Tahoe City PUD acquires Lake Forest Water Company
August 27, 2012
TAHOE CITY, Calif. andamp;#8212; The long-standing debate between Lake Forest residents and the embattled owner of the water company who has filled their faucets for many years appears to finally be resolved.The Tahoe City Public Utility District has acquired Lake Forest Water Company for $370,000, the district announced Monday, ending the lengthy eminent domain arbitration process the PUD initiated in late 2010 at the request of homeowners in the small community east of Tahoe City.andamp;#8220;This situation was very unfortunate. TCPUD’s board negotiates fairly and has rarely had to resolve issues with legal action,andamp;#8221; TCPUD Board President Judy Friedman said in a statement. andamp;#8220;In this situation, taxpayers of our district did not have the basic needs of potable water and fire protection … we tried for several years and just couldn’t reach a reasonable resolution with the current owner.andamp;#8221;According to Monday’s announcement from the PUD, an arbitrator upheld the PUD’s purchase offer of $370,000, finding it was the andamp;#8220;fair market value,andamp;#8221; despite LFWC owner Rick Dewante’s request for $2.55 million.andamp;#8220;For years, Lake Forest property owners did not have safe drinking water or fire suppression, and the Lake Forest community suffered because the owner of the water system did not adhere to mandated regulations,andamp;#8221; said Logan Carnell, a Lake Forest property owner, in a prepared statement. andamp;#8220;As property owners we had no control over the situation and would like to thank the Tahoe City PUD for their continuous effort in doing the right thing in helping the Lake Forest community.andamp;#8221;Dewante could not be immediately reached for comment for this story.
Lake Forest Water Company began providing water back in the early 1900s. It grew to serve 118 customers in the small mixed-use neighborhood. It was purchased in 1996 by Rick Dewante for $115,000.Residents who received water from company have been embroiled in a battle with Dewante for roughly a decade. The principal problem, according to previous reports, was arsenic contamination stemming from the Old Mill Well, which was drilled in 2004 and was one of the company’s three water sources.According to a California Department of Public Health inspection report addressed to Dewante on Aug. 25, 2010, water samples taken in early 2007 from the well showed arsenic levels had reached twice the state’s allowed Maximum Contaminant Level. It was at that time that 72 percent of the company’s customers petitioned the TCPUD Board of Directors to acquire the system, according to the district.In November 2010, Ronald Owens, public affairs officer with the health department, confirmed Dewante had not conducted appropriate follow-up monitoring and was out of compliance with state standards. Thus, Lake Forest property owners began to petition TCPUD to exercise eminent domain and execute a public takeover of the company andamp;#8212; which the district subsequently did, eventually leading to a Dec. 2, 2010, decision from Placer County Judge Margaret Wells to award control of the company to TCPUD.In a Nov. 16, 2010, Sierra Sun story, Dewante said TCPUD’s lack of cooperation and its use of andamp;#8220;propagandaandamp;#8221; caused undue outrage among Lake Forest property owners and residents. andamp;#8220;The TCPUD has a financial and political interest in taking over LFWC,andamp;#8221; he said.Dewante further said policies set by TCPUD have essentially forced his hand regarding water sources and supply.Despite the claims, the PUD has maintained it’s extended numerous courtesies to Dewante in hopes of resolving the issue without taking legal action and drawing out the process. PUD officials eventually retained an independent water system expert to appraise the company, who established $370,000 as fair market value. Dewante repeatedly rejected the PUD’s $370,000 offer, according to the district.
The arbitration process was held in May of this year, and the arbitrator released his findings on July 3, 2012. Final court documents are being filed this week, according to the district.The water system in Lake Forest currently is being completely rebuilt at no additional cost to TCPUD existing ratepayers. The majority of costs for the project are funded by grants from the California Department of Public Health’s Proposition 50, from Placer County Redevelopment Agency and from CDPH’s Safe Drinking Water State Revolving Fund, according to the district.The balance will be funded from a special capital reserve account the TCPUD Board set aside that covers taxpayers who have paid into the TCPUD system but don’t currently receive water from TCPUD.andamp;#8220;We couldn’t have done this without the extraordinary financial support of the State and Placer County,andamp;#8221; said Lou Reinkens, vice president of the TCPUD, in a statement. andamp;#8220;Our Board is united in the importance of helping all of our taxpayers find solutions to their health and safety needs.andamp;#8221;