OID reveals big-money water sale to outside buyers

Irrigation agencies in Oakdale and Manteca will reap $11.5 million selling Stanislaus River water to outsiders in coming weeks.

Sensitive to pressure from local farmers, government officials and media, the Oakdale Irrigation District kept the deal under wraps until Tuesday’s announcement. It surprised some Stanislaus County leaders who had been urging OID to negotiate with local buyers during the ongoing drought, and angered candidates for the OID board who have railed on secrecy and called for transparency.

“This really is a rogue agency,” said county Supervisor Jim DeMartini, among many encouraging local deals. “With the (OID) board operating in secret and not being truthful in presentations, I’ll have a hard time believing anything they say anymore.”

OID leaders defended the deal as helpful to all parties: state and federal wildlife agencies overseeing river conditions for fish, thirsty farmers in the Southern San Joaquin Valley and OID customers benefiting from a cash infusion.

“The end product is what we all wanted,” said OID General Manager Steve Knell. “It worked out good. And it’s no different from what we’ve done in the past.”

He referred to water transfers that have brought $50 million to OID in the past dozen years, helping to upgrade canals and equipment.

Knell noted that terms of those water sales were negotiated behind closed doors and announced publicly when deals were consummated. OID and its partner on the Stanislaus, the South San Joaquin Irrigation District, will present a summary of the current deal Thursday when both boards meet jointly in Manteca as the Tri-Dam Power Authority.

“We’ll explain the whole thing in the open,” OID board chairman Steve Webb said.

Although the negotiation-announcement pattern is similar, the agencies went a step further this time, approving in August a draft contract with obscure wording on a Tri-Dam agenda – not as separate boards, as was done with previous contracts. Also, OID officials said nothing of the deal during lengthy discussions about water transfers in meetings of the Stanislaus Local Agency Formation Commission, in a public debate in Oakdale, in a debate before Modesto Bee editors and in last week’s OID board meeting.

“This is very disturbing news,” said Gail Altieri, a board candidate whose platform focuses on transparency. “We were told there was going to be no water sale, then they pull a stunt like this.”

Linda Santos, a candidate for another OID seat, questioned whether the deal was handled on the Tri-Dam level “to circumvent those of us watching OID. It just irks me to no end. They don’t have a right to sell our water unless we give them that right.”

Both said opposition to outside water transfers helped prompt them to run for office.

Santos attended the Aug. 20 Tri-Dam meeting but saw no indication from agenda language that the joint boards were fixing to approve the water sale. The item read, “Discussion and possible action regarding a fall water release in cooperation with state and federal agencies.”

Knell said that fulfilled the agencies’ obligation under California open meetings law, but acknowledged that the vote was taken with no public discussion of terms of the pending deal, including price or volume of water to be sold. Tri-Dam later published meeting minutes indicating that the joint boards had approved a “contract to transfer water” under that agenda item.

The districts will sell 23,000 acre-feet of water at $500 per acre-foot, for a combined $11.5 million to split between them. The Stanislaus will swell with the extra water beginning next Tuesday.

Six days after the Tri-Dam meeting, Knell gave a lengthy presentation to LAFCO on OID’s operations, including its history of selling water to outsiders, and outlined benefits to OID and its customers. Knell said OID had shopped extra water to eight local agencies but got no takers, for various reasons, as well as to five outside agencies. The last two, state and federal contractors, “will take as much as they can” and were “willing to work on an annual contract in the interim, till some of these water issues get worked out,” Knell said, without noting OID’s deal with those very buyers.

Three county supervisors – DeMartini, Terry Withrow and Bill O’Brien – urged Knell to negotiate with locals. All three came away from the meeting, they said this week, with no understanding that OID already had approved a multimillion-dollar deal with outsiders.

“Local farmers not in OID want some OID water, that I do know is true,” said O’Brien, whose county district overlaps with much of OID’s.

Withrow said, “There’s just no need for that water to leave this county.”

Oakdale-area grower Louis Brichetto has been at odds for years with OID despite having served previously as a board member. He said Tuesday that he has tried for eight years to buy OID water and said several others in recent years have, too.

