San Diego's water supply. Attention is especially invited to the President's quotation, as follows: "I have asked the San Diego County Water Authority, and the city of San Diego, to press negotiations with the Metropolitan Water District of Southern California in order that an equitable arrangement may be completed for the permanent operation of the works, which will have continued value and utility." Acting in good faith, in conformity with the President's directive, the San Diego County Water Authority and the city of San Diego completed negotiations with the Metropolitan Water District of Southern California. These arrangements, together with contracts and outstanding bonds, with interest thereon, bring the total liability of the city of San Diego for our entire water system to the staggering sum of $72,471,067. The break-down of these figures follows: City of San Diego's share of water authority debt, including interest_ $49, 161, 712 Direct bonded indebtedness, other water development-----FWA contracts: Repayment for war-built water facilities Total liability---- 22, 118, 791 1, 190, 564 72, 471, 067 In addition to the capital investment, with interest, as outlined above, the city of San Diego must assume further liabilities when the San Diego aqueduct is completed. These include the purchase of all water that will flow through the new aqueduct (present Metropolitan Water District quotation of $8 an acrefoot), plus an estimated treatment price of $7 an acre-foot. It must be understood that all Colorado River water is not potable as it will be delivered via the aqueduct. It should be emphasized here that the city of San Diego operates its water system as a cooperative utility. The city has set up no depreciation reserves as would a privately owned utility, and the city does not credit itself with interest on investments already made in connection with its water system. This utility actually operates, and will necessarily operate for many years to come, virtually as a nonprofit utility. In fairness, it would appear that, if the Federal Government is to enjoy use of water from a nonprofit utility at cost, it should share in the investment in the capital structures of the utility. This the Federal Government has not done. The Federal Government's $300,000,000 investment in the San Diego area uses water at cost that has been developed by capital outlay of San Diego's own private citizens. When the present aqeduct is completed and in use, under existing contract, the Federal Government, in finality, will not have any funds invested in the capital structure of the nonprofit utility. This feature is explained in the fact that the city of San Diego has contracted with the Federal Government to repay the money being used for the aqueduct construction purposes at the rate of $500,000 a year. The Navy gave the city of San Diego little choice in contracting for the repayment of the cost of the aqueduct, and the city has never been entirely pleased with the terms, which the Navy dictated for acceptance within the short period of 5 days. The alternative was stoppage of work on the aqueduct and the immediate threat of a water famine directly caused by the depletion of San Diego's water resources by the Federal Government. It might be well here to review the record of relationship between the Federal Government and the city of San Diego, both before and during the war. Since World War I San Diego has been an ever-growing partnership city with the Federal Government, and primarily with the Navy. Even during the preparation for the last war-in 1916-after the Navy had shown an interest in the acquisition of a site for a naval training station, the citizens of San Diego dug down into their own pockets and raised $260,000 by popular subscription to purchase the nucleus of the land which has since grown into the greatest naval training station in the United States. Later the people voted, as a free gift to the Navy, an additional 95 acres of city land, so that this station could expand. Since that time the Navy has progressively felt the need for installation and expansion of other facilities—and there is no instance in which the city of San Diego ever asked reimbursement on any gifts which it was within the power of the city to make. The Marine Corps base was given 713 acres of available waterfront propertyfree. The naval hospital was given 71 acres, located on the most beautiful promontory in Balboa Park. Later the people of the city of San Diego voted, for this installation, another 200 acres-again free. The present site of the Eleventh Naval District headquarters, involving 191⁄2 acres of San Diego's best waterfront property, at the foot of Broadway, was presented to the Federal Government-without cost. The naval repair base was presented with 232 acres of municipally owned tidelands-without cost. The Coast Guard was given 111⁄2 acres adjacent to Lindbergh Field—without cost. The Marine Corps rifle range site of 544 acres of land was a gift from the city-free. Other smaller parcels have been granted from time to time, until there is a sum total of 2,656 acres at an approximate value of $15,000,000, for which the city asks no remuneration of any kind. . The war brought additional responsibilities to the city of San Diego. Immediately after Pearl Harbor the Army moved in and occupied the city's huge storage garage, used for the storage of several hundred pieces of automotive equipment, as a barracks for troops. The city's trucks were moved out into storage in the open and suffered, of course, the increased and accelerated depreciation during the entire period of the war, when replacements were impossible and maintenance difficult. No rent was asked-and no rent was paid. Even the utilities were furnished willingly and without stint. The city's police gymnasium was converted into office space for the use of the Eleventh Naval District. The former police headquarters building on Second Street was taken over for military use-again without rent. The Army moved into Balboa