Capital News & Notes
For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “You Guys Take That Behind the Scenes”
- Clash for The Corner Office: Gubernatorial Candidates Debate
- Top GOP Donors Open Checkbooks…For Gavin & Antonio
- Former Gov. George Deukmejian Dies, “Pervasive and Effective”
- Reflections on The Iron Duke from Bob Gore @ The Gualco Group
- California Puts the Brakes on Population Growth
- Santa Clara Water Boosts Brown’s Delta Tunnels
- “Everybody Eats” – Emerging, Essential High Tech
- Anchors Aweigh – US Navy Maps CA Coastal Wind Power
- Cannabis Cash Falls Short
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
Stay current daily! For our focused updates via Twitter: @jrgualco / @robertjgore / @gualcogroup
FOR THE WEEK ENDING MAY 11, 2018
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Clash for California’s Corner Office: Gubernatorial Candidates Debate
The candidates running to become California’s next governor aggressively clashed in the most contentious and consequential face-off of the campaign Tuesday night, trying to make the case that they are best suited to lead the state as voters begin receiving ballots in the mail.
Democrat Gavin Newsom took the stage with a target on his back as the clear front-runner. And the attacks grew deeply personal as the candidates were asked about marital infidelities Newsom and former Los Angeles Mayor Antonio Villaraigosa had while they were in office. Newsom had an affair with a close friend’s wife who worked for him when he was mayor of San Francisco.
“If you can’t trust Gavin with his best friend’s wife, how can you trust him with your state?” Republican Assemblyman Travis Allen asked.
Newsom responded that he had apologized for the relationship and admitted he was wrong, but he also alluded to the numerous allegations about inappropriate behavior that have been leveled at President Trump.
“It’s hard, with respect, to hear from Mr. Allen, who is a devout supporter of Donald Trump, talk about the issue of sexual harassment,” Newsom said.
Though Newsom took many hits, several blistering exchanges took place between the three candidates within reach of second place in the June 5 primary — Democrat Villaraigosa and Republicans John Cox and Allen — as well as state Treasurer John Chiang, who had perhaps the most to gain during the debate.
Chiang was once seen as the dark horse of the Democratic field, but his campaign has yet to ignite. A poll released in April by the nonpartisan Public Policy Institute of California put him in fourth place, favored by just 7% of likely voters.
Perhaps as a result, Chiang’s campaign has gotten more combative, ripping Villaraigosa for accepting donations from an attorney on Bill Cosby’s legal team, criticizing Newsom for flip-flopping on single-payer healthcare and attacking both for their records as mayor. But those attacks have largely come from Chiang’s staff — not him — something that changed Tuesday night.
He repeatedly attacked Newsom and Villaraigosa by name, saying that their proposals to build 3.5 million homes were unrealistic, accused them of “criminalizing” homelessness when they were mayors of San Francisco and Los Angeles, respectively, and blasted them for supporting funding from the Trump administration for sending the California National Guard to the border.
“Fake news,” Villaraigosa responded.
The two Republicans on the stage repeatedly attacked each other as they attempted to consolidate support among GOP voters. Cox accused Allen of improperly using $300,000 donated to an effort to repeal the gas tax, while Allen labeled Cox “my angry opponent from Chicago.”
Moderator Chuck Todd cut them off, saying, “You guys can take that behind the scenes later.”
The 90-minute debate, probably the last among all the top candidates before the June 5 primary, took place at the California Theater in San Jose and was sponsored by the Silicon Valley Community Foundation and NBC Bay Area. Topics discussed included high-speed rail, affordable housing and homelessness. But the conversation turned time and again to bickering between the candidates.
Villaraigosa was also asked about the affair he had with a television reporter while he was mayor of Los Angeles.
“I also acknowledge that I made a mistake. I lost my marriage. I lost my family for a time. I took responsibility for it,” Villaraigosa said.
Throughout the debate, Villaraigosa argued that he had the proven track record to lead California, and subtly swiped at Newsom when he spoke of the need to focus on the state’s needs rather than publicly sparring with Trump.
“Talking and tweeting about Trump every day is not going to solve problems, it’s not going to fix our healthcare or our schools,” he said.
Newsom, the state’s lieutenant governor, leads in fundraising and the polls. He has not participated in a debate in more than a month, and as expected, he took fire from all sides, notably on immigration policy.
Newsom called himself the “poster child” of the sanctuary city policies, but that didn’t stop attacks on his record as mayor by both Chiang and Allen.
Chiang accused Newsom of turning over an undocumented child to federal immigration officials about a decade ago under a city policy he imposed as mayor, which allowed law enforcement to report children in the U.S. illegally who were accused of felonies to Immigration and Customs Enforcement. When the San Francisco Board of Supervisors overturned Newsom’s policy, the mayor’s office continued to turn over arrested undocumented juveniles to federal authorities, according to a report in the San Jose Mercury News.
Newsom never responded to Chiang.
Allen, an advocate for the controversial border wall, ripped Newsom for supporting the sanctuary city policy in San Francisco that Allen blamed for the 2015 death of Kate Steinle, who was killed by a Mexican national who had previously been deported.
