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Tuesday, Dec 03 2013 08:00 PM

LOIS HENRY: If water's involved, progress can be drip by drip

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    Californian columnist Lois Henry

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By LOIS HENRY, Californian columnist lhenry@bakersfield.com

Time for a McAllister Ranch water banking update.

If you're wondering why I keep such close tabs on this water banking proposal, I have two reasons.

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Lois Henry appears on "First Look with Scott Cox" every Wednesday on KERN 1180 AM from 9 to 10 a.m. The show is also broadcast live on www.bakersfield.com. You can get your two cents in by calling 842-KERN.

First, it's water. Any increase in water storage is of acute interest to this community and Kern's economy overall.

Second, and even closer to my heart, the water banked at McAllister would most likely be from Buena Vista Water Storage District's Kern River rights.

Wherever Kern River water goes, my eyes follow.

So, back to the update.

There had been some hope that the two-year-old proposal might finally get off the ground if the two water districts backing the bank could make a deal to have two-thirds of the land developed for housing, as originally intended back in the boom days.

That hope went up in flames last month.

Cue the water lawyers.

"It's off to court," Eric Averett, general manager of Rosedale-Rio Bravo Water Storage District, acknowledged in a resigned tone recently.

Rosedale, along with Buena Vista Water Storage District, bought the 2,000-acre McAllister Ranch in extreme southwest Bakersfield back in April 2011 out of bankruptcy auction for $22 million. As part of the deal, the original developer, SunCal, retained an option on a big chunk of the middle of the property where infrastructure had already been built.

SunCal itself didn't go into bankruptcy but had to sell a number of its properties when its investor, Lehman Bros. went belly up.

While the deal seemed like a win-win to Rosedale and Buena Vista, the City of Bakersfield was not so enthused.

It had counted on the development fees from McAllister Ranch homes to not only finance future city infrastructure but also repay what the city had spent building a new sewer treatment plant meant to handle waste from all those anticipated houses.

McAllister isn't just blank land, according to the city.

It is zoned for residential development and is encumbered by development and annexation agreements.

"We just want the water districts to follow the law," explained Colin Pearce, the city's attorney who handles its water conflicts (and there are a few).

Those agreements have to be honored, Pearce said. More importantly, water banking isn't allowed under the land's current zoning

The water districts have to clear all those hoops before proceeding, in the city's view.

In the water districts' view, water banking is an allowable activity on the land and since they're not developing houses, they are not accountable to pay any development fees.

As you can guess, a lawsuit ensued. In this case, the city against the water districts.

Then SunCal stepped into the picture and appeared poised to buy the eastern third of the property. That would mean houses would cover most of the land.

The districts could still bank water on the western third of the ranch and the city would get a whole bunch more money in development fees.

The city was intrigued, the water districts were hopeful and the lawsuit was put on hold.

"The way it was presented to me was if we cooperated with SunCal and sold them more land so they could build a bigger project, Bakersfield would back off," said John Vidovich, now president of the Buena Vista board and a driving force behind the McAllister water bank proposal.

Though the sale to SunCal at first seemed like a done deal, I think an unforeseen schism in priorities between Buena Vista and Rosedale may have soured things.

Buena Vista is not only flush with cash, according to Vidovich, it also has extensive rights to Kern River water, giving it a solid water position even in drought years such as this.

Meanwhile, its partner, Rosedale, has further extended itself by spending $25 million to buy the Onyx Ranch in a bid to secure water rights on the South Fork of the Kern River. Rosedale's other main source of water is through the increasingly unreliable State Water Project.

Selling that chunk of McAllister to SunCal would have wiped out Rosedale's debt on the McAllister purchase. It would have possibly avoided a lawsuit with the city and hastened the districts' water storage efforts.

For Rosedale, SunCal was a beacon of hope.

Rosedale wasn't in charge of negotiations with SunCal. Buena Vista was.

"I didn't trust SunCal," said Vidovich, head of De Anza Properties, a long time housing and commercial development business in Santa Clara County.

"So, we were tough on them. We wanted a contract that would require them to do what they said they were going to do," Vidovich said.

But, according to him, SunCal kept renegotiating and "playing games" with Buena Vista. Finally, he said, SunCal backed out entirely.

That doesn't mean housing is totally out of the picture, as Vidovich said he was meeting with at least one other suitor.

"My interest is in going forward with a water bank," he said. "If there's a way that (housing development) could get the heat off us from Bakersfield, I'll talk to anyone."

SunCal still has its option on the middle portion of McAllister and Vidovich said his understanding is the development company has money from a new investor and will be closing on that option.

That is the section of land that had the beginnings of the Greg Norman-designed golf course that once caused a lot of excitement during the boom years. I asked SunCal last spring if they would resurrect the course and spokesman Joe Aguirre said he couldn't say.

Aguirre tried to get an answer from SunCal brass about why the deal with the water districts fell through but wasn't able to reach someone in time for my deadline. That's OK, I'm sure this will come up again.

All of which is to say, it looks like 2014 will be another good year for water lawyers.

Opinions expressed in this column are those of Lois Henry, not The Bakersfield Californian. Her column appears Wednesdays and Sundays. Comment at http://www.bakersfield.com, call her at 395-7373 or e-mail lhenry@bakersfield.com

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