This Time, Developer May Not Get His Water

Of all the obstacles standing between Ben Ewell and his dream of building a new town in the foothills above Fresno, water would seem the least of them.

The ambitious project sits along the shores of Millerton Lake, which holds the flow of the San Joaquin River. With a single pipeline acting as a straw, Ewell draws federal water from the lake to his golf course and high-priced houses nestled in the oak-and-granite hills.

Now, the real estate developer wants to use this same plumbing to siphon water to an even bigger planned community of 1,000 houses, a hotel, shopping centers, conference halls and a second golf course.

But the U.S. Bureau of Reclamation, on the eve of a Fresno County vote to approve the first phase of new houses, says it made a serious mistake when it allowed Ewell to pump water from the lake. The whole scheme amounts to an illegal diversion of federal water that bureau officials say they have known about for a decade but chose not to stop.

Bureau officials now acknowledge that the area where Ewell built his original golf course and houses, a community known as Brighton Crest, is designated only for agricultural water delivery. Likewise, his proposed town sits in the same zone, prohibiting irrigation water from being sent to houses and shopping malls.

“We now recognize that we were in error,” said Bill Luce, who heads the reclamation bureau’s operations in the San Joaquin Valley.

Ewell, a 63-year-old water rights attorney-turned-developer, has overcome two decades of failed partnerships, foreclosures and environmental concerns over leapfrog growth to face a new uncertainty.

“I did everything by the book,” he said. “After spending 20 years and millions of dollars, I’m not just going to go away.”

The bureau first discovered that a chunk of the planned community was not eligible for federal water in 1995 and advised Ewell not to develop 240 acres, documents show. Last year, nine years later, the bureau determined that nearly all of the 2,000-acre Millerton New Town was off-limits for federal water.

But at no time did reclamation officials caution Ewell not to go forward or alert Fresno County that it was about to approve a new town based on an illegal water grab. When asked why it took so long to address the issue -- and then only after questions from The Times -- the bureau’s water rights specialist, John Renning, explained: “Some of these issues move at rather slow speeds. It hadn’t been a priority.”

The bureau isn’t sure how to remedy the situation. The existing golf course and 60 houses will probably continue to draw water from the lake. But the new town, which envisions 10,000 residents living miles beyond the Fresno city limits, has no such legal right.

Bureau officials say they will begin negotiations with state regulators to redraw the water delivery boundaries and thus serve the new town legally. But the process, which involves petitions, state hearings and environmental studies, could very well take years. And even then, they say, the new town might be denied the water.

“We’re not sure what’s going to happen,” said bureau spokesman Jeff McCracken. “We’ve never been in this situation before.”

Ewell said the bureau had pledged to him a year ago that it would rectify the situation.

“The bureau told me, ‘We’ve made an error on the place of use and we’re going to get it corrected,’ ” he said.

Fresno County planners, who have worked closely with Ewell to pave the way for the town, say they also have known about the illegal diversion for a year but never informed the Board of Supervisors or the public.

“I don’t want to leave you with the impression that we’re trying to hide anything,” said county staffer Phil Desatoff. “If the media would have asked, we would have disclosed it.”

The board, which seemed poised to approve the final maps for the first 161 houses when it meets Tuesday, now finds itself in a difficult position. Ewell signed over the entire plumbing system to the county, which is the official purveyor of the water. By voting “yes,” the supervisors would become full partners in the illegal grab.

Supervisors, who had approved four new town maps in earlier votes, say they feel blindsided. “We’re not going to discuss this until it gets into the public forum,” Supervisor Phil Larson said. “Things can happen. We can say ‘No.’ We can say ‘Yes.’ We can say, ‘Let’s trail this and get more information.’ ”

The controversy grows out of a larger battle over the spoils of water in a valley reminiscent of a growth-crazed Los Angeles in the post-World War II years. For more than a century, the San Joaquin River has been diverted in the name of a single industry: agriculture. Indeed, it was the construction of Friant Dam in the early 1940s -- the handiwork of the reclamation bureau -- that transformed a desert filled with jackrabbits and horned toads into the most productive farm region in the world.