Newsom said the real solution is comprehensive immigration reform at the federal level, and called Allen’s reference to Steinle “shameful.”
“Until that happens, we will defend our values, we will defend our diverse communities, we will defend our Dreamers and we will push back against Travis Allen and John Cox — and push back against Donald Trump and Jeff Sessions and all the others here who are trying to divide us,” Newsom said.
Delaine Eastin, the former state schools chief, described Trump as a “racist misogynist.”
“I believe the state of California needs to stand tall on behalf of the things that we believe in, and we need to not let people misrepresent what’s going on here,” she said before turning to Cox, who decried high education spending in California. “We have not had vast increases in education. We are 41st in per-pupil spending. We used to be fifth, we used to be tied with New York. New York is now spending twice as much as California on every kid’s education. That’s wrong.”
Todd concluded the debate by asking the six candidates what they thought of California’s top-two primary system, and whether they would face a Republican or Democrat in the general election. No Republican has won a statewide race in California since 2006, so any Democrat who advances to the November election would have a much better chance of winning if they’re facing off with one of the GOP candidates.
“A Republican would be ideal in the general election,” Newsom said with a grin, then glanced over at Cox and Allen. “Either one of these would do.”
“Be careful what you wish for, Gavin,” Cox said.
Chiang said he didn’t care whom he faced, implying that he’d be happy just to be on the ballot in November.
Allen used the question to take another shot at his GOP rival, who earlier in the debate acknowledged that he did not vote for Trump in the 2016 presidential election but said he wishes he had.
“There’s only one Republican in the race anyway,” Allen said.
Top GOP Donors Open Checkbooks…For Gavin & Antonio
With less than a month to go until California’s top-two primary sends two gubernatorial candidates to the general election, Republicans face an imminent challenge: coalesce behind one candidate or risk a split vote that could allow two Democrats to advance to November’s ballot.
“We need to unite as a party,” said gubernatorial hopeful John Cox at last weekend’s state Republican Convention. “We need to make sure that we get a good candidate in the top two.”
Neither Cox, a San Diego businessman, nor his leading Republican opponent, Assemblyman Travis Allen, were able to leave the convention with a party endorsement.
But their difficulty in consolidating traditional Republican support has extended beyond a delegate count.
A KQED News analysis of donors to the last two Republicans to advance in a gubernatorial general election — Meg Whitman and Neel Kashkari — shows that those contributors are sending more money to leading Democrats this time around.
Lt. Gov. Gavin Newsom has received at least $1.1 million from Whitman and Kashkari donors, while former Los Angeles Mayor Antonio Villaraigosa has taken home more than $1 million.
Cox and Allen both received less than $100,000 from these individuals and businesses.
KQED News matched donations to Whitman and Kashkari reported to the Secretary of State’s Office with donations reported in the current gubernatorial campaign, from the beginning of 2015 through the end of the latest campaign filing period, on April 21.
The analysis does not include donations made to independent expenditure committees operating separately from the campaigns.
Like Whitman, the former CEO of eBay, and Kashkari, a former U.S. Treasury official, Cox has largely bankrolled his own campaign.
But he and Allen have struggled to gain support from major donors who backed Whitman’s campaign in 2010. Before losing to Jerry Brown, Whitman raised tens of millions of dollars on top of the roughly $140 million of her own fortune that she poured into her run.
“[Whitman] had a very large Rolodex,” said Hector Barajas, a Republican strategist who worked as Whitman’s campaign spokesman in 2010. “She had a personal connection to a lot of these folks within the tech, the banking, the financial institutions that she had built throughout her entire career.”
The absence of a Republican candidate with those wide business ties seems to have splintered traditional big GOP donors, and pushed them toward Newsom and Villaraigosa.
In Silicon Valley, Newsom has recruited the maximum allowed contributions from major Whitman backers, including $56,400 each from Yahoo co-founder Jerry Yang and venture capitalist Peter Thiel.
Closer to his home turf, Villaraigosa has raised over $100,000 from Southern California philanthropists Eli Broad and Henry Samueli, who both gave heavily to Whitman. Villaraigosa also received nearly $30,000 from businessmen Harry Sloan and Robert Day, big players on the national GOP fundraising scene.
The great fear among Republicans is that they could be shut out entirely. The number of California voters registered as Republicans has declined steadily over the years. They’re now just 25 percent of the electorate. So if Republican voters are divided, a Democrat could claim second place.
No one would like to see that more than Villaraigosa, the former mayor of Los Angeles. He has been shoring up his support in familiar places. Recently he was in South L.A. to thank African-American political, religious and community leaders for their endorsements.
Unlike the leading Democrats, Cox and Allen have also been unable to tap into historically bipartisan givers like telecom giants, Indian tribes and health care providers, which typically spread their contributions among both parties.
The cash these donors gave to Whitman couldn’t get her within 10 points of Jerry Brown in the 2010 election.
