Tag Archive | "Poseidon Resources"

Poseidon Jokes and Mesa Water Laughs Over Proposed Tax Increase for ‘Privately Funded’ Desal Project


By John Earl
Surf City Voice

Orange County taxpayers may have to pay a lot more for a $1 billion Huntington Beach ocean desalination plant if the Mesa Water District gets its way.

For the past decade the developer, Poseidon Resources, has promised taxpayers they won’t have to pay a cent for construction of the desal plant, which would create about 56,000 acre-feet of pricey drinking water every year, if approved.

The tax truth came out unexpectedly at a special Mesa Water board meeting held June 27 to promote the Poseidon project’s supposed benefits.

About 100 Mesa area residents were in the audience.

Invited speaker Robert Sulnick made Poseidon’s case during a 20-minute presentation.

Opponents of the desal plant were not invited to speak.

Sulknick was introduced as an environmental attorney and the executive director of OC WISE–with no mention (until questioned by this reporter after his presentation) that the group is a Poseidon front of developers and that he is one of Poseidon’s paid consultants.

A member of the audience questioned Sulnick about a survey mailed by Mesa Water asking her opinion of a ballot initiative to increase property taxes by $89 in order to pay for the desal plant.

Mesa’s public relations officer, Stacy Taylor, who was facilitating, was caught by surprise and so was Sulnick.

“Robert, you wouldn’t know anything about that,” Taylor said.

“I don’t know anything about it, but I was going to make up an answer,” Sulnick joked in return.

Big tax laugh

Poseidon’s Robert Sulnick and Mesa Water’s Stacy Taylor have a laugh over Mesa’s proposed tax increase. Photo from video: John Earl

Laughter ensured, but  the 11-question survey is no joke. It was sent with a two-page “Information Fact Sheet” explaining that project funding “could come from different sources” including “a ballot measure that would require two-thirds voter approval.”

The mailer mixes hotly disputed assertions, such as calling the project “environmentally sensitive and cost-effective”, with leading questions.

For example, respondents are asked if each of the 11 assertions “makes you more or less likely to support the tax” based on the assumption that:

“Investment in a desalination project makes sense for Orange County – it is a cost-effective, long-term solution to our local water supply challenges.”

The so-called fact sheet explains that to make Poseidon’s project cost-effective “a potential ballot measure could provide funding for the reliability surcharge and construction of additional distribution systems throughout the groundwater basin rather than a rate increase on your water bill.”

Taylor said that the survey was sent to 6,000 Mesa Water ratepayers and that she was told it was conducted by “one of the best ballot initiative companies in the state of California”.

She didn’t know the company’s name, how much the survey cost or who paid for it. But said she would be happy to provide that information and agreed it “was a very good idea” to post that information on the Mesa website.

The survey itself was already posted on the website, but the cost information remains unpublished at press time.

The Orange County Water District, but not Mesa Water, is negotiating a contract with Poseidon.

OCWD manages the county’s groundwater basin from which 19 north-county water retail agencies, including Mesa, pump at least 70 percent of their drinking water.

OCWD General Manager Mike Marcus told the Voice by email that Mesa acted on its own and announced the survey at an early-morning OCWD board meeting on June 10.

Mesa Water supplies 108,000 residents of Costa Mesa and Newport Beach with water from a small part of the groundwater basin.

The agency brags about its own “drought proof” and “100 percent” self-sufficient water supply; thus, it has no need for the 56,000 acre feet of imported water that Poseidon’s desalinated water would replace—at three times the cost–in order to receive a $399 million government subsidy required to make the project viable to private investors.

But the small water agency has long sought to influence the debate over the proposed desalination project and to promote desalination in general, working closely with Poseidon to do that.

In 2010, Mesa Water founded CalDesal, a non-profit lobbying organization funded by the desal industry and public water agencies.

Since then, Mesa Water board president Shawn Dewane has been CalDesal’s president. Dewane also serves on the OCWD Board of Directors.

Critics of the project never took the no-tax promise seriously, in part because of Poseidon’s insistence on receiving the subsidy.

And recently Poseidon and OCWD tentatively agreed that the water agency would pay for the infrastructure needed to deliver the desalinated water, a public cost that could reach hundreds of millions of dollars.

But on its website Poseidon still promises that its desal plant will be built “At no cost to taxpayers”.

The majority of the Huntington Beach City Council members who approved local permits for the project in 2006 accepted at face value Poseidon’s promise of private-only funding.

“We’re going to need the water”, Council Member Don Hansen said at the time. “It’s not us building the plant. It’s all private investment.”

A final contract proposal with Poseidon is expected to come before the OCWD Board of Directors by the end of the year.

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Posted in Headlines, Mesa, OCWD, PoseidonComments (3)

Poseidon’s Reliability Promise: Pay More For the Same


By John Earl
Surf City Voice

Will water ratepayers benefit if the Orange County Water District partners with Poseidon Resources Inc. to build a $1 billion ocean desalination plant in Huntington Beach?

