a

* {-- -" *4'Li

-{ffi*, iii[i{1i;str tiliq-ffi

.::ili**'-'

-

FI

-'*,

-

tirel s'ere muttering in the rr'ind. But nos, collectir-eh, thev har-e a

strong and certain r-oice. Talk about grassroots, these C)jaians are

organic, their ti-ustrarion and anger l-raving gros-n narur-allr tiom tireseeds oi escalating s'ater bills and \\-arer companr- disregard.

\bu see their signs on lards throughout the tos-n: "STOP TheGolderr State \\hter fup-OtT!" A grotip oi upset Ojai residents began

holding s-eekh- meelings in_[une 2010 to oppose spiraling \1'ater rates

:t;;,;ffitfadi'muci.r higher than tl'rose paid in other Ojai Yaller-

"\\'e rnede it our top priorrn- to solr-e tlus sater problem," recaiied

Pat ]IcPherson, chailmarr of tl're group Ojai FLO\\- (Friends ofLocalh-Os'ned \\ater). "The current siruation is just not tair. And iither'le allorred to continue these incleases, Ojai s'ill lose s-hat it is.

Ther t'ill force people and businesse s our oi town. -\nd tiris ros-n li-illlose its soul."

The groLrp -

mxr:kcdnq specialrst ]IcPherson, insur-ance brokerBob Daddi, Realtor Dale Hanson, enr-ironr-nentalist Stan Grecne,

ilccollntant I-ou Torres and rvater inclustn- lnanager fuchard Hajas -set to clraftirrg a plan to take control of the cin'is rvate r supplr'.

Tl-rel acknotledge that theirs is an r-rphill hght -

a rare s-resring

oi control of a murricipal \\'rrter s\-srerl l}orn tl-re l-rands ot a prir-ate

corporation. But there are precedents. T\ro small communities in\orthern Caiifornia clid the same thing dr.rring the last decade.

So, irr Ap::il, Oiai FLO\\'r'eleased :r 5i-page arrah-sis s'ritterr br- Hajas

sl'Lich concluded that seizing Golden State }lunral \\ater CompanltOiai operation \\'as not onh- teasible, but the onh- s'ar to rein in s-ater

rates so that current residents'cirildren ancl grandchildren could aitbrdto iive here in the tunrle.

"This is tl-re biggest noner'.issue thcing tlie cin oi Ojai," said a nes-

FLO\\'director, attorne\ Rr-an Blatz, addle ssing a group oi r-olunteers

to kick otT a spring pctitior.r drire. "\\'e're going to take Golden State's

greed and use it against them."Nos, at least 2,(t(-)l,l Ojzri r-oters har-e signed on the dotted line to

sar- that ther-, too, are mad as hell and \\-ant to seize the Ojai piece oiGolden State \\hter, a Sarr Dimas-based firrn that dramaticalh- hikes

the $':rter rates oi Ojai residents 1.ear in and \-ear ollt.Golden State, a sr"rbsidiarl of American States \\'ater Co., s-hich

sen-es about i million Calitbrnia \r-ater clrsrorners, operates in Ojaiunder an open-ended 1967 agreen-rent s-ith tl're cin: Its sen'ice cannot

be discondnued since it o\\-ns the pumps and t-ater lines that sen-e dre

communin; unless local \\'ater Llsers bul the u-atenvorks.

That\ eractil l-hat Ojai FLO\\'proposes, alguing that the publiclvrun Casitas )Iunicipal \\ater District, the Ojai Yaller-l largest, should

take or-er tire Ojai \\'arer operation. Golden State costs nLc so escessile,

acdr-ists rlgue, thar Ojai sater r"rsers couid pa) Lrp to S25 rnillionthrough the sale oi bonds to bur- out tl-re companl and still come outahead finarrciallr'.

C)ver the last nvo decades, \\'ater rates in Ojai har-e jumped about

1 50 percent; increases oi at iexst another 28 percent are pending betbre

the state PubLic Ltilities Commission; and Golden Statet master plan

calls for rnore hikes tl-rrougir 2030 to raise S?7 million to replace an

aging inirastrucnrre. Goldcn State\ rer-enues in Oiai nos- total onlr 55

rnilliorr a lear, so rates are projected to triple br' 2015 to pnv tbr the

$

oi;li FALL 2011

Golden State Mutual WaterCa. $575.45:

{proj. to go to $v51.65 in 2015)

Ventura River Counf Water District 5154.63

A comparisan made by water

based on an actual two

Casitas Municipal Water District

Meiners Oaks Water District

a_luh. discussioo.

