Measure J: Monterey Peninsula Voters Weigh Public Vs. Private Water

Nov 1, 2018

The Monterey Peninsula has always had a private water supplier.  California American Water (Cal Am) took control of the system in the 1960s. Now, voters will decide whether they want a public takeover.

Measure J requires the Monterey Peninsula Water Management District (MPWMD), a public agency, to adopt a policy of public ownership of the water system and, if feasible, buy the water system from Cal Am.  This could be done through negotiation or eminent domain.

The measure gives the MPWMD nine months to come up with a plan.  To start, MPWMD’s General Manager Dave Stoldt says they  would hire consultants to conduct a study and hold public hearings.  He says the study would assess financial feasibility. 

“If it showed that it was going to make water twice as expensive, you know, I can't imagine our board going for that. That's not feasible, if you will. If it showed that rates might go down or might not go up as rapidly, then that gives us, our board, food for thought,” says Stoldt.

The Board of the Monterey Peninsula Water Management District would have the final say on whether to move forward with the buyout.  The cost would be funded by bonds and paid back by water customers.

“We’ll be knocking on doors and making phone calls and doing everything we can to push people to the polls up until 8 o’clock (Tuesday),” says Paul Higgins, the No on J Campaign Manager.

Higgins successfully defeated the last public water takeover attempt back in 2014.  Now, he’s back to fight Measure J.  Sitting down in his office, he turns to a familiar line from the campaign materials.

“It's money down the drain because we're talking about the public purchasing a water system that’s already delivering,” says Higgins.

Cal Am is not for sale, so Higgins predicts years of costly litigation.  He also says it’s problematic that voters don’t get to decide what is feasible.

“The Measure J neither states that in the text of it, you know, what feasibility is, nor does it empower the voters here on the Peninsula to ultimately have the final decision on whether or not feasibility is feasible enough to move forward on purchasing a one billion dollar company. It's worth a billion dollars.  That’s what it’s going to cost,” says Higgins.

Last month, Cal Am released an appraisal of its assets in the Monterey area.  Outside consultant MR Valuation put the number at $1.044-billion for everything from the system’s well sites to treatment plants and Cal Am’s yet to be built desalination plant.

“It's a seriously inflated number. And it's meant to do two things. It's meant to be a negotiation strategy, but more than that, it's meant to be a tactic to scare off the public from buying out Cal Am,” says Melodie Chrislock with Public Water Now, the Yes on J Campaign.

Chrislock compares that $1-billion appraisal to other public water buyouts where water systems sold for far less than initially requested. 

Recently in Ojai, a voter initiative led to the buyout of Golden State Water in that community.  According to Richard Hajas who helped push for that initiative, the private water system’s price started at $120-million. It ulitmately old for just over $34-million.

Chrislock says it’s feasible to buy the Cal Am system because the money can already be found in customers’ current water bills.

“It's really dependent on how much we save in corporate taxes and profit every year because that's what has to offset the bonds that would go to purchase Cal Am,” says Chrislock.

As she sees it, a buyout is the only way to get control of the rising water rates.

“A public water system is run at cost. It's run just for repairs and maintenance and you can vote down a water rate increase in a publicly-owned water system. Try that with Cal Am because you have no choice with Cal Am,” says Chrislock.

Measure J needs a majority vote to pass.

Cal Am is one of KAZU’s many business supporters.  Underwriters do not affect our journalism.