The OCWD manages the Santa Ana River (groundwater) basin that provides over 70 percent of the water for central and northern Orange County.

For the past 19 months its board of directors has highballed the proposed project toward a contract with Poseidon that, so far, looks like a bad deal for ratepayers.

That deal would lock OCWD into buying 56,000 acre feet of desalinated water annually for the next 50 years, regardless of need.

And, at 3-10 times the price, it would replace an equal amount of water currently imported from the Metropolitan Water District of Southern California (MET) to help keep the basin at safe levels.

But most of OCWD’s producers (the 19 member agencies who pump water from the basin) will end up paying for Poseidon’s water, whether they want it or not.

One of those producer agencies, the Irvine Ranch Water District, thinks that would be unfair. Read the full story

Posted in Headlines, MWD, MWDOC, OCWD, Poseidon, Water BoardingComments (10)

Poseidon Desal: Will OCWD Be Shipwrecked by Mermaids?


By John Earl
Surf City Voice

Centuries ago, explorers sailed Poseidon’s Seven Seas looking for beautiful mermaids and lands full of golden treasures.

Although some of the hapless adventurers may have found what they were looking for, those who didn’t drink too much seawater were usually disappointed.

Today, it looks like Poseidon, the God of the Sea, is up to his old tricks again.

This time, taking corporate form (same as being human under American law), he’s promising to build a new source of water–an ocean desalination plant in Huntington Beach–that will create an additional and reliable supply of water for the Orange County Water District’s ratepayers.

At least that’s what most people think he is promising.

But is he?

Any proposed deal between the OCWD and Poseidon Resources Inc. to build an ocean desalination plant will depend upon a subsidy of $400 million, doled out to Poseidon for a 15-year-period, courtesy of water ratepayers throughout Southern California.

The OCWD manages the Santa Ana River Groundwater Basin, which supplies over 70 percent of the drinking water for Central and North Orange County.

The desalination plant would turn about 56,000 acre feet of seawater into drinking water every year. Read the full story

Posted in Headlines, MWD, OCWD, Poseidon, Water BoardingComments (3)

Garden Grove Desal Forum Tackles Issues Suppressed by OCWD


By John Earl
Surf City Voice

A public forum held by Garden Grove mayor Bao Nguyen last night at the city’s community center examined the cost of and alternatives to a proposed $1 billion ocean desalination plant promoted by the Orange County Water District.

Those issues–and the panel of local experts who discussed them last night–have been all but ignored by most of the OCWD Board of Directors, some of whom have strong financial and political ties to Poseidon Resources Inc., the company that would build the plant, and its big-business allies.

The OCWD maintains the county’s groundwater basin, which holds 66 million acre-feet of water and provides about 70 percent of the water used in central and northern Orange County, serving 2.3 million people.

For the past 18 months a clique of four board members, Cathy Green, Shawn Dewane, Stephen Sheldon,  and Denis Bilodeau, joined last January by Garden Grove Councilmember Dina Nguyen, have steered the District straight toward a long-term contract with Poseidon.

OCWD staff presented a proposed term sheet (pre-contract) to the board on May 14.

The board approved the term-sheet 7 -3. Nugyen voted for it.

Dina Nguyen on the right at May 14 OCWD meeting. She voted to negotiate a contract with Poseidon. Several Garden Grove residents attending the forum complained that she was non responsive. She did not attend the forum.

Dina Nguyen on the right at May 14 OCWD meeting. She voted to negotiate a contract with Poseidon. Several Garden Grove residents attending the forum complained that she was non responsive. She did not attend the forum.

Nguyen, who was the beneficiary of $11,000 in “independent expenditures” by a Poseidon related PAC in her recent election to the OCWD board, was invited to participate in the forum but was a no-show.

Staff is now negotiating a contract with Poseidon that would lock the district into buying 56,000 acre-feet of desalinated ocean water per year, regardless of need, for the next half-century.

Poseidon’s water would cost about $2,000 an acre-foot out the door, more than 3 times what OCWD currently pays for the untreated water it imports from the Metropolitan Water District of Southern California (MET) to help maintain the county’s groundwater basin supply.

Poseidon and its allies on the OCWD board claim that its more expensive water would be a “reliability premium” akin to car insurance that would add to the county’s water supply portfolio and guarantee water during a drought.

But, in order to be financially viable, Poseidon is demanding hundreds of millions of dollars in ratepayer-backed subsidies for the first 15 years of the contract. In return, MET rules require that Poseidon’s 56,000 acre-feet of desalinated water replace an equal amount of (cheaper) imported water, which would then be made available to water agencies outside of OCWD’s service area.

There would be no net gain in water supply for the district, which would be paying three times as much for Poseidon’s replacement water while subsidizing the cheaper imported water for other agencies. And the county wouldn’t receive more water during a drought.

This reporter has repeatedly asked Poseidon officials and OCWD directors to explain the benefit to ratepayers of paying three times as much for water than necessary and subsidizing cheaper water for ratepayers outside of Orange County, but to so far mum’s the word.