Now, those same donors may be concluding that any money spent on a Republican candidate is a lost cause in a state where the party’s registration sits at just 25 percent of registered voters.
“Most of the Republican donors really aren’t contributing to Republican candidates anymore,” said Mike Madrid, a GOP consultant who is advising Villaraigosa in this race. “Because they, like most of the voters, recognize a Republican is not going to win the governorship in California.”
Madrid’s presence in Villaraigosa’s campaign has been one signal that the former mayor is trying to attract traditional Republican voters and donors.
Villaraigosa has tried to establish a consistent campaign presence in the traditionally Republican Central Valley, and he’s situated himself to the right of Newsom on issues like health care.
State Treasurer John Chiang, who is hoping to leapfrog into second place in the waning weeks of the campaign, has taken aim at Villaraigosa for receiving donations from Republicans.
“Antonio Villaraigosa has shown he doesn’t care whose name is on the check as long as it clears its way into his bank account,” said Fabien Levy, Chiang’s deputy campaign manager, in a press release this week.
Chiang has received at least $277,735 from Whitman and Kashkari donors.
“It’s a politician doing political things as their numbers get stalled in the low single digits,” Madrid said of Chiang’s attack.
Newsom and Villaraigosa entered the race months (in Newsom’s case, years) before Allen and Cox, building up war chests that leave the Republicans in a financial paradox.
Allen and Cox could both use an influx of cash for a final boost leading up to election day, but that financial infusion may not happen unless either shows an increased level of viability.
“People oftentimes wait to see who makes it through the primary,” said Barajas. “Then you start seeing some of these traditional Republican donors.”
“Pervasive and Effective,” former Gov. George Deukmejian Dies
George Deukmejian, a two-term California governor who was admired by Republicans and Democrats alike for his willingness to cross party boundaries, and who quietly shepherded the state through a period of rapid growth and sustained prosperity, died on Tuesday at his home in Long Beach, Calif. He was 89.
His death was confirmed by Steve Merksamer, Mr. Deukmejian’s former chief of staff.
“He didn’t have Arnold Schwarzenegger’s bravado, Jerry Brown’s dialectical fireworks, or Pete Wilson’s Marine Corps willingness to take the hill,” Kevin Starr, the eminent historian of California, said in an interview in 2012. “He had such an understated manner, you almost missed how pervasive and effective he was in his governorship.” (Professor Starr, of the University of Southern California, died last year.)
When Jerry Brown left office in 1983 in his first go-round as governor, Mr. Deukmejian, then California’s attorney general, ran for the higher office with an eye toward reforming a state judiciary that he considered too lenient.
“Attorneys general don’t appoint judges, but governors do,” he said in an interview for this obituary in 2012. “And we were very troubled in those days by a lot of the appointments Jerry Brown had made.”
As governor, Mr. Deukmejian appointed more than 1,000 judges, many of whom are still serving in California’s courts.
In the 1982 race for governor, he defeated the mayor of Los Angeles, Tom Bradley, by about 90,000 votes out of nearly eight million cast, a victory so narrow that some news reports prematurely pronounced Mr. Bradley the winner.
When Mr. Deukmejian took office in 1983, a recession had caused unemployment in California to jump to 11.2 percent and eaten away at the state’s coffers. Billions of dollars had been used to shore up local governments after the adoption of Proposition 13, the 1978 voter initiative that radically cut property taxes.
Instead of raising taxes, Mr. Deukmejian pared spending and balanced the budget. “Our fiscal policy was to do everything we could to live within our means,” he said in 2012.
In 1986, Mr. Deukmejian, the son of Armenian immigrants, surprised some conservative colleagues when he took a public stand against the University of California’s investments in South Africa during apartheid.
In a 2005 memoir, David Gardner, who was president of California’s university system in the 1980s, wrote of the governor’s stand on apartheid, “All of this killing and violence, directed mostly against blacks, reminded Deukmejian of the Turkish massacres of Armenians in World War I.”
Recalling the episode in 2012, Mr. Deukmejian said, “My feeling was, there but for the grace of God go I.”
Mr. Gardner had strongly opposed divestment, but at the governor’s urging, the state pulled some $3 billion in stock holdings out of South Africa. During a visit to California after his release from prison, Nelson Mandela said the action by the University of California — the first large public institution to take a stand — played a critical role in ending white minority rule in South Africa.
Mr. Deukmejian won a second term in 1986, again defeating Mr. Bradley, this time with 60 percent of the vote.
In 1988, Mr. Deukmejian was approached by an official for Vice President George Bush’s presidential campaign, telling him he was being considered as a potential running mate.
“I was apparently on a so-called short list,” he said in 2012. But he declined to be considered any further.
“I said, ‘Well, I have a lieutenant governor in the other party, and if I were to join the ticket, the whole executive branch of the California government would go over to the Democrats,’” he said. “They already had control of the legislature. I couldn’t do something like that for my own benefit. So I took myself out of contention.”
