rebeccab@sfbg.com

GREEN CITY Should the state of California hand over a multimillion dollar tax break to a company that is poised to build the largest desalination facility on the continent, just north of San Diego? That question will be decided early next year when Poseidon Resources, a water-infrastructure developer, formally submits its request for more than $500 million in tax-exempt bonds to the California Debt Limit Allocation Committee (CDLAC).

The decision will demonstrate whether California is willing to roll out the red carpet for desalination, an energy-intensive technology that has many questioning whether it's a wise path to take. Proposals for desalination projects are cropping up across the state, including one for a smaller facility in Marin County, and water bonds recently approved by the Legislature as part of the state's historic water package include $1 billion earmarked for water recycling and desalination.

With the state well into a three-year drought that has left some agricultural operations high and dry, calls for new reliable water sources such as desalination plants are only growing louder. But critics worry that the private operations will suck in tax dollars the way their intake pipes suck in saltwater, and they're urging decision-makers to focus on more cost-effective strategies like low-flow showerheads, waterless urinals, drought-proof landscaping, or other comparatively thrifty ways to address water shortages. Poseidon's Carlsbad desalination plant is projected to be the largest project of its kind in California, but it's also just the beginning of an emerging trend.

A coalition of organizations, including the Sierra Club, Service Employees International Union, and Food & Water Watch, has been sounding the alarm that San Diego's Carlsbad Desalination Project is a bad deal that shouldn't be encouraged with public subsidies in the form of tax-exempt bonds. "Our group, along with most of our partners and allies, are not anti-desalination," says Renee Maas, who works for Food & Water Watch in Los Angeles. "But we think it should be a last resort," after opportunities for conservation have been exhausted.

"Aside from doing nothing about conservation and continuing to require huge amounts of energy for transmission, these plants also have no real community benefit, minimal job creation, and, most importantly, a questionable success and effectiveness," members of Service Employees International Union Local 721 wrote in a letter to the Metropolitan Water District, Southern California's water wholesaler. "We believe we can conserve more water by installing waterless urinals across L.A. County than we would obtain from the proposed desalination plant."

Yet the facility boasts a long list of powerful endorsements, including that of Gov. Arnold Schwarzenegger, a member of CDLAC. The governor was listed as a supporter on a preliminary application submitted to the three-member committee. The two other committee members are State Treasurer Bill Lockyer and State Controller John Chiang.

The facility already has its ducks in a row, with permits approved and a contract with MWD to provide as much as 10 percent of San Diego's water supply (MWD also agreed to $350 million in subsidies for the plant over 25 years). Poseidon expects the plant to be up and running by 2012. According to company spokesperson Scott Maloni, the project will proceed even if the state rejects its request for tax-exemption.

The plant will use ocean water as a raw ingredient to produce fresh drinking water by pushing the saltwater through reverse-osmosis membranes. With a capacity for producing an estimated 50 million gallons of drinking water a day, the hulking facility will share a site with a 52-year-old beachfront power plant equipped with an antiquated system that draws in ocean water to cool its machinery.