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Maria Gutzeit: Problems with water deal

Posted: January 12, 2013 2:00 a.m.
Updated: January 12, 2013 2:00 a.m.

There are three big problems with Castaic Lake Water Agency’s (CLWA) power grab of Valencia Water. It’s not legal. It’s going to cost us big time. And it’s the picture of bad government.

CLWA is a wholesale water agency. As others reported, they expanded into retail by overpaying for another retailer, Santa Clarita Water, then getting the law changed after the fact to allow them to retail in that area only (with fingers crossed behind their backs to hide their fib.)

They, like any other water agency, also have condemnation rights to exercise eminent domain over assets. Newhall County Water District counsel stated publically that legally they can’t condemn stocks.

That is what they did, however, because, due to their prior "promise" of retailing only in one area, they can’t very well condemn the assets of the water district they are taking over.

That would be too obvious.

Next, of course, they hope to get a legislative change to allow them to fully operate the retailer. They’re an optimistic and, based on their last takeover, fairly sneaky bunch so — perhaps they’ll be successful.

Until then, what they have accomplished is giving $74 million (reduced to just under $60 million after debt considerations) of public money to the hedge fund investors who bought Newhall Land and Farming/Lennar out of bankruptcy.

The guys needed the money...your money that was paid to CLWA through water rates for your state water service.

Your money was given to hedge fund investors for stock in a water district CLWA can’t operate.

Cost wise, we already know this rushed, secretive deal will result in an increase in water rates for Valencia customers.

Private water agencies typically are cheaper than public, largely due to wage and contracting issues. We’ll all pay while CLWA fights the legal battle over their illegal action, and ramps up their lobbying and PR budget even higher than the current $400,000 plus a year.

We will all pay to have CLWA tell us why this is a good deal, yet there is a glaring absence of any numbers to back that up.

What we have is the track record of CLWA taking their other retail victim from the lowest priced water in town to one of the most costly, with rate increases about three times that of any other nearby agency over the past 6 years.

CLWA itself has raised their wholesale rates over 270% in the last 10 years.

True, state water is expensive and challenge-filled to acquire, and CLWA has done a good job acquiring plenty of that water for our future growth.

We have enough state water for 30 years of growth. Trouble is, the growth has stalled and CLWA now needs customers to force that water on.

Less than 3 months ago they rolled out a rate plan that put 86 percent of their costs in the "fixed cost" category (really, toilet paper and the office Christmas party is a fixed cost?) and planned to charge it to all retailers regardless of how much state water they needed.

This had the monetary effect of incentivizing the use of the expensive state water, contrary to state policy.

Sadly it hasn’t dawned on CLWA to cut back in down times, like all business owners have learned. No, their approach is buy their customers then make the customers buy their product!

Lastly, this takes the cake for political arrogance.

Normally, board meetings require 72 hours’ notice and, one would think it is good form to have several well publicized meetings if you are, say, buying up half the valley’s water customers without telling them.

Of course, CLWA representatives have said that they had to do this quickly because they knew it would be controversial.

Oh — and they wonder why a lot of people rate the government poorly?

They tout that the 30,000 customers of Valencia water they’ll get "public representation" in the form of one director. Newhall County Water District has 5 directors, one for every 2,000 customers.

What about governance of the agency while they get through their costly and expensive upcoming legal battles so they can take over and raise rates?

They had another 24-hour noticed meeting to appoint a board of directors stacked with salaried staff members — a complete and thorough conflict of interest that is not legal at any public agency.

This ultimate valley-wide water rate hike really deserves some public discourse, though it is clear the agency in charge doesn’t want it. Many of us look at government actions and wonder — what the heck are you thinking?

Right here, right now, is the point when you can say something. Let them know you are watching and that you want some answers, not some PR that you are paying to be spoon fed to you.

Maria Gutzeit is a Santa Clarita business owner, resident, and elected official with Newhall County Water District. This column is her personal opinion and not that of any public agency.


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