A staunch fiscal conservative, Mr. Deukmejian was a consistent opponent of new taxes and government spending increases, to the point where his Republican colleagues in the legislature nicknamed him “The Iron Duke” for repeated vows to veto spending bills.
He later took credit for eliminating a $1.5 billion deficit, telling lawmakers in a State of the State address that he had “taken California from I-O-U to A-O.K.” But by the time he left office, having chosen not to seek a third term in 1990, tax receipts had slumped under the weight of a national economic slowdown, and his successor, Pete Wilson, a fellow Republican, entered the governor’s mansion facing a deep budget deficit.
Courken George Deukmejian Jr. was born on June 6, 1928, in Menands, N.Y., north of Albany. His parents had emigrated from eastern Turkey in the early 1900s. His father worked in a series of jobs — as a photographer, Oriental rug dealer and paper wholesaler. His mother worked in a necktie factory.
Mr. Deukmejian attended Siena College in Albany County, graduating in 1949 with a bachelor of arts in sociology. He received a law degree in 1952 from St. John’s University School of Law in Queens.
He entered the Army in 1953, and after infantry basic training was assigned to the Judge Advocate General’s Corps based in Paris, where he assisted in the settlement of claims made by French nationals against the Army.
In 1955, at the urging of his sister, who had moved to California, he drove across the country and put down roots in Los Angeles, where he was appointed a deputy counsel for Los Angeles County.
In 1957, he married Gloria Saatjian, a bank secretary, and the couple moved to Long Beach, where Mr. Deukmejian opened a small law practice on the second floor of a bank building, specializing in “anything that walked in the door,” he once told an interviewer.
Mr. Deukmejian entered politics in 1962, when he won a seat in the California Assembly; four years later he was elected to the State Senate. While in the state legislature, and later as attorney general, he pushed hard for the death penalty.
Mr. Deukmejian was known to be especially tough on crime. While governor, he presided over the building of more than a dozen prisons.
After leaving office in 1991, he became a partner in the Los Angeles office of Sidley & Austin, commuting from his house in Long Beach, which he and his wife had lived in since 1960.
He is survived by his wife, Gloria; their children, Leslie, George and Andrea; and six grandchildren.
One of the signal moments in Mr. Deukmejian’s governorship came in 1989, after a gunman killed five elementary school children in Stockton, Calif., using an AK-47. Bucking his party, Mr. Deukmejian supported a Democratic-sponsored bill outlawing semiautomatic rifles, one of the first such bans in the nation.
Willie Brown, the former mayor of San Francisco, who was speaker of the State Assembly when Mr. Deukmejian was in office, said of the governor’s support for the ban, “It was the right thing to do, not the politically right thing to do.”
“Deukmejian was a registered Republican, but he elevated the level of governorship above his party choice,” Mr. Brown said in an interview for this obituary. “I think his time in office will be seen as the last the State of California actually had a bipartisan, working relationship between the governor’s office and the legislature.”
Reflections on The Iron Duke:
Bob Gore’s Commentary in the Sacramento Bee
Quietly watching the 1,000 or so inmates milling around, he stood in the corner of the Super Max prison yard – the governor of California.
He was, of course, well protected, and the inmates were kept at a distance. “They’re all LWOPs, Governor,” I said, or life without parole.
George Deukmejian shook his head, looked at the ground in Tehachapi, and said something softly. I had to lean in – he was mostly talking to himself. “So many wasted lives,” he was saying. “So many wasted lives.”
Deukmejian was the 35th governor, 1982-1990. He was a thoughtful, principled and determined man who could strike a compromise. He had a surprisingly puckish sense of humor, never forgot his Armenian heritage and could be…um…stubborn.
I was privileged to be his press secretary for the last 18 months of his second term, after serving him in the Department of Corrections and Caltrans, and as a campaign aide. He was a modest man who did not like entourages – there were few senior staff around him.
He had at the time one of the most recognizable faces in politics. Terrorists and others knew him. We saw the death threats.
Yet this was a governor who would send his protective detail members home to their families on the weekends, living mostly unprotected in Carmichael. He knew they had families.
Painting him as the “Iron Duke” is far too simplistic. Consider these observations from up close:
- When it appeared there would be an execution, Mother Theresa called. By pre-arrangement, I answered, confirmed the conversation that was about to happen and handed the phone over to the governor. He said hello and listened. He motioned for me to leave the private office. About 10 minutes later, he opened the door. There was a Bible open on his desk. He said no more.
- He actually used a curse word once. A state senator looked him the eye, shook his hand and then a few hours later went back on the deal they’d struck, voting the way the senator promised he would not. When you double-cross a governor, the governor does not forgive; when you double-cross an Armenian, your act is never forgotten. Deukmejian, when I told him of the vote, pursed his lips and used the word “hell” in reference to the senator. Which is where all of the senator’s bills went for the rest of the session, vetoed.
- Even the White House could not manage an Armenian. Russia, at the time, was standing by as unrest shook Deukmejian’s ancestral homeland. Mikhail Gorbachev, then head of the Soviet Union, was visiting the Russian Consulate in San Francisco, and the governor of California scheduled a visit to say hello. He also went to hand Gorbachev a personal note, asking him to intervene in Armenia. The White House asked him to not do that. He later handed the note toward Gorbachev, but a military attaché stepped forward and took the envelope.
