Is the Town of Apple Valley shifting its position? (April 26, 2015)

Is the Town of Apple Vally (TOAV) subtly shifting its position on the water issue? Once, TOAV representatives seemed to be saying that they wanted to control the supply of water to the Town and its residents. Now they seem more and more to be saying they want to control the Town’s water system.

For example, on March 8th, the Daily Press ran a piece by Town Manager Frank Robinson entitled, Acquiring Ranchos Water Company is right move for Apple Valley. Robinson leads off by stating flatly, Our community has made it clear: The Town of Apple Valley should control its water future. That same day, TOAV posted a link to this article on Facebook.

TOAV community water ownership

The appearance of this article marked the beginning of efforts by TOAV to push publicly for the hostile take-over of Apple Valley Ranchos Water Company (AVRWC). A few days later on March 15th, TOAV directed its followers on Facebook to a website dedicated to the take-over: www.avh2ours.org — Seeking Local Control Of Our Water. This same website even has a page dedicated to The benefits of community owned water (avh2ours.com/2015/04/the-benefits-of-community-owned-water/), which was posted on April 10th.

More recently, though, TOAV seems to been changing its tune. On April 24th, TOAV told its followers on Facebook that Public ownership of Apple Valley’s water system is critical to our future.

Enquiring minds certainly want to know, What’s the difference between ’controlling the water’ and ’controlling the water system’? As it turns out, the answer is extremely important.

Anyone who has purchased a house owns a water system; the pipes, faucets, and other fixtures within the property and inside the house … the plumbing in the common vernacular. However, the amount of water contained in your water system is restricted to that which has already been purchased from the water utility, which has pipes of its own along with the water (or rights to water) to flow through its system. Unless you get your water from your own well, if you want additional water from your water system, you need to purchase water from the water utility. You have control of the amount of water you use, but you have no control over the supply of water to your system, including its cost, its quality, or even its availability.

So, does TOAV want to purchase water (or water rights), or does it want to buy plumbing?

More and more, it’s looking as though TOAV wants to buy plumbing, all the while allowing residents to think that TOAV is planning to buy water.

TOAV made a big deal about an appraisal setting the worth of AVRWC at only $45.54 million. To put this in perspective, AVRWC says it has 450 miles of pipe, which it values at $1 million per mile, rendering its self-valuation closer to $450 million, roughly ten times that of TOAV’s appraiser. Even TOAV council member Scott Nassif acknowledged in 2014 that Carlyle Group had paid more than $100 million to acquire AVRWC. TOAV would have us believe that AVRWC is worth less than half as much now, despite increases due to inflation, and improvements to the system due to upgrades and repairs performed by AVRWC since the purchase by Carlyle Group.

But if you read the appraisal, you will note that in addition to discounting the value of AVRWC’s infrastructure by half, there is a key component missing: Water rights. TOAV’s low-ball appraisal includes no water. Not one drop. This would put TOAV (and most of its residents) in the same position as a homeowner who has all the plumbing he needs, but who still has to buy water to make it useful.

Let’s set aside for now the fact that if TOAV does wind up purchasing the water system from AVRWC, the final price will almost certainly be well in excess of $45 million dollars.

Instead, let’s look at what it could cost to fill that water system with water, so that residents of Apple Valley get what they think TOAV is buying for them.

Published reports indicate that AVRWC owns or controls in excess of 13,000 acre feet of water. Given that Hesperia just purchased water rights at the rate of $8,300 per acre foot, that makes AVRWC water rights holdings worth somewhere in the neighborhood of $113,000,000 … assuming the drought doesn’t drive up prices for water between now and the conclusion of this transaction.

The bottom line is that while there are many uncertainties in what TOAV thinks it is doing, the one thing that is clear is that TOAV is not expecting that $45 million to buy any water or water rights in its proposed hostile take-over of AVRWC. Therefore, the amount of control it would be buying is minimal at best.

So what is TOAV really up to? Right now, it’s anyone’s guess.

Greg Raven is Co-Chair of Apple Valley Citizens for Government Accountability, and is concerned about quality of life issues.