Developers Go to War Over Water Bill

Some people would say California’s image as a progressive, vanguard state has long been belied by its downright backward approach to local water planning. Build a city and the water, by hook or crook, will come.

Now a remarkable alliance of farmers, environmentalists and urban and rural water suppliers--people who in flush times could barely stand each other--is pushing forward with a heretical idea.

They propose that before a city can grow new houses and golf courses and fake lakes, it must identify the source and availability of water. And in the arena of competing water demands, it is the existing businesses and residences--not the new development--that come first.

This approach, which is standard practice east of the Mississippi, is a concession to a new California, a California with limits. And it challenges what this state has always held dear: That growth is an economic winner.

Under the banner “Water First,” a monumental bill that would force city planners to consider the water supply before approving new suburbs has been introduced in the Legislature. Once headed for sure defeat, it has somehow managed to hang on in the face of intense building industry opposition and lobbying.

But whether it passes or fails this year, supporters say, it has already begun to change the state’s outlook on growth and water.

“This is one of the most significant public policy issues that has hit the screen in years,” said Mary-Ann Warmerdam of the California Farm Bureau Federation, a supporter of the bill. “We may go down to defeat this round, but the idea is not going to go away. It makes too much sense.”

Opponents of the measure include some of the state’s most influential builders and developers, as well as the California Chamber of Commerce and the League of California Cities. They argue that AB 2673, sponsored by Assemblyman Dominic L. Cortese (D-San Jose), will cede local planning decisions to outside water districts with a hidden slow-growth agenda. They agree that water and growth should be tied but in a way that keeps zoning and general plan decisions solely inside City Hall.

“Should water and growth be linked? Yes,” said Dave Kilby of the California Chamber of Commerce. “But that’s different from giving all the cards to outside water agencies. This bill is simply a transfer of land-use authority.”

Even before the bill passed by one vote in the state Assembly in July and reached the Senate’s Agriculture and Water Resources Committee last week, both sides were calling it one of the most heavily lobbied measures in years.

It has placed many conservative lawmakers in a vise between agriculture and real estate development, two formidable forces that despite their seemingly contradictory goals usually manage to avoid colliding in public. The no-win situation is especially true for politicians from the state’s agricultural heartland, which happens to be both the richest farm belt and one of the fastest-growing regions in the country.

“I’ve been beaten on the head by both sides,” said Assemblywoman Margaret E. Snyder (D-Modesto), a strong supporter of agriculture who sat out the July vote in deference to developer interests. “It feels like a 1990s version of the old range wars.”

Whether testimony to sheer audacity or sheer ignorance, this state--where three-fourths of the population lives in desert or near-desert climes--has always slid by without a state law linking water and growth. Even when air pollution and traffic were added to the mix of problems local governments had to weigh before approving new growth, the issue of water was somehow untouchable.

But as the state’s population continues its dizzying climb and the great water projects become a relic of the boom years, a new reality has set in. California cannot meet its water demand. A state Department of Water Resources report warns of a 2.7-million-acre-feet shortfall during drought years--the amount needed to supply about 4.6 million homes. Something has to give.

“Water is a limited resource and yet the way we deal with it on a local level is completely arbitrary,” Cortese said. “We’re letting the heaviest hitters, the most influential wheeler-dealer developers, get what (they) want at the expense of everyone else--current residents and businesses, water districts, even the smaller developers.”

If California is to keep and attract major manufacturers, Cortese said, it needs a reliable water supply. He criticized opponents of the bill for treating drought as a temporary inconvenience. Even in wet years, he said, untrammeled growth imposes its own drought-like conditions.

“We’re dreaming in this state,” he said. “We’re dealing with illusion.”

The consequences, the bill’s proponents say, can be glimpsed everywhere:

* In El Dorado County near Sacramento, elected officials have approved entire subdivisions without adequate water. And studies show that it is no small deficit but a shortfall of 30,000 acre-feet--the amount used by 50,000 average-sized households.

* In an artificial lake community in northeast Fresno, built on a badly depleted aquifer laden with pesticides, residents complain that the water pressure is sometimes not enough to even rinse the shampoo from their hair.

* In Madera County just north of the San Joaquin River, the state has imposed severe water rationing in one large rural subdivision where the ground-water table has plummeted 10 feet a year over the past seven years. State water officials say the parched landscape is a prime example of “unwise growth and drought compounding each other.”

It was an attempt to avoid just such a situation that gave rise to the Cortese bill. In December, 1992, the Contra Costa County Board of Supervisors gave the green light to one of the state’s most influential developers, Beverly Hills-based Nathan Shapell, to build 11,000 homes in the picturesque Dougherty Valley.