- A few days ago, Gov. Jerry Brown recognized fallen law enforcement officers at the annual memorial observance, across from the Capitol. In his own last year as governor, Deukmejian dedicated that memorial. There were several families of slain officers in the front row of the audience. He walked over and began to speak to the parents and children. The Iron Duke made it to the third family and could no longer speak. He was overcome and tears ran down his cheeks. I took his arm and we walked to the car.
About that sense of humor, one last tale. We were flying in a small plane to a speaking appearance in Fresno. He took out his index cards of text, and frowned. He turned the cards over and methodically rewrote the entire speech with his pen. George Deukmejian was, after all, a master politician who knew his audiences.
The crowd ate it up. It was a late evening. As we approached the car, he waved me to the back seat with him – he usually preferred his solitude, but he was clearly upbeat that night. I congratulated him on rewriting and delivering a stem-winder.
He got that impish grin few got to see and said, “No one sees the magic, Bob, but the magician.”
ROBERT J. GORE IS A FORMER PRESS SECRETARY TO GOV. GEORGE DEUKMEJIAN, AND A CURRENT SENIOR ADVISER AT THE GUALCO GROUP, A LOBBYING AND CONSULTING FIRM IN SACRAMENTO. REACH HIM AT BOB_GORE@GUALCOGROUP.COM.
California Puts the Brakes on Population Growth
Commentary from CalMatters
It’s time for some fun with numbers, dissecting a new state report on population trends.
The big number is 39.8 million. That’s the state Department of Finance’s latest calculation of California’s population as of Jan. 1.
It’s doubtless a little low, since California has a very large number of residents who fly below the official radar – the homeless and many undocumented immigrants, particularly. So let’s call it 40 million.
That’s almost twice as many as those living in California when Jerry Brown began his first stint as governor in 1975. However, as the latest data again confirm, the state’s rate of population growth has been declining.
During the 1980s, thanks to high immigration and birth rates, California was expanding by 2-plus percent a year, adding 6 million residents in just 10 years. However, immigration, legal and illegal, is now a fraction of what it once was (we lose more people to other states than we gain) and births are declining while deaths are rising.
In 2017, the state report says, California added just 309,000 people. Numerically, that’s about half of the 1980s surge and our annual growth rate (.78 percent) is scarcely a third of what it was then.
Inland communities continued to grow faster than those along the coast last year. Merced, at 1.7 percent, was the state’s fastest growing county, while Sacramento, which reached 500,000 for the first time, was its fastest growing large city, in both cases thanks largely to migration from coastal regions in search of affordable housing. Speaking of which, the state’s report confirms anew that California is still falling far short in meeting its housing needs.
With the average California household at 2.8 people, the 309,000 Californians added last year needed about 110,000 new housing units, but the state’s net gain last year was just 85,000 units, according to the report. While new housing starts topped 100,000 during the year, losses to fire and old age dropped the net gain below demand.
The state housing agency estimates that California needs to build 180,000 units a year to meet current demand and deal with a very large backlog. California once was building that many units, but has never fully recovered from the Great Recession’s housing meltdown.
Raising production significantly would require difficult policy changes, such as streamlining environmental regulation and overcoming local anti-development pressure, but the state’s political leadership has so far failed to do what needs to be done.
Finally, the population numbers are a new indication that for the first time ever, California’s congressional delegation may shrink after the 2020 census.
There are 435 seats in the House of Representatives and after every census, they are reapportioned among the states, based on how their populations have changed during the preceding decade.
California’s growth rate is now very close to the nation’s and if the 2020 census confirms that trend, the state’s delegation, now 53 seats, could drop by one.
That’s why California’s politicians are strongly opposed to the Trump administration’s plans to add a citizenship question to 2020 census forms. They fear that California’s non-citizen residents, especially those in the country illegally, will shy away from being counted and an undercount will cost the state a congressional seat, as well as lower the flow of census-based federal funds to the state.
That’s why, too, the state is prepared to spend tens of millions of dollars to encourage its 40 million residents to be tallied.
Call it political numerology.
Santa Clara Water Boosts Brown’s Delta Tunnels
In a significant boost for Gov. Jerry Brown’s $17 billion plan to build two massive tunnels under the Sacramento-San Joaquin Valley Delta to more easily move water south, Silicon Valley’s largest water agency Tuesday endorsed the project and voted to commit up to $650 million to help pay for it.
With a 4-3 vote after a packed four-hour meeting, the Santa Clara Valley Water District reversed a decision it made in October to oppose the two-tunnel project.
Unions and Silicon Valley’s largest business group recommended a yes vote, while environmental groups, Delta residents and the majority of speakers urged a no vote. Critics argued the project would harm wildlife and water quality in the Delta and San Francisco Bay, while also putting ratepayers of Santa Clara Valley at risk for cost overruns similar to those that occurred on the Bay Bridge and high-speed rail projects. The district’s staff said the project would cost the average ratepayer $10.26 a month in higher water bills by 2033.