Tt're Cirl Council and rhe trustees of the Ojai school disuict have

formall-r backed the eiibrts of Oiai FLO\\'. But the Casiras disrricl

norded about a potential Golden State ia*suit, is prcrceecii-ng rvith

utmost care. "Tiris is moring siot.lr' and cauiioush-." s'ard Casitas

Director Russ Baggerh, rr'ho represelts Oiai on tl.re bord. "\\b can?

alford anr- missteps."

Casitas. ah'eadr- irn-oh ed ir-r an unreiated rniilion-dollar ias-suit

against rhe itederal go\-ernlnent. is not e:r.eer ro take on anr- trore legal

risk, especialir- against rr dcep-pocketed s'eter iudustrr eiant. G,:,lderr

Stare has alrcadr hired one oi thc nation's top legal specialists in crrses

ior-oir-ilg govcrirrrenr -*eizut of pn\-rtc pr-opcr n' ior the ptiblic goo.l

- so-cxllecl eminenr ciom'.rin las'suits.

L-rcle e d. that spe ci:rl-ist -

le rrrtssee :1ttornc\'-Joc ('oni1s1 -

11'1q sg1

to cxplain his clicrrr's posirioir to the Casiras boarcl in iate-]uh-, but thc

hearirrq hatl to bc deleled bccausc so mitlr\ O]ei rc:icicnts sl-ros-ecl r,rp

to tell tireil sitie oi the storr'. For hrc satln. rhe (-esitas h,,',tling roou-t

crn hold onh -{1 people, brit irbor-rt 6(l turnccl out to tcstii\.

Sull. a felr'()jri resiclents sp,rke to thc (-rsites borrrtl bcfirrc the

lgerrc\'s I'.nrr cl situt dos-rr discLr:sion. \rrcl thcir crrttce rtt t-.t:pelpable,

Rctirec Frrnir Finck tolci thc botci 1'rc s'ls shockcd s'herr hc qot his

hr-st Golcle rr Sratc bill rf te r mor ing hcrc r eals a{o. "I gor a bill tor S lltt-t

rrrrcl I'c-1 beer-r p:rtirrg S18 irr C)r:anqe Courrtr," irc saicl. \cirr hc\ lccljrtq

r-rrrdcr stccp ncrr' irrcreases, he saic1. "\\'hat's qoirrg on: 1'tli cotrccr-rrtcl

I'll be priccd out of this vrllcl simplv be cru-sc oi tirc price oi s-rtcr.."

Iiethleerr Rrchrrlds. ir rctircd rrillrilqdr tol thc I-os ,\rrge les

Dcpartnc r rt of \\ite r and Pos cr, saici s1-rc t()o \\'irs s tlurrlcLl br G , 'l.jcr-t

St:tre's i:ttcs s'hrn she t'uorctl hcrc l5 r'c:rrs;rqo. antl tirings h',tlc onil

.qottcll \\'orse."\\itel is somcthing s'c necc'l ta) sLlr\-i\-c. It's rcalh not sourctlttt-tq

tlut siluld bc heic1 prir-:rtch." shc tcstificd. "It': rcrrllr blecdirtg tlte

cidzens ... lbr a comn"rt,,clin' thrrt is ncccssrrrr."

I)rcldi, l'hose rlirh suututeL tn'o-montlt u-:rtcr bill s :rs S-1i2. te stiftcci

bl rcrding r hrlsir criticisln oi Golclcrr Snrc's ]ii1(l rcLilrcst tol rr l9pcrccrrr r:rtc incrcesc irr Oiri. Thc cli-rcr.tmcnt D:rticli rcrd u'rs s'r-irrcit bt'

lrtfomel Pcter \. ,\llcrr oi ihe Dilisirlrloi Ratepe\'cr ,\tL ocrttcs. e perr of thc

PUC. irr rcsponse to Goldcr-r Strte's rete-

I rl \( r'iqr Lqsr i-o| r lrj- r'. 1r .

