“The local water supplies have been fully exhausted a long time ago”
52:00 Item 5: Continuation of Consideration of Request for a Second Extension of “Will Serve Letter” for 1,851 Houses in Ongoing Development within Pardee Homes-Sundance Master Planned Community
52:25 MIchael Titus, Pardee Homes Attorney: I think you got our letter yesterday, right? So we’re good there. It’s similar to a letter we wrote before. Our problems are Conditions 5 and 6. I’m not going to reiterate all the arguments in there. You’ve seem them. I’m sure Counsel’s talked to you about them. But here’s a couple points I want to raise that have come up rather recently. For example, the Pass Agency in their September discussion of where they get water concede that with a proper fee – there is enough water.
53:00 Titus: And as you heard them today; you’re not including Ventura who always has water because they passed the Soar Initiative a decade ago which crushed development in the County. So all that water that they were planning for can’t be developed in the Soar Initiative doesn’t allow you to develop anything outside the Cities in the unincorporated areas of the County. As for SLO, I happen to know a lot about SLO. They have 25,000 acre feet of water. They’ve only allocated 7,000, but it’s a little misleading, because really it’s about like 4,000 and the rest of it’s a buffer. They have plenty of State Water and the reason why is because a couple Supervisors, Gibson and Brown, don’t want any development in the County. In fact Carpeteria, which has 5,000 acre feet, tried to actually sell it to the Santa Maria Water District. They put up a Bond Issue, it got defeated, so Carpeteria can’t sell that water.
54:00 Titus: They want to get rid of it and there’s this huge No Growth. Oceanio, which is right in that area, has 500 acre feet which we almost bought, one of my Clients. They wanted to sell it, they couldn’t use it, but then all the neighbors get up and said: ‘Wait a minute, we may one day develop” it even though Oceanio clearly could never use that water. So there is water out there, it’s a question of just the cost. Getting back now to this particular issue. Pardee has put millions of dollars, tens of millions of dollars into infrastructure and into fees. Capacity Fees, other fees, with the expectation that those at the water plant and the Urban Water Master Plan that we would be able to pull our Building Permits and build our homes. The fact that the Water District has collected the money and if you look at the memo that was supplied today in Item No. 4, because some of the Agencies waited too long, the cost to acquire went up.
55:00 Titus: We, that is Pardee, incurred a significant amount of expense and the fact that people wait a long time is going to cost more money; we’re willing to help, but we’ve already helped a lot and nobody’s done anything. On the one hand we’re more than willing assist the Districts. We’ve even talked to your General Manager about advancing some of the Fees that we owe on the remainder of our Project so that the money is there to do what we need to do to get water. But putting Conditions 5 and 6 on really turned the tables. And I want to point out; when the City tried to sell some water to the Indian Tribe the District complains that they can’t do it. “We’re the Retail Water Purveyor”. Well, your Condition 5 and 6 make us do your job. That’s not fair.
56:00 Titus: What we want to do is basically have those Conditions eliminated. Give us our Will Serve Letter. In a year from now; the City’s doing work on the Recycled Water Plant, obviously the Pass Agency is starting to do things, we’ll see what happens. But in the interim either basically give us our Will Serve Letter or carve us out permanently like your Resolution 2014, which we believe did carve us out permanently. I’d be happy to answer any questions. We do want to work with you, we have been working with you. As you’re probably aware; we’ve met with the City and we’ve talked to the City about advancing some of the Fees to help pay for their upgrade. But at some point in time we need some assurance that we can continue to build. Any questions?
Board: No.
57:00 Jeff Chambers, Pardee Homes: As Mr. Titus said; we’re here because we’re looking for an extension of our Will Serve Letter. I wanted to make you all aware of the conversation we had with Mr. Fraser, Mike Taylor and I, yesterday in talking about different options. The two Conditions we asked not be included in our Will Serve Letter are Conditions we can not directly fulfill. We assured him that we would continue to work with the City, that we would do everything possible to get water flowing into the Purple Pipes which helps. It does’t alleviate the problem, but it definitely helps. We have money. There’s about $8.7 Million in remaining Fees associated with Sewer that we could advance to the City to help them get water flowing into the Purple Pipes.
