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HomeMy WebLinkAbout1994-04-19 - AGENDA REPORTS - SC WATER COMPANY (2)AGENDA REPORT AlManage.Coval Item to he presented by: Council Member Jan Heidt NEW BUSINESS DATE: April 19, 1994 SUBJECT: Santa Clarita Water Company DEPARTMENT: City Council BACKGROUND In January 1993, the City was approached by the Santa Clarita Water Company (SCWC) to enter into exclusive discussions regarding the City's purchase of SCWC. In early Fall 1993, the City was told that the SCWC had also entered into discussions with Castaic Lake Water Agency (CLWA). Five days after the January 17 earthquake, the City was notified that SCWC wished to discontinue negotiations with the City and deal only with CLWA. This matter continues to be of vital interest to the community, and the City Council should continue its involvement in this policy question. Attachment N1 outlines the nature of the retail verses wholesale agency, and also points out some issues of interest to the Council and the public. Public education of this issue should continue regarding this complicated issue. Steps should be taken so that the 20,000 customers of SCWC and other local taxpayers are aware of the following: the sale of SCWC, its purchase price, indebtedness by any local agency seeking to purchase SCWC, and the intentions by the purchaser for SCWC's water rights. The following recommendations are suggested for immediate implementation by the City Council. RECOMMENDATIONS 1. We would like the "offer" for buying the water company to be done in an open public meeting, and the agreement for acquisition of the water company be presented in a public hearing prior to final approval. If the purchaser is the City, we should do this. If it is CLWA, we should send a letter with these recommendations. 2. Because of the tremendous financial implications locally, we would like the public to be aware of the purchase price of the agency. 3. The attached "Letter to the Community" be mailed to all 20,000 customers of SCWC from the City Council. 4. The attached letter also be sent to the Los Angeles Times, Daily News, and Signal newspapers for the letters to the editor section from the City Council. ATTACHMENT 1. Fact sheet. �g '� I} 2. Letter to community/newspaper _editors. �.., n Agv 'J` -`i 1 eM: COVNCIL:agen,cwcJh:grf:lad `r`^' "''C�� � �—e-+c�C City of Santa Clarita George Pederson Mayor Jo Anne Darcy Mayor Pro -Tem 23920 Valencia Blvd. Phone Suite 300 (805) 259-2489 City of Santa Clarita Fax California 91355-2196 (805)259-8125 LETTER TO THE COMMUNITY Recently there has been much discussion regarding the sale of the Santa Clarita Water Company (SCWC). The City of Santa Clarita has been striving to provide local residents with factual information regarding the City's interest in this critical issue of long-term significance to our community. The City incorporated based upon the desire of local citizens for critical decisions to be made in Santa Clarita; not in Los Angeles or Sacramento. Since incorporation, the hallmark of the City of Santa Clarita has been to actively involve community residents in public discussions of community issues. The City Council Members, elected at large and representing the interests of all Santa Clarita's citizens, wants to be sure that everyone has ample opportunity to have accurate information and to have meaningful participation in discussions regarding the purchase of the Santa Clarita Water Company (SCWC). Carl Boyer Councilmember We at the City feel that thepublic should demand to know the purchasing price of Jan Heidt SCWC, prior to culmination of any deal -- after all, millions of tax -payer dollars, no Councilmember matter which agency or entity it comes from, is still tax -payer money. Jill Klajic The Cit of Santa Clarita was a y Company Councilmember y approached b the Santa Clarita Water Com an in January, 1993, to purchase the water company. The City was told by SCWC representatives that it was the only entity with whom SCWC was discussing the sale, though SCWC later resumed previously terminated discussions with another public agency. Local water companies owned by cities are very common throughout California and the nation. The City's management team has extensive experience in municipal water management. The majority of SCWC's service area is within the existing City boundary thus providing the City with another tool under which to implement the General Plan and meet the infrastructure needs of the community. If SCWC were owned and operated by the City, the same checks and balances of wholesale and retail water interests that exist today would be maintained. Here are a few other facts that we encourage you to keep in mind: • The City's acquisition of SCWC will provide all SCWC customers with high quality water. • The City is not seeking to purchase the SCWC to settle a lawsuit, but to help manage and protect the Canyon Country/Saugus area's water rights. PRINTED ON RECYCLED PAPER Letter to the Community Page 2 • The City is authorized under current law to both purchase and operate a retail water company, with no special approval by the State legislature needed. • The City would have a five -member water commission of local citizens providing oversight of the water