TOAV to make offer for AVRWC (May 27, 2015)

Apple Valley aims to buy water company, likely to be rebuffed

APPLE VALLEY — The Town Council authorized making an offer of just compensation for the purchase of Apple Valley Ranchos Water Co., moving ahead in possibly gaining control of the water provider.

The closed-session action at the council’s meeting late Tuesday was one more step toward acquiring the water company by purchase or, failing that, possible condemnation by eminent domain. A condemnation case decided in court seems a more likely scenario, given AVR’s repeated statements that the business is not for sale and that the town’s appraisal of its value is too low.

Tuesday’s action was reported by Mayor Pro Tem Barb Stanton.

Apple Valley Ranchos is not aware of any formal offer from the Town of Apple Valley at this time, Chris Schilling, CEO of Ranchos’ owner Park Water Co., said Wednesday.

Stanton offered a short timeline for presenting the town’s purchase offer.

The offer will be made within the next couple of weeks, Stanton said Wednesday. It will be a fair market offer to purchase the water company. An appraiser hired by the town estimated AVR’s value at $45.54 million when a presentation on the valuation was made at the March 24 council meeting. However, AVR officials say the figure should be much higher.

Mayor Larry Cusack recused himself from the purchase-offer decision, town spokeswoman Kathie Martin said. Cusack also recused himself from an earlier agenda item because his company, Apple Valley Communications, does business with the water district, he said earlier. The item approved by the council on a 4-0 vote authorizes the town attorney to hire an environmental and planning firm to produce a document that would be helpful in the Town’s potential acquisition and operation of the Apple Valley Ranchos Water Co. system at a cost of $80,000.

That agenda topic and six earlier community presentations drew a full house to the 170-seat Town Council chambers on Tuesday night, and at least a dozen spoke against the town’s possible acquisition of Apple Valley Ranchos Water Co. while one spoke for it.

The town has been moving slowly through a process exploring the acquisition of the water company since spring 2014, after scores of residents objected to AVR’s proposed rate hikes exceeding 30 percent over the three years spanning 2015-17. Town officials have consulted with officials in Missoula, Montana, because that city is served by an affiliated water company — Mountain Water Co. — also owned by Park Water Co., which in turn is held by Western Water Holdings LLC and The Carlyle Group. A trial recently concluded over the condemnation of Mountain Water but the judge has yetto rule in the case.

We have maintained from the start that Apple Valley Ranchos is not for sale, Schilling said. We are concerned the Town Council appears to have committed the citizens of Apple Valley to a long, costly and divisive condemnation fight without a vote of the people. Moreover it is surprising that they took this step after an overwhelming show of opposition by citizens to the takeover.

Stanton said that stance has been expressed before.

Why are they saying it’s not for sale, when they are selling to Liberty Utilities? she said.

AVR officials have countered by saying the business is not for sale by itself and is only being purchased as part of a larger whole. Liberty Utilities, owned by Algonquin Power & Utilities Group, is trying to buy AVR, Mountain Water and Park Water Co. in Los Angeles and is in the process of seeking California Public Utilities Commission approval.

Stanton said Apple Valley was in negotiations to buy the three water companies together, but a spokesman for Carlyle Group, Park Water’s current owner, has denied that.

Apple Valley’s ongoing exploration process is producing the purchase offer for AVR.

They could have ended that process last night, resident Tamara Alaniz said. I just ask that they stop … It’s not the right decision for the town.

She was among the smattering of residents who remained during the open session that ended about 11:30 p.m., by which time a dozen people were scheduled to speak on commissioning the environmental plan. The following closed session did not end until about 12:45 a.m. Wednesday, Stanton said.

Alaniz, formerly general manager of the Twentynine Palms Water District and previously with Mojave Water Agency, is heading up Apple Valley Citizens for Government Accountability, which seeks to foster more scrutiny and accountability by the citizens over the town’s expenditures in the potential AVR acquisition.

Bernadette McNulty, a member of the town’s Blue Ribbon Committee that looked at the matter of acquiring AVR in 2011 but advised against it, said she is now in favor of the acquisition.

Some say, ‘Why are we spending $80,000 on an environmental impact report?’ but (town) attorney John Brown explained that, she said, referring to comments he made about the desirability of crossing all T’s and dotting all I’s in the process.

Stanton said she was troubled by accusations of non-transparency in the acquisition process. We must do better, she said. Transparency is job No. 1.

Source: Gary Brodeur, Daily Press