"If it :rini broke cior-r't fir it.

Lntortunrrtch Golcien State \\ atcr

Cor-npirnr- ciocs lrot tollol that

philosophr." -\llen s'rorc. Hc conclucleci

th:rt the c(imPiln\- \\':ls ilskillg tol hike

r'atcs to pel ibr a nes' S?.f-tlrllion s-cll

rh:rt O]:ri docsrr'r ncccl. Ile rlso s'rscriucel ot Goltlerr Steie's rcclttest ibrrate hi[cs io rdt] or repl:rcc pipcllncs,"To support irs Pipelirre Replrrcctt-rcnt

l)iuqt,rrrl. (l5\\ ( .rlt('ttlfs ,i tl,tr o'-

sc:rr-e tlctics ... ,rtrd techricrtl soLurtlittq

r-r-i.rmbo jumbo.'' rhc ratcp'.ucr' l:rs-,cr

,,';urc. "'l'lt. r'crLtr ir rlr:lr CS(-\\'rpipchnc rcphccrncnr proqliu] is lkin totirc oii comp:rnics tcllirrg r or-r to chanqc

r oul c'.rL's oil cr-e n l.( ){l(.1 r-trtlcs ... it is trl'liorn cost cifectir-e."

In thc cncl. rhe PLC rt':irdcd

RichardHaju,

Ford, Aiai resident.

51s4.47

s122.32

riperlde s.

"I bcgirrr on this eigl-rr Lcars :rqo." rcceLlcC Drcldi. "I \\'elrt to a rirtc

heuring encl I rskecl Golclen Stetc: 'Flol'c2lrr 1,olr cherqc ne 51-15

tbl s'1ut I'cl par S-15 in -\leiner-. Orks?' ,\rrtl tircl said thcl cart do itbec'.r.rsc thc PLC sn s ther crr"t."

\\-hat Decldi arrd his colle:tques sec rs Golden Strte's arrogxrri

rnclittcrencc to the plight of its 2,86{l Oiri-area \\-ilter customers.

cor,rpleci u'itir rarc increlscs of 35 pcrccnt in 2t)08 ancl t6 perccnt this

Jarru'.ur, ius caughi tirc rtfcntic.rn oi clected cin lcrrclers.

"It's gotten to the pt>irrt oi crisis. lirrtl I clorr't tiink s'e cart continue

to ailos this ro }'r:lppcn to the ciuzerrs of ()iai." Cor-rncrhran Par-rl Blarz

saicl rt a re cerrt r-ncedng. lI:u or Calol Snlth added. "\\e irar-c pcople inOjai sho :rre palioq lrorc tor their rate r bills tl'ran their mortgegc.''

\\Le n corrpllirrts 'lbclut Golden Sr:1te clnerged irt lecent r-e l|s. therr

Cin ,-\ttorrrer -\Ior-rrc \\-icldels sruciied rrhcther a cin- tal;ccn'cr ot the

s etcrrlorhs s-as ii:rsibie . He found that it u':rs not. Bnt condttions h:rr-c

chrrnged s'rth thc ucl. much llqhel rrte propos:rls. rrrd thc council

seems rnore s'ilhrrg to cnter rhe ilar. ''\\'e nced to siep Lrp :rnc1 clo

someihing rnorc :rgqressir-c." Councils'omrir Bet\\- Clapp said clLrriirq

cI ** o.

I#s

filnl FAL! 20i l

Golden State a 26 percent increase tbr this r-ear instead of the

requested 39 percent.

Thatt the problem, Daddi explained later: Golden State is motir ated

to spend as much as the PUC rvill allos- on the Ojai s\-stem, because

expensir.e upgrades hike the value of the Ojai operation and increase

the rate base from s-hrch the comPanr- is allos'ed to reap an 8 to 10

nci.Fnt o..r.el nrnfit-.--'*-'r-..-''81' contrast, publich run \\ater companies oYerseen bl elected

boards, such as Casitas, are non-profits and seek to keep rates as lorl'

as possible or face the \\rrath of their consdruents at public meetings

and elections.

