SANTA BARBARA COUNTY GRAND JURY 1995-96

THE CITY OF SOLVANG AND STATE WATER

Released: June 17, 1996

OBJECTIVES

APPROACH

To gain an understanding of Solvang and its water situation then and now, the Grand Jury interviewed in person: all five City Council members of the 1991 council; all present City Council members, two of whom were on the 1991 council; the Solvang City Administrator; the Solvang Director of Public Works; the Solvang Director of Administrative Services; the Manager of ID #1; the two Solvang area representatives to ID #1; the General Counsel for ID #1; the City Attorney for Solvang in 1991; the Assistant City Attorney in 1991; the County Counsel and a member of his staff; the Research Attorney for the Santa Barbara Superior Court; the Director of the Central Coast Water Authority (CCWA); the Manager of the Santa Barbara County Water Agency; a member of the State Water Resources Control Board; the County Clerk-Recorder-Assessor; the Auditor-Controller, members of Solvang citizen groups and individuals. Telephone interviews were also conducted. The Grand Jury uses the masculine pronoun in all witness references or quotations from Grand Jury interviews.

To broaden its understanding of the County water situation, the Grand Jury attended the Cortese-Firestone hearing in Santa Maria on November 7, 1995. It also interviewed representatives from the Santa Barbara Citizens Planning Association; and it interviewed the Mayor of Lompoc and a Lompoc representative to understand the political process that resulted in that city voting "No" on State water.

In addition to reading City of Solvang reports and official City records, the Grand Jury also read the May, 1991 Environmental Impact Report (EIR); the Bond Prospectus for the $177,120,000 revenue bonds, dated October 1, 1992; various water reports issued by the Santa Barbara County Flood Control and Water Resources Agency and others. The Grand Jury found variations in the water cost and usage numbers offered by Solvang, ID #1, CCWA officials and those listed in the Bond Prospectus. In addition, the Grand Jury was informed by Solvang staff that the numbers in both the 1992 Bond Prospectus and the 1996 CCWA Draft Refunding Proposal are not always those supplied by the city. Because of the time required to decipher the complexity, it was impossible to determine which numbers were accurate. Rather than attempting to choose one set, the Grand Jury decided to cite the varying numbers and sources and let the variations speak for themselves.1

Thanks to the courtesy of both newspapers in allowing access to their files, the Grand Jury read all relevant articles in the weekly Santa Ynez Valley News from December 1990 to the present, and all water-related articles in back issues of the Santa Barbara News-Press (News-Press), regular and North County Editions, for the months of April, May and June, 1991. It also read the newspaper file of county water-related articles of January through May 1991, maintained by the County Counsel's office. In addition, it read at the Santa Barbara Public Library relevant issues of the News-Press from 1991 through April 1996 and also articles from 1960 and 1985.

These and other references are cited in the End Notes and List of References.

TIME LINE OF SOLVANG AND STATE WATER-RELATED EVENTS

OBSERVATIONS

DESCRIPTION OF SOLVANG

Demographics

Solvang has an estimated population of 4,990 inhabiting approximately 2.2 square miles.2 Forty percent of its approximately 985 developed acres is classified as commercial; the remainder is residential. On a busy summer weekend, the Grand Jury was told, the city's population can swell with tourists to more than 20,000. Solvang's physical boundaries are primarily those of the water district served by ID #1 and include no industrial areas. Tourism is the main industry.

The 1990 census showed a median income of $36,841, below its immediate neighbors, Buellton ($39,757) and Santa Ynez ($51,697). According to the 1990 Census, Solvang had a population of 4,741. The rest of the population in the Santa Ynez Valley totaled 5,160: Santa Ynez, 4,200; Los Olivos, 650; Ballard, 310. The Grand Jury was told that the Solvang population includes many retirees on fixed incomes. The 1990 census also shows a median home value in Solvang of $300,700, exceeding the Santa Barbara County seven cities' median of $239,000.3

Solvang City Government

On May 1, 1985, Solvang was incorporated. Before incorporation, it was called the Solvang Municipal Improvement District (SMID), formed in 1951.4 The Grand Jury was informed that a primary purpose for incorporation was to keep city-generated funds within the city, especially since there were deferred municipal maintenance needs and concerns about public safety issues.5

