Water diversion
How one Monterey County supervisor will gain significant liquid assets from the Salinas Valley Water Project

STORY BY DANIEL BLACKBURN
PHOTOS BY CHRISTOPHER GARDNER

END OF THE RAINBOW The Salinas Valley Water Project would take as much as 25,000 acre-feet of water annually from Nacimiento and San Antonio lakes for deliverance to farmers in Monterey County.

When fresh water is removed from underground aquifers near the ocean, saltwater often fills the void. That's what happened to Lou Calcagno's dairy 20 years ago, right about the time he was first appointed to the Monterey County Planning Commission.

More recently, when the moment arrived for the Monterey County Board of Supervisors to endorse the final phase of the Salinas Valley Water Project (SVWP), board member Calcagno didn't waver.

He seconded a motion to authorize the project's environmental impact report (EIR) and then participated in the 5-0 affirmative vote, knowing that his property stood to gain significantly from the decision.

Calcagno cast his vote despite an apparent conflict of interest-his ownership of hundreds of acres of land that will directly benefit from water imported through the completed SVWP.

Calcagno and his family own acreage all over the county now worth "at least $4 million," he said. Its value will be maintained or enhanced many times over by the availability of dependable water supplies, depending on the land's future use.

The supervisors' June 2002 action cleared the way for construction during the next few years of a $20 million transfer project that will carry water from Lake Nacimiento and San Antonio Lake-both located in San Luis Obispo County-into Monterey County.

During peak diversion periods, water levels in both lakes will be lowered significantly. That would in turn extract a tremendous toll on recreation and tax revenues to San Luis Obispo County coffers, according to some project opponents.

The water project is touted by Monterey County officials as necessary to provide flood control and to augment agricultural irrigation supplies. Providing freshwater for salt-polluted aquifers victimized by severe overdrafts is a comparatively new project objective.

Ironically, Calcagno's family-owned Moon Glow Dairy, located for 50 years at the edge of Moss Landing in north Monterey County, sits at the geographic center of the salt-laden plume that presses inland incessantly.

When he realized that his on-site dairy fresh water supply was doomed, Calcagno tapped into a well 2 miles from his dairy and formed a three-way water district with the well's owners, PG&E and Duke Energy Corp.

LAND OF GOLD Monterey County Supervisor Lou Calcagno and his family own acreage all over the county worth “at least $4 million.”

Calcagno adamantly denies that the dairy-which uses around 80,000 gallons of water daily-contributed to the saltwater intrusion problem.

"That would be like sticking a straw in the Pacific Ocean," he said last week in an interview in his small Castroville office.

"[Moon Glow Dairy was] one of the first [farms] to go salty," said Calcagno. "But it was a combination of a lot of things going wrong. Mainly, it was everyone pulling water out of the aquifer at this end while nothing was going in at the other end. I don't think the little bit that was pulled out at the extreme north end had any bearing on saltwater [intrusion]. It was just all taking, with no replenishment."

Calcagno pays about $1,000 monthly to his water district partners for 2.4 million gallons of water for the dairy's use.

To help solve the underground water quality problem, said Calcagno, planners in Monterey County looked to import water from elsewhere, through a system of 100 miles of pipes and siphons.

Near Calcagno's dairy is another large agricultural parcel he owns, the 240-acre Dolan Ranch.

Calcagno leases Dolan Ranch for artichoke production at $2,000 an acre per month. The ranch gets its water from the first phase of the SVWP, which provides a blend of fresh and reclaimed water for agricultural use.

Calcagno said he decided to use SVWP water on Dolan Ranch "with an eye to the long-term picture." And he suggested that utilization of the water, along with his official support of the water project as a county supervisor, poses no conflict of interest. But Dolan Ranch already uses 3 percent of the water project's first phase yield. That's the equivalent of $780,000 in construction costs accruing to Calcagno.

"I'm not getting rich, either with water or without water," he said, but he readily admitted that "land with no water isn't worth very much."

Calcagno said he discussed his pending 2002 vote on the water project's EIR with then-County Counsel Adrienne Grover, and that she gave him "thumbs up" to cast his vote.

In a recent deposition, Grover said something quite different. In that deposition, taken as part of a lawsuit filed against Monterey County by operators of Water World Resorts Inc., the Lake Nacimiento recreation concessionaire owned for decades by Dan Heath and his family, Grover said she couldn't recall giving Calcagno advice on his voting situation regarding the water project authorization. But, she added, she "usually did provide that kind of information."

California's Government Code contains this "general rule" regarding conflicts of interest:

"No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest."

The Political Reform Act is expressly applicable to members of a board of supervisors. The financial interest of a public official falls within the scope of the law "if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on the official, a member of his or her immediate family, or any real property in which the public official has a direct or indirect interest worth $2,000 or more."

The law requires that a public official must publicly identify any financial interest in detail sufficient to be understood by the public; recuse himself from discussing, voting, or in any way influencing the decision; and leave the room while the matter is being addressed.

