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

From public records
Account Amount
20/20 Network $150,000.00 (budgeted)
Altec Engineering $1,125.38
Best Best & Krieger $968,990.82
Bartle Wells Associates* $72,343.84
Fiona Hutton & Associates* $13,601.36
Hayward Consulting Group $127,400.00
Joshua Propp $500.00
Katz & Associates $29,313.00
Rincon Consultants $80,000.00 (budgeted)
Salaries and expenses, council members ?
Salaries and expenses, TOAV employees ?
True North Research $22,850.00
Urban Futures $12,500.00

* 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!

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.

Historical valuations of AVRWC
Source Date Amount
Bartle Wells Report 2006 $97,750,000
Bartle Wells Report 2011 $121,500,000*
Scott Nassif 2011 $100,000,000+
The Carlyle Group 2014 $450,000,000+
Hayward Consulting Group (including $80 million error) 2015 $45,540,000
TOAV (one-third of combined companies’ sale price) 2015 $83,300,000
TOAV (including $68 million error) 2015 $50,300,000
avh2ours.com/resources/faqs/ 2015 $86,000,000
TOAV (resolution) 2016 $125,000,000
Transparency Report 2016 <$88,600,000

* 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 is projecting $3.2 million, which is pretty much in line with the $3.4 million spent by Missoula to seize Mountain Water Company), plus Ranchos’ legal costs (Mountain Water spent $5 million), plus the surcharge for breaking up Ranchos (which will almost certainly be more that $1 million), plus the costs associated with breaking out Ranchos’ 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 Ranchos 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 $140 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 Ranchos 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 Ranchos, and every penny of the already-expended costs and expenses would go down the drain with nothing to show for it.

— Greg Raven, Apple Valley, CA