Solvang is a general law city with five elected City Council members, each serving for four years. Elections are held every two years. Annually the City Council chooses one of its members to act as Mayor, and he or she functions as a chairperson of the Council, representing the city at functions, but without any more actual power than the other members. Senior staff is appointed by the Council and consists of a City Administrator, Director of Public Works, and Director of Administrative Services. There are 26 full time city employees, four part time employees, three on contract, and 25 on call firefighters. Police protection is provided by contract with the Santa Barbara Sheriff's Department. Legal advice on municipal matters comes from a Ventura County attorney who has been on contract since 1994, when he succeeded the prior City Attorney whose firm had been on contract since 1987. In addition, Solvang retained a Costa Mesa firm to advise it on the water supply contract with ID #1; in 1995, the city retained a Los Angeles firm to represent it in the lawsuit against ID #1.

The Grand Jury was told that Solvang's first City Council concerned itself with the procedural matters of being a city. It was a "caretaker Council," one member told the Grand Jury, with holdovers from the SMID board. The next Council, elected in 1988, devoted itself to physical improvements to the city and beautification projects. For the first time, instead of following its "usual pay-as-you-go traditions," the Grand Jury was told, Solvang indebted itself with the issuance in 1990 of $4,128,535 capital improvement Certificates of Participation (COP) that will mature in 2010; annual payments are $325,000. Its only other indebtedness totals $535,000 in bonds.6

The Grand Jury was told by Council members that Solvang is a "frugal" and "conservative" city that is "adamant against growth." The Grand Jury was told that despite the need for revenue from an industrial area or additional tourist income, Solvang is "not expansionist," and that there is "not a lot of support" for annexation.7 Two new members joined the Council in the elections of 1994. The question of how to pay for State water now dominates the biweekly meetings, the Grand Jury was informed.

The City Council management styles have varied over the 10 years of being a city from an initial primarily policy-making, hands-off style, depending on the staff for details, to the present "micro-managing," as several described it. The Grand Jury was told that the City Council management style has matured since the village-like SMID days. Two of the present City Council members, who were also on the 1991 Council, were on the SMID Board or were involved in municipal management. The senior staff has been part of the city government since incorporation.

In 1989, the City Council adopted a General Plan that looked ahead 25 years. The Plan foresaw a population of 7,480 in 2015, a 57.8% increase from the 1990 Census population of 4,741. Water consumption was estimated to rise to 5,418 acre-feet per year, a 189% increase from the 1991 level. The Grand Jury was told that there was not a thorough study of water needs done in 1989 and that the buildout water consumption number was chosen by a staff member.

In March 1995, Solvang hired Boyle Engineering Corporation to develop a Water Master Plan study for the capital facilities needed for the next 10 years. The January 1996 Draft Report of that Master Plan revises the buildout consumption and estimates that Solvang will need 3,295 AFY "from anticipated land use development at buildout conditions, as provided by the City Planning Department." The 1993 demand of 1,870 AFY was used as a baseline.8

The Grand Jury was told that there are presently 1,810 water meter accounts. None are agricultural accounts. The Grand Jury was informed that the annual 3% General Plan growth limit, which provided for exemption from inclusion of certain "Special Plan" exceptions, such as the Duff Mesa development, has not been reached. The growth rate for 1994-1995 was 2.2%.9 In 1996, construction was begun on a new wastewater treatment plant to solve over-capacity problems that have been especially severe with high weekend and summer usage, the Grand Jury was informed. It should be completed in 1997. The Department of Public Works continues to issue "can and will serve" letters to applicants for building permits during construction of the wastewater treatment plant.