Eightl-5st.r-r'ear-o1d Bor-d Ford, a former Ojai cin ffeasurer, \\'as

in the audience at that Juir- hearing at Casitas' Oak Vies' headquartets'

He had just paid a two-month s.ater bill irom Golden State for

$s75.45."lt i: a gouge compared sirh rvhat otlrer people ale paring for

rr a,er in rhir r aller '' Ford rold

a reporter. Ford sald he uses

Littie rvater at his 2,000-square-

foot house, and in fact spends

most of his time elservhere.

But he does have a srvimming

pool, his parcel is more than

arr acre, and he did rvater his

smrJJ r inel'ard once duling rhe

billing period for three hours,

he sard.

Yet, the same water use

in the Casitas disrict r.r'ould

har-e cost Ford onlr- $154.47

about one-fourth of

rvirat Golden

State charged,accnrdinq ro* --.'_ --_-an analr"sis by

Hajas. Ford's billif he were in the Ventura River Counfi V/ater Distr-ict r.vould har-e been

$154.63, and just 5122.32 in the \Ieiners Oaks Water District. Based

on Golden State's nerv rate requests, Ford's bill for the same amount

of water would rise to $751.65 1n2015, Hajas said.

A ferv dats after the aborted Casitas hearing, Ford rvas s,alking his

propern'rvhen a Eucahptus Street neighbor, I(athr- Soares, entered

the conversation stith a water bill she'd just opened.

"Oh, it's $646.83," said a startled Soares. "Thatt $325 a month.

That's terrible."The npical Goiden State customer uses much iess vater than

customers lke Ford with large lots. And Ford par-s neadr $154 as a

service charge, far more than his neighbors with smali lots, because ofthe size of his rvater meter.

Su1l, Ojai FLOW maintains that elen for frugal users, Golden State's

rates afe excesslve -

more than double vhat theY would pal casitas.

According to Golden State, its npical Ojai customer one with

a 5/8-inch meter s-ho uses 1,300 cubic feet of u,ater or near* 9,J24

galions a month - pavs $75.57 per month, or more than $150 for each

rvater bill. That's up from $59.29 per month, or 5118.50 per br.l.l, undel

rates approved for this r-ear. That's a 27 .46 percent inctease on top of

the 30 percent increase absorbed br- the npical Golden State customer

in 2008, according to the compan\-.

Then there are the proposed 25 percent increases iot 2012-15,

ior rvhich Golden State filed rn Julr. Those are "necessarl to keep

up with increased purchased \\.atet and pumping costs $'hich 2re out

of GSWC's control and to meet GS\\'C's goals to ensure a safe and

reLiabie soulce ol' supph. implote inliastrucrure and ro promore rhe

efficient use of \-ater," according to the compant"s pubhc norice

regarding the proposed hike.

Golden State spokesman Joi'rn Des.er- rvould not comment for this

srorr-. orher than to sat Lr.rs companr rianted to state its posirion rn

public forums and statements. But in 201.0, a" Golden State official

said in an interr-ie*, that there \\/ete good reasons that its r',rater biils

s'ere higher than those of surrounding districts: It has no taxPal'er

subsidies (propern- tax rer-enue), it has to pa\- taxes and it must return

a reasonable profit to inr-estors.

Golden State DistricrN{anager Ken Peterson said

then that Ojai customers

should expect tate increases

to pal for slstem replacement

LLnul 2010. Some pipes ln

the Ojai slstem are 80 r'ears

old, he said.

"Horv ststems are

replaced depends on the need

at the time," he said. ii7ater

sYstems across the state and

nation are dealing rvith the

same issues of decat', he said.

"This countrl is dealing ri'rthinfrastructure replace ment.

Nou' it's catching up to us."

Bui Ojar FLO\\ insists

Golden State can't be trusted not to ro11 up its costs to enhance profits.

The group notes that Golden State inJulr-endeci a PUC investigation

into its contracting practices bl agreeing to pal 512.5 million inrate refunds and reductions, plus a 51 million firre. Olar customers

collectir-elr- will receir.e $986,463 in rate refunds and $250,651 in tate

reductions.

