Massive Farm Owned by L.A. Man Uses Water Bank Conceived for State Needs
BAKERSFIELD â€" The Kern River, dry as bone,
meets Interstate 5 on an expanse of land no longer tamed by
agriculture. The last stand of cotton was plowed under a
decade ago, and now tumbleweeds hide jackrabbits and
But cotton's white gold has given way to new riches stored
deep below the ground. That's where 730,000 acre-feet of
water â€" a lake worth more than $180 million
on the open market â€" awaits the pump.
In a new era of buying and selling water, there may be no
bigger stockpile than the Kern Water Bank. It was conceived
in the mid-1980s by the state Department of Water Resources
as a way to store water in the aquifer in wet years so that
it can be pumped out in dry years.
Today, though, the massive underground pool is controlled
by one corporate farmer, wealthy Los Angeles businessman
Stewart Resnick, who owns Paramount Farming Co., the
Franklin Mint, and Teleflora, a flowers-by-wire
The Kern bank, which was intended to help balance out the
state's water supply to cities, farms and fish, has instead
allowed Paramount Farming to double its acres of nuts and
fruits since 1994.
In recent years, Paramount received enough water from the
state to irrigate its existing orchards and withdraw enough
water from the bank to plant more trees.
Paramount Farming is now the largest grower and seller of
almonds and pistachios in the world, according to an
international business directory. Paramount Citrus, also
owned by Resnick, ranks as the largest citrus grower and
packer in the U.S.
Critics say Resnick's control of the water bank is a
glaring example of the perversion of water marketing
â€" how a handful of California's most powerful
and wealthy men continue to grab the state's most precious
The state purchased the 20,000 acres along I-5 and funded
the initial planning and plumbing, a public investment
totaling $74 million. But the water bank went from public
to private hands after a series of closed meetings between
state water bureaucrats and large water contractors,
"A water bank designed as a safeguard against drought is
being used by Paramount and other mega-farms to grow even
bigger," said John Gibler of Public Citizen, a Washington,
D.C.-based nonprofit organization founded by Ralph
"In some cases, this water is being promised to major
developers, such as Newhall Ranch, as a way to get
thousands of houses green-lighted by county governments. A
public resource has been privatized by and for the
William D. Phillimore, Paramount's vice president as well
as chairman of the Kern Water Bank, said his company is not
the only one to benefit.
The water, by dint of legal contracts with the State Water
Project, belongs to Paramount and other farming entities
that make up five local water districts. Although Paramount
does control more than 50% of the water bank, scores of
other farming operators, as well as residents in nearby
Bakersfield, also draw water from the bank, he said.
By banking water and drawing less from Northern California
rivers during dry times, he said, farmers also are helping
"The water bank, as it currently exists, is an asset for
the entire state. The problem with these water deals is
they are very convoluted and very complicated," Phillimore
said. "But anyone advancing the argument that the benefits
are going to one grower hasn't done their homework."
Resnick, one of the richest people in Los Angeles
â€" with an estimated net worth of $740 million
â€" didn't begin farming in the San Joaquin
Valley until the mid-1980s. He and his wife, Lynda, had
built their fortune on flowers and burglar alarms before
buying the Franklin Mint in 1984 and marketing such items
as John Wayne Collector Plates.
Resnick now oversees more than 100,000 acres from his
office on Olympic Boulevard in West Los Angeles, placing
him second only to cotton king J.G. Boswell, America's
biggest farmer with 150,000 acres in Kings County.
Paramount's buying spree, which now includes 6,000 acres of
pomegranates, would not have been possible without the
water bank, managers agree.
But Resnick, 65, isn't inclined to talk about the rise of
his farm, which consists of leftover chunks of old Texaco,
Mobil Oil and Dole Foods land.
His one subsidiary that controls the largest share of the
water bank has no office and no telephone number. His Los
Angeles-based holding company, Roll International, has no
public relations arm. The secretary answering the phone
shoos away reporters with no wasted words. "We don't talk
to the press. Goodbye."
The story of how the state's largest water bank
â€" jump-started with $74 million in taxpayer
money â€" ended up as an integral piece of the
private empire of Stewart Resnick begins with a lawsuit, or
at least the threat of it.