58:00 Chambers: We’ve told Mr. Fraser and we told the City that we’d be willing to advance that and I’m here to just ask you to please grant us our Extension. We understand that we’re in a drought. The drought may not be permanent. I’ve lived here for 62 years and we’ve had periods of rain and periods of drought. I don’t think that the drought is necessarily going to be permanent. There will be more water. I don’t hear any discussion about in the event we get 36 inches of rain; how much water that does and how that changes the overall supply. We’re talking about water that is specifically tied to the State Water Project and being put into the Basin. But I’m hopeful, and this is a question to Mr. Fraser. We’ve had a good working relationship for the better part of 15 plus years.
58:00 Chambers: We’ve paid our Fees, we’ve always been able to move forward. We have some part that we were going to start construction on tomorrow. There’s an Agreement pending, which is; we’ve paid all of our fees, we’ve provided the insurance, and we were for the first time asked not to proceed because of a pending Agreement needing a final signature. I’m just hopeful that has nothing to do with this Hearing tonight.
Board: I don’t know what that Agreement is. Do you know what Agreement that is?
60:00 Judy Bingham: It’s a new day in Beaumont and the days of trading Bond Debt for Mitigation Fees is over – ask Pardee Homes. It’s coming out of their pockets now. There have been no new Bonds since Kapanicas left in June, 2015. This Board will be held responsible for destroying the Pass Area for its current Residents.
61:00 Bingham: I personally don’t care of Pardee Homes is stopped from making their big profits. I disapprove of those Will Serve Letters. The City of Beaumont has overcharge Mello Roos Taxpayers $11.6 Million 2017 Tax Rolls. It is illegal for a city to make a profit on these taxes. This information has been sent to the Securities and Exchange Commission. The people living in the Developments are being robbed by the City of Beaumont and the Developers.
62:00 Fraser: The basis for those Conditions are, as we had stated before, it’s basically to put everyone on notice. One of the things we learned this evening from Mr. Davis is that realistically there’s maybe a couple thousand acre feet of permanent water supply that could be acquired in the near future. And I know Mr. Titus touched some other opportunities there, but I listened very carefully and you can correct me if I’m wrong, but what I heard was that it’s just a matter of costs, but you also said there were multiple attempts by those entities to try to sell their water but they were told they couldn’t or they decided they couldn’t or there were issues that precluded the sale. So you can’t essentially force somebody to sell something that they don’t want to sell for whatever reason.
talking off mic
63:00 Fraser: Sure, and we would welcome that opportunity to acquire those supplies, but the issue with these Conditions of Approval being in there was basically to put everybody on notice that hey, just as a reminder, our water supply assessments that were conducted for these projects, our Urban Water Management Plan, has always relied on those two sources of supply moving forward. Whether it’s the Recycled Water Component or if it’s permanent State Water Project or other similar rights that can be obtained by the District to bring in imported water supply into the Region. It’s really to put everyone on notice that our ability to move ahead and serve those particular projects is dependent, whether it’s an individual house or a large tract such as what’s being proposed right now, is dependent upon those imported water supplies.
64:00 Fraser: The local water supplies have been fully exhausted a long time ago. About 2/3’s of our water supply is dependent upon imported water right now. We serve about 13,000+ acre feet and out of that about 8,000 or 9,000 acre feet come out of the Beaumont Basin right now. That’’s how our portfolio is defined and moving forward it’s going to be that same way. The opportunity for Recycled Water is definitely there and we look forward to the City of Beaumont making a decision as to which direction they’re going to go. We hope that we’ll end up with a Recycled Water Component in the very near future and that will help offset those needs. But those are not really considered new supplies that aren’t already considered as part of the Urban Water Management Plan. Those were always components of the Urban Water Management Plan and the Water Supply Assessments, so its just a matter of getting them to come to fruition; just like having the Pass Agency acquire those water supplies that we need as imported water supplies.