For the first 15 years, the proposed pricing scheme would pay Poseidon a surcharge of up to 20 percent on imported MET water (at the higher MWD treated rate) on top of a 3 percent annual compounded surcharge that recurs for the life of the contract, underlying subsequently declining variable surcharge rates.

A Surf City Voice review of the proposed pricing scheme shows that after 15 years ratepayers would pay up to $2,700 per acre-foot for Poseidon’s water (assuming the required $56,000 af) versus about $1,048 per acre-foot for untreated MET water, which comes out to about $1.8 billion versus about $700 million in total for that period.

That’s about $1.1 billion dollars that could be used for the cheaper and more efficient water supply alternatives ignored by OCWD and Poseidon but examined by the forum panel of experts.

Panel members are former Huntington Beach mayor Debbie Cook, Irvine Ranch Water District’s Peer Swan, Coastkeeper’s Ray Hiemstra, and Garden Grove water officials. Members of the public, including Westminster City Councilmember Diana Carey, also spoke.
 

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Posted in Energy, Environment, Headlines, MWD, OCWD, Poseidon, Water, Water BoardingComments (1)

Drought Politics: Pat Bates Baits Union-Tribune Readers with Doomsday Scenario


By Debbie Cook
Special to the Surf City Voice

On March 11, the San Diego Union-Tribune posted an op-ed, “Desalination makes sense for Orange County”, written by Assemblywoman Pat Bates (Laguna Niguel). It is unclear why she was addressing the California Coastal Commission since the project was not on its March agenda.

The paper chose not to allow comments on her article. So here is my response to her piece which reads as if lifted from a Poseidon Resources press release.

She goaded me from her first sentence: “Anyone who has stepped outside in the past year has undoubtedly seen the effects of our state’s historic drought conditions.”

Perhaps Ms. Bates should take a look around her own district before she goes off with her dire news of “empty reservoirs, dry wells, and brown, arid landscapes across California.”

Orange County is the poster child of disregard for the drought: lush green expanses of grass in front of strip malls, road medians, HOAs, government facilities, and private properties. Any claim she makes that Orange County has “tried” to do its part is laughable.

Ms. Bate's vision of Orange County without Poseidon? Photo: SCV

Ms. Bate’s vision of Orange County without Poseidon? Photo: SCV

It is interesting that Ms. Bates would chime in on a project outside her district that runs roughly from Dana Point to Cardiff by the Sea in San Diego County. Her district imports nearly 100 percent of its water. North Orange County imports only 30 percent and it could be zero if we managed the groundwater basin equitably.

“Trying” isn’t good enough, especially when it places the burden of costly boutique desalinated water on those who are actually “doing” something.

Residents of Santa Ana and Westminster are close to an ideal goal of consumption of 100 gallons per person per day. At the other extreme are communities like Villa Park and Northern San Diego County, where 500 gallons per person per day is the norm.

Why is 100 gallons per person per day ideal? Because at that level, North Orange County could get nearly 100 percent of its water from the groundwater basin.

The manner of water allocation used by the Orange County Water District and its member agencies places a disproportionately higher cost burden on those who consume the least amount of water. In effect, those who aren’t just “trying” but are implementing conservation will be subsidizing the explosive costs of ocean desalinated water.

Lush parkways in Bates' assembly district (this one in San Clemente), located in a an area that must import 100 percent of its drinking water, seems to contradict the idea of sound water resources management. Photo: Google

Lush parkways in Bates’ assembly district (this one in San Clemente), located in an area that must import 100 percent of its drinking water, seem to contradict the idea of sound water resources management. Photo: Google

And if North Orange County goes all in for an ocean desalination project, will Ms. Bates be sponsoring a bill to enable the OCWD rate payer to subsidize water sales to South Orange County water agencies?

Ms. Bates then goes on to cheer lead for desalination: “Southern California communities have rallied behind desalinated ocean water as a reliable, safe and environmentally friendly solution to long-term water shortages.”

It is interesting to note that a small consortium of communities in her own district have spent millions of dollars building and evaluating a pilot project in Dana Point only to discover they couldn’t “rally” enough support for such an expensive endeavor.

Ms. Bates reports on the “nearly completed” project in Carlsbad. But we are still waiting to see how the San Diego County Water Authority allocates the costs of this project, a painful task they have been discussing and postponing since 2012. The devil is in the details, details that were not sorted out prior to signing a “take or pay” contract.

Ms. Bates calls desalination “out of the box” thinking but in reality it is a knee jerk reaction by politicians who have ignored California’s failed water policies, archaic water laws, and fractured governance.

Addressing long term water needs requires long term thinking which will never be the domain of politicians in Sacramento.

It is much easier for elected officials to apply a “technical” fix knowing they will be out of office before the bill arrives.

What we need are courageous politicians who dare to engage with citizens in understanding and exploring solutions that actually address water needs and not water wants.