A seven-year drought ending in the early 1990s pitted
Southern California water contractors, such as the
Metropolitan Water District, against agricultural
contractors, such as the Kern County Water Agency. Each
region made its case to the state, telling why it deserved
to receive the water guaranteed by long-standing contracts.
In the drought's worst years, urban users got 30% of the
draw, while Kern farmers received less than 5%.
In 1994, agricultural and urban interests threatened to sue
the state for nondelivery. The main parties gathered in a
closed-door meeting in Monterey to hash out a settlement.
Public interest groups, environmentalists and smaller water
contractors â€" locked out of the meeting
â€" cried foul.
When it was over, the very flow of California water had
The state Department of Water Resources set the stage for
water banking and marketing on a larger scale. Water
marketing became more important because the State Water
Project had never been fully built out. As a result, Water
Resources couldn't live up to its yearly contractual
obligation to deliver 4.2 million acre-feet of water to
cities and farms statewide.
To create more water, the department agreed to turn over
its fledgling water bank to the Kern County Water Agency
and let area farmers capture more water in wet years. In
return for the water bank, Kern agreed to amend its
contract with the state by reducing its draw of 1.1 million
acre-feet by 45,000 acre-feet.
"At the time we took over the water bank, it was the
biggest white elephant boondoggle that DWR had ever wasted
its money on. There were no recharge ponds, no new wells,"
said Scott Hamilton, Paramount's resource planning
"We gave up 45,000 acre-feet of water to get it, and then
we spent $30 million on infrastructure. It's the locals
here who built the water bank."
Public Citizen, in a report by Gibler titled "Water Heist"
to be released today, contends that the state's transfer of
the bank led to a water grab by Resnick and other big
"The state invested a lot of money and created a bank that
could store 1 million acre-feet â€" for the
benefit of the entire state," Gibler said. "It was absurd
to then trade that away to a privileged few."
Gibler argues that the 45,000 acre-foot entitlement that
Kern County gave up was really "paper water." It existed
only as a promise on a contract between the Kern County
Water Agency and the Department of Water Resources. Because
the state consistently fell short on those contracts,
Gibler said, the 45,000 acre feet wasn't real water
actually shipped from the Sacramento-San Joaquin Delta.
"Kern County gave up a pittance at best and got an
invaluable water storage facility in return," he said.
Current and former staff at Water Resources say both sides
are partly right. Yes, the 45,000 acre-feet could be
considered an illusion in most years. But the water bank
itself was nowhere near to being in working order when the
state handed it over to Kern.
"We bought the land and put in the money, but we couldn't
make it work," said Steve Macaulay, the department's former
chief deputy director.
With the bank in hand, the Kern County Water Agency signed
a joint powers agreement in 1995 with four other local
water districts and one private water company. The
agreement divided up the ownership of the water bank, with
the largest share, about 48%, going to Westside Mutual
Water, a subsidiary of Paramount Farming.
Dudley Ridge Water District, whose president, Joseph C.
MacIlvane, is also the president of Paramount Farming, got
As a result, Resnick now controlled a water bank capable of
extracting 240,000 acre-feet each year â€"
enough water to furnish the needs of 500,000
"He's got some 5 million almond trees planted in the
desert. Most of the water has gone to create a nut empire,"
Gibler said. "By controlling the water bank, they are now
poised to profit from water sales to urban development.
"And don't think it won't happen. Look at Newhall and Tejon
ranches. Big Ag is becoming Big Sprawl through water
Resnick, a major philanthropist and art collector who has
donated hundreds of thousands of dollars to Democratic
political candidates, including personal friends Bill and
Hillary Clinton, has put his farming empire in the hands of
experts, locals say.
Paramount's vice president, Phillimore, declined to answer
questions about the company's holdings or plans to sell
water for urban growth. "We honestly don't like to share
information with people," he said. "It's one of the
advantages of being a private company."
Other Paramount managers took issue with the notion that
the water bank was purely a vehicle to enrich Resnick. When
the Delta has needed more water during heavy pumping months
to spare fish, the Kern Water Bank has been a willing
seller, they said.
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