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Winter 2013

Property Rights Group Exposes Eminent Domain Scheme

The California Alliance to Protect Private Property Rights (CAPPPR) started in a response to the seizure of Conaway Ranch and its water rights in Yolo County.  Years later, they continue to fight against eminent domain abuse in California.  CAPPPR has been leading the charge to expose an eminent domain scheme to forcibly seize a private water company’s water infrastructure and water rights in two California communities. 

Both the city of Claremont and the Casitas Mutual Water Company in Ojai are considering the use of eminent domain to seize Golden State Water Company’s water infrastructure and water rights.  Not only is this a water grab it is only being done to advance a political agenda not protect the ratepayers. 

The major environmental group pushing this agenda in California is Food and Water Watch, a group of activists that target California agriculture, water bottling companies and private water system operators.

Food and Water Watch spends millions of dollars a year setting up training operations under the name Friends of Locally Owned Water (F.L.O.W.) to train political activists and elected officials.  They have set up F.L.O.W. groups across the United States and in the California communities of Felton, Aptos, Monterey Peninsula, and now Claremont and Ojai.
Food and Water Watch fundamentally disagree with privately owned water rights.  As such, they are promising ratepayers that water rates will somehow be lowered if their water utility was run by a public entity.  These communities are then encouraged to use eminent domain without a clear understanding of the financial risk. 

It is unclear how the organizers of the F.L.O.W. groups promise water users lower rates when the amount of debt that is necessary to pay fair market value for the water infrastructure and water rights is in the millions of dollars.   In many cases it has cost hundreds of millions of dollars.

Public agencies simply cannot acquire massive water systems, worth millions of dollars, without passing on these costs in the form of higher water bills and property taxes. While these F.L.O.W. activists know this, they do not share this publicly for it would undermine their message that only under public ownership can water be reliable and less expensive.  

A great example of a similar takeover happened in the town of Felton, when a public water agency acquired an investor owned company.  The community of Felton was handed a bad deal after the Felton F.L.O.W. group promised to lower water rates if the San Lorenzo Water District acquired the private water company.  F.L.O.W. valued the water system at as low as $2 million; however when all was said and done with the eminent domain proceedings the cost was $13.4 million.  That is more than 600 percent more than original estimates.  Ratepayers in Felton were forced to pay $535 more per year in property taxes to repay the 30-year bond and their water rates have gone up three times. 

It is important that the valuation of the water system and water rights are made public and that discussions are done in an honest and transparent manner.   Most importantly, Golden State Water has clearly stated that their water systems are not for sale. 

Economic studies have valued the Claremont water system at between $54 and $204 million for the capital assets.  That is just to buy the water system not to operate and maintain it.  The economist also concluded that water rates will go up for decades under any of the purchase price scenario. 

F.L.O.W. activists assert the rates will do down.  The fact of the matter is the final value of forcibly seizing property by eminent domain is usually 2-to-5 times higher than the original offer, usually because government lowballs the property owner with the threat of forcibly seizing it if the offer is not accepted. In the private sector, this would be considered blackmail, but when it comes to eminent domain abuse, its just another day.

Eminent domain is an important tool for local government, but it should only be used for true public purpose.  It is doubtful that ratepayers in either community will see any tangible benefits if the water systems are acquired through eminent domain.  

Ashley Indrieri, Chief Operations Officer for Family Water Alliance sits on the board of CAPPPR.    ■

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