North Orange County does not need an ocean desalination project and hasn’t even figured out what they would do with the water. If Ms. Bates thinks one is needed in South Orange County, then she should address her own district’s needs first.

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Posted in Headlines, OCWD, Poseidon, Water, Water BoardingComments (4)

OCWD: Costly Desalination Plan Trumped by Common Sense Alternatives


By Joe Geever
Special to the Surf City Voice

Some of Orange County’s water managers and politicians insist that a proposed partnership between Poseidon Resources Inc. and the Orange County Water District to build a $1 billion ocean desalination plant in Huntington Beach is a good deal at even three or more times the $600 an-acre-foot price currently paid by OCWD for imported water.

That’s a great price to pay for a reliable source of water during shortages caused by drought, earthquakes, and population growth, they say, because it would protect our economy and general welfare.

Opponents of the Poseidon project, however, argue that we already have reliable water sources that could be strengthened by minor management changes.

Conservation, rainwater retention, and expanded wastewater recycling are suggested as cheaper alternatives to ocean desalination.

Those proposed changes are much more cost effective than desalination and would help to maintain a reliable marine life population along the California coast.

Now a new idea has come forth from one of the County’s most experienced water managers, Peer Swan, who serves on the Irvine Ranch Water District Board of Directors.

Speaking to over 200 Orange County residents at a town-hall meeting in Huntington Beach on March 4, Swan explained how a commonsense change in the way we manage our groundwater basin and water imports could provide all the reliability we need, avoiding nearly $1 billion in desalination costs every 10 years.

On average, north Orange County gets about 70 percent of its water by pumping it from the groundwater basin. The 30 percent difference is made up with water purchases that member agencies make from the Metropolitan Water District of Southern California (MWD).

OCWD manages the basin to prevent excessive overdraft, but not necessarily to maximize its potential capacity.

There are three major sources of water used to recharge the basin: 1) rainfall/Santa Ana river flows; 2) the Ground Water Replenishment System (turning waste water into drinking water); and, 3) imported water from MWD.

Swan’s solution for water reliability is simple.

Historically, severe drought has caused MWD to reduce water allocations in one out of 15 years. To be conservative, Swan assumed water rationing in two out of ten years.

If OCWD and its member agencies withdrew less water from the basin during the eight years that have rain while maximizing their use of imported water, the basin would be full for dry periods, acting as our water reliability “insurance” policy during years of water rationing.

The groundwater basin, our water bank, eliminates any need to create additional “reliability” supplies at enormous cost.

Before shifting an exorbitant $1 billion insurance policy to the ratepayers, water managers should thoroughly analyze all of the commonsense alternatives.

But the OCWD’s board of directors has been loath to use commonsense over the past year, rushing toward a draft contract with Poseidon, while limiting transparency and public discussion of important issues left unanswered.

(The Draft Term Sheet be discussed by the board this Wednesday, March 18, 5:30 p.m. at 18700 Ward St. in Fountain Valley).

Ratepayers want reduced water bills. Conservationists want reduced environmental impacts. These two constituencies are not necessarily mutually exclusive, but Swan’s commonsense approach would answer both of their concerns.

It is simply not good enough for our elected representatives on water boards to respond with the hollow claim that, “Even if we did all the alternatives first, we still need the water Poseidon is offering.”

Without numbers and analysis attached to that unsupported claim, we shouldn’t give Poseidon our trust, or our money.

Poseidon is pushing OWCD hard to sign a “take or pay” contract—the ratepayers must buy its boutique water even in the 14 years that it isn’t needed (assuming it ever would be).

But as ratepayers in Australia recently learned, racing to build desalination facilities before exhausting better alternatives has turned out to be short sighted and costly for ratepayers who were forced to take water they didn’t need after all.

If OCWD signs Poseidon’s proposed “take or pay” contract before implementing preferable alternatives, Australia’s costly lesson on water mismanagement will have been lost at the expense of Orange County’s ratepayers.

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OCWD Director’s Unethical Culture is Challenged by Legal Complaint


By John Earl
Surf City Voice

The Fair Political Practices Commission has been asked to investigate a business relationship held by Orange County Water District board member Stephen Sheldon to determine if it precludes him from deliberating on a proposed ocean desalination plant.

The complaint alleges that Sheldon appears to be using his business relationship with consultant Roger Faubel, owner of Faubel Public Affairs, to shield his financial links to Poseidon Resources, the company that wants to build a $1 billion ocean desalination plant in Huntington Beach.

The OCWD manages the groundwater in the Santa Ana River basin used by 19 cities and water agencies, referred to as producers, in central and north Orange County.

If the plant is built, Poseidon wants to sell the OCWD 56,000 acre feet of desalinated drinking water yearly for 30 years as a replacement for imported water the District currently buys from the Municipal Water District of Orange County at about a third of the cost of Poseidon’s water.

The OCWD is currently considering various options for doing business with Poseidon, including full financing of the desalination plant.

Sheldon’s potential legal problem is that public officials are prohibited by California’s Political Reform Act from influencing legislation or policy decisions that affect their own financial interests or the financial interests of employers they worked for in the preceding year.

