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MoneyADDITIONAL INFO IN POTTER SECTION BELOW

While so much attention is focused already on next year’s presidential election, a local campaign is quietly underway locally, the race for campaign money in Monterey County’s 4th Supervisorial District even though the primary is still nine months away.

In first place so far is the incumbent, Jane Parker, who had taken in $112,000 as of June 30, the end of the latest reporting period, but former Salinas mayor Dennis Donohue’s campaign treasury stood at a healthy $65,000 thanks to hefty contributions from the Salinas Valley ag industry.

Donohue, who works in produce, received $5,000 contributions from Fresh Foods of King City, Newstar Fresh Foods, Mann Packing, D’Arrigo Brothers, Gowan Seed Co., American Farms and other ag-related entities, the Nunes Co., A.C. Smith and Massa Trucking.

Donohue received a $1,000 contribution from his treasurer, accountant Warren Wayland, who serves as treasurer for many Republicans.

The ex-mayor’s largest contribution, $10,000, came from Taylor Fresh Foods. A related entity, Taylor Fresh Farms, just opened its headquarters building in downtown Salinas and is reported to have purchased several other buildings downtown with plans to renovate. While he was mayor, Donohue pressed for a downtown makeover. Expect him to criticize Parker for supporting a county decision to buy an office building on the outskirts and move some county workers outside the city center.

Parker’s largest contribution in the first half of the year, $20,000, came from Nancy Burnett, who is the mother of Carmel Mayor Jason Burnett and daughter of computer baron David Packard.

Parker received $10,500 from Brigitte Wasserman of Carmel, $9,748 from Constance Murray of Carmel Valley, $6,500 from Edwina Bent of Monterey, $6,000 from the Babcock Family Trust, $5,250 from Shirley Devol of Carmel Valley and Gordon Kauhenen of Union, Wash., $2,500 from Lisa Hoivik of Monterey and numerous smaller contributions.

While Parker’s district covers Marina, Seaside and a portion of Salinas, she receives considerable support from elsewhere because of her reputation as the lone progressive on the five-member board. She is routinely on the losing side of major development issues.

She did receive some significant contributions from ag interests, picking up $5,000 from Dennis Caprara of R.C. Farms and $5,000 more from Sea Mist Farms of Castroville.

In District 5, incumbent Dave Potter took in $54,000 in the first half of the year, and spent $21,000.

Potter is expected to receive a strong challenge from former United Way executive Mary Adams, who plans to announce her candidacy this fall. Former supervisor Marc Del Piero, who challenged Potter four years ago, also is believed to be considering another run. The district generally covers the Peninsula south of Seaside, Carmel Valley and much of the Highway 68 corridor.

Potter’s contributions came from several directions, including Pebble Beach homeowners, investors, and resort operators.

Potter played a key role in bringing the controversial Monterey Downs horse racing and development proposal to the Peninsula, but there were few obvious signs of support from the horse racing industry. He did pick up $1,000 from Chris Bardis, a key figure in the harness racing industry. Bardis once owned a share of the Los Alamitos racetrack and sat on the state racing commission. He reported receiving $1,000 from Double S.L. Ranch of Lafayette but little information is available about that entity.

Potter received $5,000 from Shanna Fineberg, an interior decorator from Dallas, and the same amount from venture capitalist Jon Q. Reynolds of Piedmont. He received $1,000 contributions from the owners of Quail Lodge, Carmel Valley Ranch, Bernardus Lodge, Folktale Winery and Old Fisherman’s Grotto.

Steve Foster, owner of the Lucky Strike chain of bowling alley/nightclub operations gave $2,000 and the Monterey County Hospitality Association gave $500.

One $1,000 contribution of interest came from Sanford Edward, whose large Dana Point Headlands project went before the Coastal Commission while Potter was a member. The highly controversial Orange County project was approved by the commission on a 7-5 vote with Potter on the dissenting side.

Potter received a contribution of $1,000 from cotton tycoon Sam Reeves, who is fighting an application by a Pebble Beach neighbor to enlarge his home, a decision that will be made by county officials.

In the other district with an election next year, District 1 in Salinas, incumbent Fernando Armenta and his expected challenger, Salinas City Councilman Tony Barrera, haven’t reported any contributions so far.

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Clean Drinking Water The water supply drama continues. Key urban and agriculture representatives continue to hammer away at a mutually beneficial agreement for using industrial wastewater. The Monterey Peninsula Water Management District continues slowly to fortify a backup plan for a desal source if Cal Am falters. It is working with Deep Water Desal on a plan for desalted ocean water at Moss Landing.

