The Morning Report
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Thursday, January 12, 2006 | Historical neglect and a tattered credit line have jeopardized the city of San Diego water system’s compliance with state health regulations, a confluence of events that could threaten the future quality of the city’s drinking water if left unattended.
City officials now face the prospect of having to drum up an estimated $300 million to make vital improvements to the three municipal plants that distribute tap water to more than 1.2 million residents in the city and surrounding areas. City officials had agreed to a remediation plan in 1998 to address its lack of compliance with the state Department of Health Services. However, the city’s credit rating was suspended in late 2004 and it has been unable to issue bonds in public markets for essential infrastructure projects.
Without upgrades to the Alvarado, Otay and Miramar water treatment plants, the city could face water-quality violations beginning in 2012 under new U.S. Environmental Protection Agency regulations.
“Our main concern is to make sure the water is safe to drink, and right now they are under compliance and the water is safe to drink,” said Patti Roberts, health services spokeswoman.
Mayor Jerry Sanders plans to offer two major announcements regarding water and wastewater infrastructure in his first-ever State of the City address Thursday evening at Golden Hall. Spokesman Fred Sainz declined to give specifics on the announcements.
“It has come to his attention that one of the unfortunate aspects of the past couple of years is that we have not kept up with improvements that were required of us. And those infrastructure improvements are now knocking on our door in a very forceful way,” Sainz said.
City Attorney Mike Aguirre said he will propose that the mayor and City Council consider the private placement of $300 million in bonds in order to complete the necessary upgrades, a debt that would be financed through increased water rates.
“We cannot afford to let those systems break down,” Aguirre said.
The revelation is one of the bolder manifestations of the city’s fiscal crisis, as its impacts stretch to the most basic and important functions of local government. The city’s credit rating was suspended over concerns surrounding the veracity of the financial statements offered to the public and potential investors, including the way in which the city accounted for its pension liabilities.
The city’s pension system now carries a deficit that’s expected to be $2 billion when its annual report is released in the coming months. The city’s annual contributions into the pension system have climbed considerably in recent years as the deficit has deepened, threatening to consume an ever-growing chunk of the city’s annual operating budget absent significant reform.
“This is a concrete example of how the pension fraud threatens the welfare of the people of San Diego and we cannot allow that to happen,” Aguirre said.
He said the wastewater system also needs approximately $150 million in annual bond money in order to replace 40 to 50 miles of dilapidated piping in its wastewater collection system and comply with EPA regulations.
The water treatment plants at Alvarado, Otay and Miramar treat the entirety of the city’s drinking water, most of which is shipped in from the Colorado River and Northern California and eventually makes its way to homes in San Diego, Del Mar, Rancho Santa Fe, Coronado and Imperial Beach, as well as the San Dieguito Irrigation Districts.
The Department of Health Services issued a compliance order to the city in 1997 over deficiencies in San Diego’s water system. The city’s Water Department initiated a program in 1998 to fund a series of upgrades in order to bring the city into compliance. However, the city’s inability to access capital markets leaves it unable to raise money for the project through bond sales.
Although two-thirds of the city’s program is on schedule or completed, the city faces the prospect of falling out of compliance with proper cryptosporidium monitoring techniques, said Roberts, the health services spokeswoman.
Cryptosporidium is a small parasite found in fecal matter that is immune to typical chlorine treatment and requires treatment techniques that involved the gas ozone. In 1993, an outbreak of cryptosporidium in the city of Milwaukee’s drinking water killed more than 100 people and sickened more than 400,000.
Department officials recently met with city officials and are monitoring the situation.
“I think everybody is agreeing that they are facing challenges and we’re trying to work together to deal with those challenges to make sure they are under compliance,” Roberts said.
The state Department of Health issued a 96-point checklist that the city would have to follow in order to comply with laws that go into effect 2012.
Charles Yackly, acting director of Water Department, said the city has missed two compliance deadlines due to its financial problems. Ten miles of cast-iron mains are supposed to be replaced every year, because they are more susceptible to breaks than pipes made from other materials, but the city did not meet that requirement last year and will not meet it again in the fiscal year that starts in July, he said.
Also, the city failed to start construction on a pipeline between Interstate 15 and 54th Street in December 2004, Yackly said.
Other compliance deadlines lie in the immediate future, such as a June deadline to have a Rancho Bernardo project designed, he said.
All told, bringing the city into compliance would cost about $350 million, which Yackley said was easily attainable under the usual amount the water department could leverage with bonds.
Until the city’s recent woes, the water department was able to make $100 million in project improvements every year, Yackly said. In the current fiscal year, the water department is scheduled to spend $57 million in projects and will likely only be able to afford $20 million a year after.
The entire water department and its capital improvement projects are all paid for by ratepayers and not property or other taxes.
Please contact Andrew Donohue at