One month later, the East Bay Municipal Utility District, which supplies water to Contra Costa and Alameda counties, filed suit against the development, saying that it did not have enough water to serve the proposed 30,000 residents. This past June, a Superior Court judge sided with the water district, voiding the county’s general plan amendment and effectively halting the project.

The controversy caught the eye of Assemblyman Cortese, a former local supervisor with a long interest in water matters. He met with Randele Kanouse, a legislative manager for the East Bay water district, who helped draft the measure.

The bill would add another level of oversight to local planning matters to ensure that powerful developers and their lobbyists do not force projects through without a serious consideration of the water consequences, proponents say. Before a city could amend its general plan, it would have to consult with an outside water district to determine the source and quantity of water to sustain that growth.

If the water district determined that the water supply was inadequate, the city or county could identify its own source of water and still approve the development. In the event there is no outside water district, the city or county that supplies its own water must make findings on the record in a public hearing that it has adequate water to serve growth.

“This bill promotes a genuine partnership between local planners and the water suppliers,” Kanouse said. “It promotes greater coordination and joint planning at the earliest stages of a planned development. It doesn’t take land-use decisions out of local hands. It doesn’t give water agencies a final say.”

Critics say it only creates more unnecessary hoops and loops. Local planners and elected officials already take into account water when approving new projects, they say. The bill would simply provide more fodder for more legal challenges by environmental and slow-growth groups.

“This is a slow-growth bill masquerading as a water bill,” said Richard Lyon of the California Building Industry Assn. “It adds more process, more complexity, more delay and more uncertainty to economic development. And it’s that development that we need to pull us out of the recession.”

The notion that growth is good for the local economy is deeply ingrained in the California psyche. But there is growing evidence, particularly in the Central Valley, where prime farmland is giving way to inexpensive houses and strip malls, that growth is neither environmentally sound nor fiscally wise.

Perhaps there is no better illustration of this than Fresno, one of the nation’s fastest-growing big cities, which has nearly doubled its girth and population since 1980.

In that time, according to budget figures, yearly revenues attributable to new development have risen $56 million, while the yearly cost of servicing the growth has gone up $123 million. And this does not include huge capital expenditures such as new sewer and water treatment, which is only partially offset by developer and user fees.

Fresno, critics say, is growing itself into bankruptcy, and it is not alone.

“If all this growth is supposed to create all this wonderful economy, then why are general fund coffers being depleted year after year?” said Fresno City Councilman Michael Erin Woody, one of the few local officials questioning the wisdom of growth.

“Cheap houses on the fringe serviced by a Wal-Mart and Kmart and McDonald’s isn’t paying for itself.”

This same sentiment has colored the debate on the Cortese bill. Why expend such a precious resource as water on development that is taking more out of a community than it is bringing in?

Even Gov. Pete Wilson’s own staff has punched a hole in the belief that cheap houses on a city’s fringe attract sufficient commerce and industry to offset the high infrastructure costs of suburban sprawl.

“When you continue to put subdivisions out where nothing exists and you have to run police and fire out to the boonies . . . it’s not efficient development,” said Carol Whiteside, director of intergovernmental affairs for Wilson.

And yet the governor’s much-anticipated Growth Management Council has been inactive since issuing a January, 1993, report that tried hard to reconcile the differences between developer and slow-growth interests. It tried so hard, critics say, that it ended up advocating precious little. Indeed, it even shied away from the words “growth management,” preferring the term “strategic growth.” Administration-backed legislation that discouraged sprawl went nowhere.

“It’s tough doing growth management in a recession,” Whiteside conceded.

The Cortese bill faces the same uphill fight. Arrayed against it is a host of state senators who have benefited over the years from the deep pockets of developer Shapell and others. Shapell alone has contributed more than $487,000 to California politicians during the past decade, according to state records compiled by environmental groups.

“It’s going to be tough to pass this bill in an election year when a lot of legislators are concerned about annoying a constituency as powerful as the building industry,” said Michael Paparian, a lobbyist for the Sierra Club.

“But even if it doesn’t pass this year, the legislation has helped build a trust between those in agriculture and those representing the environment. For that to happen on a water bill is quite remarkable.”

Even its foes predict that the Cortese bill will live on in one form or another. “In a kind of bizarre way, it does create pressure to engage the debate on long-term water supply,” said Lyon, the building industry lobbyist. “The cat is out of the bag.”