Then there is Cal Am’s desal proposal, using slant wells north of Marina. This project is supported by the Mayors Water Authority, most elected officials, and about 16 other interested parties in a settlement agreement that was filed about 18 months ago with the California Public Utilities Commission. I am one of those parties, but I have always been baffled by Cal Am’s insistence on proceeding with slant wells, inland wells drilled on an angle to take in seawater for desalting. Though the technology is intended to minimize the intake of sea life, it is a novel and risky approach with high costs. Why is Cal Am taking this approach? What strengthens Cal Am’s resolve? There are several angles to the issue:

  • Slant wells for potable desal are not operational anywhere in the United States.  Cal Am claimed in a recent report that they are in use in Europe, but it has failed identify any. There is one extensive test site in Orange County with 14 years of effort and test data, but it is not operational.
  • Cal Am has no new water rights anywhere along our coast, and has not applied for any. However it continues to collect data in the Marina area to bolster its plan for slant wells.
  • It appears that Cal Am will use the data and the local water-supply crisis to justify an argument for a “physical solution” (the idea that practical considerations might bypass existing law). However the state Supreme Court disavowed the physical solution argument in a 2000 decision. Will Cal Am challenge that decision and add litigation costs and delay, thus avoiding the need for obtaining water rights?
  • The environmental impact report for the failed regional desal project praised slant wells as the “environmentally superior alternative.” Thus slant wells give Cal Am the imprimatur of protecting the environment.
  • However there are no state requirements for subsurface intakes (slant wells). Granted two very important state agencies – the State Water Resources Control Board and the Coastal Commission – have expressed preference for slant wells as an environmentally superior option, if feasible. There are not extensive criteria for determining “feasibility,” however. There needs to be some practical limit on the cost and amount of time spent on evaluating feasibility. This is a discretionary and subjective determination. So far, we have left it in the hands of Cal Am.
  • Cal Am has built momentum for slant wells to the point that continued investment will be proposed so as to not waste the prior investment. This is a slippery slope.
  • The city of Santa Cruz studied and rejected slant wells as too complicated and too costly.
  • Cal Am ratepayers have paid the full bill for stranded costs from prior Cal Am failures—totaling about $32 million so far, and with another $20 million on the line in legal proceedings ($15 million to $18 million is at stake in litigation with Marina Coast Water District and $3.4 million is at stake in litigation with Monterey County. Ratepayers will be outraged if another failure leads to more stranded costs on our bills. So far the bill for slant wells is probably under $10 million.
  • The mayors have stated that “failure is not an option” on the desalination front. Is this failure of Cal Am, or failure to obtain a new water supply? These two are not linked, or are they?

So why is Cal Am so determined to go the extra mile for slant wells? The answer is “tuck ins.”

Call Public Water Now paranoid, but we see a connection between this project and the defeat of Measure O, which was meant to lead to public ownership of Cal Am’s local operations. Cal Am spent an enormous amount of money to campaign against the measure — about $2.3 million — to protect its local interest. It proved the point that Public Water Now has been making, that the Monterey Peninsula is a cash cow for Cal Am and its parent company, American Water Works.

Public Water Now recently connected the dots with language from Cal Am’s corporate holding company, American Water Works. Its 10-K filing with the Securities and Exchange Commission for 2013 describes the corporate growth strategy to be “tuck ins.”

“Growth of service providers in the investor-owned regulated utility sector is achieved through organic growth within a franchise area, the provision of bulk water services to other community water systems and/or acquisitions, including small water and wastewater systems, typically serving fewer than 10,000 customers that are in close geographic proximity to already established regulated operations, which we herein refer to as “tuck ins.”

—American Water Works 10-K filing with SEC for 2013, page 4.

This national corporate growth policy called “tuck ins,” further documented in other SEC filings, is intended to establish water supply ownership/control/dominance in smaller communities as a prelude to serving the growth potential of that community. PWN contends that Cal Am is overly exuberant for slant wells for one dominant reason: it gives Cal Am a permanent foothold next door to Fort Ord, the Peninsula’s only site of predictable growth in the future.

Now it seems clear why Cal Am is so determined to capture the CEMEX site for slant wells. It is using the fragile justification for slant wells to establish itself in the Fort Ord service area. And do not think its legal battle over the $15 million to $18 million debt of Marina Coast Water District is not playing into this calculus.

This national corporate policy to use “tuck ins” for growth should be a concern to Marina, other Fort Ord interests, and the wider community. It sure will be to ratepayers.

Riley is the managing director of Public Water Now and a longtime advocate for public ownership of water utilities.

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