Immediately after the vote, Brown praised the district for supporting the controversial tunnels plan, which along with high-speed rail is viewed as one of his legacy projects.
“Simply put, this courageous decision will help two million Santa Clarans have a more reliable water supply,” the governor said.
Critics also weighed in.
“It is irresponsible for a seven-member board, without a vote of its ratepayers, to commit astronomical sums of money to a project that has never had a comprehensive cost-benefit analysis or accurate cost estimate, threatens to destroy an entire ecosystem and way of life and does not create a single drop of new water,” said Assemblyman Jim Frazier, D-Fairfield, who represents Delta communities in eastern Contra Costa and Solano counties.
Other large Bay Area water agencies, including the East Bay Municipal Utility District, Contra Costa Water District, and San Francisco Public Utilities Commission, are not participating in the project.
The tunnels plan, which would be one of the largest public works projects in California history, still has significant hurdles to clear before construction can begin. It must obtain water rights from the State Water Resources Control Board, has already been hit with at least 30 lawsuits and has not yet received clear support from any of the six major candidates for governor who are most likely to succeed Brown when he leaves office in eight months.
“This is a project that is certainly more likely to go forward — both tunnels — than it was a couple of months ago,” said Buzz Thompson, a Stanford law professor and water expert. “But it’s not a done deal.”
The board members who supported the project — Barbara Keegan, Tony Estremera, Gary Kremen and Nai Hsueh — said it would help provide more reliable water to Silicon Valley in the future and would be cheaper than recycled water, desalination and other sources.
“We want to try and get stability and cover the future needs of Silicon Valley,” Estremera said. “It’s a once-in-a-lifetime opportunity. It’s important for us to have as much security as we can.”
Board members Dick Santos, Linda LeZotte and John Varela voted no.
The project, which Brown’s administration has called WaterFix, would build two tunnels, each 35 miles long and 40 feet high. The $16.7 billion cost would be paid by water agencies that participate through higher water rates and possibly higher property taxes. The tunnels would move water from the Sacramento River, 17 miles south of Sacramento, to the huge pumps at Tracy that are part of the State Water Project, reducing reliance on those pumps.
Courts have ruled that the pumps must be turned down, or shut off temporarily, at certain times of the year, when salmon, Delta smelt and other endangered fish swim near those pumps. Tunnels bored more than 100 feet below Delta mud would allow the state to more easily move water south during very wet winters in “big gulps,” supporters argue.
“California is the fifth largest economy in the world, and Silicon Valley is a primary driver of the GDP,” said Mike Mielke, senior vice president of the Silicon Valley Leadership Group, which represents many of the largest businesses in Silicon Valley. “Our success — the envy of much of the world — is at risk unless we protect our water supply.”
Last month, the Metropolitan Water District of Southern California, which serves 20 million people in Los Angeles and other counties, breathed new life into its chances when it increased its contribution to $10.8 billion, providing new momentum.
Several Santa Clara Valley Water District board members said Tuesday that Metropolitan’s decision motivated them to change course. They said that only by helping design, fund and build the tunnels could they have a seat at the table. Santa Clara Valley would have one seat on a five-member partnership to design and build the project; Metropolitan would have two, the Kern County Water Agency would have one and the State Water Contractors, a coalition of 28 water districts and cities, would have another.
“Everybody Eats” – The Essential Emerging High Tech
The Gualco Group, Inc. co-founded and hosts the pro bono Ag Tech Roundtable, a unique convening of growers, ag tech developers, researchers and regulators focused on using ag tech to create good jobs in disadvantage rural California.
Today’s technology is rushing into one of the last traditional industries: agriculture.
A field largely still unaffected by the technological revolution, farming is ripe for change as need couples with opportunity.
“We’ve seen a wave of technology impact our information industries,” says Stanford Graduate School of Business professor Haim Mendelson. “Now we see another big wave of technology reshaping our traditional industries, and certainly agriculture is one of the most basic ones.”
Driverless tractors tilling acres of crops, produce growing in massive climate-controlled warehouses, and seeds genetically altered to require less water are among the high-tech innovations changing, or about to change, agriculture. These technologies are making farms smarter, more productive, and increasingly efficient.
And as technology reshapes the field, the benefits will compound. “This is one industry that everybody needs,” Mendelson says. “Everybody eats. So changes that improve productivity for a relative small number of farmers will scale to help everyone.”
In a new paper, Mendelson, with co-authors Stanford GSB professor Hau Lee, Value Chain Innovation Initiative Director Sonali Rammohan, and 2017 Sloan Fellow Akhil Srivastava, show what trends are pushing this food revolution and highlight the areas that are increasingly attracting startups and investors.
The world’s food system is desperate for an overhaul. By 2050, studies show, the world will have 3 billion more mouths to feed than it does today, and demand for food will rise by 50%.
