What Is Apple Valley’s Water System Really Worth (January 5, 2016)
The Town of Apple Valley has made an offer of just compensation totaling $50.4 million for the Apple Valley Water System. This offer was not based on a whim or what the Town felt like paying. The offer was based on an evaluation by an independent appraiser expert in water system acquisition. Carlyle claimed the system was not for sale — to the Town anyway — yet set its own value at $400 million.
What is the system really worth? A case in Montana provides a good comparison. In Missoula, Mont. The water system also is owned by Carlyle and the City Council also is seeking acquisition through eminent domain.
Missoula’s water system is comparable in size to Apple Valley’s — each serving about 22,000 customers. Similarly, Carlyle has claimed the system is worth far more ($146 million) than the City’s earlier purchase offer of $65 million. As part of the eminent domain process, a three-member court-appointed panel has now put the value at $88.6 million – a number much closer to what the City had offered.
There is another way to come up with a realistic price for AVR. Carlyle is proposing to sell three water systems — including Apple Valley Ranchos and Missoula – to a Canadian-based company, Algonquin Power & Utilities. (Remember that Carlyle had told the Town of Apple Valley that AVR was not for sale.) Minus assumed debt, the net price Algonquin would pay for the three is about $257 million – or about $86 million per water system.
These numbers clearly demonstrate that the actual value of the Apple Valley Ranchos water system is much closer to the Town’s offer than what Carlyle claims. They also fall well within the Town’s ability to purchase the system without raising taxes while stabilizing, and possibly lowering, rates.