Santa Margarita Dam Backers Ponder Private Financing : Long Delays Spur Search for Ways to Pay for Construction

It was way back in 1924 when farmers and other folks in these parts first proposed building a dam on the Santa Margarita River. But try as they might, the darn thing just never got built.

In the decades since the idea found favor in Fallbrook, legal snafus, troubles with government financing and opposition from environmentalists have conspired to keep the Santa Margarita flowing free.

Again and again, the dam came close to getting built, even winning approval in the U.S. Senate in 1983. But each time something went awry.

The dam has remained a dream.

Now dam enthusiasts think they’ve found a way to get the dam built. Frustrated by the bureaucratic logjam in Washington, leaders of the Fallbrook Public Utility District have begun to consider financing the structure on their own.

Under their plan, a $45-million dam would be paid for with revenue from the sale of bonds or by private investors who would receive tax breaks for assisting with the project. The district has commissioned a $15,000 study of the prospects for building the dam themselves and plan to decide this summer whether to proceed.

With the costs of imported water expected to double within the next decade, Fallbrook Public Utility District officials contend that the structure is needed to give Fallbrook a local source of water. And they are tired of waiting for the federal government to act.

“Let’s be realistic,” said Gordon Tinker, general manager of the utility district. “With what’s going on in Congress right now, with pressures to cut the federal budget deficit, the chance of getting water projects through is very, very slim.”

On the other hand, a privately financed dam is a project “with a lot of merit” and significant support in the Fallbrook area, Tinker and other utility district officials say.

“There are very few people in the community who would argue against building the dam,” said Charley Wolk, president of the utility district’s board of directors. “And given today’s financial market, the idea of private financing is very attractive.”

Despite such enthusiasm, formidable obstacles remain, among them concerns that the dam would displace a tiny songbird and block the flow of sand to coastal beaches, as well as doubts about the effects of pending changes in the nation’s tax system on the private financing scheme.

In addition, the Fallbrook Public Utility District must win the cooperation of the Marine Corps, which is entitled by contract to a portion of the river water for nearby Camp Pendleton. If the dam is to be built, the agreement would have to be renegotiated, a process that could prove thorny.

Perhaps the dam’s most fearsome opponent is the least Bell’s vireo, a bird recently placed on the federal government’s endangered species list. The bird, which nests in the dense thickets along the Santa Margarita River and other county waterways, threatens to block numerous Southern California public works projects that would invade its habitat.

In addition to concerns about the vireo, environmentalists worry that the nearly five-mile-long reservoir created by the dam would uproot numerous animals--including bobcats, mountain lions and raccoons--and inundate long stretches of willow and oak trees that serve as increasingly rare nesting grounds for other species of birds.

“It’s a very, very rich resource,” said Evelyn Ashton, chairwoman of Friends of the Santa Margarita River, a 200-member environmentalist group. “From my viewpoint, the environmental aspects of it are valuable. But someone from a utility district that wants to build a dam on the river probably thinks the other aspects are more valuable.”

District officials say they will compensate for land lost to the reservoir by creating nearly 800 acres of similar habitat on nearby Camp Pendleton.

“We feel we’re responding to the concerns expressed by the environmentalists,” Tinker said.

When the dam was proposed 62 years ago, such environmental concerns were still decades away. To the farmers struggling to grow avocados and citrus crops in fields nestled amid Fallbrook’s rolling landscape, the dam was seen as necessary to push the agriculture business forward.

Those early plans were blocked, however, by a lawsuit between the owners of two massive ranches on either side of Fallbrook, Vail Ranch to the east and Santa Margarita Ranch to the west. The lawsuit wound on for years, until the Santa Margarita Ranch was purchased in 1940 by the federal government and the Camp Pendleton Marine Corps base was established.

After World War II, Fallbrook utility officials applied to the state for permits to begin drawing water from the Santa Margarita, a move that triggered Marine Corps interest. By 1949, Fallbrook and the corps had negotiated an agreement divvying up the water between the base and the community.

That contract, however, was never signed by the Navy, and in 1951, the U.S. attorney general’s office filed a lawsuit charging that Fallbrook was interfering with the base’s water rights.

Congress attempted to resolve the legal battle in 1954 by authorizing construction of a dam on Camp Pendleton, but they never appropriated money for the project and the court challenge persisted.

In an effort to skirt the lawsuit, Fallbrook officials in the mid-1950s began buying the 1,570 acres of rugged canyon land along the Santa Margarita River for the dam and reservoir. Once that was completed, the utility district in 1961 asked federal officials to loan money for the dam but was turned down.

Finally, in 1968, the lawsuit was settled, with a federal judge alloting 60% of the water to Camp Pendleton and the balance to the Fallbrook utility district. Soon afterward, federal officials started studying the project, eventually proposing that two earthen dams be built, one on the stretch of river owned by the utility district two miles north of Fallbrook, the other in the DeLuz Canyon area of Camp Pendleton.

