Legal buffoonery (June 29, 2015)

The Town of Apple Valley (TOAV) likes to pretend it is judiciously investigating purchasing Apple Valley Ranchos Water Company (AVRWC). This pretense is contradicted by virtually every utterance and action by representatives of the TOAV: The plan is and always has been to seize AVRWC, no matter what.

Take the TOAV’s recently-announced offer of $50 million for AVRWC (Town submits offer to buy Apple Valley Ranchos Water Co., Daily Press, June 26, 2015). The TOAV refers to this offer as just compensation, as if that makes it wholesome. In fact just compensation is a legal term referring to the amount that must be offered under the Fifth Amendment requirement of payment when private property is taken for public use. Thus, this is no good-faith offer, but rather another in a long line of hostile actions by the Town toward Ranchos.

Also, the claim that the TOAV’s interest began in early 2014 is a lie, as anyone familiar with the Blue Ribbon Water Committee from 2011 can determine for himself.

Frank Robinson is quoted as saying that water (presumably in Apple Valley) should not be subject to corporate greed. What Robinson really means by this shockingly an-American statement is that it’s horrible when profits are going to a local concern that has been serving our area for 65 years, instead of to a bank somewhere abroad as payment for the debt service the taxpayers of the TOAV will be forced to assume as a result of this acquisition. The Town has already said it won’t be lowering rates, which can only mean that it doesn’t care how much the taxpayers have to pay on the loan or bond, as long as the TOAV gets the cash flow. It’s no coincidence that item 8 of the TOAV’s Vision 2020 states, Identify potential revenue streams in both public and private sectors.

(It would be funny if it weren’t so sad, but 15 years ago the TOAV was in the water business. It, under the now-defunct Apple Valley Water District, had nine connections (seven of which were active). The system was poorly managed (by the Town’s water expert, Dennis Cron) and lacked capacity for growth. After awhile, the Town could not afford the electric bills to pump the water out of the ground. The TOAV needed a white knight to save it, and found that savior in AVRWC. AVRWC not only paid off a $2 million bond to relieve the tax burden that had been placed on the property owners in the service area, but also gave the TOAV a small wastewater system in the Jess Ranch area. That, in a nutshell, is the difference between public control and private ownership.)

And what about the offer itself? AVRWC owns 13,610 acre-feet of water rights. Recent sales of water rights have set the average price at $5,000 per acre-foot, making AVRWC’s holdings in water rights alone worth in excess of $68,000,000. Whether or not the price per acre-foot has gone up under our current drought conditions, the TOAV’s offer is woefully insufficient. According to the TOAV’s own presentation on April 28, AVRWC also has 465 miles of water mains, 24 wells, emergency generators, storage tanks, booster stations, and pressure zones. Add to that an office, maintenance and installation equipment (including trucks and heavy machinery), inventory, and other assets. Even if these additional assets were worth only the same amount as the water rights, that still puts the valuation of AVRWC close to $150,000,000, $100 million more than the TOAV says is the fair market value for AVRWC.

But again, it doesn’t matter what the price is, because as long as the TOAV can obtain financing, the taxpayers are the ones on the hook, while the armchair experts in Town Hall are the ones who get to control the cash flow. And of course, we can expect Dennis Cron to be in charge. Again. After all, he did such a bang-up job managing the water rights for the Golf Course, huh? (No, not really.)

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

Published: Daily Press