SPECIAL REPORT * Amid what some call the MWD’s unfair method of choosing directors and its prolonged war with San Diego over aqueduct use, the ...Thirst to Overhaul Powerful Water Agency Grows Stronger

Dismayed by the Metropolitan Water District’s conduct in its long-running dispute with San Diego County, and worried that the agency’s form no longer matches its function, some state legislators are seeking to remake the region’s largest water wholesaler.

Three bills in Sacramento call for new approaches to governing the Los Angeles-based agency that, in importing water for 16 million people in six counties, has been the biggest enabler of Southern California’s growth.

State Sen. Ruben S. Ayala (D-Chino) has a bill that he hopes is headed for a conference committee, where various new governance schemes would be discussed.

State Sen. Tom Hayden (D-Los Angeles) has a bill that has passed the Senate that calls for the MWD to place greater emphasis on conservation and to develop a code of ethics for its officials.

Assemblyman Bruce Thompson (R-Temecula) has a bill that has passed the Assembly calling for appointment of a commission to evaluate a slew of competing proposals for new governance schemes. These range from replacing the 51-member board of directors, appointed by 27 member agencies, with an elected panel or a much smaller group of appointed engineers and accountants.

“The whole world seems to agree that the MWD board needs revamping, but the question is how to do it,” concluded the staff of the Senate Local Government Committee.

Even the MWD itself, in hopes of avoiding more dramatic change, last week proposed reducing the size of its board to 38 members in the name of efficiency.

The reform efforts come as the agency’s dispute with San Diego appears headed as early as this week for a resolution that could usher in a new era for water distribution in Southern California. With no more major rivers to dam, efforts to get more water for urban areas are focusing on redistributing some of the 80% of the state’s water that goes to agriculture.

“The only way to bring in more water is to buy off the farmers,” said William Fulton, editor of the California Planning & Development Report and author of “The Reluctant Metropolis: The Politics of Urban Growth in Los Angeles.”

San Diego wants to buy water directly from Imperial Valley farming interests but needs to use the MWD’s aqueducts, pipelines and pumps to deliver it. The MWD says San Diego should pay for the use. And so it is the price of that access--the very expense of building and maintaining a water delivery system--that is at the heart of the dispute.

If San Diego succeeds in bringing in water from Imperial County’s farmers, Fulton suggests that other MWD member agencies will be tempted to follow suit and strike out on their own to acquire supplemental water supplies. This would make obtaining water less a cooperative venture and more of “a zero-sum game. You win, I lose,” he said.

Because of that, Fulton said, he expects that the MWD, or the Met, will be significantly restructured in the next few years. “I don’t know how . . . but clearly the Met’s reason for being has changed,” Fulton said. “It’s like Russia. The Met’s got to move from being an empire to a confederation.”

MWD Director Phil Pace, who heads its communications and legislation committee, commented: “The Met had been in favor of water transfers because we need to generate more water and the only way we can generate it is by doing transfers [and arranging to move and store the water for dry years]. Those are all things the Met is working on, and I think we’ve done a great job.”

Within the MWD, however, the agency’s prime mission is unclear, said Dennis O’Connor, assistant director of the nonpartisan California Research Bureau, which provides facts to the Legislature and has been assigned to study the MWD governance question.

“When you talk to different board members, they largely all use similar language,” O’Connor said. “They say [the MWD is] a supplemental water supplier. . . . But some mean it is the sole supplemental supplier [with] a monopoly on that market” and that goes to the heart of its San Diego dispute.

Poisonous Atmosphere

San Diego started its independent effort to buy water from farmers during the last drought. As the MWD’s biggest customer, its officials became uncomfortable relying for water on an agency whose board is dominated by Los Angeles and Orange County interests. So they tried to make arrangements with Imperial County for their own supplemental supply.

But the MWD stood in the way, claiming that San Diego--a latecomer to the MWD that some say has never paid its full share of the agency’s capital costs--was compounding past sins by not being willing to pay the full cost of using the MWD’s facilities to transport the Imperial County water.

The dispute created such a poisonous atmosphere within the MWD’s ranks and so much ill will in Sacramento--where flat-footed tactics by loyalist MWD members included snooping on legislators--that old and new enemies of the agency joined in launching efforts to revamp it.

Ayala casts himself as an old friend turned enemy for reasons unrelated to the substance of the San Diego deal.

