Press "Enter" to skip to content

IWVGA’s Water Purchase Agreement does not mean what they say it means

By Patricia Farris News Review Publisher –
The Indian Wells Valley Groundwater Authority (GA) recently announced they had signed a “Letter of Intent” (LOI) to purchase approximately 750-acre feet (AF) of water, through the State Water Project (SWP), from the California Aqueduct in Kings County. The water would be imported to the Indian Wells Valley (IWV), but only after a costly pipeline infrastructure is permitted and constructed. 

  Rod Stiefvater, owner of Mojave Pistachios, states, “An LOI is not a binding legal document. On the contrary, an LOI simply states the parties have reached an agreement on basic terms. A future document, usually a ‘Purchase and Sale Agreement,’ spells out the specific terms and conditions of the agreement, and once signed, makes the agreement legally binding to both parties. The LOI was not signed by any of the members of the current owners of Jackson Ranch, but by Jon Lash whose entity – reportedly Utica J.L.J. LLC – has an option to buy a portion of the Jackson Ranch. This option has not yet been exercised and expires November 20, 2022.”

Basically, Stiefvater is saying that the IWVGA’s Water Purchase Agreement does not mean what they say it means. In an article submitted to The News Review this week, Stiefvater provided the following information. 

SWP Contract Entitlement: The GA will purchase the existing SWP contract between the State and the Jackson Ranch. It states an amount of water (750 AF) that the GA will own. This contract amount is confusing since the last time 750 AF was delivered to State Contractors was in 2006.

 On annual Water Entitlement (WE) and Yearly Water Deliveries:  The actual amount of yearly water available to IWV (and all SWP contractors) varies widely. The Department of Water Resources (DWR) determines the percentage of WE to be delivered based on each year’s hydrology, which is known as the “Yearly Allocation.” The SWP contract water is delivered through the California Aqueduct. This water originates from Feather River Watershed in Northern California and is stored behind Oroville Dam. The last three years of drought have resulted in yearly allocations of WE’s of: 2020 –  20%, 2021- 5% and 2022 – 5%. 

Consequently, the yearly water available to the GA in each of the last three years from the purchase of 750 AF WE would be only: 2020 – 150.5 AF, 2021 – 37.5 AF and 2022 – 37.5 AF. 

To get a consistent delivery of 5,000 AF/year, large amounts of water would have to be paid for and stored in wet years. In dry years, much of the 5,000 AF would have to be pumped from groundwater storage from a water bank and delivered to CA to be delivered to the IWV. This activity results in significant additional annual water costs. 

These uncertainties are in question. Will this deal actually go through? When will this deal go through? If the deal goes through, how will water be delivered given the fact there is no infrastructure in place? If a deal is done and the infrastructure is built, how much water will be able to be delivered yearly? What is the full project investment? What are likely annual costs? How much will water users, including Indian Wells Valley Water District ratepayers, be asked to pay to cover both investment amounts and annual costs?

With the total Water Entitlement investment only, the cost/AF of Jackson Ranch WE = the reported purchase price of $6,396,000/750 AF = $8,528/AF of WE. If the GA wants 5,000 AF/year delivered to Ridgecrest, then $8,528/AF x 5,000 AF = $42.64 million investment for the WE of 5,000 AF only. But since future yearly water allocations are likely to average only 50% for the SWP, then 10,000 AF of WE must be purchased to average 5,000 AF/year of water deliveries, thus the WE investment doubles to $85 million. Additional costs for yearly water will be necessary to store yearly deliveries over 5,000 AF or to draw out water from storage (from water banks) in dry years.

The bottom line is that the GA needs to have a full-scale study done of all activities, facilities, agreements, etc. for the complete water import program with assumptions, a likely timeline, and most importantly the permanent investment amount as well as yearly costs at different yearly allocations. This complete program needs to be presented to all water users in the Indian Wells Valley so they know how much this imported 5,000 AF/year is likely to cost them before the GA starts the process. It is likely that these costs will be more than water users can afford, and they have a right to understand the program costs and how much individual users’ water costs will increase before the GA starts committing serious monies to start parts of the total program. Every major public works program proceeds in this manner. The GA needs to justify in advance the scope of additional costs their actions will cause the water uses in the Indian Wells Valley to incur.

Rod Stiefvater who wrote this informational article has served 10+ years on the Board of Directors of the Belridge Water Storage District and has been a State Water Project contract owner since 1999. He also serves on the board of the Westside Water Authority (which consists of 4 state water districts: Belridge Water Storage District, Lost Hills, Berenda Mesa, and Dudley Ridge Water District (DRWD). The Jackson Ranch is in the DRWD.