West Sacramento is Now Open to a 19 Million Dollar Water Offer

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Mayor Krovoza Continues to Downplay the Possibility of a West Sacramento Water Deal – Last week as the Vanguard reported, even in the midst of its article where Mayor Joe Krovoza closed the door to the West Sacramento option, his colleague, Councilmember Brett Lee, thinks it is too soon to close the door completely.

Brett Lee went about proving it up – meeting with West Sacramento on Thursday, along with Mayor Krovoza, and emerging with a new offer as he reported to the WAC on Thursday night.

While a foot may be stuck in the door, the deal is still on life support, at best.

Last week we reported that there were two critical points that appear to be in dispute.

First, Davis asked for “A one-time purchase of the capital investment (connection fee) needed to permanently secure 12 MGD of capacity in West Sacramento’s existing surface water treatment plant at Bryte Bend [BBWTP] on the Sacramento River, not to exceed $6 Million.”

Second, with regard to the length of the contract, the city asked for: “A long term contract of at least 30 years with an automatically renewable term of 30 years. Renewals will not be unreasonably withheld. Termination must be with 10 years notice. Any determination by West Sacramento not to renew would require West Sacramento to re-purchase the capacity in the plant at the then current value.”

However, West Sacramento could not agree to these terms.

In a response on September 24 from Mr. Tuttle, he wrote: “Based on West Sacramento’s growth projections, we would be able to commit to a term of approximately 20 years (2032), unless and until additional capacity is added at the BBWTP.”

He added, “Without supporting analysis, your connection fee proposal falls short of that needed to advance the negotiations between our two cities. According to the analysis performed by our consultant, the connection fee required would be $12.66 million or $19.4 million, as outlined in the attached staff proposal.”

However, while the WAC was looking at a price not to exceed $6 million, West Sacramento would not go below $19 million for a connection fee for 12 mgd.

“Discussions this week with West Sacramento did bring forth that there is a price at which they would consider a long-term water agreement with Davis,” Mayor Joe Krovoza told the Vanguard in a statement on Friday.

“This price is $19.4 million for Davis to buy-in to use of West Sac’s water treatment plant and intake, plus a to-be-determined Davis investment when their intake requires expansion,” he added.

“For a variety of reasons, the WAC sought a buy-in cost of $6 million from West Sac.  Per the process established, this development has been communicated to the WAC and they will factor this into their consideration of our options,” Mayor Krovoza said.

As Mayor Joe Krovoza explained to the Vanguard, at that cost, we are looking at a pretty similar expense to the Woodland option, where the water quality is higher and we would have much more control over the parameters.

Unlike the last offer, West Sacramento, at the higher connection fee, is willing to meet Davis’ request for a 30-year deal with an option to renew.

Overall, the view has not changed for the mayor.  The connection fee difference of $13 million cuts heavily into any benefit on the fiscal side that a West Sacramento deal would present to the city.

As the mayor told the Vanguard previously, at the level that West Sacramento is proposing, the difference in costs between the Woodland and West Sacramento options would not be sufficient to make it worth the other downsides of the West Sacramento option.

The staff report summarizes this state of affairs: “West Sacramento desires to preserve their assets without discounting their value and therefore did not agree to the two main deal points requested by the Davis WAC: 1) a reduced connection fee of $6 million; and 2) an initial 30-year contract term.”

The only thing that has now changed is that apparently West Sacramento is willing to enter into a longer term agreement if they are to secure the higher connection fee rate.

As a customer rather than a partner, the city of Davis would have virtually no say over the matter.

At the meeting, Councilmember Brett Lee told the WAC that these would be the final talks between Davis and West Sacramento until the city has decided definitively which way to go.

“West Sacramento has built a water supply project they plan to use, and accommodating the future water needs of a larger community like Davis with the cost and duration needs we would require was simply too great a challenge,” Mayor Krovoza told the Vanguard.   “Many may hope the situation were different, but it isn’t.”

In the meantime, Woodland continues to play hardball, as well.

The staff reports that on August 31, 2012 Davis’s delegation of Dan Wolk and Rochelle Swanson met with Woodland Councilmembers Bill Marble and Skip Davies to “determine a basis for renegotiation of the allocations within the Woodland Davis Clean Water Agency Joint Powers Agreement (JPA).”

“There are multiple avenues to formulate an equitable solution and ample room for consideration of altering that allocation,” staff reports. “But Woodland will not discuss cost share of the treated water pipelines and will only entertain those negotiations within the confines of the JPA. Too much of a change in the allocation might also require a change in the voting allocation or weighting.”

Woodland indicated that it “wants to be viewed by Davis as a partner, not to be used as a bargaining chip in negotiations with the City of West Sacramento.”

Moreover, “Woodland need the source of surface water supply, regardless of what Davis decides, and intends to go forward with the intake and treatment plant project with or without Davis.”

Finally, “When Davis decides what it wants, they need to approach Woodland as a member of the JPA.”

Woodland has indeed been playing hardball, which included the op-ed by Councilmembers Marble and Davies in the Davis Enterprise.

