E.D. Jackpot, Liquid Assets Pay Off

E.D. Jackpot
Liquid Assets Pay Off
by J.T. Long | November 2008

Curt Johnston, assistant director of Fairfield’s Department of Community Development, knows Solano County holds a winning hand when it comes to attracting business tenants. An accessible location between Sacramento and the Bay Area, comparatively low real estate prices, a diverse work force and a plentiful supply of high-quality water trumps just about any other hand dealt in California.

That final card, reliable water, is rare in California and one of the most important to many manufacturing, food processing and biotechnology companies. Just ask Kevin Finger, plant manager at Anheuser-Busch Inc.’s Fairfield brewery. Thirty years ago, when representatives from the St. Louis company were looking for a West Coast home for its Budweiser distilling vats, it tested the water in Solano County and stipulated it would move to Fairfield if the city could guarantee to provide only Lake Berryessa water. Three decades later, the brewery uses more than 1,500 acre-feet of water per year to brew more than 4 million barrels of beer annually.

“Water is an important ingredient in beer, and the purity, quality and consistency of the water at our breweries is very important to us,” Finger says.

Water availability was also a draw when Genentech Inc. expanded to Vacaville in 1998 as the first step beyond its San Francisco headquarters. Like Chiron (now under Novartis Vaccines and Diagnostics Inc.), which built a 61,000-square-foot drug manufacturing plant in Vacaville in 1994, proximity to Genentech’s technology base in South San Francisco and a skilled labor pool from UC Davis were also factors.

“After an unprecedented three product approvals in slightly over a year, Genentech needed to expand manufacturing quickly in order to get its therapies to the people who need them,” Genentech spokeswoman Kelli Wilder says. “Expanding in Vacaville gave Genentech a very significant timing advantage for increasing production.”

Anheuser-Busch and Genentech were not alone in their quest for a reliable water source. Calbee America Inc. which produces Shrimp Flavored Chips and Snapea Crisps, moved its manufacturing and headquarters to a new 40,000-square-foot Fairfield facility in 2006. Water quality and supply and a convenient location were cited as guiding issues by Calbee president and CEO, Masanori Yasunaga, when he announced the move. Other food processors lured by Solano County’s liquid assets include Frito-Lay North America Inc., Guittard Chocolate Co., SePay Groves Olive Oil and Jelly Belly Candy Co.

Jelly Belly opened its candy-making facility in Fairfield more than two decades ago and water was one of many key factors, according to company representative Toni Holtz. “It has worked out well and we have continued to expand over the years,” she says.

Cynthia Garcia, Fairfield management analyst, tells the story of NRE World Bento Inc., which had Fairfield water shipped to Asia to test the rice cooked in it before opening a plant to prepare chicken and vegetable boxes to be sold on Japanese bullet trains. The water passed the rice test, and the facility opened in 2001. It closed two years later after the company was sold.

The reason Fairfield, Vacaville, Vallejo and Suisun City can deliver essential wet ingredients is twofold. First, city leaders as far back as the early 1900s saw the need for storing water to irrigate farmland during dry years. As told in Solano Irrigation District’s “The Solano Water Story: A History of the Solano Project,” in 1907 engineers George Washington Goethals (of Panama Canal fame) and William Mulholland (of Owens Valley infamy) investigated damming Putah Creek. In 1916, Suisun farmer William Pierce began the call for a dam at Devil’s Gate in Monticello, not far from where the mouth of the 1.6 million acre-foot capacity reservoir, Lake Berryessa, was eventually located.

Getting the project funded was not easy, however, and a lot of water, lobbying and dollars went under the bridge before any concrete was poured. While trying to drum up support for the project in Napa County, one Solano County Water Council Advisory Board member was threatened with jail time by the sheriff if he showed up in town again. Eventually, Solano decided to pursue the project without help from neighbors.

