City to make case for water system ownership
The trial for the right to take over the Claremont water system continues to soldier on, with the end beginning to take shape.
Attorneys representing Claremont and Golden State Water Company (GSW) have been locked in a war of words and accusations since the trial began on June 14. The trial is a culmination of years of legal wrangling that could end in Claremont earning the right to claim eminent domain over the water system.
GSW rested its case two weeks ago, after testimony from GSW executives and experts. Claremont is preparing to rest its case sometime within the week, according to City Manager Tony Ramos.
Mr. Ramos cautioned that a decision from Los Angeles Superior Court judge Richard Fruin might not be reached for two months or longer.
“Even though the trial is coming to an end, we won’t have an instantaneous decision from the judge,” Mr. Ramos told the Claremont City Council on Tuesday.
The city’s basis for taking over the water system centers on municipal control, with Claremont able to set rates and bill customers if the judge rules in the city’s favor. GSW has countered that the city has virtually no experience running the water system and only GSW, which has been in control of Claremont’s water since 1929, has the expertise to successfully run the system.
“I think [GSW] is going to make its case saying that they can do a better job in running the system than we could,” Freeman Allen, who sat in on the trial on July 6, said. He noted that GSW had brought in an expert from UC Berkeley who claimed that investor-owned utilities like GSW do a better job at running the system than municipal utilities.
Experts and witnesses have been brought up on both sides throughout the trial, including Marilee Scaff, a Claremont resident who has extensively studied the water system over the years.
According to Mr. Allen, Judge Fruin initially admonished Claremont Counsel Kendall MacVey and Christopher Pisano, of Best, Best & Krieger, for bringing up Ms. Scaff for testimony.
“Initially the judge said he didn’t really understand why the attorneys would have somebody from the community testify when they had a lot of expert testimony already,” Mr. Allen said. “He was concerned they would just be repeating things he already heard.”
Ms. Scaff was on hand to present the viewpoint of the Claremont chapter of the League of Women Voters, which did a study in 2006 about the feasibility of obtaining the water system, according to Mr. Allen.
The League’s position, in part, supports the public acquisition of the water system, converting the privately-owned company to a city-owned company through public financing, “believing that public control is worth the cost, even if high, and has long-range advantages to rate-payers and to the community.”
Part of Ms. Scaff’s testimony involved the use of local caught water versus imported water. Imported water—which GSW reportedly uses more of—is more expensive, with prices reaching $600 per acre foot in 2005, when the League’s stance was drafted, compared to $145 per acre foot for local well water, Mr. Allen said.
“Imported water is likely going to be less available during the drought,” Mr. Allen said. “It’s critical we’re capturing as much local water as we can and [GSW] has not been doing as not a good job as they can.”
Much of that local water runs down through Thompson Creek, Mr. Allen said.
Sally Seven, who was also present during Ms. Scaff’s testimony, noted it was effective in presenting the League’s stance and Claremont’s basis for the takeover.
“I think she was a very effective,” Ms. Seven said. “It was very clear she knew the water system better than those people.”
Ms. Scaff did not offer comment when contacted by the COURIER. Mr. MacVey, Mr. Soneff and Assistant City Manager Colin Tudor, who has been sitting in throughout the trial, also declined to comment.
Throughout the trial, testimony was presented regarding transparency on the part of GSW, additional rate charges and the involvement of the La Verne in helping Claremont operate the system. Mr. Soneff, of Manatt, Phelps & Phillips, argued La Verne has a spotty reputation when it comes to water quality, and Claremont’s deal with their neighbor to the west could be problematic.
Mr. Allen disagreed, noting La Verne has taken steps over the years to purify their water system, which they have controlled for over a century.
“They installed a very impressive plant to purify that water,” he said. “I think La Verne has been extremely responsible in using as much water as they can from the aquifer and purifying the water even from contaminated wells.”
At one point during the trial, Claremont’s attorneys objected to the testimony of Stephen Peters and Michael Hanemann, who were called to the stand by GSW to talk about the valuation of the water system, according to bench briefs obtained by the COURIER.
“There is no evidence that hypothetical scenarios assumed by Messrs. Peters and Hanemann will ever come to fruition,” the brief, filed on June 23, stated. “When the right to take objections are resolved and this case proceeds to a valuation trial, the city will not be constrained in the valuation opinions it may present to the jury.”
Mr. Peters noted three potential price scenarios for the system using water revenue bonds: $70 million, $135 million and $250 million, according to the brief. GSW countered that Mr. Peters’ testimony is relevant in that it includes a “draft appraisal released by Golden State of the replacement cost of its hard assets (not including real estate and water rights) of $222,772,010,” according to GSW’s brief.
In 2014, residents overwhelmingly supported Measure W, an up to $130 million bond in the event of a possible purchase. Before the trial, the city offered to buy the water system for around $56 million, but that offer was rejected.
If Claremont wins the right-to-take case, a separate trial will be convened to determine how much the water system is worth.