Last fall, when the Metropolitan Water District board voted to approve their share of WaterFix, the authorization of the General Manager was strictly limited to $4.3 billion (calculated as 26% of total estimated cost, but the limit was on the amount).
Tomorrow, the resolution before Board members does not limit the amount, but approves the General Manager to pay 64.6% of total project costs and grants the General Manager discretion in how the percentage is calculated. While the staff report estimates this amount as "up to $10.8 billion," the actual resolution varies substantially from previous resolutions in that it does not include a specific dollar amount or any language to limit the total amount.
This seems like a very substantial change to language that increases the financial obligation and risk to Metropolitan's ratepayers by much more than the difference between $10.8 billion and $4.3 billion. I have pasted the relevant resolution language below. Read it for yourself.
October 10, 2017 resolution:
"2. Authorization of General Manager. The Board hereby authorizes the General
Manager of the District, and any of the designees of the General Manager of the District, to do
any and all things necessary or convenient in the best interests of the District to effect any
financing of the California WaterFix through the Financing JPA (referred to herein as a “District
Participation Action”) consistent with the CWF Project Arrangements, and to enter into any and
all agreements and documents that the General Manager or his designee determines, in his or her
sole discretion, to be necessary or convenient in the best interests of the District to carry out any
District Participation Action, and to execute all papers, documents, certificates, agreements or
other instruments that may be required in order to carry out any District Participation Action or
to evidence said authority and its exercise; provided, however, that the District shall not make
financial commitments to the California WaterFix in excess of $4.3 billion in 2017 dollars,
which amounts to 25.9% of the estimated $16.7 billion in total capital costs of the California
WaterFix. The term of bonds issued for the project shall not exceed 40 years and the total interest
cost on debt issued will not exceed 8%. In implementing these actions, the General Manager of
the District shall be authorized to use such reasonable assumptions, methods, approaches and
calculations that it believes, in good faith, to be consistent with the authorizations herein and
necessary to the implementation of the matters provided for in this Resolution."
April 10, 2018 resolution:
"2. Authorization of General Manager. The Board hereby authorizes the General
Manager of the District, and any of the designees of the General Manager of the District, to do
any and all things necessary or convenient in the best interests of the District to effect any
Unsubscribed Capacity Arrangements, and to negotiate, execute and deliver any and all
agreements and documents that the General Manager or his designee determines, in his or her
sole discretion, to be necessary or convenient in the best interests of the District to carry out any
Unsubscribed Capacity Arrangement, and to execute all papers, documents, certificates,
agreements or other instruments that may be required in order to carry out any Unsubscribed
Capacity Arrangement or to evidence said authority and its exercise.
3. Limitation of Authorization. The District shall not enter into any Unsubscribed
Capacity Arrangement under Section 1 or 2 of this Resolution if, after giving effect to such
Unsubscribed Capacity Arrangement, the District’s funding of such Unsubscribed Capacity
Arrangement, together with the District’s estimated costs in its capacity as a State Water Project contractor, would commit the District to pay for more than 64.6% of the estimated costs of
California WaterFix; provided, however, that the General Manager shall calculate the total
amount of estimated costs of California WaterFix and the District's responsibility to pay for costs
of California WaterFix based on such reasonable assumptions and methods as the General
Manager shall determine in his or her reasonable discretion and judgment."
Highlight and Bold added 4/10.
Links to original documents:
For October 10, 2017
For April 10, 2018
