Golden State takes action for release of city’s bid documents

Unhappy with the city of Claremont’s refusal to provide the details of its water acquisition feasibility study, Golden State Water Company is taking matters to court.

The water company filed a Writ of Mandate with the Los Angeles Superior Court on December 20 to require the city of Claremont to release documents surrounding the financial impact of a water system takeover.

The water company claims the city has not complied with the California Public Records Act, which establishes that all public records in the state of California be open and available to anyone. In the court documents, Golden State executives allege the city has not been compliant or transparent as claimed.

“Claremont waived the right to refuse full disclosure by publicly revealing the specific numerical conclusions from its financial ‘feasibility report’ as well as the central conclusions from documents reflecting its investigation into the costs and operational feasibility of the takeover proposal,” the writ states.

Golden State responded with legal action nearly two months after a city-sponsored town hall meeting, where Claremont officials informed the public of the proposed financial impacts should the city continue its pursuit to take over its water system from Golden State.

After an examination of overhead costs, among other factors, the city-obtained appraiser estimated the value of Claremont’s water system at around $54 million. This figure was determined based on Golden State Water’s anticipated cash flow and fair market value, according to Ken MacVey, an attorney with Best Best & Krieger. He did note the appraisal was given without a proper examination of the water system’s underground infrastructure.

The appraiser also conservatively estimated the city could afford up to $80 million with little to no impact on existing water rates and without resorting to a water bond or parcel tax. If the water system purchase were to cost $100 or $120 million, city experts estimate rates would still be lower than existing Golden State Water rates in 9 or 17 years, respectively.

Golden State executives claim that the city revealed conclusions that were taken directly from its analysis, “but has refused to produce a single page of the actual analysis or the underlying documents related to the analysis.”

Denise Kruger, Golden State Water’s senior vice president of regulated utilities, remains skeptical.

“Golden State Water believes that residents who may be asked to pay higher property taxes for decades should be able to review the details. We’re acting to ensure that the city operates in the transparent manner residents expect. Our petition simply requests this information so that everyone can see it,” Ms. Kruger said. “Golden State Water has released a comprehensive study by Dr. Rodney T. Smith, including all the background information and data, that concludes residents will pay dramatically higher water rates indefinitely if the city attempts an eminent domain takeover.”

Despite attempts to obtain details on the information and bar graphs presented at the city’s town hall meeting, the city has remained mum.

After a closed session of the city council on Tuesday, at which time council members discussed litigation with the water company, City Manager Tony Ramos referred Claremont residents to the city website for more information on the water acquisition. An environmental impact report is currently underway, and will be available for public comment at the end of January, Mr. Ramos also noted.  

While Golden State believes the city’s refusal to provide documents is in violation of the Public Records Act, Claremont officials hold that the act actually exempts the city from disclosing information on real estate appraisals or estimates relating to an acquisition until the real estate is obtained. The city maintains that stance, asserting they “have the right to refuse disclosure pursuant to claimed attorney-client and work product privileges as well as exemptions in the California Public Records Act,” according to the writ.

While the city has denied requests for the most recent feasibility study, the COURIER obtained a similar report conducted by the firm of RW Beck under former city Manager Glenn Southard in 2003. At the time of that study, the firm appraised the water system at $40 to $45 million, a rise from a 1988 appraisal conducted by the city that had projected the cost then at $12 million. After several years of negotiations and process, the council halted its move toward attainment in 2005.

Golden State executives believe the true value of the system is much higher. In a study conducted for the water company by local water consultant Rodney Smith, he estmates a $54 million water system purchase alone would result in a water bill increase of $469 a year for Claremont residents. Mr. Smith based his estimate on capital expenditures, or the cost of maintaining the company’s assets, income tax, operating expenses and the water itself.

Golden State and the city of Claremont remain at odds over rising water rates. After previous attempts to purchase the city’s water system, Claremont officials began the move once more after the water company filed with the California Public Utilities Commission (CPUC) for a 24 percent rate increase in its Region III service area for 2013, with smaller increases in 2014 and 2015. The commission granted a 16 percent increase for Claremont residents and other Region III ratepayers last April.

The water company and city officials will meet for a trial setting conference on April 24, according to court documents. City Attorney Sonia Carvalho declined comment as of press time, but noted the city is preparing a response to Golden State’s allegations. The COURIER will continue to provide updates as information becomes available.

—Beth Hartnett


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