The state found that contracts arvarded to one engineenng comPanr

violated Golden State's own poJicl' since there rvas no competitir-e

bidding and too little documentation. In seleral of those contracts,

the rvater companl'paid too much for d're rvork, impropedv driving up

costs passed on to customers, the state concluded.

Golden State disputed those findings but agreed to settle to avoid

legal costs.

"The settlement reflects our commttment to our customers, rvho lrall

be tire greatest beneficiaries of this agreement, aad our recognition ofthe importance of maintaining positive relations w-ith the (California)

PLIC," companr- Chief Erecutir-e Robert Sprorvls sald iri a statement.

He said the compant'had long ago implemented safeguards to make

sure problems discovered in2004 had been corrected' T\r'o emplovees

u'ere fired, according to the settlement ag{eement.

The essential argument of Olai FLO\)7 is that Golden State rates

t'rll simplr- become unaifordable in the future. Based on an a\rerage

rate increase of nearir' 8 percent a r.ear for the last 20 r'ears, and Golden

State's S27-mill.ion pian to upciate, FLO\{/ projects that the companrrs

bi-monthly bi-ll for a bpical customet s'il-l reach $445by 2025.

{ri;ri FALL 2oi1

Bt conurst, tire group claims tl-rat if Casitas takes or-er the Oiais'aten orks, the bi-mor-rtl-rh- rate s'ould be onlv 5185 e\-err r\\'o months

br- 2025. That's because Casitas' 2(.)-r-ear histon' shot's residenrial rate

increases half those oi Golden State's, about 4 percent, nnd because its

current rates are less tharr half oi Golden State\. ]ts n-ronthli' sen'ice

iees are also much less.

This t-ouid be thc casc er-err if Casitas added e S2.5t) surcharge

to e\-err liO cr.ibic tcet of s'rter to par- tbr the purchase of Golden

State. to fir an aging srstcrr end to corer iegai costs. Er-en with those

e\penses, the npical C)iai custorr-rer s'ould sull par' 15 petcent less the

first r-ear ailer the pur:chnse. \nd sar-ings ri-ould irrcrerrse as urlte \\'ent

on. Oiai FLO\\ maintdrr:.."Tl'reir dutl is to rnaimize profits tbr shareholders." Rlan Blatz

told feilos'r-olunteers eallv irr rirc carnpagn. "So bur-stock iiom thetr-r,

jr.rst dont bul t'ater trom them."Oiai FLO\\' sar-s it chose C:rsitas irs its preterled go\-ernment pxrtner'

- rather tiran the cin-oL orrc otthe smaller publich' run \\'at-ragencies - because it alrcadlinterconnects rvith the GoldenState sr-ster:r, pror-iding about1 i nerrent nf the e nnrn1111'5

,,-^"^- :- n:^: ^^^1. ..^^r, lnvldr LdL,, \ rr',

some cases, Casitas' main s'ate r

lines parallel those of GoldenState. And Ojai residents are

aireadl in the Casitas \\-ater

district and propern- o\\'ners

Pa\' t2\es to ll.Ii tlie Ojai rakeoter ettolt

seems like a long shot or

a likeh-legal

quagmire,

FLO\\'supporters Polntto a similar,

successtul

can-rpaign in tiresmall Santa Cruz Counn'communin'of Felton.

I Felton communin'group, fhced s'ith a 74 percent rete increase in2002, tbught back instead, gairring annesrdon to a locai public s-ater

agenc\, shic}r sold bonds to par tbl a 51 miilion legal fight and then

finaih- prer ailed in 2008, s-hen the nadon's l:rrgest corpor-ate \\-arer

pror-ider agreed to sell.

The cost oi the Felton slstem \\'as steep - about 510,200 per

customer. or S10.5 mrllior-r - but the communin'gained -sor-ne controlof its runas-a\' \\-ater costs, since residents can no\\' petition thelocal elected board of the San Lorenzo \hller- \\ater District s-ithgrlevances.

(Anotirer small \ortirern Calitbrrua communin, )Iontar-a, used a

simrJar strategl to take control of its os'n \\'arer slstem in 2003.)

