Told you so.
Back in November when we learned that Tejon Ranch had purchased a chunk of what I call “the Nickel water” for its proposed Grapevine village, I said with all the water the ranch had been buying in recent years, it was positioning itself as a private water seller. Yup. I was right.
Tejon Ranch made $3 million, net, ($7.4 million gross) from selling most of that Nickel water in the first three months of this year, according to its quarterly earnings report.
It sold 6,250 acre-feet of water starting in February to several western Kern County water districts, including Belridge Water Storage District, Wheeler Ridge-Maricopa Water Storage District, Berrenda Mesa Water District and Lost Hills Water District.
The districts paid Tejon about $1,180 per acre-foot. That’s a little pricey by State Water Project standards, but not as high as we’ve seen in our current drought reality where ag water has gone for more than $1,300 an acre-foot.
Either way, it was a good return for Tejon stockholders, according to the earnings report.
Net income available to stockholders was $1.1 million for the first three months of 2014, compared with $615,000 for the same time period last year. The ranch attributed that bump to its recent water sales as well as a decrease in operating expenses.
Well, isn’t it nice the ranch had that Nickel water to sell and give its stockholders some extra walking-around change. Never mind that that water is Kern River water, purchased by the Kern County Water Agency with public bond money. Really, don’t get me started. (Google: “Lois Henry” and Nickel water.)
I emailed Tejon spokesman Barry Zoeller to talk more about the water sales and Tejon’s plans.
Zoeller did not return any of my emails.
I’ve been on Tejon’s naughty list since March when I wrote about how a Sacramento judge’s ruling regarding the Kern Water Bank may affect Tejon’s plans for its exclusive Tejon Mountain Village development.
See, Tejon got that project approved under the idea that if its State Water Project allotment wasn’t enough, it would tap water it had stored in the Kern Water Bank.
The ruling in March invalidated the water bank’s environmental impact report and the plaintiffs may seek to have the water bank shut down. One plaintiff, the Center for Biological Diversity, may also seek to have the bank’s “ill-gotten profits” or stored water, repaid to the state.
Obviously, I wanted to know if Tejon was concerned about what this might mean for Tejon Mountain Village.
“It’s not a concern,” Zoeller wrote in an email saying the ranch had lots of other sources of water.
I wrote that Tejon wasn’t “concerned a whit” about the ruling.
To say Zoeller disliked my wording is an understatement. He fired off a barrage of emails to me and my bosses taking issue with my story and ended by leaving a voice mail to The Californian’s CEO saying he would never speak with me again because “Enough is enough!”
Oops, guess I went off script.
So, back to Tejon’s recent water moves.
In 2006, Tejon’s water options were somewhat limited for its grandiose development schemes.
Through the Tejon-Castac Water District, which serves the ranch exclusively, it is supposed to get about 5,300 acre-feet a year. In reality, that works out to about 3,000 acre-feet a year on average considering the vagaries of the State Water Project.
It also receives about 5,500 acre-feet a year from the Wheeler Ridge-Maricopa Water District. But that can only be used for agriculture.
And it has its Kern Water Bank supply of about 39,000 acre-feet, according to Tejon’s most recent annual report.
That’s not bad for farming.
But Tejon has plans for a massive 23,000-home development on the Los Angeles side of the ranch known as Centennial. Then there’s the 3,400-home Tejon Mountain Village, the Tejon Industrial Complex, Tejon outlet mall and now the proposed 12,000-home village at the foot of the Grapevine. That calls for a lot more water than Tejon had back in 2006.
So, in 2007 the ranch expanded its water horizons through the Antelope Valley-East Kern Water District, or AVEK.
It’s done a number of banking and exchange programs with AVEK. And it was through AVEK that Tejon bought State Water Project contracts for 2,000 acre-feet a year from Dudley Ridge Water District and more than 1,400 acre-feet a year from the Tulare Lake Basin Water Storage District.
Now, Tejon has bought 6,693 acre-feet of Nickel Family LLC water for $19 million — half cash, half company shares — from DMB Associates. That works out to $656 per acre-foot with a 3 percent annual escalator, according to Tejon’s 2013 annual report.
From all appearances, Tejon is now swimming in water.
The annual report notes that Nickel water will ultimately be used for its various developments.
But in the meantime, as I predicted, Tejon has officially joined the ranks of Kern’s would-be water barons.
Contact Californian columnist Lois Henry at 395-7373 or lhenry@ bakersfield.com. Her work appears on Sundays and Wednesdays; the views expressed are her own.