OJAI UPDATE -- 9.22.15
1. Golden State lost its challenge against the use of Mello-Roos bonds.
Ojai FLOW and Casitas successfully defended Golden State’s lawsuit challenging the use of Mello-Roos bonds. Golden State lost in Superior Court and then in the Appellate court, and on July 29 the California Supreme Court denied Golden State’s bid for a review of its lawsuit—meaning we win . . . again!
2. Ojai FLOW plans to file a class action suit on behalf of Ojai’s Golden State customers.
Golden State’s legal challenge of the use of Mello-Roos bonds is over. However, the failed lawsuit has cost Ojai customers about two years of time and more than six million dollars in additional water costs. Ojai FLOW is planning to file a class action lawsuit to hold Golden State Water accountable for damages, including the additional water costs incurred as a result of Golden State’s failed lawsuit. Ojai FLOW cannot move forward with the class action suit until the eminent domain acquisition is complete.
The class action suit is completely separate from (a) Golden State’s Mello-Roos challenge that is now over, (b) the Casitas buyout of the Ojai Golden State operations, (c) the 2015-2016 rate case, and (d) the State-mandated conservation efforts.
3. The buyout of Golden State is back on track . . . but delayed by two years.
Many steps are involved in the complex process of eminent domain. The first step in the acquisition occurred on September 9, when the Casitas board voted to hire an appraiser. Following the appraisal, Casitas will make Golden State a purchase offer. At this point, we can’t accurately forecast how long this process will last; however, the entire case can be completed at any time if Golden State agrees to a purchase price. The Ojai FLOW board is guessing it may conclude by October of 2017.
As we move toward acquisition of the Golden State system, it’s important to recognize the efforts that Casitas is making on our behalf. Casitas is truly standing up to Golden State to ensure that Ojai customers will all soon receive the lower Casitas water rates. We suggest that you attend one of the Casitas board meetings to see who the board members are and thank them for their support.
4. Your interests in the Ojai Golden State 2016-2017 rate case are well represented.
Ojai FLOW has been tasked to represent Ojai in the Golden State rate case before the California Public Utility Commission. Bob Daddi is the head of Ojai FLOW’s task force on the rate case, and Bob came back from the first meeting in San Francisco saying more was needed than just voicing an opinion. It was like a court hearing; arguments had to be prepared in advance and backed up with evidence, and the judge asked that Ojai and the City of Claremont coordinate their efforts so as not to duplicate issues.
The Ojai FLOW board asked its board member and attorney Ryan Blatz to head up the legal representation. The City kicked in some money to pay Ryan, who has done an excellent job representing Ojai’s interests in the rate case, for his time. When it was about to be wrapped up, the state conservation mandate came down, which totally complicated the case. So it’s still not completely over. More on this below.
5. Golden State botches the 36% water reduction for Ojai.
We’ve always known that Golden State has never had Ojai or its customers’ interests in mind—as was evident in their recent attempt to scare us off with a bogus lawsuit about Mello-Roos. When the State came down with the 36 percent mandated water reduction for Ojai (the highest reduction amount in the state), Golden State did nothing to question whether it was appropriate or even legal for Ojai. They knew the system was stacked in their favor and that they could implement a surcharge to get back any lost profits because of the mandatory conservation.
Ojai’s Golden State ratepayers did what they were asked to do, stopped watering their lawns and trees, and saw a depreciation in their property values compared to other water districts in the area. Not until Ojai FLOW board member Ryan Blatz questioned the legality of the 36 percent reduction in his rate case testimony did Golden State even look into it. It turned out the state requirement didn’t apply to Ojai, and now Golden State is trying to take credit for getting the requirement removed. The bottom line is:
Ojai Golden State Water customers
don’t have any reduction requirements other than to limit outdoor watering
to two days a week.
You can check the Golden State website for yourself, to confirm that the reduction goal has been removed. http://www.gswater.com/ojai/
There is no doubt we’re in a drought, so we shouldn’t waste water. But many in Ojai had reduced their water consumption long before it became a state requirement, so the issue is now completely up to the individual. It’s very important that Ojai doesn’t let its trees die, as they provide beauty, shade, oxygen, and cooler temperatures so we don’t have to use so much energy for air conditioners. It’s also important to not let our lawns completely die, or to replace them with landscaping that will absorb water to prevent the erosion that could fill our drains when the El Nino rains come. Bear in mind that Golden State will implement a surcharge to get back any profits lost because of our conservation.
6. Claremont receives a court date in its takeover of Golden State.
Like Ojai, the City of Claremont is buying out their water purveyor, Golden State Water Company. Claremont used city bonds, not Mello-Roos bonds, so Golden State didn’t challenge them as they did Ojai. We would be ahead of Claremont had it not been for the Golden State lawsuit. Ojai FLOW board members Richard Hajas, Bob Daddi, and Pat McPherson went to Claremont before their election and gave presentations on what we did in our own buyout efforts. Like Ojai’s 86%, a super majority in Claremont (71%) voted in favor of the buyout. Claremont is our ally in the battle with Golden State. We have shared information about the 2016-2017 rate case.
In late August Claremont’s fight for ownership of the local water system took another step forward with a trial date set for spring of 2016. Attorneys for the City of Claremont and Golden State Water went to court on August 27 for a case management hearing, and were given a green light to move forward with phase one of the eminent domain case.
“We requested a trial date on the condemnation, and the judge granted it,” explained Best Best & Krieger attorney Kendall MacVey, representing the city of Claremont. “It’s full steam ahead from this point.”
A final status conference is scheduled for February 26, 2016, with a phase one trial to follow on March 7. That trial is on Golden State’s "right to take" defenses only (a court trial—no jury). Assuming Claremont prevails at that phase one trial, the court will set a phase two valuation trial (for a jury).
The Claremont water system serves the entire city of Claremont and small areas within the cities of Pomona, Montclair, and Upland, as well as unincorporated Los Angeles County. Other cities throughout California, as well as the investment community, are watching to see what happens with the Claremont and Ojai buyouts.