OID special treatment for Trinitas? Follow the money

Water leaders’ willingness to risk angering longtime customers by catering to recently annexed almond investors can be explained in monetary terms, at least in part.

Trinitas Partners pays far more money for far less water than established Oakdale Irrigation District farmers, in years wet and dry. And OID needs the money.

“Until it rains, we’re screwed,” said OID board member Frank Clark in a recent interview. He also wrote a letter to the editor of The Modesto Bee, noting a $5 million deficit last year and projected gaps of $10 million in 2015 and again in 2016.

OID in recent years has depended heavily on selling water to wealthy buyers in other regions and hopes to resume such transfers soon. But drought and legal challenges shut down that revenue stream this year, and the district also loses money when there is less Stanislaus River water to power turbines for wholesale energy sold to Pacific Gas and Electric Co.

The latest audited financial statement, released a couple of weeks ago, shows OID’s operating income dropped $4.1 million in 2014, largely because the district didn’t sell water to outside buyers that year, either. General Manager Steve Knell, in a management message, noted “rigorous environmental issues and a precarious economic environment” with the ongoing drought.

For the first time in its 105-year history, the OID board in April adopted restrictions on water amounts going to farms. That was met with virtually no opposition, but a component of the same vote – sending a third of the amount due established customers to Trinitas – sparked a petition, several headlines, shouting matches at board meetings and an ongoing tug-of-war playing out before the regional growth-guiding panel that approved Trinitas’ annexation to OID in 2013.

Knell says those complaining should be able to get by with 40 inches of water from OID, the most generous allotment in the region, unless they’ve failed to invest in efficiency improvements. Critics say that’s evading the real issue: whether the district deceived the Stanislaus Local Agency Formation Commission and farmers alike by promising that existing customers would suffer no harm in absorbing Trinitas, then changing terms to relieve the megagrower from pumping some groundwater and transferring that burden to others.

A look at OID’s fee structure may shed some light.

All customers pay a base rate of $27 per acre, plus $3 per acre-foot for the first 3 acre-feet of water received; $6 for the next 2 acre-feet; and so on. This year, at 40 inches a parcel, the fee for established customers comes to $42 per acre.

Trinitas will pay the same base rate, plus $55 per acre for water, plus an annexation fee amounting to more than $1.2 million a year for 20 years. With 7,200 acres, that means $194,400 for the base rate, $330,000 for water (Trinitas gets 10 inches this year, or 0.83 feet); added to the annexation fee, that’s nearly $1.76 million from Trinitas.

And that’s more than the $1.62 million coming from established OID customers. In other words, Trinitas, with 12 percent of OID land, pays 52 percent of water-based income.

“That’s pretty beneficial to our district and speaks to the value this partnership brings,” Knell said in an email.

OID intends to approach LAFCO this fall with a request to annex 1,069 more acres.

Meanwhile, the OID board on June 16 set aside $30,000 to adjust boundaries of the agency’s voting districts – nine days after The Bee reported that OID had ignored a state reapportionment law for four years.

Meeting records show that leaders in 2011 knew their district sizes had gotten far out of whack and were aware of redistricting law, but chose to do nothing.

On June 16, the board retained CH2M Hill, an engineering firm that has contracted with OID for other work, to “perform necessary research and provide technical services needed to reapportion boundaries.” The new contract calls for “work to start and be completed as soon as possible.”

This story was originally published July 4, 2015 at 1:50 PM with the headline "OID special treatment for Trinitas? Follow the money."