The complaint was submitted last week by Debbie Cook, who is a former mayor of Huntington Beach and an advocate for greater transparency by Orange County’s water agencies. She also occasionally contributes articles to the Surf City Voice. Read the full story

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Steve Sheldon Watch: OCWD director shills for Poseidon, again


Stephen Sheldon, the Orange County Water District’s elected representative from Irvine, continues to use his government position to benefit Poseidon Resources, Inc., the corporation that wants to build an ocean desalination plant in Huntington Beach.

By doing this, he may be risking the consequences of violating conflict of interest laws.

The OCWD manages the county’s groundwater basin and provides drinking water for 2.4 million residents by selling it to 19 municipalities and special water districts in the county.

The OCWD staff and board of directors are currently leaning heavily toward making ocean desalination part of its “water portfolio” through a business relationship with Poseidon.

Sheldon, a candidate for reelection in November, spoke in favor of Poseidon’s proposed project at a joint planning committee meeting of OCWD and the Municipal Water District of Orange County (MWDOC), held on July 23.

The Poseidon plant would cost about $1 billion and produce 50,000 acre feet of desalinated water a year.

In a plan conceived by OCWD and Poseidon, that desalinated water would replace the same amount of untreated imported water that the district currently buys from the Metropolitan Water District of Southern California (through its retailer MWDOC) for $593 per acre foot. That water is pumped into the groundwater basin.

Poseidon’s desalinated water would cost over three times as much, about $2,000 per acre foot, according to OCWD’s chief engineer, John Kennedy.

Until at least last December, according to Sheldon’s most recent Statement of Economic Interests (SEI), he worked as a consultant for Faubel Public Affairs, a partner of Communications Lab which lists Poseidon as a current client on its website.

Public officials who use their position to influence a government decision that affects them financially have an illegal conflict of interest under California’s Political Reform Act (CPRA) and California Govt. Code 1090.

But during the joint meeting, Sheldon tried to argue that Poseidon’s project would add to the county’s groundwater supply. In fact, as other water officials from OCWD and MWDOC pointed out repeatedly at the meeting, Poseidon’s water would not increase the county’s water supply—above or below ground—by a single drop.

“We’re just really replacing the amount of imported water we need to bring into the region,” OCWD’s Executive Engineer, John Kennedy, explained to Sheldon.

The Surf City Voice previously reported that during a May 21 OCWD board meeting Sheldon advocated for Poseidon and voted to send out Requests for Proposals to several consulting firms to analyze financing options for its desalination project, including direct OCWD funding and ownership.

Sheldon said “No comment” after that meeting when I asked him why he participated in the Poseidon vote. Then he chased after me as I left, only to demand that I tell him if I had electronically recorded his answer.

During a subsequent board meeting, however, Sheldon accused me of misrepresenting the facts about his relationship to Poseidon.

There was no conflict of interest, he said, because public officials are relieved of any potential charges related to a source of income that was discontinued a year or more in the past.

That’s true, but Sheldon’s SEI indicates that relief from potential conflict of interest charges won’t come until December, 2014, at the earliest. That’s because his SEI doesn’t indicate a termination date for his business relationship with Faubel; nor has Sheldon submitted an amendment to it since it was filed last April.

Theoretically, Sheldon could argue that Faubel Public Affairs and Communications Lab are separate businesses, despite public comments by CEO Roger Faubel and Lab founder Brian Lochrie confirming their close business partnership.

Lochrie, a former Faubel employee, started Communications Lab a year ago last April after leaving Faubel’s office with most of his staff and marketing clients, including Poseidon, according to a story at the time in the OC Register.

Lochire took his new entourage to another office in the same building, just down the hall.

Since Sheldon has not clarified his relationship to Poseidon (he did not accept an offer to meet or speak with this reporter at greater length), and any clarifying legal action against him is unlikely before election day, the voters must decide if the wall separating Faubel and Communications Lab is invisible and if Sheldon is being honest about being free of conflict.

But Sheldon’s election opponent, Newport Beach City Councilperson Leslie Daigle, may not be so shy about Sheldon’s Poseidon connection as well as his numerous other ethical and legal dilemmas.

Apparently, her campaign has been using a Facebook account called Steve Sheldon Watch to post links to documents detailing Sheldon’s numerous personal trials and tribulations, including hundreds of thousands of dollars of state and federal tax liens, contract violation lawsuits, and a divorce claim by his wife that he is stealing from his child’s $1 million “off-shore” trust account.

Two of the Facebook posts relate directly to Sheldon’s job as an OCWD director.

One of those posts questions Sheldon’s relationship to Poseidon based on in his 2012 SEI filing—in which he states he directly consulted for Poseidon, asking, “Is that legal since OCWD is studying if they want to buy Poseidon’s desalinated water?”

The other OCWD related post, “nothing but the best for Sheldon,” links to his OCWD expense reports and questions his $1,048 stay at the Ritz Carlton hotel in Los Angeles.

