Metropolitan Buys Large Block of Land in PVID

On July, 14, 1015, Board of Directors of the Metropolitan Water District of Southern California (“Metropolitan”) approved the purchase of 12,782 acres (of which 12,049 acres are irrigable) in the Palo Verde Valley from Verbena, LLC. The land is within the Palo Verde Irrigation District (“PVID”).

Discussion of the purchase was held in closed session, but all directors in attendance unanimously voted in open session to approve the purchase and declare that it was categorically exempt from CEQA. (Two directors—from Compton and Inland Empire Utilities Agency—were absent).

The purchase price is $255,644,000—which calculates to about $20,000/acre. While the Purchase and Sale Agreement between Metropolitan and Verbena allocates the purchase price to the land, the purchase also includes any easements, rights-of-way, titles, and other interests and rights—i.e. mineral rights, development rights, air rights, water allocations and water rights—that are appurtenant to the land, as well as any improvements other than the growing crops and plantings.

Combining the land purchase from Verbena with the approximately 8,000 acres in Metropolitan’s inventory from its 2001 purchase of land from San Diego Gas & Electric brings the district’s ownership in PVID lands to more than 20,000 acres, which is about 20% of the land in the Lower Palo Verde Valley. (For more information on Metropolitan’s purchase from SDG&E, see “Transactions,” Water Strategist November 2001).

Metropolitan staff plans to work with the Board of Directors to develop a land management plan in early 2016. Meanwhile, the district has leased the land back to the seller through the end of 2015 at a price of $106,000/month (based on a price of $20/acre being farmed, less $12/acre being fallowed). The leaseback will not automatically renew—but either party can provide for a one-year leaseback under the same terms with a written agreement executed by December 15, 2015.

In 2001, Metropolitan entered into a long-term fallowing agreement with PVID that is expected to provide Metropolitan with 3.63 million AF over the 35-year life of the program and is considered to be a compliment to the Imperial Irrigation District water transfers that are designed to reduce California’s Colorado River diversions. (For more on the Metropolitan-PVID fallowing program, see “Transactions,” Water Strategist July/August 2001 and “Metropolitan and PVID Finalize Principles of Land Fallowing Agreement,” Water Strategist October 2002.  For more on the IID water transfers, see “Water Agencies Revise Terms of Transfers for QSA,” Water Strategist October 2002).

Around the same time, Metropolitan also executed an agreement with the State of Arizona under which Metropolitan agreed to implement or facilitate the implementation of conservation measures or water transfers to gradually reduce California’s diversions from the Colorado River and ensure that the state’s consumptive use does not exceed its 4.4 MAF per year allocation by the end of the 2016. (For more on Metropolitan’s agreement with Arizona, see “Arizona Governor Signs Joint Resolution on Colorado River Agreement,” Water Strategist July/August 2001).

 

Written by Marta L. Weismann