The $120,000 Campaign for Montecito’s Water Future

In an extraordinary $120,000 campaign, a slate of five candidates is wielding free-swinging, fierce attacks against incumbents in a bid for control over the Montecito Water and Sanitary District boards.

Fueled by tens of thousands of dollars from just eight Montecito moguls, this “Water Security Team” wants to drought-proof the wealthy, water-guzzling community by buying into Santa Barbara’s desalination plant and recycling water at the Sanitary District. The recycled water would keep the grass green at the exclusive Valley Club and Birnam Wood Golf Club, where some of the slate’s big contributors are influential members.

No one has put an official price tag on the program set forth by the well-financed challengers and their backers, but it could mean untold increases in ratepayer bills for the long term.

“I’m really worried for our community because the Birnam Wood group wants to take over both the water and sanitary districts,” said Carolee Krieger, who lost two elections in the early 1990s to water board incumbents with deep pockets. “They want to try to get water from wherever they can. I don’t believe that they can deliver on that.”

The slate dismisses such talk.

“The incumbents generally on both boards have been in place for a long time,” said Ken Coates, a retired Ford Motor Company executive who is running for the Montecito water board. “It’s time for some fresh eyes, creative approaches, and being much more collaborative.”

As a political matter, the no-holds-barred campaign in some ways mirrors the Trump-era transformation of national politics into a belligerent spectacle of negative attacks backed up by big money. As a policy matter, the race raises a host of complex, interlocking questions that could affect the household budgets of every one of Montecito’s 9,000 residents.

Here is a breakdown of what’s at stake:

The Rationing “Nightmare”

Historically, Montecito has weathered periodic droughts by rationing. But at the tail end of the drought of 1986-91, the voters approved the importation of state aqueduct water from the Sierra to Lake Cachuma as a buffer against dry weather.

The current seven-year drought, still characterized as “severe” on the U.S. Drought Monitor map for Santa Barbara County, has shown that state water entitlements did not drought-proof Montecito or any other community on the South Coast. As local reservoirs shrank and the state made drastic cuts to aqueduct deliveries, the Montecito Water District has been forced to buy additional supplies from around California.

Unlike South Coast cities, the Montecito Water District cannot count on much water from underground. It’s water basins are shallow, and hundreds of private wells are pumping the water out.

The larger question is whether “water security” is even possible in a community where residents are using an average 208 gallons per capita per day, mostly on gardens of one-acre lots and large estates. (By contrast, Santa Barbarans use an average 55 gallons.)

From 2014 to 2017, as the drought deepened, the Water District set maximum allocations for each property in Montecito, charging stiff over-watering penalties to curb excessive use. The allocations have achieved a 38 percent reduction from 2013 levels, district records show.

In a draft of an editorial for the Montecito Journal that he forwarded to reporters, Associate Editor Bob Hazard, a Birnam Wood resident and a major donor to the slate, writes that during rationing, hundreds of customers who had accidental leaks on their properties “were dragged before both the ‘Leak Committee’ of the Board, and then paraded before the full Board to plead for relief.

“The process was degrading, humiliating and expensive …” Hazard says. He does not mention that the petitioners generally got relief, so long as they could show that they fixed their leaks quickly. But nobody wants to go through that again.

Woody Barrett, a petroleum geologist who is running for the Sanitary District board, remembers rationing as “an absolute nightmare.” For him, he said, it meant paying $2,200 monthly in over-watering penalties during about eight months to keep 17 redwoods, a species native to Northern California, alive in his back yard. Barrett said he would saturate the trunks and spray water with a hose as high as he could up into the branches, to simulate the fog drip conditions of cooler climes.

“It was painful, but the trees survived,” he said. “As long as we’re hooked on state water, there may be rationing. Do I not want penalties again and quotas? You bet. It’s unfair to the community to be hit with those things.”

But Dick Shaikewitz, a retired lawyer who is fighting to keep his seat after 12 years on the water board, is not making any promises.

“We got rid of rationing, and we hope that it never comes back,” he said. “But if people don’t voluntarily conserve, what else can we do?”

The New Water Board Majority

The campaign in Montecito pits seasoned incumbents against a slate of five candidates who were handpicked by donors who are bankrolling them.