More of those people will live in cities, much farther from the traditional source of food — rural farms, says Josef Schmidhuber, the deputy director of trade and markets at the Food and Agriculture Organization of the United Nations.
Exacerbating the problem, climate change will put more demands on how food is grown, while fewer people will work in the farming industry.
“While technology is by no means a panacea,” Mendelson says, “it offers opportunities in an internet-connected world.” Technology, he says, can create a more productive, efficient, sustainable, and resilient food system.
Although investments in the agriculture sector might seem like seedlings in comparison to overall VC funding, venture capitalists and angels are increasingly looking toward farming as an investment opportunity. They poured $735 million into 147 deals in 2017, according to CB Insights. That’s a jump from $57 million for 71 deals in 2013.
In addition, more of these startups are getting snapped up by big farming conglomerates, which are building out their own agtech divisions. For example, farming equipment giant Deere & Co. has an intelligent solutions group focused on precision agriculture that employs over 300 software developers, engineers, and testers. Just last year, it bought precision agriculture startup Blue River Technology for $305 million. Monsanto completed one of the largest acquisitions in the space when it bought big data company Climate Corp. for $1.1 billion in 2013.
For startups, the low-hanging fruit is analytics, Mendelson says. These include monitoring technologies and data analytics that can make sense of satellite monitoring or weather simulations. A major area is precision agriculture, which involves collecting and analyzing data at the individual plant level. According to the Stanford GSB team’s research, a survey of American farmers who used precision technology reported average cost reductions of 15% and a 13% increase in yields.
Beyond precision farming, analytics can be used in more general monitoring tools and centralized digital platforms. For example, Ceres Imaging, launched by Stanford graduates, helps farmers collect field irrigation and fertilizer data through sensors and cameras attached to small planes. Startups in this category have raised about $825 million from investors, Mendelson says.
Automation technology will continue to vastly change farming. Just as self-driving cars begin to dot freeways, automated tractors will enable farmers to work several fields simultaneously with the same number of workers — or fewer — and operate equipment day and night. Automated irrigation systems that collect information about soil and water levels will allow farmers to use water more efficiently. Startups in this category have raised $400 million.
Other opportunities Mendelson and Lee identified include:
- Product innovations ($4.36 billion in investment): New technologies such as gene editing or cellular agriculture are designing entirely new kinds of foods. Impossible Foods and Memphis Meat are bringing lab-grown meat to the local burger joint.
- Digital marketplaces ($682 million in investment): Allow farmers to lease equipment, pool together for better insurance, or connect to local customers. Full Harvest, for example, helps farmers sell imperfect but edible produce that wouldn’t find a market at the local supermarket, while Ricult helps rural farmers find loans.
- Operations software ($129 million in investment): Helps farmers make better operations decisions, track resources or productivity, and save money.
- Skills-building tools (minor investment): Includes videos, hotline voice services, and mobile apps that help farmers share experiences. AgriFind in France, for example, is a social networking platform for farmers to ask questions and offer advice.
- Resources ($755 million in investment): New irrigation systems deploy highly targeted water and fertilizer, using less of each, while vertical and urban farms use less land and reduce pesticides.
In the long run, one single technology won’t have the most impact, Mendelson says. “It’s really the combination that will create the real value.”
Anchors Aweigh – US Navy Maps CA Coastal Wind Power
Fans of renewable energy anticipate a bonanza blowing off the coast of California.
But a map released by the U.S. Navy puts large swaths of the state off limits to future offshore wind farms — including all of San Diego and Los Angeles, extending up to the Central Coast.
The military does not have the final say in the matter, as federal and state officials — as well as wind energy companies and at least one member of Congress — are working with the U.S. Department of Defense to develop a more flexible plan.
But the back-and-forth adds an extra layer of complexity to the nascent industry on the West Coast, where geographic features make it harder to construct wind farms in the Pacific than those on the East Coast.
“There’s a lot at stake here” for California to meet its ambitious clean energy goals, said Robert Collier, a policy analyst at the Green Energy Program at the UC Berkeley Center for Labor Research and Education. “California is going to need a lot more renewable energy from all sources. Offshore wind is not the only potential solution, but it is part of a multi-pronged strategy.”
The sight of wind turbines anchored into the ground, their blades turning like giant pinwheels, has become more common in recent years.
But it’s rare to see a wind farm looming over open water — at least in the United States. European companies with projects in places like Denmark and Scotland have taken the early lead in offshore wind energy.
In the Atlantic, offshore wind turbines can be bolted into the seabed in relatively shallow water.
But the continental shelf off the coast of the Pacific plunges quickly and steeply. That leaves developers with just one option — floating wind farms tethered, or moored, by cables to the ocean floor that don’t penetrate the surface. Electricity from the turbines is transmitted to a floating substation and carried to a power plant onshore via a buried cable.
It’s estimated that nearly a terrawatt of electricity will be generated off the coast of California, 13 times more capacity than all the land-based wind farms across the country generate.
But in the past year, some of the lofty expectations have been tempered.