SOLVANG'S WATER SUPPLY

The City Water Supply

A City Council member told the Grand Jury that until recently water has never been a big issue in Solvang. The city has an Appropriative Permit on the underground flow of the Santa Ynez River that entitles it to draw approximately 3,650 AF annually.10 Possibly threatening the amount of water that can be drawn from Lake Cachuma is a lawsuit filed by the California Sports Fishing Association (CALSPA), which requires the Santa Ynez River to have sufficient water for the resident fish to be "in good condition." 11

Although there was a county-wide groundwater overdraft in 1990, a report, prepared March 15, 1991 and incorporated in the State water EIR, stated "Only Carpinteria County Water District and the City of Solvang have surpluses in 1990. All water purveyors have deficits by 2010 with the exception of the City of Solvang, which takes its water primarily from their Santa Ynez River appropriated rights."12

Solvang has four city wells, capable of producing a maximum of 3,832.5 AF annually.13 Two are shallow river bed wells, one draws from a perched aquifer, and one, the Chalk Hill Well, takes from an edge of the Santa Ynez Uplands Groundwater Basin. Because of rights deriving from its being a municipality and also because it abuts the Santa Ynez River, if Solvang's demands should increase, the city could pump more water from its river bed wells so long as the city keeps within its appropriation, a county water manager told the Grand Jury. As a result, he informed the Grand Jury, the ability to pump from even such a shallow water system is not as limited as it would be from a deeper well system dependent on natural percolation, if the Santa Ynez Uplands Ground Water Basin is in fact overdrafted.

However, these riparian rights are not inexhaustible: in addition to the CALSPA lawsuit, the Grand Jury was told that the Santa Ynez River is a fully appropriated stream.14 Also Santa Barbara County is subject to recurring droughts. During 1990-1991, because of the low lake level, there were no river bed replenishing releases made from Lake Cachuma. The Grand Jury was informed by a county water manager that the Santa Ynez River Water Conservation District has the discretion as to the timing of releases, basing its decision on ground water levels, "credits" in the lake, how much rainfall there has been, and whether rainfall is expected.

Improvement District No. 1

In 1960, ID #1 was created from the Santa Ynez River Water Conservation District (SYRWCD), the Parent District of approximately 180,000 acres, which extends from Bradbury Dam to the ocean. The Parent District was formed after the 1939 floods to protect the water rights of the Santa Ynez and Lompoc Valleys and to obtain additional water supplies for future needs. Except for Lake Cachuma's surface waters, most of the water from within the District comes from groundwater sources.

ID #1's first entitlement was 3,300 AF of water from the new Cachuma Project. The Grand Jury was told that prices then were $10 per AF for agricultural water and $35 per AF for urban water. With a loan from the federal government, ID #1 built the distribution system west from Cachuma and now serves the entire Santa Ynez Valley, except for the private holdings that depend upon their own wells.

In addition to having its own wells, Solvang is a customer of ID #1. Prior to the Agreement of August 1, 1991, Solvang was not contractually obligated to purchase water from the District. With that contract, it obligated itself to purchase 75% of the water that the District must purchase under its Water Supply Agreement with CCWA, or 1,500 AF. Over the years, Solvang has purchased between 30% to slightly more than 50% of its water from the District. It is ID #1's single largest customer, with two meters to distribute water to the city customers.15

The District has a five member Board of Trustees, one at-large representative, two specifically identified as Solvang resident representatives, and two from the rest of the Santa Ynez Valley. The manager, who takes care of day to day business, has worked for the District since 1960. He will retire in October and a new manager has been hired.

Legal advice is provided by a Santa Barbara attorney who has been General Counsel for ID #1 through the present. He has also been General Counsel for the SYRWCD, from 1965 through 1995. He and his law firm have also been General Counsel for CCWA since its founding in September 1991. Solvang officials told the Grand Jury that ID #1's General Counsel had represented SMID. This is not correct. A member of the same law firm did represent SMID in the 1970's. A Los Angeles law firm represents CCWA in its intervention in the City of Solvang v. Improvement District No. 1 lawsuit.

Few Solvang citizens attend the monthly ID #1 board meetings. Elections are held every four years and are often uncontested. The Grand Jury inquired what were the duties of the Solvang area representatives and was informed that there is no formal structure for these representatives to receive information about Solvang. The duties of the board members run to the District as a whole, not to the geographic divisions within the District. The two "Solvang representatives" are not representatives of Solvang interests except that they are elected by voters of Solvang, one of the geographic divisions of the Improvement District. The Grand Jury was informed that ID #1 board members do not attend City Council meetings. Solvang City Council members do not usually attend ID #1 monthly meetings. The exception was in the spring of 1991 when the Mayor and Director of Public Works attended many, if not all, of the meetings.

