Agreement

Why the change in amount?

After they declined to accept the CAWA/GSW MOU, the Council expressed willingness to continue talks. On July 31, they voted to enter into an agreement with GSW to resolve some issues. One of the terms of the agreement was that the City measure would ask for approval to issue up to $135 million in revenue bonds. GSW hopes this will frighten people into voting ‘no’ on the bond measure even though 80 + 55 always added up to 135. It is not yet known how much more than the appraised value of $55 million we will actually need.

How does the City benefit from the July 31 agreement?

  • GSW dropped the petition it was circulating to compete with the City measure. It is not clear the initiative would have made it onto the ballot, but now it is certain there will no measure competing with the City measure.
  • All CEQA, Public Records Act, and Brown Act lawsuits currently in progress will be dropped and no new ones related to actions that occurred before the agreement was signed will be instituted.  This saves the City millions in legal fees of course but more importantly, since eminent domain cannot be completed while a CEQA suit is open, this allows us to move forward when the bond is approved.  Although this does not prevent all future lawsuits, it does prevent any more CEQA suits that could block eminent domain proceedings.
  • GSW agrees not to contest the use of revenue bonds as a funding mechanism. Lawsuits related to funding mechanisms can stall a water system takeover.

 How does GSW benefit from the July 31 agreement?

  • They have succeeded in getting the measure changed to request up to $135 million which they hope will scare off enough voters to defeat the measure.  They hope that the voters won’t be able to add up 80 + 55 and see that the worst-case scenario hasn’t changed at all from that indicated in the original measure asking for $55 million. They also hope no one will notice the “up to” which clearly indicates that we aren’t really expecting to have to go that high to purchase the system.
  • They gain access to portions of the feasibility study funded by the City when it was trying to determine if proceeding with acquisition of the water system made economic sense. GSW hopes to challenge the information and methods that determined the appraised value of $55 million and that we could repay as much as $80 million in revenue bonds without paying more than GSW would be charging us.

 The agreement does not prevent GSW, or any other group, from bringing future lawsuits.