Park and took over large areas, chopped down trees and tore up plantings, so that defense troops might be properly housed in a strategic position. No rent or damages were ever asked or received for these facilities. San Diego owns two swimming pools for the use of the citizens of San Diego. These were both taken over and used exclusively in the training of military personnel without rent. The city and county of San Diego even gave up space in the Civic Center itself and compressed their own offices, so that needed office space could be given to the military forces-again with free rent, free utilities, free janitor service. During the days when the wounded were streaming back from the Solomon Island, the Carolines, and Tarawa, the Navy's hospital facilities in Balboa Park were hopelessly overtaxed. Under the terms of the gift by which the city acquired its 1,400-acre Balboa Park, the property cannot be leased to anyone. Almost a half million square feet of building space was, in the space of a few minutes, turned over, without rent and without even a contract, so that America's wounded might have shelter and care. In part of this space was installed a school for training hospital corpsmen, so badly needed at that time. During much of the time that this large number of buildings was occupied, the city of San Diego paid the water and power bills, and, up until the closing months of the war, mowed the lawns, cared for the shrubs and maintained the grounds, at a cost of $20,000 per year to the city. This historical background is presented because the city wants no suspicion to enter the minds of the committee members that the city of San Diego has sharpened up its chisel and is attempting to follow the popular pastime of trying to get something for nothing. A Admittedly, San Diego has received commercial benefits in the installation of these Federal facilities. However, the cumulative over-all effect upon the finances of the municipal government has finally fallen in full fury and force. Approximately 40 percent of the property values in the city of San Diego today is tax-exempt, and most of these tax-exempt properties are owned by the Federal Government. All of them require municipal services to a varying degree. Fourteen thousand FPHA housing units have been built within the city limits of San Diego. Another 6,000 are located in immediately adjoining areas. study by the city's cost accountants shows that, while certain in-lieu-of-tax payments are made by the FPHA for these properties, the cost for services rendered compared to revenues received is disproportionate. The records reveal that the cost of furnishing municipal services amounts to $1,060,000 per year, and, after deducting the in-lieu-of-tax payments and other direct service charges, the privately owned property in the city must make up a deficit of almost $800,000 for the maintenance of these properties. In addition to this, the water purchased by these 14,000 housing units is, in all cases, master-metered, and were the Federal Government to pay the same water rates for each individual unit as do the taxpayers, we would be receiving in revenue from water to those projects alone an additional $188,000. Property taxes in southern California have always been high. These taxes have been raised to what is considered to be the point of diminishing returns, and, in addition to this, the city of San Diego has imposed every type of nuisance tax that has been used by any other city in the United States in an effort to keep up with mounting fiscal costs. The increase to the city from 1940 to 1946 in the property tax, because of warcaused inhibitions to construction of improvements, has only amounted in this period to $1,600,000; while the increase in other revenues, from nuisance taxes, sales taxes, business licenses, etc., has amounted to $3,600,000. Further complicating this picture is the exemption problem. Recent figures released by the National Housing Agency, as the result of a survey conducted for them by the United States Census Bureau, show a disproportionate increase in San Diego's veteran population. This survey indicates that 60 percent of the veteran population is comprised of veterans who lived in San Diego prior to the war, and that 40 percent is made up of in-migrant citizens. These veterans, of course, are all welcome, but the cumulative effect upon this city's tax structure is another hard blow, for in California every veteran is entitled to a $1,000 exemption on property taxes. In 1939-40 San Diego's annual municipal budget amounted to approximately $5,000,000 for a population of 203,341 people. In 1946-47 the budget amounts to $11,500,000, an increase of 114 percent for a city of 362,658, an increase of 78 percent. The extent of Federal Government owned property within the city limits of the city of San Diego is illustrated by exhibit B, attached. Truly, San Diego is America's No. 1 GI city without a bill of rights! At this point it may be helpful to summarize San Diego's water problem as of today. San Diego had, in 1939, prepared a supply of water to last through 71⁄2 years of drought. In spite of the fact that the city has experienced relatively wet years from 1939 to 1945, the city today faces the fact that, by the end of 1947, its most productive reservoirs will be totally depleted. Rainfall to date has been scattered and run-off for the season only has provided San Diego with less than a 10-day supply of water. If the aqueduct construction should be terminated, the half million people in San Diego County would face evacuation from their investments and their homes. The Navy, likewise, would face the necessity of deserting much of its $300,000,000 investment in the San Diego area and moving much of its reserve fleet to other locations. There would be created a tremendous fire hazard, with danger of major conflagrations, by a shortage of water and inadequate pressures. The Navy today has in the San Diego area, ashore and afloat, more than 106,000 men, a figure which compares with that