The Poseidon Water company has asked for $1.1 billion from a pool of state money to help finance a controversial desalination plant proposed for Huntington Beach.

It’s a prospect which critics argue could take those limited state dollars away from other projects that also qualify for the money but need it more. 

Like low-income housing.

The state’s housing shortage is estimated to number in the millions of units.

Meanwhile, Poseidon’s project proposal could reach its final state regulatory hurdle toward getting approved, in March.

In a phone interview, Poseidon Vice President Scott Maloni said that month is when he expects the California Coastal Commission to hear the project and decide on the permit it needs to move forward with construction.


The California Debt Limit Allocation Committee regularly issues tax-exempt bonds to help finance private projects with public benefits, as Poseidon says its planned facility would provide.

In 2019, the company sent an initial application for $1.1 billion in financing from the Debt Limit Allocation Committee through an issuer agency. Though a few steps are still in order to finalize the request for formal consideration by state officials, sometime before Poseidon’s application expires a year from now.

The company’s desalting plant, if approved by the Coastal Commission, would take in about 100 million gallons of seawater off the coast daily, turn half of it into potable water, and discharge the concentrated brine back into the ocean.

Opponents say Poseidon’s project would make water more expensive, isn’t worth the hiked cost on local ratepayers — especially in low-income communities — and would kill nearby marine life while damaging surrounding coastal ecosystems.

Workers responding to this month’s oil spill try to prevent the slick’s spread in Huntington Beach. In the distance lies the AES Generating Station, near which Poseidon’s facility is proposed to be built. Credit: JULIE LEOPO, Voice of OC

But Poseidon and the plant’s supporters argue the project is needed in California amidst routine drought and the threat of climate change to the state’s imported water supply.

Maloni, in a Monday phone interview, said the costs of building the plant and producing the water will be passed on to ratepayers when they start receiving the desalinated water, under the company’s agreement to sell the water it produces to the Orange County Water District. 

Desalinated water from the facility would be more expensive than imported water. Supporters argue the cost gap would close over time.

Getting state loans to build the plant — as opposed to costlier ones through other, private bond issuers with higher interest rates — may mean less expensive rates for the north and central county residents paying for the desalinated water they’re getting, Maloni said.

“The lower the debt, the better for ratepayers,” Maloni said. Such private activity bonds were used to finance the company’s other seawater desalting facility in Carlsbad.

But the Debt Limit Allocation Committee is also supposed to help finance other types of projects, such as affordable housing projects — at a time where the state is estimated to be 1.5 million housing units short of its current need.

Groups hoping to build affordable housing across the state appear to have queued up for the committee’s funding allocations. 

Yet the demand has far exceeded that which is available from the Debt Limit Allocation Committee. 

By billions of dollars. 


Federal law limits how much debt a state can rack up through the issuance of tax-exempt bonds for public benefit projects. 

In 2022, California expects to be able to give out a total of around $4.4 billion under that cap, according to Noah Starr, a spokesperson for California Treasurer Fiona Ma’s office.

Affordable housing groups’ interest in that available money has stacked up to more than $8 billion in total demand, according to estimates from a recent survey by the Debt Limit Allocation Committee.

Poseidon’s $1.1 billion ask of the state has roused opposition from the organizations and community members dedicated to making sure the plant isn’t built.

If approved, Poseidon’s request would reduce California’s total available bond issuance pool for affordable housing projects by roughly 28%, reads a Dec. 3 letter from a coalition of environmental groups, which include Azul, OC Coastkeeper, and the California Coastal Protection Network.

The letter goes on to point out that “every dollar of lower-interest financing triggers about $0.80 in federal affordable housing tax credits.”

“Once you factor in 80 cents on the dollar, $1.1 billion could now mean almost $2 billion,” said Andrea León-Grossmann, director of climate action for Azul, which is a Latino environmental justice advocacy group.

Critics write in the coalition letter that Poseidon — whose parent company is a private equity firm called Brookfield Asset Management with more than $600 billion in assets — “does not need [the California Debt Limit Allocation Committee] money to fund its projects.” 

“On the other hand, the people of California who are crushed by our current, unprecedented housing crisis are waiting for new affordable housing,” the letter reads. “It is incumbent upon [the committee] to choose the communities that are struggling to pay rent and survive rather than subsidize a corporate effort to privatize water.”

Maloni, responding to the letter, argued that he also sees water, not just housing, as an urgent crisis. 


“A determination about which infrastructure needs more support — housing or water — is a discretion that will be made by the committee,” Maloni said. “But I’ll assume they’ll take into consideration a number of things, such as the timeliness of the project, is it shovel ready? Is it ready to start construction?”

Maloni said the company is simply applying “for funds that we’re eligible for,” adding nothing is concrete and there are likely scenarios out there in which the company gets a loan from another agency and doesn’t need the bond committee money.

In 2019, for example, the Environmental Protection Agency selected Poseidon as eligible to apply for credit assistance in financing the Huntington Beach project, under the federal government’s Water Infrastructure Finance and Innovation Act. 

Company representatives hailed it as an acknowledgment of the need for the project while potentially lessening its costs on eventual ratepayers.

Poseidon filed its $1.1 billion request for the state Debt Limit Allocation Committee money through an issuer agency, the California Pollution Control Financing Authority, which approved an initial reading of the request in 2019. 

But it needs a “final resolution” from the agency to send the request through to the Debt Limit Allocation Committee, and the first resolution will expire on Dec. 9 of next year, according to Starr, the Treasurer’s office spokesperson. 

The company does not currently have a meeting scheduled to get one, Starr said.

The Debt Allocation Committee has not yet decided how much of its $4.4 billion will go to housing and how much to exempt facilities such as Poseidon’s proposal for the 2022 year. 

“That will not be decided and announced until January 19, 2022,” Starr said. 

The committee’s next meeting is set for Dec. 22. 


The Debt Limit Allocation Committee’s process illustrates the largely-overlooked intrigue of financing large-scale projects in California that may not just be costly, but controversial, said Susan Jordan of the California Coastal Protection Network.

“This stuff is important,” Jordan said. 

The committee meetings have also lacked public accessibility, she said, recalling the committee’s most recent Dec. 8 meeting, chaired by state Treasurer Fiona Ma.

In that meeting, Jordan said, public speakers — those who couldn’t attend the meeting in person, at least, to give input on the funding pool allocations — had to wait on the phone for hours, unable to access a video viewing option like Zoom for remote listeners. 

“This agency doesn’t necessarily go in the order of its agenda items … you can’t afford to not be on the phone the entire time,” Jordan said. “The only people actually seeing the meeting have the ability to go sit in the room, and that’s not us.”

Starr said, ​​”[The committee] heard those complaints at our last meeting and has rectified the situation by adding the Zoom call information for the public to the agenda of the next meeting on December 22, 20221 that is posted on our website.” 

“Occasionally items are taken out of order,” Starr added. “It is disclosed in the agenda that it is a possibility.”

Brandon Pho is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at or on Twitter @photherecord.


Start each day informed with our free email newsletter. Be alerted when news breaks with our free text messages.

And since you’ve made it this far,

You are obviously connected to your community and value good journalism. As an independent and local nonprofit, our news is accessible to all, regardless of what they can afford. Our newsroom centers on Orange County’s civic and cultural life, not ad-driven clickbait. Our reporters hold powerful interests accountable to protect your quality of life. But it’s not free to produce. It depends on donors like you.

Join the conversation: In lieu of comments, we encourage readers to engage with us across a variety of mediums. Join our Facebook discussion. Message us via our website or staff page. Send us a secure tip. Share your thoughts in a community opinion piece.