65:00 Fraser: That’s the purpose of having those in there. I don’t want the Board or the Public or whoever coming a year from now or five years from now saying “What were you thinking?” Why did you propose those things?” “Why did you recommend those Will Serve Letters?” now that we learn that we can’t get those water supplies. I’m not one of those ‘told you so’ kind of guys, but it’s going to be an ‘I told you so’. I’m telling you now that those water supplies are critical to be able to move forward and that’s why we included them as Conditions of Approvals. So everyone’s on notice and everyone’s out there and hopefully we can work together to resolve those issues, but you just need to be aware that they are necessary to be able to move forward and that’s why they were included.
66:00 Cottrell: I think if there’s any good that’s come out of the drought or the corruption at City Hall or anything like that, or even the potential problems this Board had in years’ past is that it’s brought us all aware of the fact that the City and the Water Board need to work together before Approving the development or the buildout of this City to make sure that we have the right resources. We got caught with our pants down on this one. So I think what we want to do is, moving forward; there’s different players now. I think we have to move forward not only with the Pass Agency but with the Council. The City Council and this Board to move forward to make sure that this doesn’t happen again. But that’s the benefit of the drought, it brought it to the attention of the Public, the attention of this Board, and hopefully the attention of the other Agencies.
67:00 Covington: As I’m reading the Staff Report with regards to Pardee Development, which I was not present last month, so I’m kind of playing catch-up on this this. I’ve also read the two letters that Mr. Titus delivered to the Water District. I understand Pardee’s position. As President Cottrell has just articulated, the drought has really brought a lot of things to the forefront that have been lagging for years. I am humbled to hear that Pardee is willing to put up some money, shift those funds for improvements. If I wrote this down correctly; to help with some of the needed upgrades at the City of Beaumont’s Wastewater Treatment Plant, so that really shows a commitment, I think, from the development community. I’ve read last months’ report. I’ve read tonight’s. I think that is encouraging information that Mr. Titus has brought forward.
68:00 Titus: The General Manager, the way he described the conditions, basically advising everybody warning what happening. If that’s all it was; okay, we’ve all been warned. That would be fine, but that’s not what it says. Our concern is language. “The Applicant Shall secure entitlement said non-potable water supply from the City of Beaumont that shall be conveyed to the District what is necessary to support the project in the development including non-potable water use requirements to offset potable water demand created by this project.” It goes on to talk about the cost. That’s not a warning, that’s a command.
69:00 Titus: That’s what we don’t want. We don’t think 5 and 6 are appropriate. In the strongest language; we don’t want to be your opponent in court. We’d rather spend our money not fighting your in litigation, but assisting you in getting the water. And just so you know; that language – I’ve read it. It’s not advisory, it’s a command and it’s making us do what is essentially the job of the retail agency. We’re willing to help, but the company can not do that and can not allow that language to stand.
69:40 Board: Mr. President; is there a way we can Approve the Will Serve Letter without having these Conditions number 5 and 6? Maybe suspend it?
70:00 I’ll make a Motion Mr. President, if I may. Motion to suspend Conditions 5 and 6 as stated in the Staff Report provided tonight. Furthermore; direct Staff to negotiate an Agreement with the San Gorgonio Pass Water Agency for the purpose of securing permanent water supplies. If an Agreement can not reached we will direct Staff to move forward to Adopt Water Shortage Emergency Conditions as stated in Water Code Section 350.
71:00 Cottrell: Modify the Motion to go for a year and suspend Conditions 5 and 6 for no more than 12 months.
Cottrell: The Motion as it stands is to issue a Will Serve Letter with the suspension of 5 and 6 Conditions for one year and suggest that Staff work with the San Gorgonio Pass Water Agency to secure permanent water supplies. If that Agreement can not be reached then this Agency will move forward with Water Code Section 350. And that’s outside the year. So for the first year we suspend Conditions 5 and 6 and that’s been Seconded. Any discussion?
72:00 Fraser: Is there a timeline in negotiating that Agreement with the Pass Agency? 60, 90 days?
Cottrell: The Motion had we’d negotiate long term for permanent water.
Board Member: I would give that 90 days maximum.
Fraser: So Staff has 90 days to put together the Agreement with the Pass Agency to develop a plan to securing long-term water supplies.
Cottrell: And at the end of the 90 days if that doesn’t happen then we proceed on a ..
Fraser: A process under Section 350 of the Water Code.
Cottrell: Okay.
Unanimous Approval