But dozens of developers are now seeking to turn the river from an engine of agriculture to an engine of suburbia. Some of them are pistachio and grape growers who want to convert their irrigation water to urban use. Believing the reclamation bureau will interpret water contracts their way, farmers-cum-developers have lined up behind Ewell with proposals to build thousands of houses along both sides of the river in Fresno and Madera counties.

Critics point out that much of the process, right down to meetings between developers, lawyers and reclamation bureaucrats, is taking place behind closed doors -- a new century’s “Chinatown.”

“There is a huge fight going on, sub rosa, over whether the river’s flow will continue to irrigate farmland or be sold to development interests,” said Lloyd Carter, a professor of water law at San Joaquin College of the Law and a longtime critic of the reclamation bureau.

“For years, the bureau rolled over for ‘Big Ag’ by never enforcing acreage limits on its water deliveries. Now they seem all too willing to roll over and become agents for the schemes of big developers,” he said.

Driving along a country road in 1979, Ewell was struck by the idea of building a community amid the blue oaks and golden pastures beside Millerton Lake. Early on, he understood that the biggest hurdle was water. The rocky landscape, which made for a beautiful setting, also kept the Sierra snowmelt from easily replenishing the aquifer. With groundwater scarce, Ewell joined forces with Fresno County officials to hunt down enough farm water to make the project go.

They headed to Kern County and signed a deal to help pay for the construction of a canal in the massive Central Valley Project. For its role, Fresno County got 3,200 acre-feet of federal water. Ewell, who had chipped in $250,000, was given half the allotment.

But because his 1,500 acre-feet of water wasn’t a sure thing -- the bureau could reduce deliveries in dry years -- Ewell needed a backup. He then made a separate deal with a Tulare County water agency to purchase 800 acre-feet of its federal draw.

Now all he needed was a way to pump and convey that water from Millerton Lake.

Ewell said he spent $2.5 million erecting a large steel structure with electrical pumps that he sunk by crane into the lake bottom. Then he hooked up a single main line to a $3-million water treatment plant. A portion of the water would go to his Brighton Crest country club development; the rest would remain in the lake for his new town.

“This isn’t one of the those developments where they approve the houses and assume the water will come,” Ewell said. “All along the way, the county made me show them the water before approving the plans for a single house.”

But almost all of that water, at least as a legal matter, has turned out to be an illusion.

Ewell said the first hint of trouble came in July 1995, years after the reclamation bureau had assured him that everything was fine. The bureau’s chief of contracts, Jon Anderson, wrote to Ewell that a new reading of the map had revealed a wrinkle. Two areas of the new town were outside the permitted place of use.

“You are advised not to use [federal] water acquired under the subcontract with County of Fresno on the property,” Anderson wrote.

Ewell kept on watering his golf course even though two holes were outside the permitted zone. The county, which was sent a copy of the bureau’s letter, didn’t step in either, allowing the new town to move smoothly through the planning process. This contrasted sharply with the county’s treatment of Shaver Lake, an older mountain community also deemed outside the permitted place of use.

In the case of Shaver, the county decided not to allow its supply of federal water to serve the area. Supervisors have held firm in that decision, even as Shaver residents have complained in recent months about water shortfalls.

“We think Millerton New Town is different,” Desatoff said. “Why should we ding Ben Ewell for something the Bureau of Reclamation was unclear on?”

But bureau managers are quite clear now. Millerton New Town -- its pumps, its pipeline, its treatment plant, its graded home sites -- sits outside the line for municipal water deliveries. This is also the case with two other smaller developments nearby, they say. The line can be moved only after petitioning the state Water Resources Control Board and undergoing a lengthy review process.

“We’re going to petition the state to change the line and allow continued use of that water,” the bureau’s McCracken said.

Until then, state water officials say, the county would be wise not to deliver water to future houses and golf courses.

“State law is pretty clear,” said Barbara Leidigh, the water rights attorney who oversees the Friant region for the state water board. “If you’re outside the line, it’s an illegal use of water.”