Two years ago, a Seattle-based company called Trident Winds filed an unsolicited lease request to build a floating wind project 33 nautical miles off the coast of Morro Bay near San Luis Obispo. Since then, Norwegian energy giant Statoil has also expressed interest.
At the request of Gov. Jerry Brown, the federal government’s Bureau of Ocean Energy Management established an intergovernmental task force to look into opportunities for offshore wind in California.
State waters extend from the shoreline to three nautical miles into the ocean. Federal waters extend from three miles to 200 nautical miles. Floating offshore wind projects are typically located in federal waters but since the cables connect onshore, they cross state waters. That means state as well as federal agencies are involved.
The Department of Defense (DOD) was asked to provide its assessment of the California coast. Last summer the Navy released a map, using the colors of a traffic light — green for no restrictions, yellow for site-specific stipulations and red for what it called “wind exclusion” where the military wanted no wind farms at all.
Blue areas were coded for sites designated as National Marine Sanctuaries.
The red “no-go” areas covered all of Southern California — from the southern tip of the Mexican border, extending through San Diego, Los Angeles, Santa Barbara and going all the way to Big Sur. The area included the Central Coast — site of the potential Morro Bay projects.
The only areas colored green were located north of Mendocino.
The Navy said the red areas should be off limits to wind projects because they would conflict with “the requirements of Navy and Marine Corps missions conducted in the air, on the surface, and below the surface of these waters.”
The map was updated in February and became more restricted. All the green areas turned yellow.
Why is all of Southern California in the red zone? Steve Chung, the Navy Region Southwest Encroachment Program Director, pointed to the Point Mugu Sea Range north of Los Angeles and the sprawling Southern California Range Complex situated off the coast between Dana Point and San Diego.
The complex encompasses more than 120,000 square miles of sea space for training, equipping and maintaining combat-ready forces, “supporting the largest concentration of naval forces in the world,” Chung said.
The area is also used by the Marine Corps, the Air Force (Vandenberg Air Force Base near Lompoc) and, to a lesser extent, the Army.
“It’s a very congested environment out there,” said Chung, “and we start (by) pointing out other activities such as marine traffic or civilian air traffic. When you begin presenting structures such as wind turbines, now you’re introducing additional complexities.”
When asked if putting wind farms in Southern California would be a hard nut to crack, Chung said, “Southern California is beyond a hard nut to crack. I don’t see any realistic, conceivable manner where we can find offshore wind to co-exist with the degree and complexity of operations that are occurring in Southern California.”
The wind blows harder as you move up the California coast and that’s where wind developers have really set their sights.
It’s also attractive to California policymakers to meet the state’s renewable energy goals. The state’s Renewables Portfolio Standard requires power companies to derive 50 percent of their energy from renewable sources by 2030.
Renewables have a problem with “intermittency” — solar energy dips when the sun doesn’t shine and land-based wind falls off when the wind doesn’t blow.
Offshore wind blows harder and more consistently which, its supporters say, will help balance the state’s grid while allowing for more integration of clean energy sources.
A small community power authority in Humboldt County is in position to become the first to establish a floating wind farm in the country.
“We’re excited,” said Lori Biondini, the director of business development and planning at the Redwood Coast Energy Authority, a community choice aggregator, or CCA. “We like to be pioneers of things in the energy world.”
Last month, the group formed a consortium to erect a 100 to 150-megawatt wind farm of between 12 to 15 turbines more than 20 miles off the coast of Eureka. The turbines, Biondini said, will be 700 to 900 feet tall. The project is expected to go online in 2024 or 2025.
The Navy’s updated map changed the coast of Humboldt County from green to yellow but the project is “still definitely workable,” Biondini said.
Chung said the color was changed largely because the North American Aerospace Defense Command (NORAD) wanted more information about the turbines to make sure they don’t interfere with long-range radar.
But like Biondini, Chung sounded upbeat, saying, “We will continue to be very encouraged and very optimistic for the art of the possible in Northern California.”
The outlook for the Central Coast is more cloudy.
Cannabis Cash Falls Short
California probably won’t get a windfall in tax revenue from its newly legal marijuana market this year.
The state collected $34 million in cannabis taxes between January and March, according to an update released by the Legislative Analyst’s Office on Tuesday.
That’s behind the pace Gov. Jerry Brown projected in his January budget proposal. At the time, he anticipated that the state would gain about $175 million in revenue from cannabis taxes between January and June of this year.
There’s still time for cannabis taxes to catch up, but Seth Kerstein, an economist at the Legislative Analyst’s Office, said the final tally likely will come in under Brown’s estimate.
California’s Proposition 64 in 2016 legalized recreational cannabis. At the time, supporters estimate that retail cannabis would eventually yield about $1 billion a year in state and local tax revenue.
Brown in his January budget proposal did not count on cannabis delivering that kind of jolt to state coffers.
He’s expected to release a revised budget proposal on Friday. Aside from cannabis, the state appears to have a fairly sunny budget picture. Total tax revenue is running about $3.6 billion ahead of Brown’s projections, according to the Legislative Analyst’s Office.