Felton enters Measure O debate after own Cal Am buyout

Felton >> A decade after Felton voted to pursue an ultimately successful public buyout of California American Water's system, a few of the small Santa Cruz mountains townsfolk are weighing in on the Monterey Peninsula's debate over a similar attempt.

In a Cal Am-funded TV ad against Measure O inundating the Central Coast airwaves, Felton resident Beth Hollenbeck bemoans her 2005 vote in favor of the takeover. She warns Monterey voters that water rates have gone up by 60 percent in Felton since the buyout was completed and the San Lorenzo Valley Water District took over the water system, and the town's property owners are stuck paying thousands of dollars in extra charges on their property tax bills for the system, which cost $13.4 million — well above initial estimates.

"If I knew then what I know now, I wouldn't have voted for (a takeover)," the Scotts Valley high school and middle school music teacher says in the ad.

"Don't make the same mistake we did. Vote no on Measure O. This is a risk you can not afford."

Within days, a group of Felton activists from the Friends of Locally Owned Water (FLOW) who helped engineer the takeover fired back, conducting a Yes on Measure O-backed press conference and making a video defending the buyout and accusing Hollenbeck and the ad of misleading the public by suggesting things are worse under public ownership. They argued that Felton rates are still lower today than they were under Cal Am when the system was sold in 2008, that the $14,000 on property owners' bills amount to about $39 per month over 30 years, and that public accountability had made all the effort well worth it. They urged Monterey voters to pursue public ownership.

Measure O, the June 3 ballot initiative, would require the Monterey Peninsula Water Management to conduct a feasibility study and create an acquisition plan for a public buyout of Cal Am's Monterey system. If the study shows such a buyout is feasible and beneficial, the district would be required to pursue a purchase by negotiation or eminent domain.

While both sides acknowledge there's little similarity between the Felton and Monterey systems or the public buyout attempts, they're not backing off the debate.

Hollenbeck, a San Lorenzo Valley native, said she was reluctant at first to participate in the TV ad and inject herself into the Measure O debate when Cal Am initially contacted her. She relented when she saw a Monterey Herald article about a judge ordering the Measure O campaign to make several changes to its ballot arguments to correct what the judge viewed as false or misleading statements. She said she felt she had been misled during the Felton takeover campaign by activists who promised much lower rates and seamless public governance that she said never came true. Rates have soared since the takeover, she said, and will continue to rise in the near future, despite an outcry from SLV water district customers last year that was successful in avoiding an even larger increase. She said the water district's management has not been as responsive as promised.

"I don't see, given what we went through, that it was worth it for me," she said. "It was a lot of money for really not much difference in management."

Activist Barbara Sprenger, a key figure in the FLOW effort, said she was deeply disappointed Hollenbeck had allowed Cal Am to use her to obfuscate the truth. Sprenger said Hollenbeck's claim that rates are 60 percent higher under public ownership ignores the fact Felton water rates immediately fell from $84 per month under Cal Am ($73 base rate plus an $11 treatment plant surcharge) to about $40 per month under the SLV water district for the average user (10 units of water per month) when the buyout was completed in 2008.

Taking that into account, Sprenger said, Felton customers are still paying less now — about $64 per month — than they were under Cal Am even after six years of the water district's rate increases, which she acknowledged were higher than anticipated. Even adding in the $39 per month Felton property owners pay for purchasing the water system would likely be offset by Cal Am's own rate increases over the past six years if it still owned the system, she said.

When the company finally agreed to sell the Felton system, Sprenger said Cal Am had already requested a three-year, 63-percent rate increase.

Cal Am officials acknowledged they raised rates about 74 percent when they owned the Felton water system from about 2000 to 2008. They said those increases were largely due to the poor condition of the system infrastructure. They said the district's rates are already set to increase by 11 percent in 2015 and 2016, and even though Felton customers no longer pay a surcharge for a state Safe Drinking Water loan used for a treatment plant, the entire SLV district still must pay that cost along with absorbing the impact of millions of dollars from district reserves to help pay for the buyout.

Sprenger said one of the benefits of the buyout was finally being able to determine the true condition of the Felton water system's infrastructure, which she said was poorly maintained by Cal Am during its brief ownership and had badly deteriorated. SLV water district manager Jim Mueller confirmed the Felton system was in much worse shape than expected and district officials weren't able to fully assess its condition during the eminent domain proceeding.

Perhaps the biggest advantage of the buyout, Sprenger said, is being able to elect a water board directly accountable to its customers, especially in comparison to a remote state Public Utilities Commission oversight process. She acknowledged there had been some recent community opposition to water district increases, but argued that actually showed the increased public accountability activists had promised during the takeover campaign. She said district officials had agreed to reduce their original rate increase proposal in response to public input.

SLV water district board president Margaret Bruce said she agrees Felton is better off under public ownership, but stressed that she was not speaking for the water board. Bruce said she was "a little offended" by the Hollenbeck TV ad because the Felton resident had never expressed any concerns to her about the district's management, even when Bruce campaigned in Hollenbeck's home in 2012. She said she couldn't remember Hollenbeck attending water board meetings to express her views.

Hollenbeck acknowledged she wasn't as informed on the takeover issue as she could have been in 2005, citing the demands of family and career. She agreed she hadn't regularly attended water board meetings until more recently due to the proposed rate increase issue and that she still had more to learn. But she said she's more engaged now, and her primary reason for participating in the TV ad was to urge Monterey voters to investigate the details and ramifications of Measure O before they made such a major decision. She asked to include a statement to that effect in the ad but was told it had to be limited to 30 seconds.

"People should know what it takes to run a water system before they vote for it," she said. "It's a huge challenge. People need to get involved and not everyone can. Just educate yourself on both sides."