In the Ojai case, Casitas \\ould be the equitalent oi dre San Lorenzodistrict, though Ojai is alreadr"a part oi dre Casitas district. Ii Casiras'

fir-e-person board appror-es the FLO\\- proposal, it t-ould tbrm a

special assesslrent disffict, pLlt one or more bond issues to Ojai iotersfor approrzl, tl-ren attempt to buv Golden State's local tranchise. Ii

Goiden Stlte baiked, Casitas uould begin to seizc it legallr'.

\\'hen this occuued in Felton, the private \\-ater companr retused to

sell. And tr s'asn't Lutui a \\'eek betbre tr-ial irr 2[]t)8 r]mt rrr rqreetnent

to sell \\-as rexched.

-\ttorner" Conneq sho represerrted the ..r'ater compant in tl-rc Fclton

case, l'ouid not conment on dre Oiai cxse, e\cept to sar': "There

s'ill be a nurrber of legal issues wc l'tll r-et should this Proceed." In

condemnarion cases in general, he said, "\\'e caretulh elaluate theu-

::ight to rakc . .. rnd t-e cnsure our cirents get fail rnarket r-alue fs'hichbulers] drasticalh' underesdmate in er eLl ca-se."

Oiai FLO\\' esdmates tl.re r-:rlue of tl're Golden State ilanchise at S 16

milLion to 521 mrlLion, depenclirrg on hot- soon a purchnse lr'ould occur.

But if the companl could secure r 51tl.2tl0 per customer settlement

(or cor,rrt r-erclict), as in Feiton, tire cost t'ould l:e S30 million.Conner ackrros'ledged that tl-re Felton cost per customel tas high.

Tl-re hsr-er arguirr-{ tbr the br.rvers,-JelT Odermar-r of Costa f lesa, said

the cost s'as inilated because?[)0 acres of ]and came s-ithrl-re deal. Oderman said he

has been contacted bt Oiai

FLO\\ rnd Casitas, ancl

sor-rld counscl rlr. disir:ict

ii recpested. But ire said all

inr-oired should erpect a

long, hard fight.

"In Felton, ther'

r-igoroush' objected to tl-re

rrrtcr distlicr\ right to takcrl,"ir nrnne"n "ntil rlre 1151

minute," he said. "Thel t-erc

hoping ther-could back the

commr"rnin' dor-n."P'"-nrrtinn tnr trirl r46i;

about 18 months and cost

the San Lorenzo district about S 1 rnillior-r in appraisai, engineerine and

legal ttes, l.re said.

\\-hich rlises the question of s'ho rlould par the uptlorrt costs irr

the Ojai case. The Casitas board -

tith onh" one dir-ector. froni Ojai,

nlo rnore fiom the Olai \hller- and nr'o ftom Yer.rrura -

has said it l'illnot charge its current custorrrers to undeltake the Ojai ettort. tsut Ojai

FLO\\ l.ras said Casitas could tbrrl a special district and sell bonds tocor-er ail costs of purchase, inclucling legal.

In Felton, Oderman said, the s'ater district soid nlo sets of bonds,

one tbr 51 rriillion ro co\-er r-rptlont costs and one to co\-er the acnral

purchase.

Ojai FLO\\'acknosledges it doesn't har-e the r-otes it rreeds on dre

Casitas board let."It's a ditficult, uphill cLimb." said Ri'an Blzrtz (t'ho is dre Ojai

councilmarr',s son).

But Ojai FLO\\-'s seren-rnember core condnnes to tneet eacl-t

s"eek at Dale Hanson'.s real estate otEce to plan suategr- and press fbrrictorr.

Enr-ilorunental-rst Greene, s'iro l-ras ibught ar-rd rr'on battle s as Ieader

of Ciuzeos to Preserle Ojai, recalled anotl']er grass-roots crmpeign tn

utich the nadon's largest rubbish cornpan\-\\'as blocked tiom br-rrlding

a dun.rp near the mouth oi the Ojai \hller at \\eldon Canlon."Peoplc *or:ltl sar, 'It'-s \\:rste llanagernent, tlis S1-1 billion

colrpan\, tht are r-ou taking them orri' Our ansn'er n-as same as it is'Because our cornmunirt is sorrh sar-ing."'l

t{;b .=****

^

oiili FALL 2011