The Town of Apple Valley has made an offer to acquire Apple Valley Ranchos Water Company (AVR) for $50.3 million.
This “offer of just compensation” was authorized by the Town Council in May and represents a major step forward in the Town’s efforts to acquire the water system after years of excessive rate increases and surcharges.
The offer letter was provided to Chris Schilling, Chief Executive Officer of Park Water Company, which owns Apple Valley Ranchos. In the letter, Town Manager Frank Robinson said the offer amount was determined by the Town’s valuation expert to represent the fair market value of the water system.
At this time, the Town Council has not decided to proceed with any eminent domain action and may only do so at a hearing on a resolution of necessity.
However, the Town has been exploring potential acquisition since early 2014, when AVR proposed to increase rates by 31.55 percent over the next three years.
Even before then, the average water bill for Apple Valley Ranchos customers had risen by 68 percent since 2002, not including multiple surcharges that have added to bills during that time.
Most Ranchos customers have as many as eight surcharges on their water bill, which increases their costs significantly.
Combining all of these, the cost of water in Apple Valley is almost double what it is in neighboring communities, where the water systems are owned and operated by public agencies.
“There is a reason nearly 80 percent of water providers in California and across the United States are publicly owned,” Robinson said. “We believe – and the community has strongly supported us – that water is a public asset and should be controlled by the community, not subject to corporate greed.”
This month, a judge in Missoula, Montana, reinforced that point, noting that the “public use” of water takes priority over the profit motives of an outside company.
The ruling clears the way for the City of Missoula to pursue eminent domain over Mountain Water Company, which, like AVR, is owned by Park Water Company.
The offer of just compensation is conditioned upon acceptance and the execution of a contract of acquisition.
Town Issues Statement on Missoula Water Decision
A judge ruled on June 15 that Missoula, MT, may proceed with condemnation of the privately held water system that serves the city. In a 68-page decision, Missoula District Court Judge Karen
Townsend concluded that municipal ownership is “more necessary than the current use as a privately owned for-profit enterprise.”
The ruling clears the way for a determination of just compensation for Mountain Water Company, part of a trio of commonly owned water systems that includes Apple Valley Ranchos Water Co.
The Apple Valley Town Council is considering acquisition of AVR after years of excessive rate increases and surcharges.
“We congratulate the City of Missoula on this milestone ruling. The timing could not be better as we prepare our offer of just compensation to acquire Apple Valley Ranchos Water Company,” said
Town Manager Frank Robinson. “The Missoula judge’s conclusion is undeniable: the public’s use and ownership of water is ‘more reasonable and proper’ than the current use as a privately owned for-profit enterprise. This decision certainly substantiates what we have been saying – that water belongs to public and should not be controlled by the profit motives of a private company. The Missoula ruling is an extremely positive sign when it comes to community ownership. As we explore acquisition of Apple Valley Ranchos Water Company, what we have learned from Missoula will be invaluable.”
Condemnation proceedings began after Missoula’s earlier effort to purchase Mountain Water was rejected by the company’s owner, The Carlyle Group. Since then, Carlyle announced an agreement to sell Mountain, AVR and a third water provider to a Canadian company, Algonquin Power & Utilities Corp., for a total of $327 million, including $77 million in debt.
In her ruling, Judge Townsend concluded that the city was able to prove that “the taking is a more necessary public use” than Mountain Water’s current private-business use.