South Coast extends Doheny desal finance team as year-end decision looms

South Coast extends Doheny desal finance team as year-end decision loomsSouth Coast Water District’s Administration & Finance Committee unanimously approved three consulting-contract amendments worth up to $395,000 for the Doheny Ocean Desalination Project. Members said the project needs a clearer deadline and standardised financing options as State Parks mitigation costs and competitive public funding put pressure on its schedule.

The committee approved amendments worth up to $120,000 for Fieldman Rolapp & Associates, $175,000 for Clean Energy Capital and $100,000 for Stradling Yocca Carlson & Rauth LLP.

The additional services are intended to support financial close, including work on commercial paper, WIFIA, State Revolving Fund financing, bond counsel and project agreements.

A committee member said the district must have a decision on State Parks-related costs by the end of 2026 or it will face difficulty advancing the project.

The district has submitted a request for more than $62 million from the federal desalination grant programme, while its place on the State Water Resources Control Board fundable list is not a funding guarantee.

South Coast Water District’s Administration & Finance Committee has unanimously approved three amendments to the Doheny Ocean Desalination Project’s finance-team consulting contracts, providing up to $395,000 in additional advisory, financial-analysis and legal support as the district seeks to bring the project to financial close. The amendments cover up to $120,000 for Fieldman Rolapp & Associates for as-needed municipal advisory services; up to $175,000 for Clean Energy Capital for financial analysis and contract development; and up to $100,000 for Stradling Yocca Carlson & Rauth LLP for legal and bond-counsel services. The committee’s action recommends that the Board authorise the General Manager to issue the amendments. Staff said the district had budgeted $400,000 for the current fiscal year, anticipating an intensive stage of work around a potential contract award and financial close. The consulting contracts are expected to run through the end of the year and “probably into the early part” of the following year, according to staff. The work includes support for WIFIA and State Revolving Fund financing, commercial paper, letters of credit, financial modelling and sensitivity analysis, and the development of governance, water-services, water-purchase and installation-purchase agreements. The finance team is also working with prospective participants including Eastern Municipal Water District and Laguna Beach, while South Coast considers potential arrangements with other agencies. However, the committee discussion showed growing impatience with the project’s shifting timetable and the number of potential commercial structures under consideration. A committee member called for a defined deadline and said the district should limit partner financing choices to a self-financed option and a common finance package, rather than tailoring structures for each agency. “We’re at go time,” the member said, adding that if the district did not have a decision on outstanding issues by the end of the year, it would have difficulty advancing the project. One key unresolved issue is the cost of State Parks requirements associated with stormwater reconstruction. The district’s representatives have met State Parks director-level staff to seek a departmental contribution of about $8 million, after a committee member described the additional cost currently facing the district as about $18 million. State Parks staff had requested detailed information for presentation to senior officials, and were expected to respond the following week on scheduling a further meeting. The timetable also matters for external funding. The district remains on the State Water Resources Control Board’s fundable list, but its consultant cautioned that this is not a guarantee and that competition is intense amid tightening state finances and depleted water grant and loan funds. South Coast submitted a request for more than $62 million from the federal desalination grant programme at the end of August; award notices were expected near the end of the year or early the following year. The district is also seeking $1.5 million for a recycled-water infrastructure expansion project through the US Bureau of Reclamation. The committee member urged consultants and staff to continue advocacy with federal representatives and agencies, while directing the finance team to focus on getting the Doheny project “done.”