Water bond ballot measure approved by city council
A water revenue bond slated for the November ballot received a green light from city council Tuesday night, despite a request from Golden State Water Company (GSWC) to put a plug in it.
City staff has said it can support an $80 million purchase price through current revenues collected from water bills. The proposed bonds would give the city an additional $55 million toward the potential acquisition of the Claremont water system, should the system’s price tag exceed the $80 million.
The council’s decision to move forward on issuing those bonds was somewhat complicated by an eleventh-hour correspondence from Golden State Water stating that the water company had entered into a Memorandum of Understanding (MOU) with Claremont Affordable Water Advocates (CAWA), a group of Claremont residents who would rather see the city engage Golden State in solving the water supply issues and abandon its plan to seize the system.
The MOU, which was signed by Denise Kruger, senior vice president of regulated utilities at Golden State, and Donna Lowe on behalf of CAWA, outlines 20 commitments Golden State requested the city council review before drawing any conclusions about moving ahead with the water bond ballot measure. The commitments listed in the memorandum include, but are not limited to, lower water bills for residential customers, alternatives to the WRAM rate, city participation in the Pomona Valley Protective Association (PVPA) meetings and dismissal of existing litigation.
“They have had years to collaborate with the city and find alternatives to costly rate increases,” Claremont Mayor Joe Lyons said in a statement. “But higher rates and charges is the only real agenda this city has seen from Golden State Water.”
Claremonters have been wading though the water issue for years and, given Golden State’s recent litigious activity with the city, the water company’s request was met with both skepticism and reluctance. At Tuesday’s council meeting, residents and council alike expressed determination to gain local control of the utility.
“Golden State is not making any attempt to help the citizens of Claremont and they will not,“ Marilee Scaff told the council members. “What you’re doing is draining the community of something like $8 million a year to stockholders and high salaries. Do you want to keep doing that? I don’t like paying high salaries but I don’t mind paying for something I want…like a house, or a water company. So what can you do to keep them from putting you on the spot which is what they intend to do?
“The least you can do is move ahead,” she continued “They are well aware that Claremont is determined and they’re afraid they’ll lose the vote but you can’t let them push you so far that you don’t have a chance to do it.”
The potential acquisition of the Claremont water system, which has been owned and operated by Golden State’s parent company American Water Corp. since 1929, continues to propel the city to seek additional mechanisms of financing. Council and city staff believe the water revenue bond is one viable option. Council also believes Claremont residents deserve the opportunity vote on it.
Revenue bonds are a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified entity associated with the purpose of the bonds, rather than from a tax. In this case, the bonds would be payable from the water rates residents are already paying. In other words, when a resident pays his/her water bill, the money would go to the city instead of Golden State, with no impact on property taxes.
The revenue bond measure will require approval by more than 50 percent of Claremont voters during a special election. The city would request the Los Angeles County Board of Supervisors to consolidate the municipal election with any other election to be held within the county on Tuesday, November 4, 2014 at a cost to the city of about $75,000.
The ballot measure, which was drafted at Tuesday’s meeting, would require a “yes” or “no” vote and would read as follows:
“Shall the city of Claremont be authorized to issue water revenue bonds in the maximum amount of $55,000,000 for the purpose of acquiring the Claremont Water System and other expenses related to the bond issue, paid for solely by water system revenues, but only if the purchase price of the system exceeds $80,000,000?”
In March, city consultants put the fair market appraisal of the Claremont water system at $55,094,000 and advised that the city may have to pay as much as $80 million. Golden State Water claims that the fair market value of the water system is substantially higher. The purpose of the water bond would be to generate an additional $55 million in the event they are right.
As Claremont resident Ludd Trozpek pointed out, there didn’t appear to be any legal or calendar impediment in postponing the council’s vote on the water bond issue. In fact, Mr. Trozpek implored council to consider reviewing the MOU presented, as it would be a no-cost show of good faith to explore all proposals for resolution.
“I know there is a good bit of mistrust with Golden State Water, I have it myself,” he said. “To be polite, in almost all cases they are very difficult to defend, and I’ve been watching them since 1995. However, to quote Yasser Arafat, ‘You make treaties with your enemies, with your friends you make business.’ I think all the smart attorneys on both sides could put an iron-clad agreement together.”
Councilmember Larry Shroeder asked the question on everyone’s mind. “If we put this on the ballot tonight, could we pull it from the ballot later?”
According to City Attorney Sonia Carvalho, the Elections Code provides for a withdrawal deadline of 88 days prior to the November election, giving the city until August 13 to rescind the ballot measure.
Perhaps seeing an out if they need to backtrack and a good start if they don’t, council unanimously approved the resolution for a special election.
City Manager Tony Ramos confirmed Wednesday that the city attorney had notified Golden State about the council’s decision to move forward on the water revenue bond election, but reiterated that the council remains open to discussion with Golden State on their 20-point Memorandum of Understanding.
Mayor Lyons agrees.
“If Golden State Water is serious about working with the city on real solutions, our door is open,”?Mr. Lyons said. “The city has been engaged with our residents for over two years through this process. Where is Golden State Water Company’s transparency when it comes to their rates, tariffs, surcharges, and now signing agreements with advocacy groups?”
Councilman Corey Calaycay was very spirited in urging the water company to come before the public to discuss the new proposal drafted with CAWA.
“This is very inappropriate,”?Mr. Calaycay said to a packed council chamber. “If they have an MOU, then put it here on the table so that the council and everybody else can see it. Not your minions but, you yourself, Ms. Krueger. Come here and present your proposal in public, don’t hide. The irony is they have a couple of representatives outside who are watching from a distance but won’t even come in the room and speak themselves, so let’s be honest about it.”
It’s unclear if Golden State remains open to discussions with the city given Tuesday night’s decision.
“There has never been a public takeover of a water system where the acquisition and rate promises have come true, and Claremont will be no different,” says a spokesperson for GSWC. “Golden State Water believes residents should have the opportunity to vote on the entire financing proposal of $135 million and continues to recommend that the city operate transparently, produce public information and allow for a full review of their plan.”
The outcome of the revenue bond measure will reinforce which side of the water table Claremont residents want to be on. What side are you on? Visit www.claremont-courier.com to participate in our poll.
See the official Golden State Water Company memorandum with Claremont Affordable Water Advocates.