Although there was a lack of formal contact by most 1991 City Council members and senior staff, they told the Grand Jury that they had thought highly of the District and its staff and had relied on and trusted it for any questions to do with water. In the mid-1960's, the District had assisted Solvang in getting its appropriation rights to the Santa Ynez River. Until Solvang developed its river wells in the 1960's, water from ID #1 was Solvang's primary water supply.

Unlike Solvang with its relatively shallow wells, ID #1 draws from a deep and plentiful upland basin. The Grand Jury was told by a county water manager that Solvang, compared with ID #1 as a whole, has "virtually no underground water" except what it takes from ID #1, which has a "huge supply." However, in 1987 and subsequently in 1990 and 1991, ID #1 received reports from Stetson Engineers, Inc. showing a 4,000 to 4,400 AF overdraft in the Santa Ynez Upland Basin, its main supply. On February 19, 1991, the District, stating the existence of a "significant shortage of water to meet current water demands in Santa Barbara County," adopted and passed Ordinance No. 91-1, calling for the construction of the Coastal Branch and Mission Hills Extensions of the Coastal Aqueduct. In compliance with the WSRA, executed on June 21, 1983, the ordinance would take effect with a majority vote of the voters in the District.16

The Grand Jury was told the basin is assumed to be still slightly in overdraft. There are on-going studies to determine the extent of its overdraft, if any.17 In 1995, the Stetson Report showed no overdraft for the Santa Ynez Upland Basin and a 1984-1994 average basin overdraft of 700 AF.18 The report shows for the Santa Ynez River Alluvium deposit from which Solvang draws part of its water supply an annual average overdraft of 400 AF for the same period; the report shows no present overdraft.

Except for Solvang's concentrated urban users, ID #1's customers are classified as domestic and agricultural, although fewer than two dozen actively farm as their primary source of income. The Grand Jury heard from Solvang residents comments on how Santa Ynez water rates are lower than those in Solvang. The California State Water Code provides that agricultural rates shall be at least three times and no more than five times lower than other rates; ID #1's agricultural rates have been set at four times lower.19

Despite an estimated 8% increase in population since 1990, Solvang's water consumption has been dropping as results of conservation measures adopted because of the seven year long 1980's period of low rainfall and the recent increases in city water rates. (Both of these factors will be discussed below.) In 1988, Solvang produced for its own consumption from its wells and ID #1 purchases 2,028 AF; in 1991, the figure was 1,852 AF; and in 1994, the production needs had declined to 1,806 AF. In 1995 consumption declined further so that 1,710 acre-feet were delivered to city customers.20

THE DECISION TO BUY STATE WATER

Solvang City Council Resolution

On May 13, 1991, the City Council passed unanimously Resolution No. 91-192. The Resolution, the facts of which were "determined to be true and correct," was signed by the Mayor and the City Clerk. It listed 15 reasons why the City of Solvang should support the construction of the Coastal Branch, Mission Hills and Santa Ynez Extensions of the California Water Project. Some of those reasons were:

The Resolution also noted that taking State water would mean that it would be possible to avoid constructing a water treatment facility that would cost over $7 million to filter Lake Cachuma water. (The Environmental Protection Agency requirement for such a treatment plant had been put on hold until after the bond measure election.) Another reason stated was that State water would be of higher quality than Cachuma water.

There was no mention of the cost of State water to Solvang and how the cost would be allocated. The Resolution stated that final design and environmental impact reports were scheduled for completion "within a few months." (The official publication date was May 14, 1991; the EIR is described below.) There was no mention that about a month before on April 10, 1991 San Luis Obispo County, by an advisory vote of 53% of those voting, which was 35.5% of the registered voters, had opted out of taking State water. That action would raise the cost to down stream users.21

There was little public input at the May 13 Council meeting. Although the minutes of that meeting show no opposition, the Grand Jury was told that one citizen did question how much State water would cost and whether Solvang could afford the water, but his questions were unanswered.22 The Grand Jury was told that the tape recording for that meeting has been erased, which was then the standard practice after three years.23

