Editor’s note: Senate Bill 634 is due to go before the Senate Appropriations Committee on Wednesday this week.
In a lightning-swift series of short-notice special meetings and ex-parte court motions, Castaic Lake Water Agency and Newhall Land and Development Company, the latter of which then owned Valencia Water Company, moved quickly before the 2012 holidays to seal a sweetheart deal between the agency and the developer for the $73.8 million acquisition of the Valencia Water Company.
Valencia Water was the wholly owned subsidiary of its parent development company, the Newhall Land and Farming Co., a fact that had long raised suspicions among environmental groups and the public as to the accuracy of the water supply reports for the developer’s Santa Clarita developments, including the 21,000-unit Newhall Ranch project.
On December 17, 2012, Castaic Lake Water Agency entered into a contract to purchase Valencia Water Company. That contract contained a plethora of other promises favorable to Newhall Land. Among the deal points were promises to ensure water to the massive 21,000-unit Newhall Ranch project.
In one section the contract states:
“Notwithstanding any contrary rule, regulation, policy, resolution, or ordinance of the agency, the company, the PUC or LAFCO, upon assignment or conveyance by Newhall, the agency shall hold in trust for Newhall or its designee, all rights and water supplies described in this section 6.8 that are needed to provide water service to the Newhall Ranch Specific Plan, and all associated rights thereto, until such rights or water supplies are required to meet the actual demands for the Newhall Ranch Specific Plan” (Condemnation Contract, page 25, provided upon request).
Other deal points ensured that Valencia and Newhall Land would retain control over how water supply assessments for future Newhall projects were evaluated and written, even promising in regards to the ground water in the Ranch area that neither Valencia Water nor Castaic Lake Water Agency:
“(ii)shall never contend or claim that the ground water is not available to serve
elements of the Newhall Ranch Specific Plan due to the need to use such supplies to
support the water needs of other existing or future water users within or outside the
service areas of the Agency or the Company. …”
Water supply assessments are meant in part to ensure an adequate water supply to existing residents. We should all be concerned about a water agency that promises it will disregard its own community’s needs and a water bill that ensures such unethical behavior becomes law.
In other circumstances, everyone would applaud the move of a private water company to public status, but in this case, SB634 would codify into law a structure that appears to benefit a large development company at the public’s expense.
Moving nearly $74 million into the pockets of the Newhall hedge fund owners while illegally committing future water supplies was not in the public’s interest, especially in light of increasing water well closures in Valencia due to ground water pollution in our valley. This was bad public policy then; it is still bad policy now.
The lack of transparency and the secret backroom deals that assured these huge Newhall developments a water supply while attempting to avoid a fair and thorough public review is a clear attempt to skirt state law. It is not only poor planning; it is just plain illegal.
Will our state Legislature codify these unethical actions into law? Or will it protect the legal safeguards meant to ensure good public process and oversight of our water resources by voting “no” on SB634?
Instead, it is time for the Legislature to closely examine a governance structure that forces Valencia water ratepayers to provide an annual dividend of $800,000 from their water rates to Castaic Lake Water Agency. This governance structure is not sanctioned anywhere in state law. This structure, along with Valencia Water Company’s lack of transparency, must be addressed.
Lynne Plambeck is a Santa Clarita Valley environmentalist and a member of the board for the Newhall County Water District.