3/18/2007

Claremont may take over water company: Inland Valley Daily Bulletin, Ontario CA, 3/11/07

Election results could provide impetus for buy

By Will Bigham

A shift in power on the City Council following Tuesday's election vastly improves the odds Claremont will make another move to take over the city's water service.

Purchasing the private Golden State Water Co.'s holdings in the city has long been a priority, but friendly negotiations reached an impasse in mid-2005 when Golden State rejected what it considered a lowball offer from the city estimated at between $40 million and $45 million.

The city's only recourse after that - eminent domain proceedings - needed the support of four of five council members, but only three favored the option.

But with Councilwoman Jackie McHenry - an opponent of eminent domain - voted out of office last week, the reconfigured council is poised to take another look at the eminent domain option.

"The purchase of the water company, and the need for local control of our water, resonated well with voters because they were thinking that something needs to be done," Councilman-elect Sam Pedroza said. "The way the system is set up now with Golden State is not working."

Claremont residents and city leaders have long maintained Golden State's water rates are too high. That concern led to years-long discussions of purchasing Golden State.

"We didn't move forward with very much in the last couple years; we dealt with micro-managing issues," Councilwoman Ellen Taylor said.

Before moving forward with a purchase of the water company - which would include Golden State's water delivery apparatus in the city, its water rights, and possibly its 47-percent share of the Pomona Valley Protective Association's holdings - the city must first conduct a detailed analysis to determine the value of Golden State's Claremont holdings, City Manager Jeff Parker said.

In 2005, Golden State, then named the Southern California Water Co., told the city that the value of its holdings, not including its share of PVPA, was more than $100 million.

The city balked at the figure, and representatives for Golden State believe the value of its holdings has only increased in the past two years.

The added cost of Golden State's PVPA holdings "could be tens of millions more than the $100 million," said Joel Dickson, senior vice president of Golden State.

"It would be a very risky proposition for Claremont to take over Golden State, and it would be the customer who would be at risk," Dickson said. "Claremont customers would pay higher rates for at least 30 years."

If the City Council decides to pursue the purchase of Golden State through eminent domain, the cost ultimately would be decided in court, Parker asserted.

The city would then issue bonds to pay for the acquisition, and fund repayment of the bonds through increases in water rates during a 30-year period.

"The cost part of it, absolutely, there's a point where it's no longer feasible," Pedroza said. "But this is water, and water, being a natural resource, it's beyond just what we think the system is worth. There's also a benefit to the city in having local control."


Inland Valley Daily Bulletin, Ontario CA: http://www.dailybulletin.com