Modesto residents paying millions for water plant. But why isn’t there more water?

Modesto’s water customers are paying $4.1 million a year to pay off the debt for a project that doubled the capacity of the city’s water treatment plant.

But while the $109 million expansion was completed in 2016 (and at much more expense and time than envisioned), the city has not received one extra drop of water from the Modesto Regional Water Treatment Plant, and it could be many years before it does.

Modesto is not getting more water because it did not grow as expected when officials with the city and the Modesto Irrigation District approved expanding the plant at the Modesto Reservoir about a dozen years ago.

The plant is a partnership between the city and the district and provides the city with about half of its drinking water from the Tuolumne River; the rest comes from wells.

“The City’s General Plan projects rapid population growth within the City, from a current population of approximately 200,000 to approximately 400,000 by 2025,” states one of the project’s documents from 2004.

Modesto has about 215,000 residents today. And it provides water to about 260,000 people who live in the city and in the surrounding communities that use city water, including Salida and Del Rio, according to the city’s draft 2017 Water Master Plan.

The expansion was planned for and approved during a time of heady growth.

George Britton, who was city manager when the project was approved, said all the indicators were in place for Modesto to continue to grow quickly. He said the influence of the Bay Area on the Northern San Joaquin Valley was being felt, with homes being built for Bay Area commuters and Bay Area jobs and investment coming here.

Britton added there were concerns Modesto could begin drawing down its groundwater faster than it could be replenished, and the state was requiring groundwater to meet higher standards, which required more treatment. The project also would increase Modesto’s reliance on a higher-quality and more reliable water source.

Utilities Director Will Wong added that Modesto also was facing pressure from developers who were concerned the city would not have water for their projects.

Then came the Great Recession, and while the biggest economic downturn since the Great Depression is over, the boom times have not returned to Modesto.

“Unfortunately, based on what we expected to come in did not happen,” said Wong, who was named Modesto’s utilities director in March and has worked for the city in water and wastewater services since 2001. “But the city of Modesto has to provide water for existing customers and for growth. And we’ve positioned ourselves for any type of growth.”

Still, Wong said it’s a “crystal ball question” when asked when Modesto will grow enough to need the additional water. He said Modesto is starting a marketing campaign to let businesses and developers know Modesto has the water and sewer capacity for growth.

But Eric Reimer, the former longtime treasurer of the Stanislaus Taxpayers Association, said he opposed the expansion because the population forecasts were too optimistic.

“The whole thing was predicated on rather astounding growth projections,” he said. “The (growth) rates were at least double of what was conceivable to anyone outside of government ... That’s been peddled for at least 25 years — that Modesto will grow, and the need to expand all the utilities to match.

“(But) this was more than just a little bit of pie-in-the-sky projections. It was a combination of development interests and the ethos at City Hall that we are going to grow up and be a big city.”

Britton said the decision to expand was not made lightly and the growth projections were based on information from solid sources, including the state. “There was a long public debate and discussion about this,” he said. “A lot of people were looking at it ... This was not a whimsical thing.”

And officials envisioned the need for a phase two expansion when the water treatment plant was being built in the 1990s.

Former MID General Manager Allen Short, who oversaw the irrigation district during the expansion, did not respond to emails seeking comment for this story.

Another issue for Modesto is that water use has changed since the expansion was approved. California is working on making water conservation a way of life after a devastating five-year drought that ended last year and predictions of more extreme dry and wet years in the future.

The state also is proposing to increase what are called the unimpaired flows on the Merced, Tuolumne and San Joaquin rivers, which would result in less water for the Northern San Joaquin Valley.

Modesto opposes this, and Wong said the state also is taking a one-size-fits-all approach to water conservation and that harms Modesto. He said that while other communities may be water poor, that is not true for Modesto, which relies on river water and wells.

“That’s what is really concerning to us,” he said. “The water rules have completely changed. The assumptions are different.”

The MID owns and operates the water treatment plant, which opened in 1995.

Through what it charges its water customers, Modesto pays the MID for the water and is paying for building the plant, including the expansion. The expansion actually involved building a second pant next to the first one. MID spokeswoman Melissa Williams said both plants are operating.

Williams said the MID borrowed $93 million of the $109 million needed for the expansion.

Including interest of roughly 4 percent, Modesto’s water customers will pay $193.4 million over 30 years to pay off what was borrowed. The city’s water customers are paying $4.1 million annually for the debt, but that will increase to $8.3 million starting in 2024. The last payment is in 2038.

Williams said these amounts could change if the MID refinances the debt. The city’s water customers also are paying $6.6 million annually to pay off the debt the MID issued to build the plant in the 1990s. Those payments end in 2023.

There also are other costs associated with the plant expansion. Wong said Modesto is nearly finished with $61 million of its own improvements — including storage tanks and transmission pipelines — that complement the expansion.

He said Modesto simply cannot turn off its wells and get all of its water from the treatment plant. “From an operational standpoint, we need to keep them running,” he said. “And we need to demonstrate to the state that we need groundwater and surface water.”

Williams said Modesto will be entitled to more water as it converts agricultural land to urban uses, in other words, as it grows.

“We hope that the City of Modesto uses any and all water necessary to meet their demands, however we understand their ability to use surface water (from the treatment plant) is limited primarily by conservation and the required operation of their existing (wells),” Williams said in a statement.

“Based on the decreased rate of agricultural to urban land use conversion from what was once forecasted, MID and the City remain in cooperative and productive discussions with respect to (the) Phase II water supply.”

This story was originally published April 29, 2018 at 8:35 AM with the headline "Modesto residents paying millions for water plant. But why isn’t there more water?."