Congress authorized funding in 1948 as part of the Reclamation Project Act. The Federal Bureau of Reclamation paid the $38 million for the Solano Project, which included the Monticello Dam, the Putah Diversion Dam, the Putah South Canal, the Terminal Dam and Reservoir, the Green Valley Conduit and distribution systems. Construction of the project began in 1953. In 1959, water began flowing into the Vaughn Canal near Dixon. Solano Irrigation District made annual payments to the bureau and operated the precious resource along with the Solano County Flood Control and Water Conservation District.

The decisions made in the 1950s continue to reap economic development benefits more than half a century later. “City leaders either had wonderful foresight or were lucky,” says Andrew Florendo, water resource specialist with the Solano County Water Agency.

Monticello Dam was built to support agriculture, and the community began collecting the bounty almost immediately. Agricultural production grew from $12.7 million in 1955 to $50.4 million in 1966. Dividends continue to roll in today. In 2007, Solano County produced $268.3 million in nursery stock, tomatoes, alfalfa and walnuts, according to the California Farm Bureau Federation.

A payoff of the presence of agricultural water has been the area’s attraction to industrial users looking for abundant, drought-resistant, affordable, high-quality water. While Solano cities welcomed these job creators with open arms, they were also conscious of the importance of preserving agricultural land and resources to keep fresh food in the supply chain. In 1998, the cities of Benicia, Fairfield and Vacaville sued the Department of Water Resources for “area of origin” water rights permits to divert as much as 31,620 acre-feet of water each year from Barker Slough tributary to the Sacramento River, regardless of drought conditions.

“We were testing a 50-year-old statute that said we had first right to the water before the State Water Project exported it south,” says Rick Wood, Fairfield assistant director of public works. In 1997 the state Water Resources Control Board settled, giving Fairfield the rights to enough water to supply 155,000 people each year.

“The language is clear, and I think we would have won, but they decided to settle, so no precedent was set,” Wood says.

Napa County, Butte County and Yuba City filed their own area of origin suit in Sacramento County Superior Court in 2007 after the state announced it was cutting deliveries across the board because of drought conditions. That suit is still pending.

Today, Fairfield uses 25,000 acre-feet of water per year and has rights to twice that amount. That leaves plenty of water to serve the gold-colored industrial areas indicated on the most recent general plan map, including 57 acres left in the 220-acre Solano Business Park.

Neighboring Vallejo has also been dealt a winning water hand, according to Erik Nugteren, Vallejo’s water superintendent. A combination of Berryessa and Solano Project water and Delta State Water Project water gives the city rights to 44,000 acre-feet per year, enough to fill all anticipated needs through 2030 without any cutbacks until the third year of a drought. “The result has been that existing residents, golf courses and businesses have not had to cut back this year as they have in other cities,” Nugteren says.

Vallejo has not been able to capitalize on its abundance of water as much as some neighbors when it comes to attracting industry; it just doesn’t have the room. “We don’t have the industrial space of some other cities,” Nugteren says.

While water may be relatively plentiful in Solano County, it is not limitless. That is why Solano cities have promoted water conservation for residents and businesses. Genentech plans to cut total water consumption by 10 percent by 2010 compared to 2004 uses. Already, in 2007 the manufacturer realized a year-over-year 21 percent decrease in water use per unit of marketed product.

Anheuser-Busch in Fairfield reduced its water consumption by 11 percent in 2007 and has a goal of reducing water use by another 10 percent by the end of 2008. New equipment, including a bio-energy recovery system, which will be operational later this year, will reclaim water from the brewing process.

The other side of the water supply coin is sewage, says Fairfield’s Johnson. The Fairfield-Suisun Sewer District processes more than 15.5 million gallons of sewage each day and is in the middle of a $35 million expansion. Water is treated and sent to the Suisun Marsh, which keeps prices relatively low because it doesn’t have to meet drinking water standards like many other areas of the state. According to an August Bay Area Clean Water Agencies report, Fairfield-Suisun’s full service rate is among the ten lowest of the 65 listed.

From supply to drainage, Solano County economic developers are using water to recruit companies. As then-Rep. Vic Fazio described the long, twisted tale of creating the Solano Project: “This was not a mere coincidence. It was due to the foresight and dedication of a number of people.”