Washington, DC – U.S. Senator Dianne Feinstein (D-Calif.) has introduced a measure designed to help increase the water supply for Redwood Valley County Water District, which is in a rural area near Ukiah in Mendocino County.

Specifically, the legislation would allow the Redwood Valley County Water District to suspend payments for $7.3 million in unpaid federal loans, in order for the Water District to qualify for privately-funded projects to increase the region’s water supply. The legislation also stipulates that once the private loans have been satisfied, the federal loans must be repaid. 

The water projects identified by the County will help provide a reliable drinking water supply of 2,000 acre-feet, which will service 3,800 residents in the area.

“The residents of Redwood Valley County Water District today face an untenable situation:  unpaid federal loans totaling $7.3 million and a serious water supply deficit,” Senator Feinstein said. “The legislation Senator Boxer and I have introduced today will help give the Water District the flexibility it needs to become eligible for loans – funded by private sources – to develop projects that will increase the supply of drinking water for the area. The federal loans still must be repaid, but the District will be able to first pay off any privately-funded loans before it must repay the federal loans.”

The measure is cosponsored by Senator Barbara Boxer (D-Calif.). Companion legislation was introduced in the House by Representative Mike Thompson (D-Calif.)

Background

In 1983, the Redwood Valley County Water District completed a project to supply water to a rural agricultural community near Ukiah, in Northern California. Two Bureau of Reclamation loans totaling $7.3 million partially financed this project. The District was unable to repay these loans.

As a result of this situation, in 1988 Congress passed a law that indefinitely suspended the District’s obligations to repay these Bureau loans and ordered the Secretary of the Interior to renegotiate the terms of the loans. This loan renegotiation has never taken place and now the District finds its water supply highly uncertain. The Bureau of Reclamation acknowledged in a 2000 report that the District needs a reliable water supply in order to solve its current financial dilemma.

The District recently identified two potential new projects, either of which could supply a firm and reliable water source. No government funds will be sought for these projects. The District intends to rely on private financing, a strategy that the Bureau is encouraging.  However, before the District can secure private financing for new projects, it must renegotiate the existing loans to provide for their repayment subsequent to the repayment of the new loans.

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