In spite of concerns regarding funding, the Riverside County Board of Supervisors voted to approve the Temecula Valley Wine Country Interagency Funding Agreement between Riverside County and Eastern Municipal Water District (EMWD) during a regular meeting held April 22. The move will allow for a budget adjustment in the county’s general fund and a loan from its workers’ compensation fund to allow for sewer improvements to the area.
The project is moving forward in conjunction with the development of the Temecula Valley Wine Country Community plan that was approved by the board on March 11 of this year.
According to the plan, the development of waste water facilities will allow the plan to move forward as it was designed and provide sustainability for current hospitality and winery businesses.
Total cost of the project is $28.8 million, with the county contributing $2 million to phase one of the project. Cost to the county for phase two is $3 million. EMWD has already awarded the contracts for phase one of the project while timing for phase two is yet to be determined.
Paul Jacobs, a resident of Temecula, spoke to commissioners saying he was concerned about the funding of the project.
“While I agree a sewer system is necessary for Wine Country to survive and thrive as a tourist trap, something doesn’t smell right with the identified and unidentified funding sources for what is sure to be a project in excess of 30 million dollars,” Jacobs said.
Jacobs went on to point out that the county will contribute $2 million for phase one of the project and an additional $3 million for phase two that will be borrowed from the workers’ compensation fund.
“Phase one is apparently funded to the tune of $14.44 million,” Jacobs said, “but the staff report has a disclosure stating that the parties recognize that funds for phase two will have to be budgeted and appropriated and available for payment if the funds are not made available then EMWD may suspend or not advance to phase two.”
Jacobs expressed concerns regarding the lack of a plan to finish the project that will borrow $2 million from the workers’ compensation fund to the capital improvement program fund. The loan will be repaid by the transient occupancy tax (TOT), a 10 percent fee charged by hotel operators on top of room rental fees. In fiscal year 2012-2013 the TOT generated more than $1.85 million with just over $824,000 coming from Temecula Valley Wine Country.
“How can you proceed with plans to build half of a sewer system with no certainty the second half will ever be built,” Jacobs asked noting that he and his wife would have backed out of the deal to build their home had there been no certainty their project would ever be completed. “The county seems to be acting as the lead agency on this project yet EMWD seems to be the government agency really calling the shots on this project.”
Jacobs said he was concerned that county taxpayers and rate payers would end up footing the bill if EMWD later decided the cost of the project were to exceed the funding earmarked for the project.
“Does it seem to you that the county is practicing best practices in the management of this project,” Jacobs asked. “I have my doubts. The only distinction here is that the county is throwing money at a sewer instead of directly into it.”
Chairman and third district supervisor Jeff Stone said the project has been a public partnership between EMWD and many of the vendors and that the project was being financed at a very low rate of interest.
“There are 17 property owners in phase one that have committed their properties as collateral for this loan,” Stone said noting that the sewer is currently being installed and that the project will allow for over a billion dollars of new projects including hotels which would be subject to the TOT. “It is that future bed tax which is going to reimburse that $2 million dollar, first phase of this project.”
Stone said the second phase would require financing by EMWD who would not proceed without the buy in from property owners to put their land up as collateral.
“Certainly the county is not going to be forwarding any money unless there is a genuine project which may be higher or lower,” Stone said. “The first phase is completely financed and the only exposure for the taxpayers is the $2 million dollars which we know will be reimbursed from the future bed tax that is going to come from the entrepreneurial investment that is happening there.”
Riverside County resident Gary Grant also addressed the commission expressing concerns over the financing of the project.
“Borrowing money is a very risky business and should only be applied in dire urgency,” he said. “This project does not meet, in my opinion, on this matter.
Grant went on to say that he is concerned how the project financing would affect those who live in EMWD’s area of service.
“In reference to EMWD it appears to me that growth is entirely reliant on water and sewers and consequently whether I like it or not investors and investments have a tendency to move towards that direction and the only problem with this is that generally agencies of water district involve everybody in these areas,” Grant said. “The funding and the costs is referenced to everyone concerned in this area of growth