Daigle told the Daily Pilot that she was running against Sheldon because of the OCWD board’s involvement in frivolous lawsuits and its attempt to build a power plant.

Sheldon was one of three OCWD directors, including Denis Bilodeau and Roger Yoh, who as members of the district’s Water Issues Committee (WIC), met secretly with several members of the Anaheim Chamber of Commerce in October, 2013, to smooth the way for building the power plant on 20 acres of OCWD property in the so-called Ball Road Basin in the city of Anaheim.

Many Anaheim residents are opposed to the proposed power plant and want to use the lands for parks and recreation purposes.

The WIC meeting arguably violated California’s open meetings law, known as the Brown Act, so the Anaheim Chamber of Commerce protested. To prevent a lawsuit, the OCWD Board of Directors voted to promise to “cease and desist from prior challenged conduct.”

But the agenda for one of many secretly held OCWD Executive Committee meetings exposed by the Voice through a public records inquiry, reveals that the directors may have broken their legally binding promise.

The Executive Committee agenda for June 10, 2014, contains a discussion item about how to gain leverage for rezoning the Ball Road Basin—if a proposed deal with Competitive Powers Ventures to develop the power plant fell through—by supporting grant requests by Anaheim for developing pocket-parks.

“I believe we could leverage cooperation on these types of soft issues in return for the City helping us kill SB 26 and helping us rezone Ball Road Basin to commercial usage if the CPV deal falls through”, OCWD General Manager Mike Marcus wrote.

The OCWD seems to have backed off its efforts to build a power plant in Anaheim for now, but this month its board of directors voted to study building one in Fountain Valley instead as part of its Long Term Facilities Plan.

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OC Water Official Says ‘No Comment’ on Poseidon Vote


By John Earl
Surf City Voice

“No comment!”

That’s all that Director Stephen Sheldon will say about his participation in a recent Orange County Water District discussion that was largely about the financial future of his former employer, Poseidon Resources, Inc.

Specifically, at OCWD’s May 21 board of directors meeting, Sheldon discussed and voted on a proposal to hire consultants to study various cost scenarios, including direct involvement by OCWD, related to an estimated $1 billion ocean desalination plant that Poseidon proposes to build in Huntington Beach.

The OCWD manages the county’s groundwater and provides 75 percent of the water used by ratepayers in its central and northern parts. With its Ground Water Replenishment (sewage recycling) program, the OCWD (with the Orange County Sanitation District) produces enough fresh, clean, drought-proof drinking water for 600,000 people, and there are plans to expand that program in the near future.

Under California’s Political Reform Act, elected officials are prohibited from voting on any project before them in which they have a financial interest or that would affect their economic interests or that financially impacts a company they worked for in the past year.

Working for Faubel

Working for Faubel

The ACT also requires elected officials to disclose financial sources and interests that by its definition cause a conflict of interest.

Those disclosures are contained in a yearly Statement of Economic Interests (700 form) that is on file for each board member at the office of the clerk for the Orange County Board of Supervisors.

OCWD meetings are also subject to California Government Code 1090, which is stricter than the ACT.

Recognizing indirect and direct influences that public officials have on decision making, Govt. Code 1090 prohibits any financial conflict of interest by those officials over contracts, even if the official isn’t voting; those officials, it says, “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”

Under 1090, the board is prohibited from voting on any contract which financially enriches any of its members, even if such a member recuses himself from the matter.

Sheldon’s 2013 Statement of Economic Interests reports working for Poseidon, earning between $10,000 and $100,000 yearly. In 2014 he no longer lists Poseidon as a source of income, but does list Faubel Public Affairs, owned by political consultant Roger Faubel (a former director for the Santa Margarita Water District), as a source of $10,000 – $100,000 of income yearly.

On the FPA website, Poseidon Resources is shown on a list of former and current clients. But on April 1, 2013, according to an article in the OC Register, long-time Faubel business associate Brian Lochrie and his wife, Arianna Barrios, took over most of Faubel’s marketing clients and hired most of his staff under a new business name, Communications LAB, which now lists Poseidon as a client on its webpage.

Faubel and partner

Faubel and partner

But the break-off from Faubel was little more than a rearrangement of chairs, as both Faubel and Lochrie made clear to OC Register reporter Sarah de Crescenzo:

Faubel…said the two firms will have a strategic partnership.
Added Lochrie: ‘We’ll continue to work together closely. (Roger’s) been a wonderful mentor for the last 12 years, and I look forward to continuing to work with him.’

Consistent with that goal, Faubel’s website lists Communications LAB as its “partner agency”, and the “two” companies are located in the same building in suites 200 and 250 respectively.

Sheldon, carefully waiting for his post-Poseidon one-year voting restriction to end, recused himself at the April 2 (2014) OCWD meeting when the board approved the RFP for the Poseidon financial analysis.

