Raining on Water Importer’s Parade : Drought: The latest series of storms may have doused chances that a Santa Barbara firm will get a large contract to import water from Canada.
Mother Nature and the environment minister of British Columbia are enough to make Jack B. Lindsey sweat.
Lindsey is chairman of Sun Belt Water Inc., a Santa Barbara company formed eight months ago to bring water from rain-soaked British Columbia to the parched Central Coast. But when the Goleta Water District chose Sun Belt last week to ship water south by tanker, it was the beginning of the firm’s troubles, not the end.
For starters, in the week that has passed since the water district vote, enough rain has fallen to make district officials wonder if they need to spend an estimated $100 million on an emergency tankering program after all. Local reservoirs are rising, and more rain is in the forecast.
“This may have been the equivalent of a $100-million storm,” said Patrick Mylod, vice president of the Goleta Water Board. “If there is enough water, the desire (to ship by tanker) will be diminished. Still, we don’t want to be seduced by the rain.”
On Wednesday, British Columbia’s environment minister announced that the province will issue no more licenses for the bulk export of water until at least July, when such exports can be thoroughly reviewed.
Sun Belt is now licensed to ship 200 acre feet of water each year from British Columbia through its Canadian subsidiary, Snowcap Water Ltd. The Goleta Water District wants about 7,500 acre feet for its own customers and to share with nearby Montecito. One acre foot is equal to about 326,000 gallons of water.
If it leads to lengthy delays in issuing water export licenses, the Canadian province’s announcement could mean that Sun Belt will be unable to fill Goleta’s needs. That would be true even if the water district authorizes a contract with the company, an action that is scheduled for Monday night but could now be delayed.
Lindsey, however, remains confident.
“Snowcap has not asked for a new license, but an amendment to an existing license,” Lindsey said. “It seems to us that they have not been included in the (license) freeze. We have asked for a clarification.”
It is not an auspicious start for a company that considers its negotiations with Goleta possibly the start of a whole new industry. But then, the whole tankering process in this town north of Santa Barbara has been confusing at best.
When the Goleta Water District selected a company last Friday with which to negotiate a tanker deal, its needs were great and its options were small. Lake Cachuma was going dry and a $52-million agriculture industry was on the brink of death if water could not be found within the year.
Four companies submitted proposals to ship water by tanker to the district. Three of those firms--including Sun Belt--were created just for such a job; they are so young they have no background to check. For all four, the Goleta emergency water contract would be the major company asset.
In the words of Richard L. Jiminez, the district’s outside auditor: “In my opinion, none of these organizations have a strong or substantial financial history to support this project by themselves.”
When the water board chose Sun Belt after an acrimonious, six-hour meeting, it turned its back on three British Columbian companies in the process--including the firm that a Goleta advisory committee picked unanimously as the best choice to bring water in from the North.
The board spurned Western Canada Water, the advisory committee’s favorite. Western Canada bottles Canadian Glacier water, the No. 2 imported non-sparkling water in Southern California. Perhaps more important, the firm is already licensed to ship 43,000 acre feet of water annually--licenses it initially sought for its bottled water business.
Such permits are the key to importing water from British Columbia.
“Sun Belt has yet to produce (an adequate) water permit,” said Mylod, the water board vice president, who nonetheless hesitantly supported the firm during last week’s vote. “So we are very reluctant to spend any significant amount of money in order to secure a contract when the permit has yet to exist.”
In the final analysis, it was Sun Belt’s Santa Barbara address--and the belief that a California company was best able to cope with California concerns and local bureaucrats--that probably turned the tide.
“We need to address local permits,” said board President Katy Crawford before the unanimous vote. The complicated tankering project “could fail on this end just as easily as it could in Canada.”
To Mylod, a company has two assets to offer the Goleta Water District in its search for relief from the drought: water and expertise. “So far,” he said, “no one’s shown me enough expertise to convince me to spend $100 million.”
Lindsey--and Bank of America--disagree.
The Sun Belt proposal calls for $23 million in total project costs, money that will cover construction of facilities for loading and unloading water. Bank of America has agreed to finance all but $2.3 million to $4.6 million of that amount. Lindsey, Sun Belt President Richard P. Schuller and other investors will cover that increment.
“I guarantee you they won’t have any trouble getting (the money),” said Les Stephens, vice president of Bank of America’s project finance group. “There are people coming out of the woodwork wanting to put money into the project. We could be seeing the birth of a brand new industry, a very significant industry in California.”
THE SUN BELT TEAM
Sun Belt Water Inc. of Santa Barbara plans to bring water to the Goleta Water District with the help of the following people and firms:
* Jack B. Lindsey, chairman, was a legislative aide to Ronald Reagan in Reagan’s first term as California governor. He is a founder of food company Early California Industries and served as chief executive of Sun Harbor Industries, a San Diego tuna company and part of the C. Arnholt Smith empire.
* Snowcap Water Ltd. of Canada is the water and permit source. The company will be an equity owner in the tankering operation along with Sun Belt and Bank of America.
* Bank of America will provide financial advice and funding.
* IMODCO Inc., a Calabasas engineering-design company, will construct the loading and unloading facilities.
* Western Marine Agencies of Long Beach will do the actual tankering. The firm is the owner-operator of 55 ships.
* Legal counsel in the area of governmental affairs will be provided by former Gov. George Deukmejian, who has been hired as consultant.
HERE’S THE PLAN
If tankering does occur, water would be loaded onto supertankers in British Columbia, shipped down to Goleta, where it would be offloaded at an as-yet unspecified spot. Plans are to offload the water into a pipeline for direction into the Goleta water system. From there, it would be distributed to customers through normal channels.