A little-known water company created by farmers in Natomas is on the verge of selling a big chunk of its water to the city of Folsom -- a deal that would clear the way for thousands of homes to be built south of Highway 50.
Folsom would use the water to supply the 12,000 new residential units and accompanying offices and stores proposed for 3,600 acres south of the current city limits.
Finding a water source has been the most significant hurdle facing the city as it seeks to expand.
In a 4-2 vote, the board of directors of the Natomas Central Mutual Water Co. recently endorsed the idea of transferring a portion of its U.S. Bureau of Reclamation water to Folsom.
The water deal -- in which the water company could receive a total of more than $60 million -- is not final, however. Natomas Central will conduct a study to make sure the water being sold is actually not needed by farmers in Natomas. Then it will submit the agreement for a vote of the company's 275 shareholders.
Under the terms approved last week, Folsom would buy the right to an annual allotment of 8,000 acre-feet of water from the U.S. Bureau of Reclamation. Another 7,000 acre-feet could be included in the sale if the district determines it has enough surplus water, said general manager Dee Swearingen.
An acre-foot of water is 326,000 gallons, roughly a year's supply for two households.
Swearingen said the sale price of the water has not been finalized. But former U.S. Representative Doug Ose, a board member of the water company, said the agreement calls for the city to pay roughly $4,000 an acre-foot, with an adjustment for inflation between now and when the deal is complete.
Landowners seeking to develop south of Highway 50 would reimburse the city for the cost, said spokesman Jeff Raimundo.
Folsom officials are eager to finalize an agreement. They hope to begin environmental review of the city's expansion plan by this fall. But that timetable is contingent on securing the water.
Measure W, adopted by Folsom voters in 2004, requires the city to find a new water source for the area south of Highway 50.
Folsom City Manager Kerry Miller declined to comment this week on the agreement with Natomas Central. The city's key staff member monitoring the deal is on vacation, he said.
"We're pleased that the action was taken, but we don't know how to evaluate the details of the vote, so we're just kind of reserving judgment," he said.
Talks between Folsom and the water company have been going on for well over a year as various factions of the water company board vie for position.
The once-obscure water company has become a cauldron of conflicting interests as developers displaced farmers as the most significant players.
Natomas Central is owned by landowners in the Natomas Basin, a bathtub-shaped area that stretches from northern Sacramento County to southern Sutter County. One acre of land equates to one water company share.
At one time, the company's shareholders were all farmers. But the profile of landowners in the area has changed dramatically. The largest shareholders now include developers, the Natomas Basin Conservancy and Sacramento County, by virtue of its airport.
Developer Angelo K. Tsakopoulos, whose firm is a significant shareholder in Natomas Central, also owns much of the land south of Highway 50 that would benefit from the water sale. Mark Enes, Tsakopoulos' representative on the Natomas Central board, recused himself from the vote on the sale.
Enes referred calls to Raimundo, spokesman for the Folsom landowners' group. Raimundo said the water sale "is a good deal for everybody involved."
Urbanization in the basin has put the financial squeeze on Natomas Central and its farmer clients. Fields that were once irrigated with company water are now part of the city of Sacramento, and covered with stucco homes. Those homes receive their water from the city, not Natomas Central.
As a result, the company's costs are spread over a smaller customer base, meaning farmers pay high prices. Aging pumps and equipment need upgrading.
The average Natomas farmer now pays about $100 an acre-foot for Sacramento River water, about triple what their counterparts in other counties pay, Swearingen said.
He's convinced that the company has plenty of surplus water to cover the Folsom sale. But Ose said he's not so sure. He voted against the deal, and said he's waiting for proof that the water is really there.
One major issue that hasn't been decided is what the water company will do with the money if the sale goes through. It could invest the funds in the system to reduce the hefty cost of water to its farmers. Or it could distribute the proceeds to its shareholders as a dividend -- an approach that could produce millions of dollars for large landowners.
"That's a lot of money," said Ose, whose family owns 1,000 acres. "I don't think there's any resolution yet, and that's a serious question. If you go to the shareholders and say we're going to do this, they're going to say, 'How does that affect me, and where is the money going?' "
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Water deal key to Folsom growth
http://www.sacbee.com/101/story/308481.html
Natomas firm's pact could allow building south of Hwy. 50.
By Mary Lynne Vellinga - Bee Staff Writer
Last Updated 1:00 am PDT Saturday, August 4, 2007
Story appeared in MAIN NEWS section, Page A12
