DWR discovers “accounting error,” reduces loan for Delta tunnel engineering design
In September 2020, the Department of Water Resources (DWR) signed an agreement to provide an additional $15 million to the Delta Conveyance Design and Construction Authority (DCA) for engineering design and field work in support of the Delta tunnel project. DWR had previously loaned the DCA $33.8 million, bringing the total to $48.8 million.
On September 17, 2020, Delta Legacy Communities, Inc. sent a formal objection to the $15 million loan to DWR and the Department of Finance. Delta Legacy Communities, Inc. asserted that DWR did not have sufficient legally available revenues in the State Water Resources Development System (SWRDS) accounts to pay for the loan. For each statute governing a SWRDS fund, Delta Legacy Communities explained how the statute restricted DWR’s use of the fund.
Delta Legacy Communities, Inc.’s Chair, Dan Whaley said, “DWR cannot take money dedicated to maintenance and repair of the existing State Water Project facilities and use it to pay for the Delta tunnel engineering.”
DWR is now planning to sign an agreement to reduce the loan to the DCA to $9.4 million, calling it an accounting error. “Hogwash,” says Whaley. “DWR was using State Water Resources Development System funds illegally.” DWR has also reportedly told the State Water Contractors that DWR will not fund the Delta tunnel planning and environmental review past December 31, 2020.
On October 15, 2020 Delta Legacy Communities, Inc. made additional objections to DWR’s $9.4 million loan to the DCA. The $9.4 million loan appears to come from funds appropriated by the legislature to pay for recreation and fish and wildlife enhancement costs for the existing State Water Project facilities. Under the 1961 Davis-Dolwig Act, DWR cannot charge the State Water Project contractors for costs allocated to recreation or fish and wildlife enhancement. DWR has allocated about 6% of State Water Project capital costs, and about 3% of operations costs to Davis-Dolwig purposes. In December 2005, 27 State Water Contractors contested charges for Davis-Dolwig costs. The claims are tolled until December 202. Because of the claims, DWR could not issue more revenue bonds until the ongoing Davis-Dolwig costs for the SWP facilities were covered.
“DWR still doesn’t have a legal source of funds for the $9.4 million loan,” said Whaley.
Related posts: Delta Legacy Communities objects to DWR’s $15 million loan for Delta tunnel engineering design