallons. The expansion was expected to be finished in 2009 at a cost of about $63 million; errors are pushing that to more than $107 million, and the work won’t be done for several months.

Problems included steel plates installed in the wrong places atop mason block walls, which complicated connections to steel roof pieces, and stability of membrane basins in the filter system.

The agencies’ agreement called for Modesto to pay for the expansion while MID would continue to own and operate the plant.

In court documents, attorneys representing the city blame “MID’s gross negligence in mismanagement of the project and the negligence of MID’s contractors” and say that “MID does not wish to be named as the defendant in a breach of contract action heard by a jury made up of its customers.”

The city’s attorneys called MID’s lawsuit “convoluted, ambiguous (and) overbroad” and said the irrigation district could have spent the past two years preparing for a “significant hardship” rather than threatening now to jack up customers’ bills.

MID’s attorneys contend that “Modesto intentionally twists and contorts” the district’s claims and warn that bickering “could potentially delay or halt further construction and may impact MID’s rate payers.”

A judge recently denied MID’s request to have the city cover the district’s legal expenses in the fight with a contractor.

MID spokeswoman Melissa Williams on Tuesday said, “Our discussions with the city of Modesto continue.”

The Bee was unable to reach a San Francisco attorney representing Modesto.

Despite the expansion debacle, MID’s involvement in domestic water service has drawn relatively little attention compared to its core missions of delivering irrigation water to 3,100 farmers and electricity to 113,000 power customers.

The board has yet to decide how to raise money for about $115 million in upgrades to the water-distribution system or how to erase the historic inequity of power customers paying millions of dollars more than a fair share each year to keep farmers’ water rates low. A recent Bee review found that the district raised its power income from homeowners 130 percent in the past 12 years compared to a statewide average of 36 percent for public utilities.

Unrelated to the lawsuit, MID previously said its board members will consider whether to raise electricity rates early next year.

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