The slate candidates for the water board are Coates; Brian Goebel, a management consultant; and Cori Hayman, a lawyer who serves on the board of the Montecito Association, a homeowner’s group. Sharon Byrne, the association’s executive director, is the slate’s campaign manager.

The slate has the race sewed up; its candidates will form a majority even if Shaikewitz keeps his seat. That’s because two seats are uncontested; and two board members — Tobe Plough and Floyd Wicks — were elected in 2016 with $80,000 from some of the same donors. Plough and Wicks have donated $9,000 from their 2016 treasury to the current slate.

Meanwhile, in the race for two seats on the Sanitary District, the slate is running Barrett, the owner of Alltex Exploration Inc., a Houston-based oil company with operations in Texas and Louisiana; and Dana Newquist, the owner of Mission Villa, an Alzheimer’s facility on Mission Street in Santa Barbara. Newquist has served on the Montecito Fire Protection District board.

Two Sanitary District board incumbents are defending their seats: Judith Ishkanian, who has served on the board for 12 years and has been president four times, and Bob Williams, who has served for four years. Williams oversaw the design, construction, and installation of recycled water infrastructure as a division executive for the Irvine Co. in Newport Beach.

With the exception of Coates, who has been going to Water District meetings for the past four years, the slate candidates are newcomers to water issues and have attended only a handful of meetings. But they have amassed 10 times as much campaign money as their rivals.

The Influence of Money

Eight Montecitans are funding nearly half of the slate’s $122,000 campaign, according to statements filed with the County Elections Office.

Some of them first got together in 2014, when the water board refused to look into a proposal by PERC Water Corporation, a private water company based in Costa Mesa, to build a recycling plant and a desalination plant in Montecito. The project was estimated to cost $70 million.

As Phil Bernstein, the owner of Jacob Stern & Sons, a Santa Barbara agricultural import-export firm, tells the story, he and Fred Gluck, a retired senior partner at McKinsey & Company, a worldwide management consulting firm, along with a few other Montecitans, offered the district $100,000 to pay PERC to study the proposal.

At the time, PERC was represented by Wicks, a water industry consultant and the former president and CEO of American States Water Co. American States provides water to 260,000 California residents through its subsidiary, the Golden State Water Co.

“We would have sold the water to the district, which could have bought the plant if they wanted to,” Wicks recalled last week. “The board didn’t even want to hear our proposal.”

When the water board declined the money, Bernstein said, it was “an inspiration to us in helping to make a change at the board level.” In 2016, the group backed the campaign that put Plough and Wicks on the water board. Coates, a current candidate for the same board, ran that campaign, which featured a glossy photograph of a spacecraft on its mailers, with the words, “What does the International Space Station have that the Montecito Water District does not? The answer is recycled water.”

According to campaign statements filed at the county Elections Office as of October 10, the largest donor to the 2018 Montecito slate, at $25,000, is Joseph Hardin Jr., a retired Walmart executive who served as president and CEO of Sam’s Clubs in the 1990s. Hardin has been a board member at both Birnam Wood and the Valley Club.

Seven other Montecitans have contributed $5,000 each, the filings show. In addition to Siemens and Hazard, a past president of Birnam Wood, they are Bernstein and Gluck; Palmer Jackson, the owner of the Jackson Ranch, a 240-acre property that is up for sale on East Valley Road; Bob Short, a retired real estate developer who has a “social” membership at Birnam Wood; and Kenneth Stinson, the retired president and CEO of Kiewit Infrastructure Co., an Omaha, Nebraska-based firm that is one of the largest general contractors in the world; and Wayne Siemens, co-owner of Santa Barbara Capital, a local investment company. Together with Hardin’s contribution, their donations total $60,000, or nearly half the total $122,000 in campaign donations for the slate.

During the 2016 campaign, Bernstein, Gluck, Hazard, Siemens and Stinson each donated $5,000 to Plough (another “social” member of Birnam Wood) and Wicks.

“A small group of us were very distressed at the Water District,” said Short, who donated $5,000 this time around. “They were doing nothing on ‘desal.’ We live in Montecito; we expect good services. Some people think we’re a bunch of slick politicians. We’re just a bunch of inexperienced guys trying to do the right thing.”

