According to General Manager Steve Knell, the Oakdale Irrigation District’s (OID) Board of Directors was preoccupied with the district’s precarious financial position as far back as 2011. And that may be why the Board failed to address its state-mandated requirement to apportion district boundaries based on population.
“The board, faced with financial challenges, may have elected not to spend money hiring a consultant to help reapportion, a priority that ‘probably didn’t sit high on the board’s agenda,’” said Knell recently.
Four years later, OID still hasn’t reapportioned and its financial situation has worsened. A few weeks ago, Knell said that the district lost seven million dollars last year and is on track to lose ten million more this year. OID’s financial position makes all the more puzzling its sweetheart deal with Trinitas Partners, a Bay Area investment group that was annexed into the district in 2013.
Probably the most eye-popping part of the annexation was the price for OID’s water. The cost included an annual fee of “$19.50 per gross acre” and “a water charge of $55 per acre foot of water actually delivered by the District.”
By 2013, the state’s water crisis had driven prices into the hundreds of dollars per acre foot. In some places they were even higher. In February of 2013, the San Diego County Water Authority agreed to pay a desalination plant $2,000 an acre foot for water.
Prices were not that high farther north, but given Trinitas Partners’ 7200 acres of almond trees and the scarcity of water in the San Joaquin Valley as a whole, OID’s price seemed to many observers to amount to a giveaway.
The price of water wasn’t the only sweet part of Trinitas’ deal with OID. Trinitas agreed to pay an annexation fee of $2600 an acre, for a total of $2,539,160. OID then agreed to carry the loan at three percent, which amounts to $165,700.42 for twenty years―great terms for Trinitas but not so great for a public entity hemorrhaging dollars.
Given recent events, the most intriguing passage of the annexation agreement may be one that gives Trinitas Partners veto powers over “water transfers or other arrangements which will result in a reduction in the amount of water available to the Property” [Trinitas].
Earlier in the year, OID’s plans to sell water outside the district were foiled when attorneys hired by farmer Louis Brichetto pointed out that OID had failed to perform a required Environmental Impact Review prior to the sale. Not long thereafter, OID notified senior members of the district that their water allocations would be reduced due to the drought.
When those senior members found out that newcomer Trinitas was to receive water ahead of them, they mounted a protest, claiming district officials had misrepresented the annexation agreement when Trinitas was taken into the district. The senior farmers claimed they were assured the annexation would not have adverse effects on their water allocations.
But OID’s plans for a water sale could only mean the district had promised Trinitas Partners a full complement of water beforehand. Otherwise, the sale could not have proceeded.
OID then found itself in the awkward position of having a junior member of the district dictate district policy. It’s no wonder OID officials floundered badly. Their plans to balance the books with outside water sales were thwarted by a failure to observe state-mandated requirements even while their giveaways to Trinitas left them adrift in a growing pool of red ink.
As one of the few districts in the San Joaquin Valley with an abundance of water, OID should have had Trinitas over a barrel during the annexation process. Instead, OID ended up wearing the barrel.