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business Monday 30 May 2022
How San Diego secured its water supply, at a cost

(AP) - As a worsening munity came together and
drought forces millions of said, ’We’re not going to
Californians to face man- be in this situation again.
datory water restrictions, We need to plan for our
one corner of Southern Cal- own reliability,” said Sandy
ifornia has largely shielded Kerl, general manager of
itself from supply-related the San Diego County Wa-
woes: San Diego County. ter Authority.
For Western water planners, So in 2003, the water author-
the path it took to get there ity cut a deal to get water
serves either as a blueprint from the single largest user
or a cautionary tale. of the Colorado River, the
Over the past three de- Imperial Irrigation District, in
cades, San Diego County Southern California. San Di-
diversified its water supply, ego County funded repairs
ramped up conservation to leaky canals belonging
and invested in big-ticket to Imperial and signed a
water infrastructure in- historic water transfer deal.
cluding the Western hemi- Today, it receives about
sphere’s largest desalina- 55% of its total supply from
tion plant, which removes Imperial as part of the deal.
salt and impurities from The water authority also
ocean water. As a result, helped farmers use less
the water agency that water. It raised dams to in-
serves 24 water utilities in- An official at the Carlsbad Desalination plant fills a cup with filtered water made from ocean crease storage capacity
cluding the city of San Di- water, Thursday, May 26, 2022, in Carlsbad, Calif.The facility is the Western hemisphere's largest in reservoirs. It provided re-
ego says it can avoid cuts desalination plant, which removes salt and impurities from ocean water. (AP Photo/Gregory Bull) bates to homeowners who
until at least 2045, even dur- ripped out grass lawns for
ing dry periods. But that se- large avocado industries University who recently was almost all of its water came water-efficient alternatives.
curity has come at a cost. want to break away from commissioned to study the from the Metropolitan Wa- In 2012, San Diego County
San Diego County’s water the regional water supplier, region’s water costs for a ter District, the country’s forged a deal to get 10%
is among the most expen- saying they can purchase California agency. “I think largest water provider. That of its water supply from
sive in the country, cost- cheaper water elsewhere. this is a harbinger of some- experience and a tense, the Carlsbad Desalination
ing about 26% more at If they succeed, water in thing that’s going to hap- dysfunctional relationship Plant for the next 30 years.
the wholesale level in 2021 San Diego County could pen elsewhere in California — California water experts The plant produces 50 mil-
than the Metropolitan Wa- grow even more expen- and elsewhere in the U.S.” say — with water officials lion gallons of drinkable
ter District’s, which serves sive. “San Diego’s situation San Diegans didn’t always in Los Angeles spurred San water — enough for about
Los Angeles and surround- is very surprising, very strik- rest easy during drought. In Diego County’s aggressive, 400,000 people — every
ing counties. Now, two ru- ing,” said Michael Hane- the 1990s, a severe dry pe- decades-long pursuit of day and is by far the re-
ral irrigation districts in San mann, an environmental riod cut the region’s water water self-sufficiency. gion’s most expensive wa-
Diego County home to economist at Arizona State supply by 30%. At the time, “At that point, our com- ter source.q

More buyers opt for adjustable-rate mortgages as rates rise

LOS ANGELES (AP) — Rising able. “It’s natural for home- Such loans became less
interest rates are making buyers to be looking at attractive the last couple
adjustable-rate mortgages ways to reduce that mort- of years as average long-
an increasingly attractive gage payment, and one of term mortgage rates fell to
alternative to common the ways is to use an adjust- an all-time low.
30-year, fixed-rate home able-rate mortgage,” said ARMs’ share of all loans by
loans. Selma Hepp, deputy chief dollar value sank to just 4%
ARMs made up 13% of all economist at CoreLogic. in January 2021 from 13%
home loans by dollar vol- Adjustable-rate mortgages a year earlier, according
ume in March, their highest don’t make it any easier to to CoreLogic. ARMs have
share since January 2020, qualify for financing, but made up between 10%
according to CoreLogic. they do offer buyers some and 19% of all loans by dol-
The increase coincides with flexibility with their monthly lar value over the last 12
a sharp rise in mortgage mortgage payments in the years. Condominium units are offered for sale in the Dorchester neigh-
borhood, Wednesday, Aug. 18, 2021, in Boston. Rising interest
rates. The average weekly first few years of the loan At the height of the last rates are making adjustable-rate mortgages a more attractive
rate on a 30-year mort- term. housing boom in 2005 ARMs alternative to common 30-year, fixed-rate home loans. (AP
gage slipped this week to For example, a homebuyer represented just under 45%, Photo/Charles Krupa, File)
5.25% from 5.3% last week, who takes out a typical 5/1 CoreLogic said.
which was the highest level ARM will have a low, fixed Back then, such home securities to investors. Far Great Recession.
since 2009, according to rate for the first five years loans were more common looser lending criteria also “We still see very solid
mortgage buyer Freddie of the loan. After that, the because lenders could sign set up many loans to de- underwriting standards,”
Mac. The average rate was loan adjusts to an adjust- up homebuyers for a loan fault when they adjusted to Hepp said. “The last few
3% a year ago. able interest rate, which and then take it off their a higher rate. years have been some
Rising mortgage rates, in could be higher or lower, balance sheet by selling it Such a scenario isn’t in the of the best underwritten
conjunction with sharply until the debt is paid off, or to investment banks that cards now, however, as loans, irrespective of what
higher home prices, make the buyer refinances the made a big business of banks have beefed up their people use as their mort-
homeownership less afford- loan. selling mortgage-backed lending standards since the gage type.”q