Will Poseidon’s desal HB plant take money from the state for social housing?
Poseidon Water has requested $ 1.1 billion from a state pooled fund to help finance a controversial desalination plant proposed for Huntington Beach.
It’s a prospect that critics say could take those limited state dollars away from other projects that are also eligible for the money but need it more.
Like social housing.
The housing shortage in the state is estimated count in millions of units.
Meanwhile, Poseidon’s project proposal could hit its last state regulatory hurdle towards approval, in March.
In a phone interview, Poseidon vice president Scott Maloni said that this month he expects the California Coastal Commission to hear about the project and decide what permit it needs to go from there. before with construction.
The California Debt Limit Allocation Committee regularly issues tax-exempt bonds to help fund private projects with public benefits, as Poseidon says his planned facility would provide.
In 2019, the company sent an initial funding request of $ 1.1 billion to the Debt Limit Allocation Committee through an issuing agency. While a few steps are still needed to finalize the request for formal review by state officials, sometime before Poseidon’s request expires in a year.
The company’s desalination plant, if approved by the Coastal Commission, would absorb about 100 million gallons of seawater off the coast daily, turn half of it into potable water, and discharge the concentrated brine into the water. ‘ocean.
Opponents say Poseidon’s project would make water more expensive, not worth the increased cost to local taxpayers – especially in low-income communities – and kill nearby marine life while damaging surrounding coastal ecosystems.
But Poseidon and supporters of the plant argue the project is needed in California amid routine drought and the threat of climate change to the state’s imported water supply.
Maloni, in a telephone interview on Monday, said the costs of building the plant and producing the water will be passed on to taxpayers when they start receiving the desalinated water, under the deal. the company to sell the water it produces to the Orange County Water District.
Desalinated water from the facility would be more expensive than imported water. Proponents argue that the cost gap would close over time.
Obtaining state loans to build the plant – as opposed to more expensive loans from other private bond issuers with higher interest rates – can mean lower rates for northern residents and from the center of the county who pay for the desalinated water they get, Maloni said.
“The lower the debt, the better it is for taxpayers,” said Maloni. These corporate bonds were used to finance the company’s other seawater desalination facility in Carlsbad.
But the Debt Limit Allocation Committee is also supposed to help fund other types of projects, such as affordable housing projects – at a time when the state is estimated at 1.5 million dwellings in the short of its current needs.
Groups hoping to build affordable housing statewide appear to have lined up for committee funding allocations.
Yet demand has far exceeded what is available from the Debt Limit Allocation Committee.
By billions of dollars.
Federal law limits the amount of debt a state can accumulate by issuing tax-exempt bonds for public utility projects.
In 2022, California expects to be able to contribute a total of about $ 4.4 billion below that cap, according to Noah Starr, spokesperson for the office of California Treasurer Fiona Ma.
The interest of affordable housing groups in this available money amounts to more than $ 8 billion in total demand, according to estimates from a recent Debt Limit Allocation Committee survey.
Poseidon’s $ 1.1 billion request to the state has sparked opposition from organizations and community members anxious to ensure the plant is not built.
If approved, Poseidon’s request would reduce by about 28% the total bond issuance available in California for affordable housing projects, read a Dec. 3 letter from a coalition of environmental groups, which said. includes Azul, OC Coastkeeper, and the California Coastal Protection Network.
The letter goes on to point out that “every dollar of low-interest financing triggers about $ 0.80 in federal affordable housing tax credits.”
“Once you factor in 80 cents on the dollar, $ 1.1 billion could now mean close to $ 2 billion,” said Andrea León-Grossmann, director of climate action for Azul, a Latin group. American advocate for environmental justice.
Critics write in the coalition letter that Poseidon – whose parent company is a private equity firm called Brookfield Asset Management with over $ 600 billion in assets – “does not need [the California Debt Limit Allocation Committee] money to finance its projects.
“On the other hand, Californians who are crushed by our current and unprecedented housing crisis are waiting for new affordable housing,” the letter reads. “It is up to [the committee] to choose communities that struggle to pay the rent and survive rather than subsidize a corporate effort to privatize water.
Maloni, responding to the letter, argued that he also viewed water, and not just housing, as an urgent crisis.
“Determining which infrastructure needs more support – housing or water – is a discretion that will be taken by the committee,” said Maloni. “But I guess they’ll take a couple of things into consideration, such as whether the project is ready to go? Is he ready to start construction? “
Maloni said the company was simply asking for “funds that we are eligible for,” adding that nothing is concrete and there are likely scenarios where the company gets a loan from another agency and doesn’t need money from the bond committee.
In 2019, for example, the Environmental Protection Agency selected Poseidon as eligible to apply for credit assistance to finance the Huntington Beach project, under the federal government’s Water Infrastructure Finance and Innovation Act.
Company representatives greeted this as a recognition of the need for the project while potentially reducing its costs for potential taxpayers.
Poseidon filed his $ 1.1 billion claim for state debt limit allocation committee money through an issuing body, the California Pollution Control Financing Authority, which has approved a first reading of the request in 2019.
But it takes a “final resolution” from the agency to send the request to the debt limit allocation committee, and the first resolution will expire on December 9 next year, according to Starr, a spokesperson for the office. of the treasurer.
The company currently does not have a meeting scheduled to secure one, Starr said.
The debt allocation committee has yet to decide how much of its $ 4.4 billion will go to housing and how much to exempt facilities like Poseidon’s proposal for the year 2022.
“It won’t be decided and announced until Jan. 19, 2022,” Starr said.
The next committee meeting is set for December 22.
The Debt Limit Allocation Committee process illustrates the largely overlooked intrigue of funding large-scale projects in California that can be not only expensive, but controversial, said Susan Jordan of the California Coastal Protection Network.
“This stuff is important,” Jordan said.
Committee meetings also lacked accessibility to the public, she said, recalling the last committee meeting on December 8, chaired by state treasurer Fiona Ma.
At that meeting, Jordan said, public speakers – those who couldn’t attend the meeting in person, at least, to give their opinion on funding allocations – had to wait on the phone for hours, unable to access a video viewing option like Zoom for remote listeners.
“This agency doesn’t necessarily go in order of its agenda… you can’t afford not to be on the phone all the time,” Jordan said. “The only people who actually see the meeting can go and sit in the room, and that’s not us. “
Starr said: “[The committee] heard these complaints at our last meeting and rectified the situation by adding the Zoom call information for the public to the agenda for the next meeting on December 22, 20221 which is posted on our website.
“Sometimes items are taken out of service,” Starr added. “It says in the agenda that this is a possibility.”
Purchase a Voice of OC shirt, coffee mug or tote bag to show your support for the community while supporting your nonprofit newsroom. In response to early comments from some readers, we would like to note that this kind of effort does not cost Voice of OC anything to sponsor.
“ Start every day informed with our free, OC-focused newsletter.
“ Be aware with free last minute text messages from Voice of OC.
Since you’ve made it this far,
You are obviously connected to your community and appreciate good journalism. As an independent and local association, our news is accessible to everyone, no matter what they can afford. Our newsroom is focused on the civic and cultural life of Orange County, not click-trap ads. Our journalists hold powerful interests responsible for protecting your quality of life. But it’s not free to produce. It depends on donors like you.