Redwood Valley water district loan goes unpaid

Thirty years after water began flowing through the Redwood Valley County Water District's pipes, the $7.2 million loan to build the infrastructure remains unpaid.

It's the only private water district in the country that received U.S. Bureau of Reclamation loans to fall so far behind on payments, officials said.

"Redwood Valley is the only one that has not paid anything in decades," said bureau spokeswoman Margaret Gidding.

About 30 private water districts in the Western United States received such loans, which are no longer available.

Redwood Valley made just two payments -- a total of $102,000 -- on its loans before district officials realized they would not be able to maintain payments that started at about $150,000 a year and that would steadily increase over time.

"Without sufficient income, that was going to be an impossibility," said board chairman Don Butow. The district has an annual budget of $1.3 million and serves about 1,500 homes and 202 agricultural customers northeast of Ukiah.

Redwood Valley water officials blame their inability to pay off the loan on a shortage of water rights, an obstacle they've been struggling to overcome for three decades.

The water district has only a wintertime right to pump water from Lake Mendocino and only when the reservoir is full, a dilemma that led to a court-ordered moratorium on new water hookups in 1989.

The district buys most of its water from other agencies, but the purchase agreements are for surplus water only and disappear when there are severe water shortages.

Redwood Valley's population nearly tripled between 1970 and 2000 -- from 2,007 to 5,871 -- but the moratorium prevents the district from providing the newcomers with service.

Unless it can increase the number of its customers, it cannot increase its income, Butow said.

"If we could have built out, we would have sufficient funds to pay off the Bureau of Reclamation," he said.

The water district was able to obtain special legislation in 1988 that suspended its loan payments and penalties until final repayment could be renegotiated.

But that didn't help with the main problem -- a lack of water.

The district is now pursuing additional legislation that would allow it to seek bond funding to help find a more reliable water source. It could then expand the district and eventually repay the Bureau of Reclamation loan, Butow said.

The district already has allocated or spent about $1.1 million on various schemes to obtain a firm water right in the past 10 years.

They included an application for water rights to springtime flows in the Eel River near Dos Rios, a proposal the district has since abandoned as too costly.

"We blew about $85,000 trying to get that done," Butow said.

Critics have complained that the district could have been making loan payments with the money it's spent on now-discarded projects.

"They were well on their way to saving up money and paying it off," said Lee Howard, a member of the Russian River Flood Control and Water Conservation Improvement District, which sells water to Redwood Valley.

The district currently is focusing on building a reservoir where it could store water from its winter water right for use throughout the year.

Butow said the district has identified some potential sites, but it will need to raise money to make it happen.

District founders were aware they lacked water rights when they began going door to door in the 1960s to lobby for the district's formation, said Charlie Barra, a winegrape grower and water district founder.

But they they were certain they would be able to find a reliable water source.

"We tried everything we could to get some water rights," he said. But by the time the project was built, "we knew there was no water available."

You can reach Staff Writer Glenda Anderson at 462-6473

or glenda.anderson

@pressdemocrat.com.