The slate’s backers, including Plough and Wicks, have floated a number of ideas at one time or another for bringing in new water supplies to Montecito, including buying recycled water from the Carpinteria Valley; storing recycled water underground in Toro Canyon; building a stand-alone desalination plant in partnership with private investors and the Carpinteria Valley Water District; building a combined desalination and wastewater treatment plant at the Sanitary District headquarters on Channel Drive; and merging the water and sanitary districts.

“We should plan ahead and be assured of water banked for a period of at least five to 10 years in the future,” said Siemens. “There’s been too much hyperbole, angst, and anger over policies that the water board has adopted over the years. It’s going to be more expensive, but everything is more expensive, looking forward.”

The Cost of New Water

The candidates for the slate like to say they are for “smart and sustainable harvesting of all the water supply possible this side of the mountain.”

“We need to do a much better job of harnessing local water sources and using state water not as a primary source,” Goebel said. “If we’re able to achieve a local diversified water supply, we’ll be able to take quotas and rationing off the table in the future.”

The five candidates want the Water District to buy into a long-term supply of treated seawater from Santa Barbara’s desalination plant, an option that the board put on hold last year but is pursuing again now. The deal will likely be for 50 years and will meet more than a third of Montecito’s demand for water, district officials say.

The slate also wants to treat Montecito’s wastewater to the non-potable standard for landscaping and pump it through “purple pipes” to the golf courses and the Santa Barbara Cemetery. The Valley Club and Birnam Wood alone use roughly 10 percent of Montecito’s water supply, effectively spraying drinking water on the golf course greens.

The water board has not divulged how much it would cost Montecito to buy a long-term share of desalinated supply from the city. As for recycling, a treatment plant that would produce non-potable water may cost as much as $16 million, water district officials say. It would free up about 10 percent of the community’s water supply — an amount equivalent to what is used indoors.

Shaikewitz, the water board incumbent, has raised less than $2,000 in his campaign, just enough to send out a one-page typed statement to voters. By his estimate, the two projects could cost ratepayers as much as $7 million yearly, on top of $19 million in current water district expenses. That translates to a potential 35 percent increase in ratepayer bills.

Will golfers pay for recycled water here, as they do at the storied Pebble Beach Golf Links near Carmel? Shaikewitz doesn’t think so.

“The candidates promise to get things done, and super-fast, but it can’t happen that way,” he said. “You have to ask, ‘Is it fair to the customers to do this?’

“I’m not opposed to any of these things. I just want to make sure they make economic sense and our community isn’t stung. I’ve gotten four of the slate’s brochures in the mail, and there is not one word on how they’re going to pay for all these nice things they’re promising everyone.

“If you’re wealthy and don’t mind paying a big bill every month, terrific. But how many people in the district does that apply to?”

The Escalating Campaign

With the water board race in the bag, the slate is taking close aim at the Sanitary District, contending that it has done little to advance the cause of wastewater recycling for more than a decade. The district set aside land for a recycling plant in 2004 in its master plan; the lot remains vacant today.

“They’ve fallen behind the times,” said Newquist, who has been to one district meeting.

Santa Barbara and Goleta have been irrigating parks, schools, and golf courses for more than 25 years. But it falls to the Montecito Water District to authorize such a project, and the board never showed much interest until Wicks and Plough were elected. Every time recycling came up on the agenda, Shaikewitz would express concern about the safety of the water.

Hillary Hauser, the executive director of Heal the Ocean, a local environmentalist group that supports recycling, recalls how for years, the water board just said “no.”

“We have been working forever, trying to get the Montecito Water District to come to the party,” Hauser said.

A few weeks ago, the slate mailed a fold-out brochure to residents, calling on the district to “Stop dumping 500,000 gallons per day of partially treated wastewater into the ocean off Butterfly Beach” and instead recycle the water for landscaping.

The district began receiving calls from concerned citizens and puzzled regulators, and the board swiftly took out an ad in the Santa Barbara News-Press to correct what it viewed as “misleading information.” The ad invited the public to take a tour of the wastewater treatment plant, and it highlighted quotes from agencies and associations commending district practices.

