December 2, 2008
To: Sierra Lakes County Water District Board of Directors
Re: Possible Condemnation/Acquisition of Lakes Serena and Dulzura, Green Belt, and Dam Parcels in Eminent Domain.
The following "10 Reasons SLCWD Should Acquire the Lakes in Eminent Domain" were originally written for posting on Serene Lakes Property Owner's Association Forum. As they were written for general community readership they are sometimes somewhat lighthearted, and they are by no means exhaustive. Matters which were nuanced or arcane were not touched upon; such matters would be more appropriately explored with SLCWD's legal counsel.
The subject matter covered by the postings is serious, and the issues involved are complex and layered. Of all the issues, I think the most compelling is the following:
Royal Gorge LLC, as titular owner of the lake and dam parcels that may be subject to the exercise of eminent domain, is confronted by inherent conflicts in managing the lake and dam. Because of pressures to maximize their profits, to satisfy their investors,and to provide water to the large development they are proposing to build on Donner Summit, they may be torn between acting in a manner that takes into account the many factors SLCWD considers in managing water supplies, and acting in a manner that satisfies other competing considerations. While they certainly have longstanding duties to the lakes, and water supply, there is a danger those duties may play "second fiddle" to their other interests.
SLCWD, on the other hand, is a duly elected public board with the specific responsibility of managing our water, and protecting our resources. They stand in a position of trust with the entire community, and are the one body uniquely able to ensure Serene Lakes, as a water supply, and as lakes with recreational, aesthetic, and wildlife values, are protected for all constituents.
Hence, I would urge the board to seriously consider the many reasons that necessitate either the purchase of the lakes and other parcels for fair market value, or, alternatively, condemnation in eminent domain.
Thank you for you consideration.
Sincerely,
Kathryn Gray
TEN REASONS SLCWD SHOULD ACQUIRE THE LAKES IN EMINENT DOMAIN
REASON #1 WHY SLCWD SHOULD PURCHASE, OR IF ROYAL GORGE LLC REFUSES TO SELL, CONDEMN THE SERENE LAKES/DAM PARCELS FOR FAIR MARKET VALUE AS PERMITTED UNDER CALIFORNIA LAW
If Royal Gorge LLC, or a subsequent owner licenses/makes agreements to let SLCWD do various things concerning the lake (like maintaining the dam, etc.), but then goes into bankruptcy*, those agreements may not hold water. They're going to be back on the table in a bankruptcy court room, and SLCWD is going to have to spend lots of time, money, and hassle keeping their agreement alive. Read up on the Pacific Lumber bankruptcy case, and the issues with agreements they'd made to protect the environment, and you'll see this could be a real problem if SLCWD were to be embroiled in something like this.
In a economy like we have today, anything can happen, and SLCWD should only have to be concerned with providing safe and clean water, and maintaining the lake- not extraneous issues such as the financial viability of their licensor, the owner of the lake, shore and dam. SLCWD should own the lake, shore, and dam free and clear of potential legal hassles.
*This is not to suggest Royal Gorge LLC, or their bank, etc. is involved in bankruptcy, and is not suggesting that they are currently selling the lake, greenbelt, and dam.
REASON #2 NOW RATHER THAN LATER--ACQUIRING SERENE LAKES SOON IN EMINENT DOMAIN IS MORE PRUDENT THAN WAITING TO ACQUIRE THE LAKES LATER
In this week's news the Big 3 automakers are looking at dire prospects, and having to discuss why Chapter 11 bankruptcy (reorganization) proceedings aren't attractive (it would put off customers, they say!). Meanwhile, there's talk that Chinese interests may buy American auto making, lock, stock and barrel--not a nice thought for those of us who like our cars "made in America."
Add in the almost weekly reports of developers in Northern California going bankrupt/or properties falling into receivership etc., either because they overreached, the bottom of what looked like a good market fell out, or their money supply dried up because lenders are more cautious, or are themselves going belly-up (Citibank), and it becomes clear that it's not necessarily prudent, or showing good planning and foresight for SLCWD to rely on any constancy of ownership* of the lake parcels SLCWD relies on to carry out operations to ensure the regular, continuous provision of safe, potable water.
