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Monday, January 14, 2008

(Lack-of-) Water laws may throttle growth

Statutes force a district near Lake Perris to assess whether supply will be available for huge warehouse project, which is now on hold.

By Deborah Schoch, Los Angeles Times Staff Writer
January 14, 2008

The planned distribution center for the footwear firm Skechers USA would rise on 1.7 million square feet in the Inland Empire, making it one of the largest warehouses in the United States. It would anchor a new community called Rancho Belago, a variation of the Italian for "beautiful lake," after nearby Lake Perris reservoir.

Now, in a sign of growing water anxieties, the Skechers warehouse and six other large projects in western Riverside County are on hold until March or later because the local water agency could not promise to deliver water to serve them.

The dilemma shows what can happen when construction and global trade, key drivers of the regional economy, are reined in by a potential lack of water.

"Just looking at the raw numbers, we kept coming up short," said David J. Slawson, president of the board of directors of the Perris-based Eastern Municipal Water District, one of the largest districts in the state.

Slawson explains that his own livelihood as a land surveyor depends on growth, that no one on the board wants to hobble the economy. Still, he said, the restriction is "something we feel is necessary until we have some better numbers and we see some action statewide."

He says he's surprised that other water districts have not paused to review their own supplies.

This winter is posing the first significant test of two little-known state laws passed in 2001 that link large development to the availability of water.

The Eastern district may be the first in the region to cite water as the reason for delaying approval of a large project because of the laws.

Developers and water officials worry that more agencies may do the same, further weakening a building market already crippled by the sub-prime mortgage crisis. Although Inland Empire business leaders hope Eastern will ease its restrictions as early as March, the district is offering no guarantees.

"No water. No construction. It's a bad combination," said Borre Winckel, executive director of the Riverside County Building Industry Assn., which has seen a dramatic decrease in requests for building permits.

But state Sen. Sheila Kuehl (D-Santa Monica), sponsor of one of the two laws, says it is working the way it should, by requiring cities to be realistic about how ambitious developments can strain water supplies to the limit.

The twin laws require local water agencies statewide to assess the needs of large projects and assure that water supplies are there for both existing and new customers for the next 20 years. The Kuehl law focuses on residential growth of 500 units or more, while a related one sponsored by a former state senator, now Rep. Jim Costa (D-Fresno), requires supply studies for all large projects.

Since then, Eastern water district officials approved 82 studies, called water supply assessments, for new projects in the fast-growing region.

Each time, they looked at whether the projects would strain water supplies. Each time, they found that the water was there. That changed last year, amid what some are calling "the perfect drought," a confluence of natural problems sharply decreasing water deliveries to the area: a record-low snowpack in the Sierra Nevada, an eight-year drought in the Colorado River Basin, record-dry weather at home.

The final blow came in late summer with a federal court decision protecting the endangered Delta smelt by limiting water deliveries from the Sacramento-San Joaquin Bay Delta, linchpin of the state Water Project that distributes water statewide. The federal order, made final in December, will reduce deliveries to Southern California by an estimated 22% to 30%, state officials say.

"What triggered things was the cutback on the state Water Project," said Peter Odencrans, spokesman for Eastern. "That made us think that until we work things out and get some security, we'd better be a little more cautious, and make sure that the data we come up with we do stand behind 100%."

The Eastern Municipal Water District distributes water to a 550-square-mile area from Moreno Valley to Temecula and Hemet nearly to Lake Elsinore. The area's population is now 660,000, but that is expected to soar eventually to 1.5 million, district officials said.

"We estimate that there may be requests for 120,000 new homes in our service area by 2030," Odencrans said. The current construction slowdown may offer some time for district water officials to study projected growth statistics and finish a projected $1 billion in capital improvements planned within five years.

Economist John Husing, who has studied the Inland Empire extensively, worries that other water agencies will be forced to follow Eastern's lead, squeezed by the twin water laws and the federal smelt ruling.

"I expect that you're going to see it in every edge area of Southern California. That's Palmdale/Lancaster, out in the Imperial Valley," Husing said.

Eastern gets 80% of its water from the Los Angeles-based Metropolitan Water District, the water wholesaler that sells to 26 member cities and agencies. The MWD, in turn, gets its water from Northern California and the Colorado River Basin, and current shortages may force cutbacks to its members as early as May.

The MWD board could approve a formula as early as February that could benefit the Inland Empire by allotting more water to growing areas that are heavily dependent on MWD water -- exactly the sort of area served by Eastern.Some older, built-out cities in the Los Angeles area are criticizing that formula, saying it would force low-income customers to subsidize growth elsewhere.

In the meantime, Eastern officials are conducting a full-scale study of how much water they have already approved for other projects, since some of those may be on hold or canceled because of the building slowdown.

"We're going to look at the numbers all anew, sort of like zero-based budgeting. It's a zero-based urban management water project," Slawson said.

The developer of the Skechers distribution center said he understood the approach.

"They made a statement indicating that the purpose of their evaluation is certainly not to limit growth, but to find an approach to better manage their resources," said Iddo Benzeevi, chief executive of Highland Fairview Properties in Moreno Valley, which is developing the project.

Construction is slated for the second half of this year, and Benzeevi said he was optimistic that the schedule would be met.

"We're confident, to a point, that this is not a long-term thing," added Mark Gross, senior planner for the Moreno Valley planning department. "We're hoping that something will get resolved in March."

Slawson, who owns a civil engineering and land surveying company in Moreno Valley, said he was constantly being questioned about the district's delay by owners and representatives of businesses in the area.

Some business leaders ask him why Eastern decided to start deferring approvals. He tells them that the two 2001 state laws gave water districts new responsibilities in assessing growth.

"I do get questions: Why haven't other water districts done this?" says Slawson, who hears that others are still issuing water supply assessments.

"All I can say is that the water industry is not inclined to act as land planners," he said. "But nonetheless, when they revised the water code to require us to issue these assessments, they changed the rules."

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