If a desalination facility is built in Dana Point, the South Coast Water District board wants the district to design, build and operate it.
Board members on Wednesday unanimously agreed with General Manager Andy Brunhart's recommendation that the district take ownership of a possible plant instead of partnering with a private company.
The vote quashed the possibility that South Coast, which serves 35,000 customers and 1,000 businesses in South Laguna, Dana Point, San Juan Capistrano and San Clemente, would partner with a private entity, such as Poseidon Water, which wants to build a desalination facility in Huntington Beach that could produce 50 million gallons of drinkable water per day.
Poseidon approached South Coast last year about a possible partnership.
The board did not vote on the amount of water it would want the facility to produce, nor has it approved the proposed Doheny Ocean Desalination Project.
Board members noted South Coast's current dependency on imported water as reason to look for other means of supplying water to customers.
The district imports 80% of its water from Northern California and the Colorado River. Brunhart said the water supply could be cut off if a large earthquake severed pipelines.
Wednesday's public meeting was the seventh meeting or workshop since April 2016 about the proposed project, which would use slant wells to extract water from underneath the ocean floor at Doheny State Beach.
The facility would sit on 30 acres of district-owned property near San Juan Creek.
The district has offered alternatives for a facility that produces 3, 5 and 15 million gallons of water per day. Brunhart has said that a plant producing 5 million gallons would satisfy the district's current needs.
"Let's roll up our sleeves and work hard to get to the point of hopefully having some takers of the water," board member Rick Erkeneff said.
Board member Bill Green expressed interest in a financial model that would combine district and private equity money to build the project, a scenario South Coast refers to as hybrid financing. South Coast could secure financing with a 30-year fixed state loan with a 2% interest rate if it owned the facility.
A South Coast-owned facility would yield lower water costs than a plant owned by a private company from which the district would purchase water. South Coast admitted it would assume greater risk if it owned the plant instead of a private entity.
For example, an average customer in tier 2 of the district's tiered-rate structure would pay $7.08 more per month on his or her current water bill with a facility that produces 5 million gallons per day under the hybrid financing model compared to the current imported water cost, according to district statistics.
Under a public-private partnership, the same customer would pay $22.09 more than the current charge for imported water.
Though Wednesday's discussion centered on desalination, board member Dennis Erdman urged his colleagues not to lose sight of other means of providing water to customers.
"For a long time I've advocated a portfolio approach, to make the recycled water program more robust, to look at indirect or direct potable reuse," Erdman said. "Desalination may be a part of that portfolio, if we get partners to participate."
South Coast was one of five agencies interested in desalination in 2005, when test drilling began at the mouth of San Juan Creek to gauge whether the area could support a below-ground intake system. Results affirmed that it could support a system.
But interest waned in the last handful of years as districts either boosted conservation or secured other sources of water such as groundwater.
The Doheny project caught the recent attention of the Santa Margarita Water District.
"I believe all water projects that bring new water to South [Orange] County are important," Santa Margarita Water District board member Saundra Jacobs told South Coast's board. "In January we will have our strategic planning workshop and put [desalination] back on the table for our board members to discuss. You ultimately need to do what is best for South Coast."
Brunhart will now seek proposals from legal firms who specialize in design-build-operate contracts. A draft environmental impact report is being prepared.