Woodland needs to understand first that the city of Davis pushed forward the water project under previous councils that went further than the voters were willing to go.  And that, as of right now, it is very much in the air whether a JPA with Woodland could get a majority vote.

For his part, the mayor remains hopeful that, with Woodland, issues can be resolved.

“With Woodland, the city’s leaders have committed to discussions on issues of great importance to Davis and for this we are grateful,” the mayor told the Vanguard.  “The issues the WAC has identified for our Council to resolve with Woodland are of great importance; I have every expectation Woodland will work with us to resolve them.  “

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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16 thoughts on “West Sacramento is Now Open to a 19 Million Dollar Water Offer”

  1. Matt Rexroad

    David — you keep up this line of “Woodland needs to understand first that the city of Davis pushed forward the water project under previous councils that went further than the voters were willing to go.”

    So how would you propose potential regional partners do anything with the City of Davis that lasts beyond the next election? Are we supposed to decide at regional meetings to ignore Sue Greenwald because we predict that at the next election she will be voted out of office? Shall we just take polls on a regular basis and ignore the elected leaders of your city?

    Come on.

    Your duly elected Davis City Council took action. Woodland is not to blame for that.

    I would offer instead —

    The people of Davis need to understand that the City of Davis jointly entered into an agreement with the City of Woodland, Continued erratic behavior by Davis makes it less and less likely that anyone would want to partner with you in the future.

    At this point I am tired of the stupid drama. Make a decision and let’s get on with it.

    Matt Rexroad
    662-5184

  2. DT Businessman

    From the perspective of someone that regularly negotiates agreements, telling your negotating counter-party “you need to understand” is an arrogant, losing strategy, that does nothing but generate ill will. Furthermore, Woodland doesn’t need to understand anything further. They have an agreement and appear to have the wherewithall to go it alone in the event of a breach. Finally, as Max points out, they appear to have a pretty good understanding of their Davis counterparts.

    -Michael Bisch

  3. rdcanning

    I guess I agree with other commenters that the tone of many of the statements of some Davisites and this blog is arrogant and entitled. Water is not Davis’ problem alone. The notion that the City of Davis can simply do what it wants without regard to other communities and regional water supply needs is the height of arrogance and snobbishness. Davis needs to get off it’s high horse and play nice with our neighbors.

  4. davisite2

    “As a customer rather than a partner, the city of Davis would have virtually no say over the matter.”

    ‘no say”? That’s what contracts are all about.

    “West Sacramento options would not be sufficient to make it worth the other downsides of the West Sacramento option.”

    How about the “upsides”. Davis would indeed have more control as WPA decisions would not be controlled by Woodland and UCD members. We would be able to reduce the cost by taking advantage of the fact that if we buy less West Sac water, we pay less.This could very well begin to help offset cost of starting a plan to use non-potable water in a dual water delivery system. Municipal rather than private corporations markedly reduce the influence of corporate money on any public over-site process of a privately owned water system. Politically ambitious politicians, their personal over-site appointees and private consultants for-hire can readily “corrupt” the over-site process.

  5. davisite2

    I tend to agree that nothing has really changed as long as Davis capitulates to Woodland’s “deadline”. Woodland can avoid any additional penalties,if it chooses to do so, while it waits for Davis’ decision. Brett’s arbitrary public cut off of any further negotiations with West Sac appears to represent that capitulation mind-set. The political narrative still suggests that the Davis voters will have to reject this first Council-generated ballot measure for Council and staff to be forced to move on and continue seeking a workable West Sac plan. Woodland will wait to see the West Sac-Davis outcome because it is in their best interest to do so.

  6. hpierce

    [quote]At this point I am tired of the stupid drama. Make a decision and let’s get on with it. [/quote]As another frequent contributor might say, “spot on”. Fish or cut bait. Personally, am pleased with the JPA agreements as currently constituted. Will not “love” the rate increases that will be necessary to fund the improvements, but favor the direction of where we have been going, rather than the West Sac or ‘do nothing’ options.

  7. Matt Williams

    davisite2 said . . .

    “Woodland can avoid any additional penalties,if it chooses to do so, while it waits for Davis’ decision.”

    davisite, you have made this statement a number of times in the past. Out of curiosity, just how do you propose that Woodland avoid any additional penalties?

  8. Steve Hayes

    “….Woodland needs to understand first that the city of Davis pushed forward the water project under previous councils that went further than the voters were willing to go.”….

    Especially when the Davis City Council sprang it’s “Christmas Coup*” in December of 2010.
    __________
    *The Davis City Council approved the Project the week before Christmas when everyone was busy, unaware, or away! Those approving the Project (Sousa, Saylor, Krovoza, and Swanson) did not provide any explanation why the critically needed Project water right offer was available from the developer ONLY in December of 2010. Finally, December 2010 was also the last month that Councilman Saylor (the third assured vote for the Project) was available. Mr. Saylor became a Yolo County Supervisor in January of 2011.

  9. hpierce

    [quote]Especially when the Davis City Council sprang it’s “Christmas Coup*” in December of 2010. [/quote]Asolutely… and the destruction of the twin towers was a conspiracy directed by “the shrub”.

