Water Authority agrees to pay $40 million to Imperial Valley
- North County Times
SAN DIEGO -- San Diego County water leaders have agreed to pay the Imperial Valley $40 million, ending a long-running dispute over whether the county's historic 2003 water transfer deal, to buy billions of gallons of water from valley farmers, had hurt Imperial Valley, officials said Tuesday.
Under the settlement agreement's general terms, the San Diego County Water Authority would pay the Imperial Irrigation District $40 million over the next 10 years.
The irrigation district agreed to chip in $10 million to cover economic harm felt by farmers and the agricultural industry, and to take future responsibility for any additional harm.
Water Authority and irrigation district officials have been arguing without resolution over the issue for two years. Irrigation district officials said the Water Authority should have to pay up to $170 million for economic harm created by farmers having to take farmland out of production. An independent 2004 economic study disputed that notion.
The two agencies began formal arbitration hearings in court last week, but chose to settle at the eleventh hour instead.
Water Authority board Vice Chairman Mark Watton said the $40 million settlement would have negligible effect on local water rates and would end a dispute that has rankled both sides of a county-valley partnership expected to run for 40 more years.
Watton and Water Authority General Manager Maureen Stapleton also said the settlement wasn't influenced by upcoming negotiations over the water transfer deal.
The Water Authority and irrigation district signed their deal in 2003, promising that Imperial Valley farmers would sell up to 65 billion gallons of water a year to San Diego County residents for roughly $50 million annually. The deal is set to run for 45 years, but could be extended to 75.
After the deal's fifth year, this year, the irrigation district has a right to renegotiate the price it charges for the water. By 2020, 1 out of every 5 glasses of water in San Diego County will be filled by the transfer deal.
Watton and Stapleton rejected the suggestion that if irrigation district officials lost in arbitration it could harden feelings and prompt the irrigation district to hold out for higher water prices.
"I think they were two separate things," Stapleton said. "We're in a long-term partnership with the irrigation district, and I think both parties wanted to figure out how to resolve this (economic harm issue) so that each and every year we wouldn't have to address it."
Irrigation district leaders could not be reached for comment.
However, irrigation district General Manager Charles Hosken said in a written statement, "There is no doubt that fallowing (taking farmland out of production) has hurt many in the agricultural services and farm labor segments of the economy. This is a compromise whose time has come."
Irrigation district officials have argued almost since the water transfer deal was struck that it would hurt the valley and its people economically -- because some farmers had to fallow land to come up with the water in the deal's first 15 years -- and that San Diego County should pay more for that.
The Water Authority, citing a 2004 independent study created by a panel of three economists chosen by both sides, disputed that, and said the transfer had created a $1.1 million windfall in the valley.
Watton said the Water Authority was confident that its position was right, but did not trust the uncertainty of the legal process. He said irrigation district officials proposed a settlement, and the two sides agreed quickly.
"We felt, obviously, that our case was well-founded," Watton said. "But when judges render decisions, you sometimes get surprised.
"When you get to the courthouse steps," he said, "if we could strike a deal that serves the purposes of all the parties, it seemed like the prudent thing to do."
Although the Water Authority agreed to pay $40 million over 10 years, it has already paid the irrigation district $10.48 million, money that was intended to be returned.
As a result, the irrigation district will keep the $10.48 million, and the Water Authority will pay an additional $29.52 million in equal yearly payments over the next 10 years.
For its part, the irrigation district agreed to pitch in $10 million of its own to help cover the economic pain felt by valley farmers and farm-related industries and workers. The irrigation district also agreed to take full responsibility for any future economic harm. Finally, the agreement ensures that the economic panel that was created to measure the water transfer's effects -- the same panel that created the disputed 2004 study -- will no longer be used.
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