Final Push

A public takeover of Cal Am would turn the utility’s property holdings into tax-exempt public assets. MPWMD officials estimate it would cost the district nearly $2 million to subsidize tax revenue losses.

A local public agency’s attempt to fulfill the will of voters and purchase the local assets of embattled utility California American Water was foiled again after an arcane government commission voted to deny the effort. 

The seven-seat Monterey County Local Agency Formation Commission stood as the final step in the process before the water agency Monterey Peninsula Water Management District could make an offer to buy the local Cal Am system and become the region’s water utility. Despite LAFCO’s staff initially recommending approval after an in-depth analysis of the buyout’s feasibility, LAFCO commissioners voted 5-2 on Wednesday, Jan. 5 against granting MPWMD the power to become a water utility, citing concerns that local agencies such as the school and fire districts would lose tax revenue if Cal Am’s private local assets became tax-exempt public assets. 

Some commissioners said they were voting against because smaller satellite Cal Am water systems, such as the one serving Chualar, would not be included in the buyout. Cal Am has said, without the larger system subsidizing the cost of the smaller systems, disadvantaged communities such as Chualar could see rate increases. 

LAFCO will have one more opportunity to reconsider their decision and change their vote, likely next month, where MPWMD will work to present new information to commissioners they hope will influence their votes. Without a change of heart, MPWMD’s general manager David Stoldt and board members have said they will take LAFCO to court. Stoldt estimates taking LAFCO to court will delay the process at least nine months. 

The Jan. 5 LAFCO meeting featured a slew of public comment for and against LAFCO’s decision. Resident Tammy Jennings said she was floored that five commissioners could “dispel what thousands of people voted for.” Marina Mayor Bruce Delgado said he was concerned for LAFCO’s reputation moving forward. 

“[LAFCO] will be seen as the main reason there is a delay in getting the water supply that the coastal cities so dearly need and it's a shame because, up until now, LAFCO has avoided going down the route of [the Fort Ord Reuse Authority], that is, having a reputation of being a politically-persuaded board,” Delgado said. “It's not a good day for LAFCO and I think this will be black eye in the future when people think of LAFCO.” 

Christopher Neely covers a mixed beat that includes the environment, water politics, and Monterey County's Board of Supervisors. He began at the Weekly in 2021 after five years on the City Hall beat in Austin, TX.

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