“I’ve been involved for many years with MWD,” the legislator said. “Ten years ago, I was probably their best friend in Sacramento. . . . But I really don’t have any confidence in them anymore. . . . The arrogance of this bunch! . . . They are out of control.”

Ayala’s problems with the agency range from its decision to build an expensive new headquarters in downtown Los Angeles rather than buy a cheaper, existing building, to its method of apportioning director positions. Among other things, that approach gives Ayala’s growing Inland Empire district relatively little clout.

Other critics also charge that the MWD’s method of apportioning directorships is outmoded and inequitable. Every district starts out with one director and gets additional board seats according to the assessed value of property within it.

That idea made sense when the MWD began. Higher-valued properties indicated more developed land, which presumably meant more water usage and certainly meant higher property taxes for the MWD.

In its early years, when the agency sold relatively little water, property taxes were key to the MWD’s survival, composing 90% of its revenues, according to Lambertus Becker, its chief financial officer.

Today, survival is instead keyed to water sales, which account for three-quarters of the MWD’s revenues, while property taxes constitute just 10%.

But board member apportionment has not been changed in recognition of this shift. As a result, San Diego, which buys 25% of all the water the MWD sells from the Colorado and Feather rivers, gets fewer directors than Los Angeles, which in recent years has purchased only 10% of the MWD’s water.

(Los Angeles gets seven seats to San Diego’s six because property within Los Angeles has a greater assessed value. Los Angeles purchases less water than San Diego from the MWD because it has its own Owens Valley source and treats the MWD’s water as a supplement.)

In seeking legislative backing for their effort to secure a supplemental source, San Diego water officials sought to create as much trouble as possible for the MWD in Sacramento. It wasn’t difficult. Many legislators got angry at the MWD when San Diego revealed that a group associated with the water agency had hired a firm to snoop on the lawmakers.

Ayala spearheaded a Senate inquiry, which suggested that a group of MWD members who called themselves the Partnership for Regional Water Reliability held illegal secret meetings and engaged in other improper activities that included researching public records on legislators.

The group was looking for connections between legislators and the billionaire Bass brothers, who have bought vast tracts of Imperial County farmland and hoped to profit by selling water to San Diego rather than using it for farming. The group’s idea was to point up potential conflicts of interest that could bar legislators who supported San Diego from voting for the deal. No conflicts were found.

But Ayala’s committee hearings “humiliated” the MWD, said one of the agency’s paid advisors, former state Atty. Gen. John K. Van de Kamp. They also drove home the point that the once-mighty, famously hidebound agency--whose unpaid directors, known as “Water Buffaloes,” generally serve for life--was subject to legislative control.

Early last week, in an attempt to placate Ayala and furnish him with its own language for a revised governance scheme, the MWD board convened with a prayer for guidance “so that future generations may fill their cups from an ever full aqueduct.” Then it voted to cut off part of itself in the hopes that the rest would be allowed to live. The board voted to eliminate 13 positions and reduce its size from 51 to 38 members.

“We were told to look at ourselves, and we did,” said Pace, the MWD director who chairs the board’s communications and legislation committee and represents the San Gabriel Valley’s Central Basin Municipal Water District. “Hopefully, with a smaller board, we [would be able to] get things done in a more efficient and a quicker matter.”

Ayala said he was not satisfied with the proposal.

And some legislative staff members, noting that the MWD would still rely on property valuations to distribute seats, call the proposal insubstantial.

“I don’t see that it accomplishes anything,” said one staff member. “It doesn’t change the [relative clout of member agencies in the] voting. It doesn’t change any coalitions.”

Deal May Be Near

This is not the first time some legislators have tried to change the way the MWD is governed. In 1992, then-Assemblyman Richard Polanco introduced unsuccessful legislation calling for a 25-member board elected from districts of equal size.

This time, momentum for change seems to be coming from San Diego’s quest for semi-independence.

“This is about softening MWD up to get them to accept San Diego’s terms,” said UC San Diego political scientist Stephen Erie, who has testified as an expert witness on behalf of the MWD, contending that San Diego has not paid its fair share of capital costs.

The MWD’s negotiator told its board last week that a settlement is near, thanks to promises by state officials to pledge $200 million of this fall’s prospective $1-billion water bond issue to bridge the gap between the parties.

A question facing would-be reformers is whether they will retain a head of steam once a settlement is reached.

MWD Director Pace said some members of the Legislature have told him that “if we settle the San Diego deal, a lot of the problems we are having will go away. . . . But whether that is so or not remains to be seen.”