His lawsuit threat earlier this year derailed an OID plan to sell water to Fresno-area buyers, based on environmental studies that OID failed to conduct. The district is pushing ahead with such studies in hopes of striking a new bargain next year, but needs no such document for the current deal, approved in the past couple of weeks by state and federal water and wildlife agencies.

“We don’t want to beat up on the district,” Brichetto said. “We just want to buy water, and we’ll pay a premium for it.”

Knell in August told LAFCO that growers in the Paulsell Valley southeast of Oakdale, such as Brichetto, would see land values instantly rise $15 million if annexed into OID. On Monday, Withrow said that reasoning made little sense to him: “What’s that got to do with the water? Are you jealous of him?” Withrow said.

“I think a lot of bad blood out there is interfering with things that could benefit our county and we’ve got to get past that,” Withrow continued. “We can’t have old disputes preventing sound deals from being made.”

Another of OID’s prickly relationships, with the Modesto Irrigation District, stands in the way of dealing with other local agencies.

With the drought worsening two years ago, OID formally sought offers from MID and its partners on the Tuolumne River, the Turlock Irrigation District and San Francisco. At the LAFCO meeting, Knell said MID and TID “didn’t want any part of it;” at last week’s OID meeting, he said, “after meeting with MID, we decided there was no point in pursuing this.”

Others, such as the Del Puerto Irrigation District near Patterson, would happily buy OID water but have no connection to receive it. MID could “wheel” the water, acting as a broker, by giving Del Puerto some of its supply from the Tuolumne and receiving in exchange a like amount from an MID canal adjacent to one of OID’s. But that OID water would have traveled through OID farms, picking up impurities, MID said in a January letter to OID.

MID also wanted a commitment to develop a long-term water-swapping policy, but OID apparently wasn’t interested. “Our questions and concerns have yet to be addressed,” MID spokeswoman Melissa Williams said.

Last week, the OID board considered taking another run at shopping surplus water to local agencies, but decided to hold off because weather forecasts predict a wet winter. Webb on Monday said that issue was discussed as a response to comments made at a political debate two weeks ago.

Political machinations aside, the deal will bring $5.75 million each to OID and SSJID. The cash, Knell said, will help offset an expected $10 million budget gap over the past two years; with little water captured in dams, the districts are generating less electricity for wholesale to a private buyer, and have few other ways of raising income.

Because the districts have no claim on water stored in federally operated New Melones Dam each year after October, it’s possible that state and federal wildlife agencies might have released that water to cool the Stanislaus and attract salmon returning from the ocean to spawning beds, with no regard for OID or SSJID. That would have angered the districts, which in April formally agreed to conserve water for so-called pulse flows benefiting fish in the fall, at the request of the state and federal agencies, and a dispute could have resulted in an ugly lawsuit.

The deal gives credit to the districts while allowing them to sell the water to the San Luis & Delta-Mendota Water Authority, which has 28 member agencies on the Valley’s west and south sides.

“We turned a loss into a benefit, not only for us but for the fisheries,” Knell said. “We extended cooperation and are building on working relationships while other fisheries around the state are suffering.”

O’Brien said, “You can probably justify the transfer, if they were just going to take it from us anyway; this way, they get paid for it. But we do have farmers still trying to buy this water.”

Many farmers made planting decisions based on OID’s action earlier this year to cut back on the amount customers typically get, imposing a ceiling for the first time in the district’s 105-year history.

“They cut us (customers) back,” Santos said, “because they wanted to make a water sale at the end of the season. I am so angry that this board thinks this is the way to do business.”

Her opponent on the Nov. 3 ballot is board member Al Bairos, who was not reached for comment. Altieri is challenging board member Frank Clark, who said he had nothing to add to an OID news release touting cooperation among the various agencies.

Knell said the water sale will be explained in a portion of the Tri-Dam meeting labeled on the agenda as the general manager’s report. The meeting begins at 9 a.m. Thursday in the SSJID chambers at 11011 Highway 120, Manteca.

Garth Stapley: 209-578-2390