City Council to Appeal Judge’s Ruling Denying Takeover of Golden State Water’s Claremont Water System

Posted on Mar 8, 2017

City Council to Appeal Judge’s Ruling Denying Takeover of Golden State Water’s Claremont Water System

On January 31, the Claremont City Council voted to appeal the December 9, 2016, ruling against the city’s eminent domain case to acquire Golden State Water Company’s (Golden State) Claremont water system. An article in the Inland Valley Daily Bulletin indicated the city spent close to $14 million on the eminent domain proceedings, which were initiated after voters passed Measure W in November 2014 allowing the city to borrow up to $135 million to acquire the system.

At the January 31 meeting, the city council also voted to appropriate $450,000 toward legal fees for the appeal from its Operating and Environmental Emergency General Fund Reserve and its Equipment and Facility Reserve. If the decision stands, the city could be obligated to reimburse $450,000 to $1 million for Golden State’s legal fees as well as $500,000 to $1 million in interest charges.

“It is disappointing that the City of Claremont has chosen to appeal the decisive ruling made by a Superior Court judge in favor of Golden State Water. Claremont taxpayers will now be forced to pay millions more in additional legal fees and interest charges,” said Denise Kruger, Golden State Water’s Senior Vice President of Regulated Utilities, in the newspaper article.

A recent research report, “The Economic Consequences of Contested Government Takeovers of Investor‐Owned Water Utilities,” issued by Analysis Group, illustrates contested takeovers typically are very costly for the acquiring government entity and do not necessarily result in lower rates or better service than private ownership post-takeover.

David Axelrad, a partner in the law firm retained by the city, noted, “Across the country, only 20 percent of appeals are successful.”

The appeal is expected to take 18 months to two years to complete.