If Royal Gorge LLC, or any subsequent owner were to be involved in bankruptcy/receivership/or insolvency, and SLCWD had not acquired the lake bottom parcels already in eminent domain, it would be much more complex and expensive to carry out the eminent domain proceedings during the pendency of those actions. If our aging dam suddenly needed extensive repairs, it would be difficult, within the strictures of those proceedings, to get the necessary permission to fix the dam, and to apportion costs to the actual owner of the dam, who probably would not be able to pay for those needed repairs.**
On the other hand, if SLCWD had already acquired the dam and other lake parcels in eminent domain, there would be no need to expend district funds on extensive legal advice. SLCWD shouldn't have to seek permission from anyone to insure the dam is safe and functional, and certainly shouldn't have to be entangled in legally complex situations in order to carry out their day to day duties.
It would be prudent for SLCWD to acquire the lake and related parcels now, paying just compensation, as required by California law, instead of gambling with the future of our water supply.
*There is no intent to imply Royal Gorge LLC has any commonalities with developers in bankruptcy, reorganization, nor is there any intent to cast any aspersions on their economic model.
**This would be an incredibly complex and messy situation. As Royal Gorge LLC owns the dam, they have the duty to pay for its repairs. What if they, or a subsequent owner refuse, or are financially unable to pay for needed repairs?
REASON #3 SLCWD SHOULD EXERCISE THEIR EMINENT DOMAIN POWERS TO ACQUIRE THE LAKE TO PREVENT HISTORY FROM REPEATING ITSELF.
Many, many years ago the relationship between a young SLCWD, and the Sierra Lakes Club, who owned the lake, was confused and ugly. SLCWD had state granted rights to the water in the lakes, but the Sierra Lakes Club, who would be analogous to Royal Gorge LLC today in terms of ownership of the lake, greenbelt, and dam, sued SLCWD, saying since they owned the lakes, the water was theirs, not SLCWD's and their customers.
They got bounced out of court pretty quickly on that claim, and SLCWD kept their water rights. However, this is no guarantee that variations on that claim would be dismissed so quickly today. Have you ever noticed that it seems like folks who have a large budget for lawyers can improve their chances of prevailing on claims just by outgunning those who don't have a lot of economic clout? Also, did it ever strike you that sometimes just the mere hint of a threat of a claim/lawsuit might influence decision makers in such a way that they might give undue weight to the interests of those who might sue them?
SLCWD shouldn't have to worry about the possibility of Royal Gorge LLC, or any successor owner* of the lake, greenbelt, and dam asserting that the water is theirs to do with as they please. While SLCWD would most likely win, there are no certainties, and at a minimum, fighting such a claim would be costly and time consuming, and would distract SLCWD from their core duty of maintaining and providing clean and safe water to all their customers.
SLCWD should exercise their eminent domain powers to protect against any owner of the lake asserting competing claims to water rights. History shouldn't be allowed to repeat itself.
*No implications as to whether Royal Gorge LLC might be involved in negotiations/situations which would transfer ownership of the lake to another entity are intended.
REASON #4 SLCWD NEEDS TO ACQUIRE THE SERENE LAKES IN EMINENT DOMAIN TO PREVENT ROYAL GORGE LOSING THEM IN A POKER GAME*
*This is not to imply Royal Gorge is actually betting our lakes in a poker game.
Seriously, should Royal Gorge find a willing buyer, say, for example a large firm buying up lakes, springs, and other wet things with possible water rights (See Why Big Banks May Be Trying to Buy up Your Public Water System http:// www.alternet.org/story/105083m ), they could sell the lake, the greenbelt, and the dam.
Is this likely? Probably not. The lakes are probably worth more to them as a wedge issue than what small sum, if any they could get out of anyone else. However, if they did sell the lakes, SLCWD would have yet another hassle to deal with--an absentee lake landlord.
Then again, maybe losing the lakes in a game of cards isn't so far-fetched......
REASON #5 SLCWD NEEDS TO OWN THE DAM TO KEEP ROYAL GORGE FROM STICKING BITS OF PLYWOOD ATOP IT TO RAISE THE WATER LEVEL*
Silly as this sounds, a long time ago baffles were place on top of the dam to raise the lake level. The Department of Dam Safety was not amused, and ordered them removed.
