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California Continues Struggle With Drought

April 2016

California’s drought—now in its fifth year—continues to make headlines, and not just during the daily weather report.

The Washington Post recently reported on some, perhaps, unintended and unexpected consequences that California residents are seeing as a result of Gov. Jerry Brown’s mandate nine months ago that water use be cut by 25 percent statewide. The details of the mandate were reported in the article “Come Hell or High Water” on pg. 50 of the May 2015 issue of units Magazine.

The Post reports that Californians are noticing trees dying because of lack of water, trees falling as the dry Earth cannot support them during windy conditions and additional tax bills sent to them from the federal government to cover the rebate checks they received for tearing out the grass in their landscape and replacing it with less water-dependent materials.

“We have a lot of dying or dead landscape, but not so many dead trees,” says San Diego—based owner Bob Nida. “Commercial and taxpayer-funded organizations are converting to hardscape in many noticeable instances. In many residential neighborhoods, green lawns survive in spite of water district rules to water only two days per week. Many did a good job of hitting district water reduction goals. But since December’s [heavy] rains, there has been some increase in usage and, therefore, goals are not being met.

Linda Morris of San Diego-based Cambridge Management Group has more than 30 citrus trees as well as a large oak tree on its property that are in distress because they have not been able to water them effectively, Morris says.

“I am close to losing several of them,” she says. “These trees take years to mature. Losing them will result in a state-wide problem. I am not the only one who is affected. A very large grove [nearby] has been completely cut down. It is not replacing the [lost] trees.”

Morris says trees at some communities she manages were affected by a recent storm.“They were ripped out of the ground because the root system [had deteriorated] from the drought. Several were very large and fell into the street. If this continues, it could turn into a safety issue, as passersby could be hurt or killed.” One such instance occurred recently in Pacific Beach, Morris says, when a woman driving by was killed by a tree that fell on her car.

The effects of dying trees, The Post reported, carries over to worsening air quality and less shade during times when temperatures approach or exceed 90 degrees—not to mention their habitats for squirrels, birds and other animals. The cut in water use also is potentially driving the state’s utility companies to raise rates to cover the
loss of a reported half-billion dollars in revenue that would have come from “normal” water use.

When the governor urged homeowners to tear out their lawns, he offered them a carrot: Tax-free state rebates of as much as $2,000 to help pay for replacement desert-themed foliage, The Post reports. One
water supplier offered rebates for as much as $4,400.

But California water officials who forgave state taxes on the rebates overlooked a major potential drawback—federal taxes. Now the Internal Revenue Service is preparing to tax the rebates as income, a move that
could bring a key water conservation program to a halt, The Post reports.

“Our clients who replaced grass are all getting 1099s,” says Bob Kevane, The Kevane Company, a San Diego-based real estate firm. “They wouldn’t be sending these if it wasn’t taxable. The IRS did state at the time that the rebate payments would be taxable if done in connection with an income property.”

As of February, the state doled out $22 million in rebates to homeowners who swapped their grass turf for mulch and less-thirsty plants. The Metropolitan Water District, the state’s largest water supplier to utilities
from Los Angeles to San Diego, gave away $340 million.

One received a $1,400 tax bill from the rebate, The Post reports. It says some may have mistaken the water rebates for energy-efficiency rebates that have been awarded, which the IRS didn’t tax.