Part Two: The Ground Water Recovery Plant

By John Perry

This is a continuation of a 4-part series of the history of the Ground Water Recovery Plant.

The idea for the Ground water recovery plant ( “GWRP”) seemed to originate in the early 1990’s with the Metropolitan Water District (MWD)’s offer to pay a $250 per acre-foot subsidy for locally generated water from an unused source. The San Juan Capistrano Basin Authority (SJBA), city staff, and City Council members believed the calculations from the City–hired water consultant that showed the City could clean up the brackish ground water by building a facility capable of processing 5.1 million gallons of water per day. This would allow them to deliver 4800 acre-feet of clean water per year at a cost just over that being charged by MWD. 

In 2004, Cindy Russell who was then SJC’s Director of Administrative Services and Assistant City Manager said, ”…we need to generate more sources of local water here. This city has an ace in the hole, a huge untapped local source of ground water. The catch is that this plentiful source is too brackish to use as it is, so the issue is how to capitalize on the water most effectively.”

A Capistrano Valley Water Commissioner who served from 1996 - 2004 remembers the backroom negotiations the City had with the Rancho Mission Viejo Company that supported building the GWRP in order to free up basin water allocation for its 14,000 home planned development east of town. The Ranch development was then under consideration for approval by the County of Orange but,

...[the Ranch]  needed to demonstrate that they had the water allocation to service such a large development. If our City could produce more usable water, it would free up a larger allocation to service the Ranch’s development (at least on paper).

The problem was that the City needed to have water rights to 5400 acre feet of raw water to produce 4800 acre feet of finished water per year to meet its goals. Thus, in October 2002, then-City Manager George Scarborough presented for approval a SJBA Project Implementation and Operating Lease Agreement to the Capistrano Valley Water District Board (controlled by the San Juan City Council). The SJBA agreement provided expanded water rights throughout the lease period to enable the City to construct and operate the GWRP.  
The terms of the Agreement with SJBA are astonishing; the City agreed to lease the project from SJBA for a term of 30 years, with a renewal option for another 20 years. For the first 30 years of the initial lease, all costs of the GWRP are borne by the rate payers of San Juan Capistrano, including the initial construction cost of $32 million. 

It is costing the City’s water ratepayers $2.7 million per year to repay the bond debt until 2035 when the bonds will be paid off. It costs us an additional $3.5 million per year in personnel costs to operate the plant. This does not include maintenance costs, which have amounted to millions more than what was anticipated.

At the end of the lease period, the SJBA will own the GWRP, the City will lose control of it and its water rights will revert to the original 20% of the basin according to the City – Council approved 2010 Urban Water Management Plan prepared by water consultant Malcolm Pirnie.

Under the terms of this Lease Agreement, the City ratepayers will have invested more than $100 million dollars (estimated to be as high as $138 million) in the GWRP only to see control and benefit revert to the SJBA.
I simply cannot understand what the City Council was thinking when they entered into this extremely bad deal.

This is only the beginning. Stay tuned for the upcoming installments; “The Middle Years - 2005 to 2008, and “The End - 2008 and beyond”.

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