The much-awaited meeting addressing the financial implications of the proposed water merger was met with skepticism and doubt by some attendees at Wednesday night.
At least 50 people showed up at the Castaic Lake Water Agency’s Rio Vista Water Treatment Plant Wednesday night for the last in a series of public workshops held to inform citizens about a plan to merge the Santa Clarita Valley’s water wholesaler and one of the three main water retailers to which it sells water.
A firm hired to examine the financial implications of the wholesaler – Castaic Lake Water Agency – merging with the Newhall County Water District treated attendees to an hour-long slide presentation titled, Financial Evaluation.
Mike Whipple, president of MF Whipple & Associates, examined all aspects of finance affecting both wholesaler and retailer – cost, revenue, assets and liabilities.
According to Whipple, all financial indicators examined by his firm – from how each agency manages its debt, to how each tackles capital improvements – suggest that a merger is the favorable way to go.
At least three times Whipple used the phrase: “The trend is favorable.”
About the prospect of new water rates under one new merged agency, Whipple said: A merged agency should “retain the current and programmed rates for some time” and that a supermajority vote would be required if any change was made to NCWD rates.
About capital improvements, he said: “All three continue to make improvements,” referring to the CLWA, NCWD and the Santa Clarita Water Division, one of SCV’s water retailers owned by CLWA.
On the issue of outstanding debt incurred by each prospective merger partner, he said: “All three agencies practice sound debt management.”
About debt management in general, Whipple said: “The long-term total liability to total assets ratio is extremely favorable for each agency.”
“Each of the agency’s maintains a stable operating situation,” he said.
At the close of the presentation, NCWD board member Lynne Plambeck asked if meeting attendees could ask questions about the financial aspects of the proposed merger.
B. J. Atkins, head of the ad hoc committee examining the proposed merger, denied the request.
When the floor was opened up to questions, the comments were far from “favorable.”
“This is another dog and pony show,” said Ed Dunn, former president of the NCWD board of directors. “What we’ve heard here is a lot of misinformation and false information.
“Bigger is not better,” he said. “You don’t see school districts merging.”
Dunn’s wife, Joan, who also served on the NCWD board in the past, said: “I worry about this organization because in the past it’s done questionable things.
“There’s something wrong here,” she said.
One speaker asked that another meeting be held so that citizens, once informed, could ask intelligent questions.
The next meeting suggested by NCWD General Manager Steve Cole, however, was a meeting to consider a settlement agreement between NCWD and CLWA to settle litigation between the two agencies.
That meeting is slated for Dec. 13.
Cole pointed out in closing a number of common ways the two agencies conduct business.
“When it comes to inspecting our reservoirs,” he said, as an example. “We use the same vender to do that.”
“About assets, obviously we have a tone of real estate assets,” he said.
CLWA General Manager Matt Stone cited the state-mandated directive for water agencies to work more cooperatively.
“Part of the governor’s vision is for better inter-governmental cooperation and efficiency,” he said.
“As the state further defines what sustainability really means, we’ll be working together on that,” he said.
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