company. • Purchase of SCWC by the City will be self -financed from the company's own revenue, no City money will be used, nor will funds be borrowed to purchase SCWC. • SCWC funds will not be used to subsidize the City, nor will City funds be used to subsidize SCWC. • The City is your local government -- not a state -appointed or state -regulated agency. • The City is a not-for-profit local government. There is no profit motive to purchase SCWC and no City officials stand to make any money, personally or otherwise, from this sale. • Purchase of SCWC by the City will provide the City with a seat on the 11 - member Castaic Lake Water Agency board to represent this water company's interest, and be a participant on local water policy decisions. This will provide customers of SCWC with the same representation enjoyed by customers of the three other water retailers. The City believes that exhaustive open and public discussion of these and other critical points will lead to an appropriate decision of whether the City, or another entity, is best able to serve the needs of all Santa Clarita residents. The 'offer" for buying the water company would be done in an open public meeting, and the agreement for acquisition of the water company must be presented in a public hearing prior to final approval. Please let us hear from you. We value your views. Sincerely, The Santa Clarita City Council c VNCI :�,.,f.W I Santa Cla Wholesaler (4 Customers) C.L.W.A. Created by State 1962 Public Agency with interest in Kern, Ventura & L.A. Counties 11 Board members 7 Elected & 4 Appointed By Retailers rita Water organizations Retailer (43,200 Customers) Santa Valencia Clarita Water Water Co. Co. (Private) Newhall County Water District (Public) L.A. Co. Water #36 (Public) ICustomers Customers Customers Customers I 20,000 16,000 6,400 800 East Valley West Valley Central Valley Val Verde Castaic A Sale of the Santa Clarita Water Company Eight Points to Consider • The City was approached by Santa Clarita Water Company (SCWC) in January, 1993, to purchase the water company. • The City is already a key player in local water policy through Sanitation Districts 26 and 32, Santa Clarita Watershed and Conservation Authority, Emergency Services responsibilities, National Pollution Discharge Elimination System, Safe Drinking Water Act, and water conservation implementation authority. • Santa Clarita incorporated based upon a desire for local control. • City staff, including the City Manager, Assistant City Manager, Deputy City Managers, Finance Director, City Engineer, and Redevelopment Manager all have municipal water experience. • Ownership of SCWC by Castaic Lake Water Agency (CLWA) creates potentially significant conflicts of interest in terms of creating a vertical water monopoly and preferential treatment of its water retailer. • Purchase of SCWC by CLWA and companion settlement of SCWC's lawsuit against CLWA will shift historical water rights from the east side to the west side of the Santa Clarita Valley. • Millions of taxpayer dollars are at stake if a public entity purchases SCWC. • The vast majority of SCWC's service area is already within Santa Clarita's City boundaries. Purchase of SCWC by the City does not provide the City a greater opportunity to control growth. Commonly Asked Questions Regarding the Sale of Santa Clarita Water Company 1. Q. If the City of Santa Clarita acquires Santa Clarita Water Company (SCWC), will there be a change in water quality? A. SCWC customers will enjoy a better quality of water through a higher quality blend of State Project water to groundwater. 2. Q, Can I expect my water bill to go up as a result of the City's purchasing SCWC? A. The purchase would be self-financing and not trigger a rate increase to help finance the purchase. 3. Q. Will funds be taken from other City programs to finance the purchase or subsidize SCWC operations? A. The purchase and operation of SCWC will be self-financing and will involve no subsidy from other City programs. 4. Q. What advantage is there for SCWC to continue having representation on the Castaic Lake Water Agency (CLWA) Board of Directors? ( `'4 A. SCWC representation on CLWA's Board ensures that SCWC customers will continue to enjoy the same representation as customers of other water companies. 5, Q. When will a comprehensive water management plan be completed for the Santa Clarita Valley? A. The City, as owner of a water retailer, would finally be able to push for a water management plan originally granted to CLWA via 1986 State Legislation. 6. Q. Isn't it unusual for cities to own water retailers? A. Not at all. Many cities throughout California and the nation own and operate water companies. In Los Angeles County, Santa Clarita is the largest City which does not own a water retailer. 7. Q. Does anyone in the City have municipal water management experience? A. Every member of Santa Clarita's executive management team has worked in at least one City with a municipal water retailer. Several City employees have had direct water management and operation experience. Q. If SCWC doesn't sell to CLWA, what other buyer options exist? A. SCWC's present owners could retain ownership, a private interest could buy the company or SCWC could renew negotiation with the City.