What Are We Doing?

The rat-hole

These costs are from the TOAV only. Presumably, AVRWC and LAV will spend millions more defending itself from TOAV. NONE of this money has gone toward buying water, buying water rights, new infrastructure, infrastructure repairs, or infrastructure upgrades. It’s simply gone.

Summary of known costs to date

* Overlapping figures. For a fuller breakdown, click here. See also: AppleValleyWaterFacts.com

Keep in mind that Town manager Frank Robinson is on record as saying that the amount spent is less than half of $500,000 as of March 2015, a figure that had grown to $325,000 by May 28, 2015. By August 2015, this number had grown to $666,133 spent to date out of a total budget of $3,200,000, with $813,816 in additional related costs!

Trial costs

If correct, this would mean that over 11.5 months of the trial included in this time frame, the TOAV spent an average of $523,817.26 per month just on the trial portion alone. Presumably, this includes staff costs during this period, but not any of the years and years of costs leading up to the trial. Keep in mind that the TOAV has claimed that it costs them $250,000 annually to administer the essentially defunct RDA fund, so any guesses as to what they are claiming for staff costs for seizing the water company must necessarily start there.

Remember when the TOAV said it had budgeted $3.2 million for the take-over effort? Somehow they spent nearly twice that just for the trial.

Future costs

TOAV published an appraisal showing that in its opinion AVRWC is worth $45.5 million (including infrastructure and water rights). After local resident Alvin Rice pointed out numerous math and typographical errors in the appraisal, TOAV raised the valuation to $50 million.

As a counter-point, the Carlyle Group puts the valuation of AVRWC at $450 million (450+ miles of pipeline at $1 million per mile).

As far as I know, AVRWC owns or controls in excess of 13,610 acre-feet of water. Given that Hesperia just purchased water rights at the rate of $5,000 per acre-foot, that makes AVRWC water rights holdings alone worth somewhere in the neighborhood of $68,000,000.

* May include purchasing portions of Golden State’s water system within Apple Valley.

Keep in mind that the complete cost of this transaction, should it take place, will be all of the TOAV’s costs to date (it was projecting $3.2 million; Missoula spent $3.4 million to seize Mountain Water Company), plus Liberty’s legal costs (Mountain Water spent $5 million), plus the surcharge for breaking up Liberty Apple Valley (which will almost certainly be more that $1 million), plus the costs associated with breaking out Liberty’s portion of the bonds and loans it holds in conjunction with Park Water Company (or Liberty Utilities, should that sale go through before condemnation takes place) and obtaining new bonds or loans, plus the costs of bringing on-line whoever is going to actually run the water system, plus whatever the judge or jury rules Liberty Utilities is really worth.

All of these costs and expenses go into the total for the bond or loan TOAV will have to get. This means that if the purchase price turns out to be $150 million, and the other costs turn out to be $10 or $15 million, but TOAV can only get a bond in the amount of $150 million, then TOAV won’t be able to afford the deal. Because of the way condemnation laws work, it is possible that TOAV could take control of Liberty Apple Valley before discovering what the total price is going to be. If this were to happen, TOAV would incur the transition costs, but if later it proved that TOAV could not raise financing, TOAV would incur further costs returning the water system to Liberty Utilities, and every penny of the already-expended costs and expenses would go down the drain with nothing to show for it.

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

See a breakdown of acquisition costs of other systems here.