of 176,000 men at the peak of the The hundreds of ships in active and inactive service and the shore stations depend entirely upon the San Diego water system for their supplies. war. San Diego has never been a large industrial city, and being remotely situated in the southwest corner of the United States, has always experienced difficulty in attracting industry to the area to absorb a reservoir of skilled and unskilled labor. For this reason, many years ago, San Diego adopted water rates which favored the large consumer. Government installations, being large users of water, have enjoyed these favorable rates. The Federal Government, without any investment whatsoever in San Diego's water supply system or without any payment of compensatory taxes, used a heavy proportionate share of San Diego's water supply during the emergency from 1940 to 1946. Water was purchased by the Federal Government at an average rate of only 11.3 cents a hundred cubic feet. It should be pointed out that the citizen-owners of San Diego's water system purchased most of their water at an average rate of 19 cents a hundred cubic feet during this same period. San Diego now finds, much to its dismay, that replacement of its water supply will cost, over the next 10-year period, an average of more than 25 cents a hundred cubic feet. The Navy at present enjoys buying water at an average of 16.8 cents a hundred cubic feet, for the reason that the city hesitates to abolish lower-cost brackets on water usage and discourage badly needed industries which also are heavy, users of water. (This 16.8 cents figure compares with 20 cents a hundred cubic feet which the Navy pays for water at Vallejo for service to the longest-established navy yard on the Pacific coast.) It should also be pointed out that only four of the industrial users in the entire city enjoy the same low rate for water as does the Federal Government for most of its installations, and all but one of these users is currently engaged largely in the production of contract goods for the Federal Government. San Diego at the present time has an unemployment figure of over 20,000 persons, 7,000 of them veterans of World War II. It is for this reason that San Diego is almost forced to subsidize both the Government and industry to continue its economic structure. The city of San Diego has ever been alert to the fact that it is situated in a semiarid region, and its citizens have done everything within their power to protect themselves and the Federal Government from water famine. The legality of the entire effort, through months and years of planning and sacrifice, now has been thrown open to question, and at the time when San Diego is faced with its most serious threat of water famine. The citizens of San Diego, in good faith, voted last November 5 on the recommendation of the Federal Government to shoulder the responsibility of an unprecedented financial burden in a desire to provide a water development adequate to meet the combined needs of the Federal Government and the city. In assuming this tremendous burden, many years in advance of normal expectancy and with 38 percent of the property within the area nontaxable because of Government ownership, the citizens of San Diego demonstrated a strong faith in the Federal Government. The Federal Government should not break faith with these half million people now. The President of the United States, in full realization that conditions of peace might indicate another scrutiny of the over-all financial problems in connection with the San Diego adeqduct, September 12, 1946, reconstituted the interdepartmental committee to inquire into "the existing and potential financial burden of the city of San Diego or the San Diego County Water Authority in connection with the San Diego aqueduct and the extent to which a readjustment of that burden would be proper." The Comptroller General's opinion has now caused the suspension of work by the interdepartmental committee. The interdepartmental committee has held hearings and is considered to have developed pertinent facts. The San Diego aqueduct is 73 percent completed. Stoppage of work on San Diego aqueduct would create disaster. In view of this situation the city of San Diego respectfully submits to this honorable committee that the whole matter be tabled until the President has reported to the Congress the findings of his interdepartmental committee with his recommendations thereon. The city of San Diego is a financial casualty of World War II. Its record of unstinting cooperation and full and unselfish assistance to the war effort deserves nothing less than the granting of this plea. HARLEY E. KNOX, Mayor, the City of San Diego. In further support of this statement there is appended hereto the following exhibits: Exhibit A. Water supply, safe yield and delivery. Exhibit B. Map showing governmental activities situated in San Diego and vicinity [not reproduced]. Exhibit C. Chart showing city of San Diego population and water consumption. Exhibit D. Chart showing break-down of governmental revenues and expenditures, excluding harbor and water department operation, city of San Diego, Calif. Exhibit E. Comparative chart showing investment in water utility plant at end of each fiscal year, 1939-40 to 1945-46. Exhibit F. Chart of rainfall and run-off records, 1850-1946. Exhibit G. San Diego aqueduct progress map [not reproduced]. Exhibit H. Photograph showing depleted water supply, El Capitan Reservoir, February 18, 1947. (San Diego depends upon this reservoir for almost twothirds of its total water supply.) [Not reproduced.] Exhibit I. Photograph from top of El Capitan Reservoir showing low level of water presently stored, February 18, 1947 [not reproduced]. Exhibit J. Photograph of upstream face San Vicente Reservoir, February 18, 1947. (This dam, completed in 1943, is only 15 percent filled and no withdrawals have ever been made from it. This would be the storage dam for Colorado River water, to be developed through San Diego aqueduct [not reproduced ]. |