  10. davisite2

    The negotiations with Woodland and West Sac have not really yet begun. They will begin in earnest when the Davis voters reject the Council March ballot measure asking for JPA surface water project approval. It is interesting that the West Sac offer of 12-19 million dollar connection fee pencils out to close but less than the current JPA plan. Has a genuine counter offer been made by Davis or are we standing pat with the $ 6 million dollar offer?
    The “deadline” is an attempt to cause the complex process of offer/counter offer to run out of time. IMO, Woodland will drop its demand to have Davis “commit” to the JPA plan before negotiating changes when the Davis voters reject the Council’s March ballot measure. We will no doubt then see Woodland and West Sac making counter offers. This is reason enough to vote no on the March ballot measure to approve the JPA/Woodland plan now.

  11. medwoman

    [quote]The people of Davis need to understand that the City of Davis jointly entered into an agreement with the City of Woodland, Continued erratic behavior by Davis makes it less and less likely that anyone would want to partner with you in the future.[/quote]

    I frequently find myself on the opposite side of issues from Max Rexroad. I think that he has this one right.
    As a city, we made an agreement with Woodland. We appear to be in the process of at least flirting with yet another city to see if we can finagle a better deal for ourselves. Hardly a trust worthy stand. From Woodland’s point of view, it does not matter why we are being inconsistent, it only matters that we are. I also do not see what there is for Woodland to understand. I think they fully understand that we are proving an unreliable partner. What else is there that would be beneficial [b]to them[/b] to understand ?

  12. Matt Williams

    davisite2 said . . .

    [i]”The negotiations with Woodland and West Sac have not really yet begun. They will begin in earnest when the Davis voters reject the Council March ballot measure asking for JPA surface water project approval. [b]It is interesting that the West Sac offer of 12-19 million dollar connection fee pencils out to close but less than the current JPA plan. [/b]Has a genuine counter offer been made by Davis or are we standing pat with the $6 million dollar offer? “[/i]

    davisite, lets look at the stream of events . . .

    1) an independent engineering consultant Carollo Engineers evaluated the current West Sac plant, and in a package of costs recommended a $12.56 million connection fee as fair and equitable.

    2) the WAC (myself included) using a recent trio of contract renewals in Portland Oregon as precedent voted unanimously to recommend a $6 million connection fee counter offer to West Sac for a 30 year term with a 30 year renewal. .

    3) West Sac revisited its own numbers and counter offered with a $12.66 million required connection fee for service only until 2032, with Davis also being responsible for funding the capital costs of adding 12 mgd to the West Sacramento plant at a future date. They also provided a $19.4 million connection fee counter offer for service as a permanent water customer, with West Sac being responsible for funding the capital costs of adding 12 mgd to the West Sacramento plant at a future date.

    4) Brett Lee worked hard, and in earnest, and successfully to set up another meeting with West Sac to try and discuss the $6.66 or $13.4 gulf between Davis’ offer and West Sac’s counter offers.

    5) Mayor Cabaldon formally stated that it was the WAC not City Council who was responsible for his belief that Davis wasn’t serious about West Sac.

    6) The meeting took place and West Sac stood firm on irs “pro-rata share replacement value” financial calculations of $12.66 and $19.4 million, but agreed to translate those numbers into per mgd amounts in case Davis needed less than 12 mgd. It is hard to imagine that that most recent counter offer came unilaterally out of the blue from West Sac. It almost surely came after a back and forth offer/counteroffer exchange.

    All of the above appears to be quite genuine.

    The “deadline” is an attempt to cause the complex process of offer/counter offer to run out of time. IMO, Woodland will drop its demand to have Davis “commit” to the JPA plan before negotiating changes when the Davis voters reject the Council’s March ballot measure. We will no doubt then see Woodland and West Sac making counter offers. This is reason enough to vote no on the March ballot measure to approve the JPA/Woodland plan now.[/i]

  13. DT Businessman

    “The negotiations with Woodland and West Sac have not really yet begun. They will begin in earnest when the Davis voters reject the Council March ballot measure asking for JPA surface water project approval.” -davisite2

    Again, purely from a negotiations perspective, my recommendation to my client (Woodland), at that point, would be to terminate contact with Davis altogether regarding the surface water project and unwind the JPA (assuming that’s possible). All to often there comes a time in negotiations where the counter party has shown such bad faith that continuing with a long term contractual relationship is simply untenable. As much as they may wish to avoid going it alone, Davis will have forced their hand.

    -Michael Bisch

  14. Steve Hayes

    hpierce10/13/12 – 11:48 AM…

    “Especially when the Davis City Council sprang it’s “Christmas Coup*” in December of 2010…” (Comment by Steve Hayes)

    “Absolutely… and the destruction of the twin towers was a conspiracy directed by “the shrub”. (Comment by hpierce)

    The Davis Vanguard capably and extensively covered the rushed Water Project approval process (what I have called the Christmas Coup)back in late 2010 and early 2011. David’s article titled “What’s the rush!” (among others) was particularly illustrative concerning this problem.

    Past Vanguard coverage of your irrelevant comment (and its relation to the WAC approval process)appears to be lacking.

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