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Water Company Unmoved by Claremont Bid to Buy Assets

Claremont is offering to buy Golden State Water Company's delivery system for millions. But the company insists it is not for sale.

Golden State Water District has classified a $54 million bid by Claremont officials to purchase the water delivery system as not serious, according to statement released by the company late Thursday.

“Clearly this offer is not serious, because the city knows that the system is not for sale,” according to Denise L. Kruger, Senior Vice President, Regulated Utilities, of Golden State Water Company.

The city and its water supplier have been at odds for some time. City Council members have questioned Golden State's fees, claiming the city’s residents are being severely overcharged.

Golden State officials insist that the city uses a large amount of water that dwarves the water use of neighboring cities. Golden State is part of a privately owned, publicly traded company that serves water to residents and business owners in Claremont.

On Oct. 23, Claremont’s council directed the city’s negotiator to make an offer, City Attorney Sonia R. Carvalho reported following a closed session meeting.

On Nov. 6, Claremont submitted an offer of $54,067,000 for the purchase its water delivery system and assets, according to a statement by the city.

"The offer made by the City is based on an inspection of the Claremont water system and an independent appraisal that was prepared in accordance with State law and accepted appraisal procedures," said Claremont Mayor Larry Schroeder. "The offer made to Golden State Water is for the full amount of the current fair market value of the utility system and its assets."

READ GOLDEN STATE'S ENTIRE STATEMENT HERE.

Officials said the offer included a state-mandated provision permitting them to be reimbursed if Golden State chose to conduct its own appraisal and information on California's eminent domain process.

The appraisal of the water system and offer made to Golden State Water does not trigger the eminent domain process, officials added. That would require separate Council authorization.

Golden State officials said the city’s intentions are clear to them.

“Without any public review, the City of Claremont has made an unrealistic offer of $54 million to purchase Golden State Water Company’s local system,” Kruger said. “The most basic review of the letter reveals that it is nothing more than the first step in an expensive and financially risky eminent domain takeover process.”

The water system services all of Claremont, as well as small portions of the cities of Montclair, Pomona, Upland, and adjacent areas of unincorporated Los Angeles County.

"We are looking forward to meeting with representatives from Golden State regarding our offer. It's time for a meaningful discussion regarding the future of water service in Claremont," said Councilman Corey Calaycay. "To merely claim the water system is not for sale will not serve the best interests of ratepayers in Claremont." 

"Our entire Council is committed to ensuring that ratepayers in Claremont have access to water at rates that are fair, transparent and reasonable. The offer to purchase Golden State Water is a key step in ensuring that Claremont residents will have control over the future of water service for their community," said Councilman Sam Pedroza.

Golden State Water recently submitted a rate increase application to the California Public Utilities Commission seeking a 24.54 percent increase in 2013 with additional increases in 2014 and 2015, city officials said.

Nick Mirman November 09, 2012 at 05:04 PM
The California Alliance to Protect Private Property Rights has witnessed the worst kinds of eminent domain abuse. This is often the case when both property owners and taxpayers are victimized. In 2006, the League of Women Voters (http://bit.ly/ZdQqZ8 p.18) estimated that forcibly seizing Golden State Water company, financed at a conservative interest rate, would have cost Claremont residents nearly $200 million over 30-years. Regardless of what the City’s lowball appraisal suggests, the real cost will be significantly greater than some $54 million. Claremont needs to carefully consider the consequences of its actions relative to other public services. It would also be prudent for the City to have an independent audit conducted on its own financial viability to assure taxpayers that Claremont can actually afford this massive seizure of private property without putting current city services at risk. The bottom line is the City can't take on the cost of a water system worth hundreds of millions of dollars, without passing on the cost to ratepayers or taxpayers. The City knows this, but has not shared its study that would disclose the risks with the public. Rather, they have chosen to keep it a secret. Is this the transparency the City espouses? Claremont taxpayers have a right to this document and a right to know the financial risks of forcibly acquiring a water company. It’s not too late for the City to reverse course. It would be wise if they did.
Claremont November 11, 2012 at 02:31 AM
Nick - I see you live in Folsom. What's your interest in a water fight in Claremont? Your paycheck as a lobbyist.

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