H2 UH-OH Water World Resorts Inc., Nacimiento’s recreation concessionaire, has already filed a $200 million lawsuit against Monterey County, alleging that the project will take substantially more water than is needed.

In the matter of the SVWP vote, Calcagno did none of the above.

"I didn't have to," he said. "It wasn't a conflict."

Jail time, heavy fines, and disbarment from holding public office are penalties for misdemeanor convictions under the conflict law.

"I don't think there are any supervisors who are not supporting the water project," said Calcagno. "It would be very difficult for someone from the valley who represents the area to not support the project."

He said the matter of conflict was discussed at length.

"We went over this so many times. We've had so many people look at us, and we are told there was no conflict," said the supervisor. "From the standpoint of an area, at the time I was the only farmer on the board. For a farmer on the board to vote against [the water project] wouldn't have been a very good situation. I feel comfortable, and we have legal arguments pretty well documented that will sustain that I did the right thing. I'm scrutinized so closely now, by the California Coastal Commission, the U.S. Army corps of Engineers, the water quality control board, mosquito abatement, Monterey health department, you name it."

He said he didn't see much difference between recusing himself from a vote and simply voting "no."

"My constituents would see it the same way," he said. "When you look at the total picture, I was a very little part of the picture. Legal counsel recommended that I vote. I had to weigh it. First, at the point when I voted, Moon Glow Dairy was not benefiting in any way from the Salinas project. And it still doesn't today. Will it benefit in the future? It may."

Here, Calcagno observed, "If I knew your questions were going to be this way today, I'd have had legal counsel with me, like I did during depositions."

Water World Resorts has filed a $200 million lawsuit, alleging that the project will take substantially more water than is needed for agriculture and repelling of saltwater intrusion. The lawsuit also charges Monterey County water officials with a violation of the public trust, by promoting the project's construction in one way and then threatening to operate it in another, for additional purposes.

"The original stated purposes for the dam [at Nacimiento] was for flood control and agriculture," said San Luis Obispo County Supervisor Harry Ovitt, whose district encompasses both Nacimiento and San Antonio lakes. "If they [Monterey County] are going to let more water go down for urban use, that is a big concern for everyone. The operation of the dam is a concern, too, because that involves the release of water. And we are very interested in the public trust issue," said Ovitt of his fellow SLO County officials.

Nacimiento Lake is located entirely in San Luis Obispo County, but the water supply is owned and controlled by Monterey County, the result of a 1950s arrangement with the federal government during which time SLO officials cared little for the idea of participating in an expensive water storage project.

Today, Nacimiento hosts an average of 202,000 visitors annually, almost all of whom are guests at Nacimiento Resort.

The Salinas Valley Water Project would take as much as 25,000 acre-feet of water annually from Nacimiento and San Antonio lakes and deliver it to farmers in the Castroville area. (An acre-foot of water covers one acre a foot deep, and will provide for the needs of a family of four for a year.)

Monterey County's plans include modification of the spillway at Nacimiento Dam. The dam's height would be unaffected, as would the lake's total storage capacity. But the feature could "spill" more water when needed, meaning that the lake could be filled more often, and earlier in the year, than now occurs.

Calcagno sees his participation in the water project as a "public service."

"What we have [in Monterey County] is one of the most productive agricultural valleys in the world. It extends from Cuesta Grade in San Luis Obispo County to Moss Landing. And in that valley," said the Cal Poly graduate, "we have climatic conditions to produce the vast majority of salad and vegetable needs of the entire United States, and some export." Agriculture is a $3 billion industry in Monterey County.

According to Calcagno, he is "not the least bit interested" in making any of his land available for residential or commercial development.

"I probably will dedicate the agricultural deed to the Dolan property, to keep it in production. I don't need any more money. That land is very sensitive habitat, and no development is ever going to take place. If I sold it, it would probably be to Fish and Game, because no one else would have any reason to buy it."

He said the people of Monterey County are not interested, either, in lots of development.

"If we wanted to allow building, it would have happened a long time ago," he said. "Politically you might support one of those big developments, but it would be the last time. I don't need this job. I'm doing it for public service."

Calcagno also was the centerpiece of a 2001 San Francisco Chronicle article titled "Cutting a Deal on the Environment," in which it was reported that Calcagno "pressed regulators to approve [the expansion of Duke's Moss Landing power plant]" and brokered a transfer of $12 million from Duke to a coalition of environmentalists who had opposed the expansion. When the money changed hands, that environmental opposition was dropped.

Calcagno told reporters Scott Winokur and Christian Berthelson that his land holdings "could grow in value" as a result of Duke-funded projects in the area. And of course, his dairy exists only because of the three-way water district pact he enjoys with Duke and PG&E.

There is no reason for San Luis Obispo County residents to be upset by the planned water diversions, said Calcagno.

"Those people are really worrying about nothing. They're going to have all the water they need-except in a few critical years. They are all wound up over nothing." ³

News Editor Daniel Blackburn can be reached at dblackburn@newtimesslo.com.