TAHOE CITY, Calif. and#8212; After assuming control of a derelict water district serving about 117 parcels in Lake Forest, the Tahoe City Public Utility District is making significant infrastructure investments.

The district was awarded Lake Forest Water Company on Dec. 2, 2010, after Placer County Judge Margaret Wells ruled owner Rick Dewante was operating a substandard district and subjecting customers to unsafe drinking water.

Soon after assuming possession in January 2011, the district began a two-phase construction project that should conclude in the fall of 2012.

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and#8220;The entire system is a problem,and#8221; said Kelli Twomey, TCPUD spokeswoman, during a recent interview. and#8220;Thereand#8217;s no temporary fix; it needs complete reconstruction.and#8221;

In January, the district installed a second interconnection between TCPUD and Lake Forest pipelines to ensure customers receive water that 100 percent complies with state and federal standards, Twomey said.

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Construction on a 10-inch diameter water main along Lake Forest Road began in August, with the purpose of improving water transmission. Work should conclude this fall, Twomey said.

Phase 2 gets under way next summer, consisting of replacing all water mains in the water companyand#8217;s residential neighborhoods.

Estimated project cost is $3.7 million, Twomey said, coming via a $2 million grant from the California Department of Public Healthand#8217;s Proposition 50 funding, $400,000 from Placer County Redevelopment Agency and the remainder covered by the public health departmentand#8217;s Safe Drinking Water State Revolving Fund.

Hurdles remain in TCPUD assuming full control of company, Twomey said, as a Placer County court must decide on a fair market value its cost and how TCPUD will compensate Dewante.

However, because the funds have been withdrawn from the state due to matters of public health, improvements to the district will move forward regardless of impending court decisions, Twomey said.

Residents who received water from Lake Forest Water Company have been embroiled in a battle with Dewante for years.

The principal problem, according to previous reports, was arsenic contamination stemming from the Old Mill Well, which was drilled in 2004 and is one of the companyand#8217;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 stateand#8217;s allowed Maximum Contaminant Level.

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 and#8212; which the district subsequently did, eventually leading to Judge Wellsand#8217; decision late last year.

In a Nov. 16, 2010, Sierra Sun story, Dewante said TCPUDand#8217;s lack of cooperation and its use of and#8220;propagandaand#8221; caused undue outrage among Lake Forest property owners and residents.

and#8220;The TCPUD has a financial and political interest in taking over LFWC,and#8221; he said.

Dewante further said policies set by TCPUD have essentially forced his hand regarding water sources and supply.

Dan Wilkins, TCPUD board president, has said the district attempted to work with Dewante, but he refused to agree to stipulations regarding water quality.