The Drought, 1990-1991

The Grand Jury was told many times by Solvang officials and residents that there was near "hysteria" in the county generally in 1990 and early 1991. Rainfall had been below normal for eight of the previous ten years. There had been drought conditions statewide since 1987, so much so that proposals were being made to cut the flow of Northern California water to Southern California by 85%, with rationing expected in most Southern California cities.24 "The water shortage along the Central Coast between Santa Barbara and Monterey is the most severe. No region in California has been so far below its average rainfall with such low reservoir levels and so little runoff."25

Lake Cachuma was down to 13.6% of its then 204,000 AF capacity; the lowest level was 27,681 AF on February 27, 1991.26 Reservoirs throughout the Central Coast were at 9% of capacity, while the statewide average was 32%. In May 1990, Solvang adopted voluntary restrictions of a 10% cutback. That "Stage One" condition resulted in a 12-14% decrease in consumption, according to a Grand Jury interview.27

In March 1991, when Lake Cachuma was at its lowest level since 1955, the "miracle" rains began. Unlike in 1990 when only 4.7 inches of rain fell between January and March, in 1991, 13.11 inches of rain fell in the same period, mostly in March. The Santa Ynez River began to flow above and below Lake Cachuma.28 The water level in Cachuma, however, remained low. The lake's dry shores were immediately visible to all Santa Ynez Valley residents traveling to Santa Barbara. By April 1, 1991, Lake Cachuma had risen to 66,210 AF, but from the road it still appeared near-empty; by May 27, the lake contained about 75,000 AF. On April 1, 1992, the level was at 166,116 AF, still below its 1960-1990 average of approximately 172,000 AF.29 All interviewees from Solvang commented to the Grand Jury on the importance of years of drought and the sight of a shrunken Lake Cachuma as helping make the decision to vote for State water.

Despite the drought, the City of Solvang's taxable transactions increased in 1989-1991, as they did for the County of Santa Barbara; Solvang's bed tax receipts also increased during the drought period.30 Unlike in Lompoc or Santa Barbara, there was no organized opposition to State water in Solvang or in the Santa Ynez Valley. Santa Barbara newspaper articles from that time showed intense coverage of the water crisis, but the articles concentrated on the South Coast. The Santa Ynez Valley News wrote extensively about the lack of rainfall, but the Grand Jury found no discussion of the adequacy of Solvang's water supply.

City Research, Legal Advice and Decision-making

On May 14, 1991, after six years of work and a cost of $5 million, the California Department of Water Resources completed the two volume, 1,055 page Environmental Impact Report (EIR). It was distributed to all county and municipal offices and libraries. The EIR discusses the entire region from the state aqueduct in Kettleman City to Lake Cachuma and is filled with charts, graphs, and financial projections. For the first time, the State water cost of $970/AF was listed.31 Several Council members noted seeing the EIR on the City Hall counter. None told the Grand Jury that they read it. A Council member said that he never saw the EIR and did not know that it existed. None of the City Council members mentioned reading the above-mentioned March 15 Santa Barbara County Water Agency Report that was subsequently incorporated into the EIR, forecasting that Solvang would have no water shortage through 2010.32

Throughout the spring of 1991, Solvang had a Water and Sewer Committee consisting of Council members and staff. A 1991 Council member told the Grand Jury that "all the information" came from ID #1 and that the City Council "relied entirely" on the plans of the District. That Council member told the Grand Jury that the committee did not talk about State water since Solvang rarely had any problems with its water supply. He said that there was never a recommendation made to the City Council as a whole to take State water.

Another 1991 Council member told the Grand Jury that the Council relied on the water committee and did no independent research. Another told the Grand Jury that the committee consisted only of the Mayor and the Director of Public Works. One Council member was out of town for much of the spring of 1991. The Grand Jury was told that the committee reported back to the City Council. On examining the minutes of the Council meetings for the spring of 1991, the Grand Jury found few references to water being discussed. On requesting the minutes for the Water Committee, the Grand Jury was told that no minutes exist for the Water Committee meetings.33

In February, 1991, according to a city memorandum, the valley water purveyors recommended that the City Council appoint a representative to meet over the months of March and April to discuss "the status of water in the valley ...(to be) informed of the different phases of conservation and the effects physical, financial and politically of entering the different drought conditions."34 There is no mention in the City Council minutes of the spring of 1991 of any public reports from those meetings.

