Cadiz Inc. announced it has completed a 99-year lease on February 8 for the potential to develop and farm 9,600 acres of its Cadiz Valley property in the Mojave Desert to Fenner Valley Farms, LLC, a subsidiary of Water Asset Management LLC (WAM). The deal, which will begin with the development of irrigation on 2,100 acres, will accelerate the developed of groundwater production capacity of Cadiz’ existing well field in San Bernardino County, California and will allow Cadiz, within the next 20 years, to divert the “beneficial use of the water and integrate the agricultural well-field infrastructure into the Cadiz Water Project.”
“Demand for agricultural land with clean, abundant water supplies is at an all-time high in the West and we are happy we can put our most valuable asset to work through this constructive partnership with WAM while also advancing the infrastructure improvements required for the Cadiz Water Project,” said Cadiz CEO Scott Slater. “The well-field infrastructure and related improvements are substantially similar, regardless of whether the water is applied for agricultural use or conserved for Water Project participants.”
Cadiz owns a total of 35,000 contiguous acres in the Mojave Desert, which lie atop a groundwater aquifer system estimated to hold 34 million acre-feet of water – a volume greater than the total of Lake Mead – the largest surface reservoir in the U.S. And despite the ongoing drought ravaging the state, the groundwater levels at the Cadiz property are currently at a 20-year high. The property has been farmed in varying capacities since the 1980s and is the largest agricultural holding in San Bernardino County.
In addition to Fenner Valley Farms, Limoneira has a previous agreement in place with Cadiz reserving the right to plant up to 1,480 acres of lemons in the Cadiz Valley – to date the company has planted 360 acres.
“The Cadiz Valley provides excellent growing conditions with high quality land and water resources and we applaud the additional partnerships with FVF that will further improve the opportunities at Cadiz,” said Harold Edwards, President and CEO of Limoneira Company. “As agricultural land pricing continues to climb, Cadiz Valley’s attractiveness will only further escalate.”
For the initiation of the project involving the first 2,100 acres, Cadiz had received $12 million. Of this amount the company has allocated $10.5 million to reduce outstanding debt and to satisfy mortgage debt through June 2017. The remaining $1.5 million will be allocated to transaction fees and to be used as working capital. Under the agreement, Fenner Valley has the right to lease an additional 7,500 acres of the property by December 22, 2016 for $43 million.