Golden State rejects water offer from city as ‘defective’
Claremont’s asking price of $54,076,000 for the purchase of the city’s water system “is but a fraction of the fair market value of Golden State Water’s assets,” said attorney George Soneff in a statement rejecting the city’s offer sent last week.
Mr. Soneff further alleges that the city’s offer is “legally defective.”
Mr. Soneff of Manatt, Phelps and Phillips, LLC, sent the letter to the city on behalf of Golden State Water Company. In the letter, Mr. Soneff suggests that—based on the city’s low estimate, and exclusion of the price of water rights—the city did not conduct an appraisal based on the system’s fair market price.
“It appears that no appraisal has been conducted as to the fair market value of Golden State’s Water rights, despite the fact that the materials accompanying your letter suggest the city may attempt to seize those rights through eminent domain,” Mr. Soneff states.
Should the city wish to purchase its water system, the water rights are a vital piece to the water system purchase.
“Water is the real prize, not the pipes,” Claremont resident Marilee Scaff said in an interview last month. “If we don’t preserve our water rights—the right to pump the water—we are in trouble.”
The city of Claremont uses an estimated 13,000 acre feet, or 4.2 billion gallons, according to a study conducted by the League of Women Voters in 2004. Well water, pumped through the Six Basins Aquifer, accounts for 50 percent of Claremont’s water. That percentage fluctuates from 60 to 40 percent depending on the level of rainfall.
Water rights are needed in order to pump water from those wells, allocated through the Six Basins Watermaster, the agency that oversees the aquifer. In 1999, the watermaster determined who had the right to pump that water and by how much. The city of Claremont was given 2.8 percent—or according to the League’s estimate about 471 acres or about 153.5 million gallons of water—and Golden State Water was given 34.7 percent. Pomona College and other local cities make up the remaining amount.
In 2004, when the city last attempted to purchase the water system, negotiations with Golden State Water included $50 million for infrastructure and $36.7 million for its portion of the water rights. While the city has made its offer on the infrastructure made known, residents remain in the dark about the rights to pumping the water.
In an interview last month, city officials refused comment on how the city is handing the water rights, stating that since the city is in the middle of negotiations it is “privileged” information.
“We do not want to release information regarding our negotiation strategy,” Mr. Ramos had said of why the city is not commenting.
Mr. Soneff’s letter further claims the city fails to meet the requirements of Government Code 7267.2, which states, “the public entity shall establish an amount that it believes to be just compensation therefor, and shall make an offer to the owner or owners of record to acquire the property for the full amount so established, unless the owner cannot be located with reasonable diligence.
“Even if the legal defects in your letter are remedied, a takeover effort by the city is bound to result in costly litigation,” Mr. Soneff continues. “As you well know, the city’s plan to take Golden State Water’s assets—simply in order to use those water utility assets for the same public service they are now used to provide—may be rejected by the courts depending on the outcome of a ‘right to take’ trial. If the city’s plan is rejected in court, the city would have to pay all of Golden State’s attorney’s fees and other litigation costs, as well as its own.”
Despite the allegations, the city released its own statement late last week defending the legitimacy of its offer.
“The City's offer, dated November 5, 2012, was made in strict compliance with the State of California's laws governing the acquisition of property and reflected the opinion of a qualified appraiser who established fair market value,” reads the city’s press release.
The release continues, “While Golden State Water did not accept the City of Claremont's purchase offer, the City is continuing to move forward and evaluating all options available by law to acquire the water utility.”
Claremont officials have agreed to meet with Golden State Water representatives to discuss this matter further. Because the city’s potential water negotiations are a part of ongoing, closed session discussion, city staff has made it clear that are “unable to comment further.”