The Grand Jury was told that the City Attorney raised no questions about costs. The Grand Jury was told that the City Attorney did not recall any discussions about water and that his role was to offer legal advice: Whether to take State water or not, how much to take, and how to pay for it were not legal questions. Such opinions, the Grand Jury was told, belonged to the City Manager.35 The Grand Jury asked all Council members about the role of Solvang's legal counsel concerning water and was told that he offered few opinions; they also said that they asked him few questions. The Grand Jury was also informed by counsel members that there was not any discussion of the costs of State water. Another attorney, however, told the Grand Jury that the 1991 City Council was very much involved in learning the issues affecting the city.36

After the June 4 vote, the water committee became the "city negotiators" with ID #1 for the amount of water that Solvang would take.37 The Grand Jury was told that the two-person water committee arrived at the decision to take 1,500 AF on the basis of the 1989 General Plan buildout projections. At the August 26 public meeting discussed below, the Director of Public Works explained, "The amount of 1,500 acre-feet was approximately what we draw from the Santa Ynez River." He further said at the meeting that "some of the basis of our decision" was the "very, very real threat" to Solvang's river rights from the Sport Fishing Association.38 However, another 1991 Council member told the Grand Jury that "no one had ever been authorized to negotiate anything."39

The June 4 favorable vote did not bind Solvang to take any State water but it was seen as the expression of the people. The Grand Jury was told that the City Council neither asked for nor received a written financial analysis of the costs and affordability of State water from the Director of Administrative Services. The City Council hired no independent consultant or analyst to assist in decision-making.

The Grand Jury received testimony that ID #1 was faced with the decision of whether or not to take its full allotment of 2,000 AF per year. It could not do so alone since, minus Solvang, the Grand Jury was informed, the other customers were in a predominantly agricultural area and could not pay the rates that would have to be charged.40 Some years earlier, in a decision by the State Water Resources Control Board, Solvang (and other watershed water users) had won the right of priority over the Cachuma Project users. As a result, Solvang started pumping its own river water and basically became a non-customer for ID #1 water. The Grand Jury was informed that in 1991 the District said to Solvang, in effect, if you want this water, take it, but if you don't want it, tell us now because we can get rid of it under the Water Supply Retention Agreement.

On July 18, the Solvang Mayor, accompanied by two senior staff members, informed ID #1 that the city would take State water. At that meeting, ID #1 asked what Solvang wanted to do. The Grand Jury was told by an ID #1 representative that Solvang was informed that it had the choice at that time of taking a thousand acre-feet or two thousand acre-feet, or nothing at all. Whatever the choice, the District said that it needed to make a decision right away so the District could decide what it was going to do.

The Grand Jury was told that almost at the beginning of the meeting the Solvang representatives said they wanted 1,500 acre-feet. The Grand Jury was informed that that decision was made "at arm's length": the District asked; the city responded. The District asked if the Solvang representatives were sure of the amount. Solvang responded to ID #1 that it was certain of the amount of 1,500 AF, the Grand Jury was told. The District then checked with Smith Barney, the bond underwriters. They determined that the District, on the basis of the water revenues that were likely to be received, was creditworthy to take 2,000 AF, 1,500 of which would be sold to Solvang.41

A contract was drawn up and dated August 1, 1991. City Council members told the Grand Jury the City Attorney gave them no written analysis of the August 1 contract; the City was billed for a presumably oral review/analysis. The Grand Jury learned from City Council members that most had seen the contract a few days before in their regular packet of Council materials. Three members acknowledged not reading it before the meeting. None of the Council members read the underlying Water Supply Retention Agreement. The Grand Jury was informed by Solvang staff that it was not available to them or to the City Council. Once they did read the August 1 contract, council members told the Grand Jury, they did not understand all of it, but did understand that it was a take-or-pay contract that had no cap on potential costs and that it was basically the same contract that all the water districts signed.42

The Decision to Sign the Contract for State Water

On Monday, August 26, 1991, the City Council met in an open public meeting and listened to a presentation by the General Counsel for ID #1 about the CALSPA fisheries complaint and groundwater supply problems. The Grand Jury was told it was assumed that the Council had discussed the details of the costs beforehand. At the August 26 meeting, the General Counsel for ID #1 informed the Solvang City Council that the District could not go forward with State water without some kind of an agreement in place with Solvang.

