Real Cost of Proposed Delta Tunnel Plan Is More than Double $25 Billion Price Tag

Friday, December 27, 2013
(photo: Randall Benton, Sacramento Bee)

Countless stories have been written and broadcast about Governor Jerry Brown’s proposal for remaking the San Joaquin-Sacramento Delta, a plan that would add two water diversion tunnels and provide needed repairs for around $25 billion in one of the most expensive public works projects in the state’s history.

The San Jose Mercury News reported on Thursday that the Westlands Water District heard a report from its staff and a Citigroup bond consultant last month which said when financing and other costs are factored in, the cost rises as high as $67 billion. That would put it right there with the projected cost of the beleaguered high-speed rail project.

The newspaper said the figures were verified by the state Department of Water Resources (DWR). “We need to be clear that if you add up the total debt service, that's a different type of calculation than the capital cost estimate,” DWR Director Mark Cowin told the Mercury News. “I would hope those two types of estimates aren't confused.”

The cost breakdown looks like this: $18 billion to build the tunnels; $9 billion for Delta restoration; and most of the rest for paying interest on 5% bonds over 30 years. Other factors that could up the price include inflation, lawsuits and creative bookkeeping by participating water agencies that defer interest payments to later years.

Unlike the bullet-train, California is not looking to the federal government for major funding. Bonds would cover 85% of the cost. But like the high-speed rail funding and all big-ticket infrastructure projects, there are many unknown financial variables that will need to be addressed on the fly. Around 70% of the bonds will be floated by water districts around the state, and those commitments haven’t been made yet.

Draft documents for the Bay Delta Conservation Plan were released earlier in the month by the DWR, kicking off a year-long public review process. The document was seven years in the making, but does not spell out how the financing would work.

What it does describe is an effort to save the Delta, which has been degraded for decades by human beings attempting to extract fresh water for transport to agricultural interests and thirsty Californians around the state by 2027. Levees at risk of failing would be rebuilt, river flows into the Delta would be reshaped, farmland would be reconfigured, endangered wildlife and plants would be better protected, and Delta communities would be transformed.

Yet, the Delta plan’s 34,000 pages are vague about a number of key elements and undecided about others, like exactly how much water would actually flow through the Delta, deferring some of the largest battles between agricultural interests, conservationists and thirsty Californians until later. Two wildly divergent proposals about flow won’t be decided until later.

The backdrop to the debate over the fate of the Delta is a brutal drought that has ravaged the state this year and the threat global warming poses. USA Today says climatologists are calling this the worst year ever for rainfall in California. Los Angeles, which averages 14.9 inches of rain a year, has received 3.6 inches. San Francisco has had its driest year since record-keeping started 150 years ago.

According to the U.S. Drought Monitor, 84.9% of the state is experiencing “severe drought.” State and federal lawmakers have been agitating for months for a gubernatorial/presidential emergency declaration of drought. An interagency task force has been formed to consider the proposal and, like the Delta plans for the future, are under intense consideration.

–Ken Broder    


To Learn More:

Delta Tunnels Plan's True Price Tag: As Much as $67 Billion (by Paul Rogers, San Jose Mercury News)

Driest Year Ever in Calif. Sparks Fire, Water Fears (by Doyle Rice, USA Today)

Delta Water Tunnel Plan Presents California with Tough Choices (by Matt Weiser, Sacramento Bee)

Federal Agencies Have Harsh Words for State’s $24.5 Billion Delta Tunnel Plan (by Ken Broder, AllGov California)

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