State records show that treated wastewater shipped offshore from Montecito is well within state and federal standards for ocean discharges. In fact, most months, the records show, it meets a higher treatment standard that is not required — the standard for non-potable recycled water.

“I know that our discharge into the ocean is absolutely safe and compatible with marine life,” said Diane Gabriel, the district’s general manager. “Our reports, our toxicity testing, our ocean-bottom testing — nothing indicates that anything needs to be done any better. We’d be wasting our ratepayers’ money.”

On Thursday, the slate’s law firm in Sacramento responded by sending a cease-and-desist letter to Gabriel, demanding that she personally repay the money for the “improper advertisement” and that she and the district refrain from spending any additional public funds “to engage in political speech.”

Gabriel said, “There was no ill intention in any of this.” But Coates, a water board candidate for the slate, said: “The Montecito Sanitary District rarely runs ads. Running it in the News-Press and having a clear orientation to respond to political ads and mailers — that to me is a violation of the spirit of the law.”

The district also received a letter on Friday from the state Fair Political Practices Commission with an anonymous complaint against Williams, one of the two Sanitary District incumbents who are up for re-election. The complaint alleged that Williams had violated state conflict of interest laws by voting to spend district money on the News-Press ad to “benefit his campaign.”

Williams was taken by surprise.

“I just don’t believe it is correct to cite a public service ad as connected politically to the campaign,” he said. “It’s disingenuous and false on its face.”

“I didn’t run to get in a battle with anybody,” Williams said, adding that he has spent less than $1,000 on his campaign and has purchased only eight yard signs. “I’m an advocate for recycled water.”

Finally, in a move that prompted a flurry of protest letters to the Sanitary District, the board announced plans last week to appoint a new member for an open seat on November 5, the day before the election. (By law, no one running for election can be appointed.)

Hayman, a water board candidate for the slate, called this rush to fill the vacancy “very troubling.”

“It is stealing the election and undercutting the democratic process,” she said.

A District’s Independence

For some time, the slate’s wealthy donors — most publicly, Hazard and Wicks — have been promoting the idea that the Montecito water and sanitary districts should be consolidated into one agency.

Hazard declined to be interviewed for this article. But in the September 6-13 issue of the Journal, he wrote that, assuming all five slate candidates are elected, the two boards this fall should “begin collaboration and determine what savings can be derived from a community service district that might include Montecito Sanitary, Montecito Water, and possibly Summerland Sanitary.”

Hazard was calling for changes on the Sanitary District board a year ago. During a free-wheeling water board meeting on November 15, 2017, in his self-appointed role as a kind of sixth board member, Hazard spoke at length about a combined desalination and wastewater treatment plant in Montecito as “our No. 1 priority.” The Sanitary District site, Hazard said, “is crucial to our success.”

“There’s an election coming up on their board,” Hazard said, “and, you know, what we need to do is see how many votes we’re short, and we need to see who we need to re-elect, and if we can kick out Judy.”

At the same meeting, Wicks said, “I think frankly the consolidation of the two districts themselves would be an interesting way to go.”

Judy Ishkanian says she is proud to have helped build a strong financial base for the district, over the years. After the catastrophic debris flow of January 9, Ishkanian said, the board did not have to borrow $1.6 million to fix its broken lines; the money was available in the district’s own emergency fund, and the federal government has already reimbursed $900,000.

Ishkanian believes she has been targeted for replacement on the board because she also serves on the board of the Local Agency Formation Commission for Santa Barbara County. LAFCO is the state agency that oversees the formation and boundaries of special districts.

The slate candidates themselves say they favor consolidation only as a last resort.

“If we can get the two districts to work together, that’s all we need,” Coates said.

But Ishkanian, who has raised only $10,000 in campaign funds, mostly from family members, is not convinced that the candidates will act independently of their wealthy backers.

“They spew out these big ideas like salesmen and make you want something, like on nighttime TV,” she said. “The fear of a lack of water sells. They think they’re going to bring abundant water. Are they going to use private investors to put up the money, and then we’d have to pay it back at 9 percent interest? The end result will be much higher water bills.”