Update on Water Acquisition and General Rate Case

City Manager's Report for March 19, 2015

Four months ago, Claremont voters approved Measure W to finance the acquisition of the Claremont Water System by 71%. In the time since the revenue bond measure passed, the City has been moving forward on the acquisition of the water system. On November 25, 2014, the City Council held a public hearing to determine if the public’s interest would be served in acquiring the water system. The Council found there was a public need to acquire the system and unanimously adopted the Resolutions of Necessity. The City’s legal team filed an eminent domain lawsuit in the Los Angeles Superior Court. The Court has assigned the case to Judge Fruin.

The case is in the discovery phase in which each party may request records and information pertaining to the case. The judge will review Golden State Water’s objections to the Resolutions of Necessity and rule on the City’s right to acquire the system by eminent domain.

Should the judge grant the City’s right to take the system, the judge would then begin proceedings to determine the fair market value of the system. If both parties agree, the case may be determined by a jury. At this stage, both parties are required to submit a valuation with supporting documentation. The City had a certified appraiser value the system at $55 million. It will be up to a jury to evaluate the valuations and decide on fair compensation. Once the value of the system is determined, the City would need to issue bonds and purchase the system.

The litigation process is long and complex and may take up to three years. Both parties may appeal the decision.

In addition to the eminent domain lawsuit, the City is also protesting Golden State Water’s 2016-18 rate application. Golden State Water has requested a 5% increase in residential rates and a 10% increase in commercial rates for 2016-18. The City is an intervener in the rate case and submitted testimony on March 6, 2015. Key issues the City is protesting in the applications are, the numerous memorandum accounts Golden State Water uses to charge customers, the use of WRAM to penalize customers conserving water, the company’s history of rate increases, and the use of regionalized rates to subsidize other communities. Evidentiary hearings will begin in May 2015.

The City encourages residents to stay informed on water issues by visiting the City website at www.ci.claremont.ca.us.

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