The Cambrian

Cambria CSD signs $13 million loan agreement for water project

Jerry Gruber, left, general manager of the Cambria CSD, signs loan papers Monday, Aug. 4, at the Veterans Memorial Building with Charles ‘Chick’ Adams, the district’s bond counsel from the Jones Hall legal firm in San Francisco.
Jerry Gruber, left, general manager of the Cambria CSD, signs loan papers Monday, Aug. 4, at the Veterans Memorial Building with Charles ‘Chick’ Adams, the district’s bond counsel from the Jones Hall legal firm in San Francisco. ktanner@thetribunenews.com

Correction: An earlier version of this story misidentified a speaker at Monday's CCSD meeting. The speaker was Ken Butterfield.

Cambrians will pay $13 million for an emergency water-supply project that’s under construction but won’t be online until at least late fall, and its conversion to a permanent facility for emergency use remains uncertain.

The Cambria Community Services District Board of Directors voted 4-1 Monday to authorize the 20-year financing agreement.

Director Amanda Rice voted no, saying she wanted to wait before “we commit this community to this loan” so the agencies could iron out various environmental and other issues.

Normally, such changes would happen during a project’s environmental review process. But under an emergency coastal development permit, such as the one the district has from the county for this project, such reviews are less intensive and no appeals can be filed.

Future droughts or dry spells would be considered separate emergencies, triggering the need for a regular permit, with all the normal requirements for various studies and approvals. The district has applied for that full coastal development permit.

Five agencies have expressed concerns about converting the project’s emergency permit into a permanent one, necessary for the project to be used during future emergency shortages.

The California Coastal Commission’s concerns are serious enough that commission environmental scientist Tom Luster is urging the district to convene a multi-agency consultation meeting in Santa Cruz.

If those concerns cannot be resolved, it’s possible the plant, as currently configured, could only be used during this drought, under the county’s emergency permit.

The project under construction will use three purifying processes, including reverse osmosis, to filter brackish groundwater that would then be injected back into the aquifer to supply the district’s source wells on San Simeon Creek Road.

A 67-day test of the flow pattern is underway. The test and the plant’s construction are to happen concurrently.

At Monday’s four-hour special meeting, CSD board members also opted not to reopen to public use the district’s nonpotable water well on Santa Rosa Creek, the SR1 well from which Cambrians had been drawing irrigation water.

The money

After the district board of directors approved the 20-year financing package, General Manager Jerry Gruber signed the loan documents with Western Alliance’s TPB Investments Inc. The borrowing mechanism carries a fixed interest rate of 4.11 percent.

District financial experts estimate that debt service through Aug. 1, 2034, will be in excess of $13 million, including $9 million in principal and more than $4 million in interest. Payments would be $658,000 per year, to be covered by an estimated $780,000 in recently approved increases in water rates.

Over the course of the contract with Western Alliance Bank of Arizona, the financing package equates to nearly $3,350 for each of the 3,938 parcels that receive water from the district.

Coastal Commission

The debate over the project has resulted in touchy exchanges between the Coastal Commission and CSD officials at times.

Luster sent a 6:23 a.m. email Monday to Monique Madrid, the district’s administrative services officer, to say, “As we discussed, we recommend the district hold off on completing CEQA (California Environmental Quality Act decisions) or funding the proposed project until after the (interagency) meeting, as you are likely to get advice and guidance from the agencies about substantial changes needed for the project to avoid significant impacts and be consistent with several requirements and laws.”

Luster referred to penalties such as those for the loss of steelhead trout, a federally protected species.

In a later email exchange, Gruber replied that he had asked commission staff to “remain open-minded” about the project and the serious issues facing the district.

For instance, “Cambria is surrounded by a forest that is currently a tinderbox,” and Gruber wants the district to be able to fight fires, provide safe, reliable drinking water and to address “public health and safety concerns as it relates to sanitation, flushing toilets, operation (of) our collection system and treatment.”

Luster replied that the current proposal “will likely cause ‘take’ of listed species and cause long-term harm to sensitive habitat. I would be much more comfortable looking at this with an open mind if the district showed an interest in working with the key resources agencies to identify needed changes before locking in to a long-term project.

“What if studies show that mitigation flows need to be two or three times” more than currently planned (at 100 gallons per minute)? “I believe the district would want to know these answers before locking into a long-term project and its associated liabilities,” such as the loan documents signed four hours after Luster’s email was sent.

The vote

The path to the vote was a contentious one that took more than 2 1⁄2 hours of public comment, debate and outbursts from the audience of about 50 people.

Not all audience members were opposed to the project. When speaker Ken Butterfield asked if anybody was in favor of it, nearly a dozen people raised their hands, although none spoke at the meeting.

Discontent was so profound that someone apparently set off a small stink bomb, according to residue found later by the maintenance crew. Some attendees mentioned the sulfurous smell.

Gruber said later, “This is a criminal activity and shows the outright disrespect that certain members of the community have for the elected officials, general manager, staff and the general public.”

Public comments ranged from “financing the doom of the Titanic,” “a hostile takeover of our district,” to concerns about legal ramifications of the agreement and worries over paying off a large loan on a system “that might not work at all.”

Director Muril Clift countered that timing was important, because the emergency permit “technically runs out Nov. 15. We can delay this, but you won’t make that permit, won’t get it done, won’t meet the bank’s requirement. You’ll wind up starting over.”

Director Mike Thompson said, “it’s necessary to go forward. I may not like all the details, (but) I don’t want anybody turning on their taps in December and having sand come out.”

Director Gail Robinette said she supported the financing package because “we don’t have any way of knowing that we won’t run out of water. We do know it’s very likely that we could. It’s not worth the gamble for me.”

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