Price tag for Claremont’s failed attempt to take over water system keeps rising (January 14, 2017)

CLAREMONT >> The city’s price tag for the so-far unsuccessful battle to take over the local but private water system is nearing $14 million.

In an unprecedented move, Claremont tried to acquire the rights to run the local water pipes via eminent domain, or a government taking that includes compensation. The process is often used to buy land to build public projects, such as highways.

A Los Angeles Superior Court judge’s final decision in December sided with Golden State Water Co., a private concern out of San Dimas.

If the decision stands, Claremont could end up on the hook for the entire bill, including $7.54 million racked up by Golden State Water’s legal defense. Claremont has already spent $6 million on its own legal expenses.

Claremont’s financial obligation will hinge on the outcome of a special City Council meeting to discuss the failed lawsuit scheduled for Jan. 31. Staff and legal counsel will provide information on status of the eminent domain case and the future of the city’s acquisition efforts.

There’s some tough decisions that we have to make ahead, Mayor Sam Pedroza said by phone Friday. These big decisions cost a lot of money.

The special meeting will address the worst-case-scenario, such as how it would pay back the fees. The city currently has $7,761,000 in its general reserve fund.

The city has identified several options for funding these expenses that would not impact city services, city spokeswoman Bevin Handel wrote in an email last week.

In November 2014, voters overwhelmingly backed a bond known as Measure W, allowing the city to borrow as much as $135 million to acquire the system, which serves more than 11,000 customers.

A month later, Claremont filed the eminent domain lawsuit, seeking to appropriate ownership of Golden State’s system for itself.

These (legal) costs may be reimbursed through the revenue bond if the city wins the case on appeal, Handel said in the email.

But if the city loses, its bill keeps growing.

Should the city appeal the Superior Court’s decision and lose, the financial losses for Claremont taxpayers will increase, as the city will remain obligated to pay all of its own future legal expenses for the appeal, as well as those incurred by Golden State (plus interest), Denise Kruger, senior vice president of Regulated Utilities for Golden State said in a statement.

Handel said Claremont has a financial consultant reviewing these expenses for accuracy and will file objections with the court over any disputed expenses.

Pedroza said he wasn’t surprised by the amount of Golden State’s legal fees.

Both sides had top-notch attorneys, and there’s a price to pay for that, he said.

Based on what he has heard from those in the legal profession, Pedroza said he’s a bit optimistic. Many have told him the appellate process isn’t nearly as costly as the trial court.

The special meeting is an opportunity for residents to share their opinions with the council, Handel said.

If the council doesn’t move forward, Pedroza said the city will have to accept the decision and figure out how to pay the legal costs and how we proceed with a relationship with Golden State.

Kruger said water company officials are looking forward to put the case behind them.

As we have stated from the beginning, Golden State Water is committed to the Claremont community and focused on providing reliable, quality water service, and we would hope that the city would choose to move forward collaboratively instead of continuing a costly legal conflict of which the outcome is clear, Kruger said.

Since the ruling, Pedroza said the public sentiment and support has remained the same.

The same people who have opposed the water issue have been louder but not newer, he said.

That’s not to say the ruling hasn’t raised some eyebrows in the city.

‘Oh wow,’ he said recounting some reactions. It’s riskier — now we’re talking about real numbers.

The special meeting will be at 6 p.m. Jan. 31, 207 Harvard Ave.

Source: Liset Márquez, Inland Valley Daily Bulletin

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