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June 26, 2012

Modesto Irrigation District discloses terms of water contract, delays vote

The Modesto Irrigation District released its revised contract for a proposed water sale to San Francisco on Tuesday evening and announced that it will delay its vote on the proposed deal until July 24.

The Modesto Irrigation District released its revised contract for a proposed water sale to San Francisco on Tuesday evening and announced that it will delay its vote on the proposed deal until July 24.

The city of Modesto has threatened legal action stemming from its 2005 contract with the MID to provide water to thousands of residential and commercial customers. Many farmers who receive water from the MID, environmentalists concerned about the Tuolumne and San Joaquin rivers, and others also oppose the proposed sale.

MID officials and supporters contend that there is plenty of water to go around, and that San Francisco's willingness to pay a premium for it will allow the MID to make much-needed improvements to its canal and water delivery system.

MID board President Tom Van Groningen said the district's 11,000 acre-feet obligation for a fish research project will end soon, allowing more than enough water to cover the 2,240 acre-foot obligation of the proposed San Francisco deal.

"It's literally a drop in the bucket," Von Groningen said Tuesday night.

But board member Larry Byrd, who has opposed the proposal from the outset, called even the revised contract a bad deal.

"This agreement locks up all of Modesto irrigation water, not just that 2,240 piece, because it grants San Francisco first right of refusal to all future sales," Byrd said.

San Francisco proposes paying $700 per acre-foot, compared with $9.83 per acre-foot paid by farmers for their basic allotment of water this year. The contract allows an inflation adjustment of up to 3 percent per year, but Byrd pointed out that water prices likely will soar far above inflation.

City Councilman Dave Geer said he, too, opposes the sale.

"Utter disappointment," he said Tuesday. "I don't think it is going to bode well for our agriculturally based economy. I don't see committing that much water for such a long period of time."

Mayor Garrad Marsh said the city wants to meet with the MID regarding the water sale. "I am hoping they will sit down with us and address some of our concerns," he said. "I am not satisfied with the way it is now. I don't think the language is something I'm comfortable with."

A major revision from the first contract in the spring allows the MID to back out of the deal after 10 years, or sooner "if there's a drastic need," said MID Director Nick Blom. The original contract allowed San Francisco to back out of the deal with two years' notice, but committed the MID to the full 50-year term.

"That's one of the things we weren't comfortable with as a board," Von Groningen said.

Under the revised contract, the MID has more leeway to exit the contract and adds federal requirements in the relicensing for the Don Pedro Dam power house as a potential reason.

The original deal specified that the San Francisco Public Utilities Commission would get first dibs to water, ahead of Modesto — prompting the city's threat of legal action.

Only an act of God, war or terrorism would be grounds to dry up the westward water flow under the revision. Drought or local groundwater problems are specifically excluded.

Von Groningen said the MID was not able to give the city of Modesto equal standing with San Francisco under the deal, but the new contract adds assurances that Modesto will get its water.

The revised contract leaves the MID on the hook for a potential city of Modesto lawsuit, but says the parties will share defending the agreement against other actions. Byrd said he sees fine print that shields San Francisco from those costs in other sections.

San Francisco draws its water from the Hetch Hetchy reservoir, upstream on the Tuolumne River from Don Pedro, which is jointly owned by the Modesto and Turlock irrigation districts. The TID is not involved in the proposed water sale.

The additional water, if approved, would be transferred via the existing Hetch Hetchy pipes that take the water to millions of customers in the Bay Area.

Blom said he needs more information before making up his mind for next month's vote.

"I'm really interested to see what the public has to say about it," he said.

The public had plenty to say at Tuesday morning's MID board meeting. About 20 speakers addressed the board for up to five minutes each.

Most opposed the transfer, predicting disaster for local agriculture should the sale go through. Others said costs of needed water system fixes and upgrades far outstrip what Modestans and farmers can pay, and the sale makes good business sense.

Josh Vander Veen predicted that farmers would be unable to fund an estimated $115 million in needed repairs. "We need to continue down this path because there are no other economically feasible options," he said.

But Les Johnson said the MID would lose in the end if the deal goes through. "You're all swimming with the sharks out of San Francisco. They're going to eat you alive," Johnson told the board.

Reed Smith said Modesto's planned water treatment plant expansion, releases to save river habitat and other unspecified water uses account for more water than the MID allotment. "Contracts are irrelevant. We don't have anything to sell," he said.

Smith and John Duarte are spearheading an effort to block the sale with a referendum and recall drive. They said they have formed a political action committee called, which has raised $25,000 toward the effort.

The two estimate that they will need at least 10 times that figure to mount a petition drive and special election. They believe a voter referendum could overrule the MID board's decision, should the sale go forward.

Von Groningen said he knows of no law allowing voters to overrule the board.

The board is scheduled to vote July 24 on an initial deal to sell 2,240 acre-feet per year, earning it $1.6 million. The water volume is 1.6 percent of the MID's deliveries to farmers and the treatment plant serving the Modesto area.

However, a pact to sell San Francisco 25,000 acre-feet of water per year waits in the wings.

The larger deal would bring in more than half a billion dollars in its first 25 years, according to MID projections. An environmental impact report on the larger sale would take more than a year to complete.

Bee staff writer Ken Carlson contributed to this report.

Bee staff writer Nan Austin can be reached at or (209) 578-2339.


Highlights of the initial and revised contracts for the first proposed sale of Modesto Irrigation District water to San Francisco:


Initial: 2,240 acre-feet per year

Revised: No change


Initial: $700 per acre-foot to start, with annual increases of up to 3 percent

Revised: No change


Initial: Drought is not among the reasons the MID could cite for suspending the sale.

Revised: No change


Initial: San Francisco would have a right of first refusal for water the MID proposes to sell in the future to another party outside the Tuolumne River basin. The city would have to match that buyer's price.

Revised: Wording changes to good faith offer due San Francisco first.


Initial: The MID would sell water to San Francisco, not the underlying rights to this water.

Revised: No change


Initial: 10 years, during which time the MID and San Francisco would review the possible effects on this water of state and federal requirements for increased flows in the Tuolumne River. The contract would renew as is for a pair of 20-year terms unless the district and city agreed to amend or end it. The contract has a clause allowing San Francisco to cancel it for any reason with two years' notice. The MID could cancel it only if the city defaulted on the terms.

Revised: 50 years with reviews every 10 years. The MID has leeway to cancel, depending on federal requirements in the relicensing for the Don Pedro power house.

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