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Massive Farm Owned by L.A. Man Uses Water Bank Conceived for State Needs

December 19, 2003|Mark Arax | Times Staff Writer

BAKERSFIELD — 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 coyotes.

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 -- a lake worth more than $180 million on the open market -- 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 service.

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 -- how a handful of California's most powerful and wealthy men continue to grab the state's most precious natural resource.

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, including Paramount.

"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 Nader.

"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 wealthiest."

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 environment.

"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 -- with an estimated net worth of $740 million -- 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 -- jump-started with $74 million in taxpayer money -- ended up as an integral piece of the private empire of Stewart Resnick begins with a lawsuit, or at least the threat of it.

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