Gov. Brown’s grand water-tunnel project runs into money uncertainty

FILE - In this Feb. 25, 2016, file photo, water flows through an irrigation canal to crops near Lemoore, Calif. The federal regulators evaluating Gov. Jerry Brown's decades-old ambitions to re-engineer the water supplies from California's largest river are promising a status update Monday, June 26, 2017, as Brown's $16 billion proposal to shunt part of the Sacramento through two mammoth tunnels awaits a crucial yes or no from national agencies. (AP Photo/Rich Pedroncelli, File) less FILE - In this Feb. 25, 2016, file photo, water flows through an irrigation canal to crops near Lemoore, Calif. The federal regulators evaluating Gov. Jerry Brown's decades-old ambitions to re-engineer the ... more Photo: Rich Pedroncelli / Associated Press 2016 Photo: Rich Pedroncelli / Associated Press 2016 Image 1 of / 5 Caption Close Gov. Brown’s grand water-tunnel project runs into money uncertainty 1 / 5 Back to Gallery

Just months after Gov. Jerry Brown’s plan to shore up California’s water system with two giant tunnels won key approval from regulators, the $17 billion project is running into potential financial problems.

The dozens of agencies that have expressed support for the delta tunnels as a way to ensure that they get more reliable water deliveries, from Silicon Valley to the Central Valley to Los Angeles, are supposed to produce financial commitments in coming weeks. Many, however, appear reluctant to sign on.

Officials with the sprawling Westlands Water District in the western San Joaquin Valley, the state’s largest agricultural supplier, voiced concern on the eve of a Tuesday vote that the cost won’t justify the benefit. Westlands is the first major agency to vote on whether to help pay for the tunnels, and its decision is likely to influence other water districts around the state.

Those districts won’t know exactly how much they — and their customers — will have to pay until all the suppliers have spoken.

“It’s kind of a chicken-and-egg thing: Do you support the project or not?” said Robert Shaver, general manager of the Alameda County Water District, which serves Fremont, Newark and Union City and gets 40 percent of its water from state water deliveries. “We can’t determine what the cost is going to be without knowing who is supportive of the project, but it’s hard to support the project” without knowing the cost.

Whatever the financial obligation turns out out to be, it’s certain to prompt water agencies to raise rates.

The governor’s plan calls for a pair of 35-mile-long tunnels to be built through the Sacramento-San Joaquin River Delta for moving water from the north state to the Bay Area and Southern California. Proponents of the project say the delta’s current system of canals and levees is crumbling, and without the upgrade known as California WaterFix, statewide water deliveries as well as local wildlife will suffer.

The cost of the project is supposed to be split among the agencies that receive delta water, with each paying a portion commensurate with their allotment. But some smaller water agencies have already decided it will cost too much and have opted out. That raises the cost for all those that remain.

The Alameda County Water District, which serves about 350,000 people in the East Bay, hasn’t scheduled a vote on whether to commit to the project. The larger Santa Clara Valley Water District, which also relies on delta water for about 40 percent of its supply, has agreed to make a decision next month, though it remains equally uncertain about which way to go.

“The district continues to evaluate the project,” John Varela, board chairman for the Santa Clara Valley agency, said in an email. “We are methodically reviewing a combination of water supply possibilities, weighing the risks, and focusing on cost control to make the best investment decisions for the future of Santa Clara County.”

State officials say agencies that don’t help pay for the tunnels won’t be entitled to their benefits. At stake, officials say, is a boost in water supply of up to 20 percent when the new, more efficient infrastructure is in place.

Erin Mellon, spokeswoman for the California Department of Water Resources, said Monday that while there’s no timeline for water agencies to make their funding decision, they need to do so soon so the project can get off the ground. The department would like to begin building the tunnels as early as next year. The work is expected to take at least a decade.

“If there aren’t enough water contractors at the table, we’ll have to go back and reassess the project,” Mellon said.

Downsizing the work is the obvious alternative, though what form that would take remains unclear. Any new proposal would have to undergo the same regulatory scrutiny that the tunnels plan has endured, a process that could take years.

In July, WaterFix won a long-awaited approval for its environmental review, overcoming environmentalists’ concerns that the project could harm water quality and endanger fish runs in the delta.

Managers of the Westlands Water District, which provides water to farmers across 1,000 square miles of Fresno and Kings counties, released financial projections last week that suggest the math might not work out in their favor.

Westlands is among several water agencies that get their water not from the state but from the federal government, which also plans to use the twin tunnels to move water. The federal contractors are being asked to foot 45 percent of the total bill, with state contractors taking up the balance.

According to the district’s report, the billions of dollars that Westlands might have to commit to the project would force the district to more than double water rates for growers. And if additional water agencies decline to commit to the project, rates could rise even further.

“There’s a lot we don’t know,” said Sarah Woolf, a Central Valley farmer and Westlands board member. “Honestly, I don’t know that we’re at a stage that we can vote.”

A legal challenge filed last week also threatens to undermine the financing of the tunnels proposal. Six groups submitted court papers contending that the state can’t legally issue bonds to pay for WaterFix because the project faces too much uncertainty, from pending lawsuits over its environmental impact to a failure to identify its funders.

“They haven’t even reached agreement on who’s going to pay what percentage,” said Bob Wright, an attorney representing Friends of the River, Restore the Delta, the Planning and Conservation League, and the Sierra Club California.

Wright fears that the state will come up short on money for the tunnels but still choose to proceed and pass the debt on to taxpayers.

“People who don’t benefit,” he said, “will have to foot the bill.”

Kurtis Alexander is a San Francisco Chronicle staff writer. Email: kalexander@sfchronicle.com Twitter: @kurtisalexander