[Congressional Record Volume 142, Number 106 (Thursday, July 18, 1996)]
[Extensions of Remarks]
[Pages E1326-E1327]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   SUPPORT A LOAN GUARANTEE FOR THE OLIVENHAIN WATER STORAGE PROJECT

                                 ______
                                 

                     HON. RANDY ``DUKE'' CUNNINGHAM

                             of california

                    in the house of representatives

                        Thursday, July 18, 1996

  Mr. CUNNINGHAM. Mr. Speaker, I rise today to introduce legislation 
that will help north San Diego County meet its water needs in the event 
of an emergency and also encourage the Federal Government to shift its 
role from that of planner and builder of expensive western water 
projects to the more cost-effective role of being a facilitator and 
partner in regional efforts to solve regional problems. My legislation 
will authorize the Secretary of Interior to provide a Federal loan 
guarantee to the developer of the Olivenhain Water Storage Project, a 
project currently being planned by the Olivenhain Municipal Water 
District in my district of north San Diego County.
  The Olivenhain Water Storage Project is a critical part of the effort 
to increase the independence and economic stability of north San Diego 
County. Currently, the north county is almost 100 percent dependent on 
imported water from northern California and the Colorado River to meet 
its residential, industrial, and agricultural/horticultural needs. 
Potential drought conditions, environmental needs at the source, and 
demand elsewhere in the State all contribute to a rapidly rising cost 
of imported water, the cost of water to north San Diego County has 
risen 55 percent in the last 5 years. Additionally, an earthquake along 
any one of the three major faults underlying the pipelines that bring 
imported water to San Diego County could cut off water supply to the 
region for up to 2 months. The residents of north county must be 
assured that water will be available should a natural disaster occur.
  The Olivenhain Water Storage Project will provide emergency water 
supplies for over 1 million people, including those living in the 
cities of Oceanside, Carlsbad, Solana Beach, Encinitas, and San Marcos, 
as well as portions of the city of San Diego. The San Diego County 
Water Authority supports my legislation, as they recognize that the 
lack of emergency water storage in San Diego County must be addressed 
immediately. A copy of their letter of endorsement is attached at the 
end of this statement.
  The project is fully permitted after going through more than 10 years 
of environmental review. Working together with the U.S. Fish and 
Wildlife Service, a biological resource management plan has been 
developed that will enhance regional habitat preservation while also 
providing 17 miles of nature, hiking and bicycle trails to the 
community.
  The proposed loan guarantee program reflects the changing role played 
by the Federal Government in developing water projects in the West. 
Rather than having the Federal Government contribute funds, construct 
the project and control its management, the loan guarantee program 
allows the Government to leverage its limited funds to allow for cost-
effective private financing alternatives and encourages public-private 
partnerships in the building and operation of the project. This limited 
Federal participation in the financing of water infrastructure projects 
allows the project developers to secure private loans at rates that are 
competitive with municipal tax-exempt financing, while preserving the 
limited bonding capacity of local governments for other crucial 
community needs like public safety and schools.
  The Olivenhain Municipal Water District is considering the 
possibility of utilizing a public-private partnership such as I have 
described for the development of the Olivenhain Water Storage Project. 
Under this scenario, the district would competitively select a private 
partner to build and finance the project, which would then be leased 
back to the district. No Federal taxpayer funds would be involved in 
the financing of the project, and the local ratepayers will benefit 
from the cost-efficient construction and management of the project.
  The U.S. Environmental Protection Agency estimates that the costs of 
complying with the Safe Drinking Water Act and the Clean Water Act will 
be nearly $200 billion in the next 15 years. Neither local governments 
nor the Federal Government have the unlimited resources necessary to 
meet these costs. However, through a loan guarantee program such as the 
one that will be demonstrated under this legislation, limited Federal 
resources can be the catalyst for the development of private capital to 
meet these needs.
  There have already been congressional hearings on legislation to 
create a loan guarantee program--April 18, 1996. Opposition to that 
legislation (H.R. 2781) centered around the potential exposure of the 
Federal Government to a loan default and the elimination of the 
existing direct lending program at the Bureau of Reclamation. This new 
bill addresses those concerns by: First, limiting the loan guarantee 
authority to the development of one project; second, requiring that 
project developers secure any loans guaranteed by the Government; and 
third, allowing the existing loan program to remain unaffected by this 
new proposal.
  The Overseas Private Investment Corporation provides tens of millions 
of loan guarantees for the private development of water infrastructure 
in foreign countries. Shouldn't we afford our own communities in the 
United States with the same opportunities for competitive 
infrastructure development?
  My legislation will demonstrate that loan guarantees provide a cost-
effective alternative for Federal assistance in financing water 
infrastructure development. I urge my colleagues to support this 
measure. I have attached a letter of support from the San Diego County 
Water Authority.
                                                  San Diego County


                                              Water Authority,

                                      San Diego, CA, May 20, 1996.
     Re support of Government loan guarantee for water storage 
         project in San Diego County.

     Hon. Randy ``Duke'' Cunningham,
     Congress of the United States, Cannon House Office Building, 
         Washington, DC.
       Dear Congressman Cunningham: The San Diego County Water 
     Authority has been working diligently to complete an 
     Environmental Impact Report (EIR) under CEQA and 
     Environmental Impact Statement (EIS) under NEPA for emergency 
     storage in San Diego County. Currently four alternatives are 
     under consideration. The Water Authority staff expects the 
     Board of Directors to select a preferred alternative and 
     certify the EIR in July 1996. Certification of the EIS and 
     granting of a 404 Permit by the Corps of Engineers would 
     occur months later.

[[Page E1327]]

       The Olivenhain Water Storage Project is a component of the 
     Water Authority's emergency storage alternative known as 
     System 25. The Olivenhain water storage and treatment project 
     is needed, whether or not the Water Authority and Corps 
     choose System 25 for the Authority's project. The Water 
     Authority is aware that Olivenhain is pursuing legislation to 
     obtain a government loan guarantee under the Dept. of 
     Interior's Small Projects Act. The Water Authority staff 
     supports the Olivenhain Water District's endeavors to obtain 
     such guarantee and to develop a storage project in northern 
     San Diego County; whether this project is pursued 
     independently or in partnership with the Water Authority or 
     others.
       San Diego County, including the North County, has an acute 
     lack of emergency storage. Olivenhain, other member agencies 
     and the Water Authority are working together to improve this 
     situation. If you have any questions on the San Diego County 
     Water Authority's Emergency Storage Project, please contact 
     me or Ken Steele, the Authority's project manager. If you 
     have any additional questions on the Olivenhain Water Storage 
     Project, you may contact David McCollom, General Manager of 
     the Olivenhain Municipal Water District at (619) 753-6466.
       Thank you very much for your interest in your projects.
           Sincerely,

                                            Maureen Stapleton,

                                                  General Manager,
     San Diego County Water Authority.

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