But at the May 21 board meeting, Poseidon CEO Scott Maloni whispered that Sheldon could vote on the matter because his legal restrictions had expired a month ago. What Maloni didn’t say is that by working for Faubel, who Maloni spoke with closely throughout the meeting, Sheldon was again on the hook for potential conflict of interest charges.

The Discussion

Director Philip Anthony started the discussion on the proposed Poseidon study by calling it premature to spend the $150,000 that staff recommended to hire two of the five consulting firms that submitted proposals.

“The Poseidon project is hung up by a couple of big things happening at the state level,” he said. “The sad truth is that the Poseidon project…is not clearly defined at this point. It’s subject to huge change based on what these state agencies do. So I suggest we save our money, your money, for the time being.”

Director Kathryn Barr agreed with Anthony, who, after hearing (pro-study) supporting comments made by directors Green, Denis Bilodeau, Vincent Sarmiento, and Roger Yoh, made a motion to defer consideration of hiring the consultants until the Poseidon project was better defined.

Pensive Sheldon

Pensive Sheldon

Then Director Jan Flory boldly suggested that the board wait up to two years to see how Poseidon’s nearly identical Carlsbad desalination plant works and in the hope that new and better technology would emerge that will allow Poseidon to bring forth a more environmentally sound project.

At least three of the eight directors present wanted to table the financial analysis until Poseidon finished its obligation–due ten years ago–to properly study sub-surface ocean intakes. Poseidon claimed before the Coastal Commission last November that sub-surface intake is infeasible for is chosen Huntington Beach location due to the local ocean topography, but the Commission called Poseidon’s submitted studies inadequate.

The only feasible option, according to Poseidon, is to co-locate its desalination plant with the AES power plant, located in southeast Huntington Beach, and use its “once-through-cooling” (OTC) intake pipes to gather the needed 127 million gallons of water that it would convert into 50 million gallons of drinking water daily.

Flory, Anthony, and Barr also wanted to wait for an expected decision by the State Water Board on the future use of OTC, if any, for ocean desalination plants. The board banned once-through-cooling for power-plant use because of its deadly mass effect on marine life.

Also to be resolved before the Commission is an appeal by Poseidon’s opponents of an enabling Coastal Development Plan approved by the city of Huntington Beach in 2006.

Doing all of that would take at least another six months.

Frustrated by the concerns of three of his colleagues, Sheldon said it was unfortunate that they had been “listening to misinformation by some of the opponents of this [Poseidon desalination] project,” potentially causing a delay over environmental issues that had already been asked and answered long ago.

“I think we have an obligation to our ratepayers,” Sheldon said, “[and] to our representatives, that we continue to study, that we spend an amount of money that is necessary to move forward.”

Poseidon’s desalination project is “important”, he added, and “is going to be a great benefit in the years to come.”

Sheldon then called Maloni to the speaker’s podium.

Maloni explained the “urgency”, from Poseidon’s point of view, for the OCWD to act now.

“One of the questions raised at the Coastal Commission meeting [in November] was, who’s the customer? Where’s the water going to go? How do we know the water [production] needs to be a 50 million gallons per day plan?”

Scott Maloni

Scott Maloni, Poseidon Resources, Inc.

Maloni’s list of questions are important because at this time only one water agency in Orange County (Faubel’s former water district, ironically) is indicating a real interest in obligating (per Poseidon’s terms) its ratepayers to buy Poseidon’s desalinated water–which will cost three to four times the normal rate –even if that water isn’t needed.

“That question needs to be answered when we go back to the Coastal Commission,” Maloni told the board, “and it can’t be answered if you don’t take your first step in due diligence to evaluate the financial impacts of the project.”

But Maloni must also be concerned about the public relations momentum that Poseidon has lost in recent years as public skepticism about the need for its Huntington Beach project, if not ocean desalination itself, grows stronger.

That makes Sheldon’s role as the OCWD plant for the partnership of Faubel Public Affairs and Communications LAB vital to the future financial well being of their client, Poseidon Resources, Inc.

But Sheldon is loath to acknowledge his mole-role in public, as shown when he glared, silently, at Director Anthony when he pointedly asked Sheldon, “So, I guess you’re okay to talk about Poseidon now? … You’re free?”

Green answered for Sheldon, injecting his silence with a simple, “Yeah,” as if, “Well, yeah, of course he is!”

After some more discussion (including a hilarious soliloquy by Green about needing to complete the Poseidon desalination project so she wouldn’t have to use Porta-Potties), the board, under pressure from Director Denis Bilodeau, voted 7-1 (Green voted no, Dewayne and Sidhu were absent) to continue the item until June 4.

After the meeting, I approached Sheldon, Samsung tablet in one hand and pen in the other, and asked him what the difference was between past meetings, when he had recused himself from Poseidon related agenda items, and that night (May 21).

Alarmed by the question, he pushed himself back in his chair, and said, firmly, “No comment.” Again, I asked, and again the answer was, “No comment.”

As I started to walk away, Sheldon panicked and demanded to know if I had recorded our “conversation.”