Some jokes just don't die, though. Royal Gorge had proposed raising the dam level in their water supply alternatives study (they called it lake level management), despite the fact it would flood the greenbelt, and other private property for an extended period of time, possibly killing trees, and damaging landscaping and foundations.
Homeowners who don't want to step out their backdoor into the lake will certainly object, but can SLCWD? After all, Royal Gorge owns much of the greenbelt, which most of you probably thought belonged to everybody, or to SLCWD. ( I did too). SLCWD can and should object, especially if prolonged inundation of the greenbelt will harm it as a filter, and increase erosion and sedimentation, threatening the safety of our water supply.
However, if Royal Gorge doesn't listen to the objections**, and stubbornly keeps the lake level high, then SLCWD will have to hire lawyers, file suit, and spend a lot of time in court to force Royal Gorge to allow the lake go back to its more natural level.
Isn't Eminent Domain starting to sound like a really good idea?
* Perhaps they'd use inflatable Avon dinghies, all firmly lashed together
** This should not be taken as an assertion that Royal Gorge blows off the water board, or the locals. Really--they assure us they have our best interests at heart--that's why they have a couple of water lawyers attend SLCWD's meeting whenever they think SLCWD might pass an ordinance that...well, actually any ordinance......
REASON #6 SLCWD SHOULD ACQUIRE THE LAKES TO PREVENT ROYAL GORGE FROM STICKING THEM WITH BITS OF UNWANTED BILLS
Quite a few water board meetings have involved Mike Livak, of Royal Gorge LLC (politely) wrangling with the water board over payment for various studies concerning the lakes which, although Royal Gorge initially said they'd pay for, afterwards they inexplicably got a little pinchy with the pennies. This produced one of those awkward situations analogous to a group of friends going out to dinner, with one person putting away a bottle of Dom Perignon, and then expecting everybody to divvy up the bill equally.....
The duties and responsibilities of SLCWD and Royal Gorge towards maintenance of the lakes, the greenbelt, and the dam, are to put it charitably, somewhat intermingled, maybe even confused. What's to prevent Royal Gorge from tinkering with the dam, and then presenting SLCWD after the fact with a big fat bill, claiming that the bill, or at least a portion thereof was SLCWD's responsibility? Even if some dam tinkering was needed, what if Royal Gorge does a champagne level job, when SLCWD might have had it done perfectly well on a beer budget?
SLCWD should acquire the lake in eminent domain so it can budget appropriately for maintenance and repairs, and not find itself having to argue over bills from Royal Gorge LLC or any subsequent owner for services it did not contract for.
REASON #7 SLCWD SHOULD OBTAIN FULL RECORD OWNERSHIP OF THE LAKE BY EMINENT DOMAIN IN ORDER TO PROTECT ITS VERY EXISTENCE
Ten years ago there was serious talk about merging DSPUD and SLCWD. http://www.sierrasun.com/article/19981231/NEWS/112313186&parentprofile=search At the time, Serene Lakes homeowners were fighting to stay out of a sphere of influence encompassing both districts at Donner Summit, fearing that was the first step in annexation to DSPUD.
Homeowners, and SLCWD should be aware that the risk of annexation to DSPUD, and subsequent cessation of SLCWD as an entity(merger and extinguishment) is still very real. In fact, DSPUD recently moved into Placer County's LAFCO*, ostensibly because of issues related to Sugar Bowl representing a large chunk of DSPUD's tax base; this could be a first step towards annexation of SLCWD. Even more recently, DSPUD has sought to exercise their latent special powers, and acquire Placer County park district money for use on the Summit; this despite the fact Placer County voters/SLCWD board will have no control over use of the park funds.
How is this connected to the need for SLCWD to own the lake? Placer County LAFCO, in making an initial assessment whether it would be desirable to pursue a merger of the districts would look at many, many things, including possible overlap of services of the two districts, economies of scale of merging DSPUD and SLCWD, and water rights and assets of each district. DSPUD's water rights in Lake Angela are limited by PG&E's interests, and SLCWD's rights are not perfected; in fact, Mr. LaBel's complaint to the State Water Rights Control Board has caused problems regarding SLCWD's rights to storage vs rights to direct diversion.
