While residents near the upper reaches of Lake Berryessa face a dilemma caused by costly improvements to failing water and sewage treatment facilities, those who live along the southernmost shores of the lake are also seeing slow progress on water upgrades.

In Berryessa Highlands, a neighborhood of homes on the rugged hills off Steele Canyon Road with views of the lake, plans for a new plant that would provide more fresh water and more efficiently processed wastewater have stalled.

The reason: Delays in contract negotiations between the U.S. Bureau of Reclamation and the resort company set to run nearby Steele Park Resort and four other lakeside concessions.

Last year, property owners served by the Napa Berryessa Resort Improvement District voted to pay for nearly $14 million for water and wastewater improvements. The need for the improvements stems from inefficient and aging systems that had prompted the state Regional Water Quality Control Board to find the district out of compliance with state regulations.

While property owners approved the financial assessments in the spring of 2007, the district has collected no money toward the repairs. A NBRID staff report issued last month states that Pensus Group, which has won the right to operate Steele Park Resort, “has not yet made a commitment to participate in the assessment, which prevents the district from pursuing bond financing” for the water treatment upgrade.

The Pensus Group, an Arizona based operator of marinas and resorts, would be expected to pay about $4 million of the $14 million total, according to Napa County Auditor-Controller Pam Kindig.

The staff report goes on to note that the U.S. Bureau of Reclamation, which controls the lakeshore and decides who operates the lakeside resorts, has guaranteed that whoever operates Steele Park Resort will be required to pay its share of the upgrades.

Yet the Bureau and Pensus have yet to sign the deal.

The Bureau of Reclamation’s Pete Lucero said that there is no question about Pensus’ eventual participation in paying for the wastewater treatment system.

“Reclamation has inserted (participation in the improvement district) as a requirement in the contract. Any operator that operates at Lake Berryessa will participate,” he said.

Lucero said contract negotiations with Pensus “are proceeding very well” and that the sewage treatment financing is “not a sticking point.”

An official with Pensus, an Arizona-based operator of marinas and resorts, did not return a phone call seeking comment.

The Bureau of Reclamation and lake users first hoped to have the contract with Pensus complete by the beginning of summer, when the 50-year contracts with current lakeside concessionaires began to expire. But that date passed, as did a mid-August date that lakeside businesses were hoping would help salvage the summer season at Lake Berryessa.

Lucero declined to speculate about when the contract would be completed, but emphasized that the Bureau of Reclamation and Pensus “are not far off at all. The complexity is that it is not just Steele Park, but it is five concession areas under one contract. We need to make sure all the T’s are crossed and I’s dotted.”

The slow going on the Pensus contract has had other consequences at the lake, including the closure of several resorts during peak season. Former operators have seen their contracts expire and have shuttered their visitor accommodations and boat launches, but Pensus has yet to move in.

Berryessa-area business owners are concerned about the down season and are encouraging guests to visit the lake, where the water is still warm and the public launches and some of the privately-run resorts remain open.

Repairs ahead

The Napa Berryessa Residential Improvement District, which is a special district overseen by county officials, has until 2012 to address regional water quality board concerns. Until it does, a moratorium bars construction of any new residences in Berryessa Highlands.

Nate Galambos, an engineer with the district, said that NBRID’s problem stems from use of a spray field for treated wastewater. State regulations say agencies generally can use spray fields to absorb treated water only between mid-April and mid-October. Off-season spraying raises the risk of treated sewage entering creeks and streams, and possibly the lake.

In recent years, the out-of-date facilities and volume of water have forced the district to spray in the wet season.

Upgrades to be paid for by the assessment include faster and more efficient creation of potable water, more efficient processing of wastewater and decreased reliance on the spray fields.

Kindig and Napa County Counsel Robert Westmeyer explained that NBRID will issue bonds to pay for the upgrades, but that seeking bonds before Pensus formally commits to the assessment would force NBRID to face unfavorable financial terms.

Kindig said it will be less expensive for residents of the area if the bond is issued under better terms, thus the decision to wait for the contract between Pensus and the Bureau of Reclamation.

Assuming the Pensus deal is completed, Kindig estimated that the first bill for the assessment would be issued no earlier than December 2009.