Shared from the 12/29/2015 The Sacramento Bee eEdition

Sale of Delta islands to agency in south state hits problems

Metropolitan Water District, Kern County partners eye five islands Legal restrictions could hinder Metropolitan’s plans Agencies already have ‘handshake’ agreement on price

MANNY CRISOSTOMO Sacramento Bee file

The deal would be Metropolitan’s first direct land purchase in the Sacramento-San Joaquin Delta, a fragile estuary.

A controversial plan that would put Southern California’s most powerful water agency in control of a group of Sacramento-San Joaquin Delta islands has run into a potentially significant hurdle.

The Metropolitan Water District of Southern California has been working for months with three Kern County agricultural water agencies to buy five strategically placed islands now used for farming. The move has sparked accusations that Metropolitan, which serves 19 million Southern Californians, is looking for a way to extract more water from Northern California. Metropolitan says it’s interested in conducting environmental restoration on the islands as a means of shoring up existing water deliveries.

The proposed land purchase has hit a snag in the form of pre-existing legal restrictions that govern how the islands are treated. The restrictions date to a 2013 settlement agreement that the islands’ owner – Delta Wetlands Properties, controlled by Swiss insurer Zurich Insurance Group – made with officials of San Joaquin County, neighboring water agencies and other government entities.

The deal “is more complicated than we thought because of these settlements and other restrictions on this property,” Metropolitan General Manager Jeff Kightlinger said Monday. “We told them we wanted to buy the land free and clear ... not to have heavily restricted lands.”

Metropolitan’s efforts to control Delta property come as the future of the estuary enters a crucial phase. A longstanding state plan to build a pair of tunnels beneath the Delta to streamline water deliveries between Northern and Southern California faces ongoing political and financial obstacles, with Metropolitan the only major water customer voicing real enthusiasm for the project. The environmental review is expected to be completed in 2016.

The tunnels project could get a boost from Metropolitan buying the five Delta islands. Getting the tunnels built will require potentially lengthy and expensive eminent domain proceedings with Delta landowners, many of whom are opposed to the project. Two of the islands under discussion are situated along the proposed tunnels route. One of the islands also could serve as a temporary repository for the mounds of dirt the project would create.

Kightlinger said he still thinks the land deal will be completed and added that “we have basically shaken hands on a price.” He wouldn’t go into specifics, but said the price would be between $150 million and $240 million for the 20,000 acres.

“There may be further discussion of price if those restrictions aren’t removed,” Kightlinger said. Ultimately, if the restrictions remain in place, Metropolitan will have to decide “is it really worth pursuing,” he said.

Zurich has been trying for more than 20 years to convert the islands into giant for-profit reservoirs that would ship water to Southern California in dry years. Along the way, San Joaquin County and others sued, claiming the project could devastate the Delta. The negotiated settlements were intended to safeguard against environmental havoc and other problems.

One lawyer who was involved in drafting the settlements, George Hartmann of Stockton, said easing the restrictions is unlikely. “We have no intention of changing a word in any of those agreements,” said Hartmann, a lawyer for farmers who own land near the Zurich properties and are parties to the settlements.

Officials with Zurich Insurance had no comment.

Metropolitan is working on the land deal with three Kern County water agencies: Semitropic, Rosedale-Rio Bravo and Wheeler Ridge-Maricopa. The islands, some in San Joaquin County and some in Contra Costa County, are Bouldin Island, Bacon Island, Webb Tract, most of Holland Island and a slice of Chipps Island.

The deal would represent Metropolitan’s first direct land purchase in the Delta, the fragile estuary that serves as the hub of California’s elaborate man-made water delivery system. The timing, with the tunnel controversy simmering, heightens suspicions about Metropolitan’s intentions.

“If it was anyone other than Met or Kern or some one like them owning Delta islands, I don’t think any of us would be concerned,” Hartmann said.

Kightlinger has said Metropolitan is interested in the islands primarily as a means of restoring Delta wildlife habitats. However, he also has acknowledged that a healthier Delta would serve Metropolitan’s aim of improving water deliveries to Southern California. Water deliveries are sometimes interrupted or curtailed to protect endangered fish in the Delta.

The $15.5 billion tunnels plan, championed by Gov. Jerry Brown and known as California WaterFix, is also aimed at helping water flow more efficiently to regions south of the Delta. Supporters say the tunnels would improve water flows, protect fish and enhance reliability of Southern California water deliveries.

The Zurich settlements could get in the way of Metropolitan’s plans. The settlements, among other things, place restrictions on excavating land on the properties. Digging the tunnels would involve massive amounts of excavation. Another clause requires the islands’ owner to protect the levees on neighboring islands from seepage, a problem that could arise when islands are flooded to restore habitats.

“They’re going to have to sign onto this and live up to this agreement,” said Dante Nomellini Sr., a lawyer for the Central Delta Water Agency, one of the parties that settled with Zurich in 2013. “I’m sure they don’t like the idea of being obligated to these things.”

Dale Kasler: 916-321-1066, @dakasler

See this article in the e-Edition Here