It is hard to predict whether or not SLCWD's not being the recorded owner of the Serene Lakes would enter into Placer LAFCO's assessment of whether to pursue annexation; the danger is that LAFCO would decide that DSPUD would be on exactly the same footing as SLCWD regarding Royal Gorge LLC, the apparent owner of the lakes, greenbelt, and dam, and hence there would be no impediment on those grounds to moving towards annexation and merger, with DSPUD the likely survivor, as they own the sewer treatment plant.
Why should we care? Both property owners and registered voters can serve as directors, and can vote to both elect and recall directors of SLCWD, and can petition the board, and initiate referendums. However, in DSPUD, only registered voters, who are basically a very small pool of full time residents can serve on the board, and vote. Whether this is a factor in DSPUD's repeated notices of violation from the Central Valley Regional Water Quality Board, and most recently, the "boil water" order due to nasty stuff, including algae from Lake Angela making it into DSPUD's water supplies is open to question--at any rate, our board and voting structure assure an engaged constituency, have yielded an educated and experienced board, and increase the chances of having a board who is responsive to voter concerns, especially concerns about important issues such as water quality. DSPUD's water quality issues, and the fact that DSPUD would not have the same solicitude for the recreational aspect of our lakes (Lake Angela does not allow recreation) should also underscore the benefit of the continued existence of SLCWD.
If Placer County LAFCO put all this to a vote in the SLCWD district , wouldn't everyone vote against it anyway? Here's where it gets really worrisome. At the last water board director's election, Royal Gorge LLC had been fussing about getting to vote all their parcels; they did not end up getting to do that. However, our district is a strange hybrid of landowners and registered voters voting. Some issues regarding our voting have been settled by California courts, but, as always, there are gray areas. There are some landowner's districts(usually irrigation districts) wherein the landowners vote by variations on numbers of parcels, or acreage. Would anyone be surprised if a large landowner such as Royal Gorge LLC**, who possibly saw some advantage in the extinguishment of a pesky little district such as SLCWD, suddenly felt the need to challenge SLCWD's current voting practices, in order to maximize their vote to consolidate SLCWD and DSPUD?
It would behoove SLCWD to line up all their ducks, in order to continue to represent the historic interests of their customers at Serene Lakes. By doing so, they will protect our right to vote for that which we are taxed upon, and for that which we are charged usage fees. To put this in English plain, they need to carry out Eminent Domain.
*Here, from Placer County's LAFCO page, is a quick description of what they do:
"Each county in the state is required to have a LAFCO. These LAFCOs fulfill their legislative mandate through the consideration and approval or denial of boundary changes proposed by individuals or the local agencies themselves. LAFCOs do not have the power to initiate boundary changes on their own, except (emphasis mine) for proposals involving the dissolution, consolidation, or merger of special districts or the establishment of subsidiary districts."
**This is not to say Royal Gorge LLC is planning on challenging SLCWD's voting structure, despite the fact they've already tried to get to vote all 28 of their parcels. Further, there is absolutely no intent to imply that Royal Gorge LLC would rather do business with DSPUD than with SLCWD......
REASON #8 SLCWD NEEDS TO USE EMINENT DOMAIN TO CONSERVE AND PROTECT THE GREENBELT
The original vision for Serene Lakes included greenbelt all around the lakes, accessible to all property owners. Some lakeside lots even have deeded easements, to ensure access to the greenbelt. There had been the thought that the greenbelt should either be in common ownership, owned by the water district, or subject to easements to protect it.
In reality, most of the greenbelt around the lakes is in private ownership--some lakeside owners' properties extend out to the lake, but, by and large, Royal Gorge LLC acquired the larger part of the greenbelt when they purchased Ice Lakes Lodge and other Summit properties.
Because of the long history of access and use of the greenbelt, SLCWD, and Serene Lakes property owners, particularly lakeside owners could use various juicy legal stratagems to ensure continued access to the greenbelt.* However, Royal Gorge could counter with a flurry of those "No trespass", and "Right to Pass...." signs that have sprung up all over their cross country resort, in an attempt to establish their ownership of the greenbelt.
No matter how many signs Royal Gorge nailed to trees, though, access is pretty much assured. However, if Royal Gorge chooses to do things to the greenbelt, like chop down trees, put a path around most of the lake, make cuts into the banks, or do small dredging projects in an attempt to eke a few more acre feet of storage out, SLCWD would have to ask them pretty politely to stop, and if that didn't work, take them to court, in order to protect our water supply. If SLCWD acquires the lake, dam , and greenbelt in eminent domain, they will have control of, and be able to protect the greenbelt. This will also protect property owners' historic right of access to the greenbelt.
