Little new information presented at water bond forum
Claremont business owners and residents thirsty for answers were left a bit parched on Wednesday afternoon following a panel discussion held at the DoubleTree Hotel on issues relating to Measure W.
The 90-minute water bond seminar, sponsored by the Claremont Chamber of Commerce, was well attended with roughly 75 audience members.
For Claremonters who’ve followed the water revenue bond issue, the answers that were to follow by the four panelists echoed previous declarations made in recent months. For those just getting up to speed, the discussion offered a little something for every argument.
Arranged two-to-a-table with a podium in between, the panelists—Joe Lyons, mayor of the city of Claremont, Rodney Smith for Golden State Water (GSW), Freeman Allen for citizen-group Claremont Friends of Locally-Owned Water (Claremont FLOW) and Mark Sterba, representing both Claremont Affordable Water Advocates (CAWA) and No On Measure W—were introduced by Chamber Executive Board Chair and moderator Linda Sarancha before being instructed they would each be given five minutes for opening statements and one minute each to respond to each question posed.
Ms. Sarancha noted that Mayor Lyons, serving in his role as a councilmember and a representative for the city of Claremont, may not take a position advocating for or against Measure W, citing state and federal laws.
Mr. Allen (FLOW) kicked things off, referring to a handout that offered a graph comparing the city of Claremont’s water rates with those of La Verne. In June 2013, Claremonters paid 86 percent more than La Verne, who owns their own water system, Mr. Allen noted.
Mayor Lyons followed, maintaining the stance that the city is committed to providing Claremont residents with an affordable water system that stabilizes water rates by offering local control. If Measure W passes, Mr. Lyons said, the city will conduct its due diligence and transparently address issues in public session.
Mr. Smith (GSW), president of Stratecon, Inc, a strategic planning and economics consulting firm specializing in water and other natural resources, provided his evaluation of the city’s feasibility study, complete with graphs, projecting increased water rates over the next 30 years, regardless of the purchase price of the system from Golden State.
Mr. Sterba (CAWA) praised Golden State’s reliability of service and quality, but conceded that water rates in Claremont are unreasonable. The economist and consultant also pointed out that there is more than one way to control price other than buying the company and taking on 30 years of bond debt. He noted that residents are reducing water use and argued that the city’s assumption that consumption will increase in the coming years is unreasonable.
Most of the 12 questions that followed the opening statements didn’t raise many eyebrows from the audience. However, there were a few that struck a chord and piqued the interest of those in attendance.
One question requested an estimated timeline and cost of legal fees for eminent domain proceedings.
If Measure W passes with a majority vote on November 4, the city will be authorized to issue water revenue bonds up to $135 million to pay for the acquisition of the Claremont system and incidental expenses as well as to begin eminent domain proceedings.
“If it’s the public’s will to move forward, the eminent domain proceedings would initiate with a resolution of necessity,” said Mayor Lyons. “Once filed with the court, again. it will be decided on and passed by council. We’re talking about initiating a process that could take a number of years to come to fruition.”
Mr. Smith elaborated on that answer, estimating a timeline of three to five years for eminent domain, including the trial and the appellate process, with a cost to both sides of between $5 million to $10 million.
Mr. Allen said the one comparable eminent domain case, that of the city of Felton, took three years. At the end of the process, when the case was to be decided by the court, the water company settled out of court for not a great deal more than the appraised value of the system.
“What will the cost be [for Claremont’s system]? I don’t know,” Mr. Allen said. “Whatever the cost is, we’ll pay for it. We’ll be paying for it whatever Golden State Water charges, because we’re paying the bill. And they’ll make it as high as they possibly can.”
If eminent domain proceedings were to move forward, Mr. Allen stated it would not be a single judge making the decision but that both the city of Claremont and Golden State could decide to settle. Should a trial commence, he explained, it will mostly likely focus on the valuation of the system and be based on expert testimony and evidence presented by both parties.
“It’s very likely that in an eminent domain proceeding, a jury or a judge will pay a lot of attention to the assessed valuation,” Mr. Allen said. “The water company has yet to provide an assessed valuation, while the city’s assessed valuation is $55 million. Both those numbers are likely to be very influential in the settlement.”
Another question had audience members on the edge of their seats:?What would Claremont water rates look like, absent the high executive compensation and record dividend payouts of Golden State Water representatives?
Mr. Sterba was first to answer.
“Executive salaries are a big issue around this country. I encourage you to look at the price of the Golden State senior executive versus the senior executive at Apple,” he said, as the audience gasped with disbelief at the comparison. “The amount of money the person is making is exactly the same ratio. When you start talking about executive salaries, you open the door. Everybody is entitled to make a living. It is a competitive environment to be an executive in that sort of corporation.”
This point did not sit well with Mr. Lyons.
“A more appropriate directive, when comparing salary-to-salary, would be the executive director of the preferred water system as opposed to the executive director of Apple,” he suggested. “It seems to be mixing apples and oranges.”
Mr. Smith said the impact of executive salaries on rates was proportional. “There’s more to Golden State Water Company than the city of Claremont.”
Panelists’ responses were varied when asked how the city will structure its rates, information the city has not put forth.
“The only modeling we see at this point is to reduce overhead by 10 percent. What about reduced usage?” Mr. Sterba posed, wondering how the city will recoop enough funds to pay for bonds should the trend of conservation continue.
Mr. Smith took a different stance, stating that it is the “environmentalists” who have set current rate structures.
City staff, according to Mr. Lyons, is currently assessing a potential rate structure for Claremont.
As residents took a look around the room following the event, noticeably absent were executives from Claremont longtime chamber member, Golden State Water.
“I truly would have liked Golden State to be here,” Randy Scott said after the meeting. “It makes no sense why they would put a paid consultant in front of their clients. It was a great opportunity lost by Golden State to get in front of their customers.”