“It’s a public meeting,” I answered, as I continued to walk out of the board room, ignoring him as he called after me. Green, who overheard our exchange, gasped, presumably in Sheldon’s favor.

After following me outside the board room, Sheldon approached and asked, again, “Did you record our private conversation?”

I tried to explain to him that it wasn’t a private conversation, but I did not tell him if I had recorded it or not. But he persisted.

“I don’t have to answer your question,” I told him, adding my own “No comment” when he pressed yet again.

“Alright,” Sheldon warned, “You’re going to hear from our lawyer.”

On Monday, May 26, I sent the following email to Roger Faubel, ccd to Director Sheldon:

Given Faubel Public Relations’ (sic) past contractual relationship with Poseidon and your firm’s (self professed) partnership relationship with Communications LAB, as well as your continued interest in the Poseidon project, as demonstrated by your presence and frequent close conversation with Poseidon’s VIP (sic), Scott Maloni, at the meeting, as well as Director Sheldon’s response of “No Comment” when I asked about his vote, is there any reason why the public should not assume that the director did not illegally participate in the discussion and subsequent vote on the Poseidon related RFP?

So far, I have not received an answer.

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Poseidon’s Water Boy: Mayor/Assembly-Candidate Matt Harper Quietly Pushes Desal Scam Past Ratepayers


Commentary by Debbie Cook
Special to the Surf City Voice

Ocean desalination in Huntington Beach makes sense…if you don’t really think about it. But thinking about it requires understanding all the consequences of Poseidon Resources’ proposed project.

Take for example the unnamed city staffer who probably thought he was brokering a good deal for residents when he negotiated 3000 acre feet/year of Poseidon’s water for 5 percent below the Metropolitan Water District of Southern California imported rate–a savings of $150,000. The problem is that if Orange County Water District (OCWD) approves partnering with Poseidon, the Replenishment Rate (RA) for all of the water we pump from the aquifer will rise by at least $103/acre foot according to their estimates. Huntington Beach pumps on average 20,000 acre feet per year. That means that rate payers will pay an additional $2 million per year for water to save $150,000.

Thinking about it seems to be the last thing that Poseidon and the water agencies want us to do. OCWD recently reneged on their promise to convene a citizen’s committee. Their Board of Directors along with the redundant Municipal Water District of Orange County (MWDOC) meets in almost anonymity, their agendas often obscuring the real nature of discussions, thus thwarting public participation. They certainly don’t want people really thinking about it.

HB City Councilmember Matt Harper. Photo: Arturo Tolenttino, SCV

HB mayor Matt Harper. Photo: Arturo Tolenttino, SCV

Huntington Beach’s Mayor Matt Harper similarly impedes anyone, including other elected officials, from thinking through ocean desalination. Within a two week period recently, Harper placed items on the agenda of the obscure West Orange County Water Board (WOCWB) and the City’s Intergovernmental Relations Committee aimed at hastening agreements that were not understood by members or staff.

At the WOCWB, he invited Poseidon’s pipeline consultant (former Huntington Beach City employee Howard Johnson) to present a pipeline lease arrangement sought by Poseidon. Information was not available prior to the meeting. The item was placed on the meeting agenda as an information item rather than an action item. California’s open meeting laws preclude action on information items, but this did not stop Harper. He attempted to garner the votes to move forward on the hiring of consultants and the writing of pipeline lease agreements. Even staff was caught off guard and not prepared to give their own presentation or answer questions. Fortunately the representatives of Westminster, Seal Beach, and Garden Grove were uncomfortable with acting so hastily and the motion failed.

Undaunted by this setback, Harper moved on to the city’s Intergovernmental Relations Committee. He invited a representative from MWDOC to present an item that their board has been pursuing for several years, to re-categorize desalinated water as a “core” service rather than a “choice” service. Few residents are familiar with this issue and even fewer are likely to have given it much thought. If MWDOC is able to move desalination from a choice service to a core service, then Huntington Beach and other North Orange County cities will be forced to subsidize south Orange County water agencies and their plans to build a desalination project to serve south Orange County. That makes about as much sense as Orange County subsidizing San Diego County’s desalination project.

The problem with those of us who have spent time thinking about the devil in Poseidon’s details, is that it turns you into a cynic seeking a semblance of rationality in the situation.

I can come up with only one rational reason for such blatant disregard for the public’s interest and the facts–money. Money turns many self proclaimed fiscal conservatives into corporate welfare campaigners.

A glance at Matt Harper’s recent campaign donors tells the story:

Poseidon Resources, $2,540; Simon Wong Engineering, $249; Geosyntec Consultants, $250; Arcadis, $250; AKM Consulting Engineers, $250; Psomas, $540; Parsons, $250; Nossaman, $189—a total of $4,518 from donors directly or indirectly involved in promoting the ocean desalination business.

Poseidon and their brethren have spent millions to keep you and your elected officials from making sense of their uneconomic and imprudent project. In effect, there will be no thinking allowed on their watch.

Debbie Cook is a former mayor of Huntington Beach and is an advocate for greater transparency in public water management.

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