He said at that meeting that negotiations had taken place and that "the city negotiators came to the conclusion that the 1,500 number was the right number and that's the number which ID #1 is comfortable with. ...This is a take-or-pay contract in which ID #1 has no choice but to enter into a water supply agreement with CCWA to receive 2,000 acre-feet of water. Whether it comes or not we have to pay for it."43 One Council member asked, "I'm wondering where the 1,500 square foot number comes from? Acre-feet, square foot. Building a house? I told you I didn't know about this. If there is some sort of formula that because we are urban users and that's why we're going to pay 75% of it. I just don't (understand.) ...Is this the only opportunity we have to name the number? Do we get to come back in a year and say we wished we'd taken more?"44

After explaining that it was "strictly a negotiated number" that could have been anywhere from 1,000 to 2,000 AF, the ID #1 General Counsel said to the last question, "No. This is basically the time." Subsequently, the Grand Jury learned that although a delay would have been "very difficult," it would have been possible. The time for participation was set by Santa Maria's April 10 vote to take State water. The Grand Jury was informed that the districts that had allotments, including ID #1, had until November 15, to sign on to take their reserved shares.45 The Grand Jury was told the City Council asked neither for a delay nor a reconsideration of the contract.

The General Counsel for ID #1 explained to the City Council on August 26, 1991: "We've got to go forward. Everybody has got to make decisions and hard decisions and that's what we're trying to do ourselves all the way through this thing to solve all the problems. We've got to have certainty on it before November 1 of this year, because at that point all the lines are going to be sized. If we don't have a satisfactory answer to this question, Improvement District No. 1's view is that it wouldn't be able to proceed, basically, with State Water Project water, at least certainly in these amounts."46

At the meeting Council members spoke: The Mayor said, "This is do or die. This is the old 20/20. You're looking 20, 30 years ahead. This is the only time you're going to get a whack at it." A Council member was concerned about water quality and being saved from "mud in the summer time" and "saving on water softening costs and a lot of things." That Council member continued, "I think the voters said it best, they want it. ...(W)hat more assurance do we want that this is something the electorate sees as the future, and we're in the best company...."47

The cost of Cachuma water was then approximately $10-$35 per acre-foot, depending on the type of user.48 The Public Works Director explained, "This gives us a more firm commitment to a protected amount, and that's what the committee was looking at as well and, looking at as I said before, just trying to get around 3,000 acre-feet, not knowing that we couldn't really afford much more, we couldn't afford more than the 1,500 acre-feet, the actual cost of the water for delivery is somewhere around $1,000 an acre-foot."49

Several Council members asked again about receiving 1,200 AF, but were told of the complications, including the possibility that if ID #1 took less, that would increase the costs to the county for building the Coastal Aqueduct.

The Public Works Director responded to a question from a Council member, saying that the average monthly water bill would increase by $5.00 or about 35%.50 Finally, the Mayor said, "I think five years down the road our water demand in spite of prices is going to be 2,500 acre-feet." Shortly thereafter, the Council voted 4-1 to execute the agreement with ID #1 for the delivery of 1,500 AF of State Project Water.51 Only one Council member refused to vote in favor, holding out for 1,200 AF. He said, "I cannot support the agreement before us this evening. However, I support State water and payment for same on an equitable basis with all ID #1 customers. ...Solvang cannot conjunctively use 1,500 AF of State water and perfect its river appropriation."52

A Council member told the Grand Jury that the first time he saw the contract was in the packet prepared for Council members before the meeting and that he "assumed" there would be "full disclosure" at the meeting.53 The Solvang City Attorney was present at the August 26 meeting, but is not recorded as saying anything.

Report Continued


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