The project appeared to be on its way--but in 1969, Congress passed the National Environmental Protection Act, a far-reaching bill that set up strict mitigation requirements for public works projects such as the two dams planned for the Santa Margarita.

As one of the first large federal projects to be reviewed, the dual dams were in the environmental spotlight and years went by as federal regulators conducted a tedious examination.

In 1976, President Jimmy Carter decided to reestablish the long-dormant Water Resources Council to review all federal water projects, but Congress refused to fund the agency. The stalemate created a bottleneck that once again snagged the Santa Margarita dams.

Meanwhile, military officials at Camp Pendleton had grown increasingly concerned about flood control. Heavy rains in 1978 and 1980 resulted in extensive flooding of base facilities along the Santa Margarita.

It was a problem corps officials realized could be controlled by construction of the dams. Worries about the potential for flooding, coupled with concerns about the base’s dwindling water supply, prompted renewed interest in the dams among corps officials.

Pushed by former U.S. Rep. Clair Burgener, Congress in 1982 agreed to pay for studies on the Santa Margarita project. Rep. Ron Packard (R-Carlsbad), who replaced the retiring Burgener that same year, took over where his predecessor had left off, avidly pushing for the dams.

After the Senate approved construction of the dams on a voice vote in 1983, the project ran into tough opposition in the House, in particular from Rep. Jim Bates (D-San Diego). Calling it an “expensive, unneeded boondoggle,” Bates attacked the $230-million project as being an example of “the worst kind of agricultural subsidy” and raised the specter that the dams were being planned to help accommodate increased development. The congressman helped scrap the project once again.

Given such a legacy, it is understandable that Fallbrook utility officials seem ready to turn their backs on the federal government. Indeed, even Packard, the project’s biggest supporter in Congress, agrees that the town would probably have more luck building a dam themselves.

“I think they came to the realization--and it’s probably correct--that it won’t get done with federal funding,” Packard said. “They would be able to avoid a lot of the red tape and paper work and funding delays and problems. It’s certainly a good idea, if they can come up with the means to do it.”

That’s a sizable if.

Although preliminary studies show that the Fallbrook Public Utility District could build a single dam using private financing, critics such as Ashton wonder aloud whether the district’s nearly 6,000 customers would have to foot “a pretty astronomical bill” for the water they use each day.

Nonetheless, Fallbrook utility officials insist the project will likely prove affordable. Particularly encouraging, he said, is a program offered by the Metropolitan Water District that provides partial subsidies to Southern California districts that develop independent sources of water.

As now envisioned, the utility district could either sell revenue or industrial development bonds or use the attraction of tax write-offs to persuade private investors to put up money for the project. With changes in the nation’s tax laws looming, however, those benefits may dwindle.

Wolk and other officials, however, remain optimistic that the tax changes will not sink Fallbrook’s plans. “I still feel the project will be do-able with non-federal money,” Wolk said.

But there are other obstacles as well.

Officials in Oceanside and Del Mar opposed the project in 1983 because of concerns that the dams would block the flow of sand onto their beaches. According to oceanographers, riverbeds are an important source of beach sand, which is becoming an increasingly rare commodity on the North County shoreline.

Tinker notes that an April report commissioned by the Fallbrook Public Utility District found that building the dam would have little effect on sand transported by the Santa Margarita River.

Wolk is more blunt, maintaining that Oceanside officials first voiced concerns about the sand issue in 1983 merely to punish Marine Corps leaders who they believed helped block the city’s effort to annex Camp Pendleton. Oceanside officials have denied that charge.

“The sand issue was nothing more, in my opinion, than a political red herring,” Wolk said.

The proposed dam, a 200-foot-high structure planned for a river canyon north of Fallbrook, would have a capacity of 35,000 acre feet of water with room for another 15,000 acre feet for flood control. It would yield nearly 12,000 acre feet of water each year, which would be divided between the base and the utility district. (One acre foot of water is 326,000 gallons or about the amount of water used by the average family each year.)

Some critics say they are wary of the dam because it could increase Fallbrook’s water capacity, paving the way for residential growth. Moreover, they charge that the reservoir would become a prime spot for land speculators with visions of creating a lakeside paradise.

Tinker, however, disputes such claims, saying the dam has “absolutely nothing” to do with development. The amount of water yielded by the project would be about equal to what the utility district now imports, he said. Tinker stressed that the utility district has no plans to sell land near the reservoir because district officials must control access to the shoreline to protect water quality.

“It’s just another one of these emotional issues people keep throwing out on the table,” Tinker said.

Wolk agreed, insisting that the dam’s harshest critics--on both the environmental and economic fronts--are not residents of the Fallbrook area.

“As far as I’m concerned, it’s really none of their damn business,” Wolk said. “They don’t pay the rates. And as long as we’re paying the tab, the decision on this dam is for the people of this community.”