HomeMy WebLinkAbout1999-01-26 - AGENDA REPORTS - PURCH SANTA CLARITA WATER CO (2)NEW BUSINESS
DATE:
SUBJECT:
DEPARTMENT:
BACKGROUND
CITY OF SANTA CLARITA
AGENDA REPORT
City Manager Approi
Item to be presented
January 26, 1999
POTENTIAL PURCHASE OF THE SANTA CLARITA WATER
COMPANY
City Manager's Office
The Santa Clarita Water Company is the largest water retailer in the Santa Clarita Valley. In
1993, the owners of the Santa Clarita Water Company expressed an interest in selling the
company to the City of Santa Clarita. Several meetings were held, and the negotiations were
terminated after the Northridge Earthquake. During the Summer of 1997, the Water Company
again expressed an interest to discuss the sale of the Company to the City and several meetings
were held to discuss the subject.
Before considering such a purchase, the City Council directed staff to evaluate the benefits to
the community such a purchase would create. The following summarizes the findings:
Benefits to the Citizens of Santa Clarita
• The City is the largest provider of services to local residents, and such a purchase would
allow the coordination of efforts such as street improvements, capital improvement projects,
and new roads with the installation, removal or relocation of water lines.
• As water is such a key issue in the Southern California Region, ownership of a local water
company would give the City a voice in the local water forum, with the goal of ensuring an
adequate water supply for the future of the community.
• The City would have greater control over the future of the Santa Clara River, ensuring that
it is preserved in the best possible state for water quality, beautification and recreational
purposes.
• The purchase would be consistent with standard practices throughout the State, whereby
many municipalities also provide water to their residents.
• The City has in-house water expertise, as the City Manager, Assistant City Manager, and
other management staff have managed water companies in previous cities for which they
worked. In addition, the Santa Clarita Water Company has thirty-seven employees who are
experts in the delivery of water.
• The presence of perchlorates in the Company's water supply presents a potential threat to
the users of the water provided by the company, and it would benefit the community to have
the City address this issue.
Based on these and other reasons, approximately eighteen months ago, the City Council
Continued To: z
entered into negotiations to purchase the Santa Clarita Water Company. In 1998, the City
retained Bookman Edmonston Engineering to conduct an appraisal of the Company and to
study preliminary funding methods of the purchase. The preliminary work is complete, and the
City has determined that the net revenues from the Company may be used to retire the debt
incurred by the purchase, thus not impacting the funding for City services. It is now
appropriate to begin the public discussion process and enter into subsequent negotiations.
Staff recommends entering into a contract with Bookman Edmonston Engineering to assist the
City with the negotiations to purchase the Santa Clarita Water Company. In addition, staff
recommends entering into a contract with Rogers & Associates, a strategic communications
firm, to help City staff ascertain community attitudes and to provide public information
regarding the provision of water services by the City.
City Council approve and authorize the City Manager to execute agreements with the following
companies for services related to the potential purchase of the Santa Clarita Water Company
by the City of Santa Clarita, subject to City Attorney approval:
1. Bookman Edmonston Engineering, in an amount not to exceed $100,000, from account
#1240-7401, the City Council Contingency Fund.
2. Rogers & Associates, in an amount not to exceed the City Manager's standard authority of
$50,000, from account #1240-7401, the City Council Contingency Fund.
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