Instead of having to hire a lawyer to complain, SLCWD just needs to exercise eminent domain.
*Don't even ask about docks!
REASON #9 SLCWD NEEDS TO OWN THE BATHTUB WE FLOAT OUR BOATS IN
SLCWD presently has state permits to "use" 1177 acre feet of water a year. One of the things they must do in order to keep those rights is to put that water to "Beneficial Use." Beneficial Use includes providing our homes with water, keeping enough water in the lake to protect the purity of our water supply, and to protect habitat and wildlife, and, I imagine, letting water flow over the dam on Dulzura to nurture and protect downstream habitat and wildlife.* Also, in order to keep those state permits, SLCWD has to have a place to store the water they use.
Let's say Royal Gorge LLC gets some water rights of their own, by purchasing them from someone like PCWA, or San Juan District, or scooping some up if, as expected, the State Water Resources Control Board votes to strip the Auburn Dam of all the water rights they held. One of the basic rules of water rights is "use 'em or lose em'", and the Auburn Dam (thank heavens) has never used those water rights they've been sitting on**.
Royal Gorge LLC would need some place to store that water. Dams (i.e., Van Norden, or down Serena Creek) are time consuming, and uncertain to get permitted, and lately, a Royal Gorge employee had even been heard to say that perhaps East Lake wouldn't be necessary. So where would Royal Gorge put any water they got rights to? Well, they own a perfectly good lake......
Wait, you say, SLCWD has always used that lake to store their water--how can Royal Gorge put their water there too?
Remember that complaint Mr La Bel filed with the state concerning SLCWD's failure to bypass water down to the North Fork American River? It seems the state thought what SLCWD was doing passed muster. However, there was a problem with how the permit was written, as it only allowed for storage, and not direct diversion. SLCWD has always, even at the time the permit was written by the state many, many years ago, practiced direct diversion for some months of the year. It is hoped that the state will rectify the language in the permit.
However, here's the danger. What if the state comes back, and says, "SLCWD, you use 110-145 afy, so we're only going to permit you for 150afy." SLCWD would of course say they need 800afy or so to keep the lake nice, and protect wildlife, and float boats. What if Royal Gorge LLC then sticks their oar in, and says the rest of the balance of what the lake holds is theirs for storage, if they get their own water rights, since they own the actual storage vessel?
We'll all ruefully be humming, "Ship of Fools".*** This would be an absolute full employment act for water rights lawyers, and would cause no end of hassle and expense to SLCWD. By the simple and expedient act of condemning the lakes in eminent domain, SLCWD can make sure it spends its time and effort providing us safe water, and protecting the aesthetic, recreational, and wildlife/habitat aspects of our lake -not wrangling in court.
To keep our water rights (and floaty boats) from going down the drain, SLCWD needs to carry out eminent domain.
*Disclaimer for #9, and for all ten reasons for SLCWD to carry out eminent domain. You may notice this is really, really simplified. To get the full breadth of all the many issues involving eminent domain and our lakes, you'd have to consult a lawyer--maybe two or more lawyers. The thing about consulting lawyers, though, they're expensive, and anything they tell you? Chances are, another lawyer representing a party with interests adverse to yours, will come up with lots of things to weight the scale the other way. End result: lots and lots of money spent on legal advice, lots of contentiousness, and perhaps answers that please no one.
**Of course the North Fork American River may already be so over-appropriated, at least when the needs of the Delta are taken into consideration, that there will be no free rights--funny things can be done with "paper" water rights, though.....
*** http://www.youtube.com/watch?v=WeZozn33SvA&feature=related (copyright trolls and troll helpers permitting)
REASON #10 IT WOULD BE "PENNY-WISE POUND-FOOLISH" FOR SLCWD TO FAIL TO ACQUIRE THE LAKES
It's really a shame that SLCWD, when they had the opportunity years ago, failed to acquire the lakes, greenbelt, and dam. They apparently felt that they could rely on carrying on business as usual, which maybe* wasn't such a good call, since the lakes have now, to some degree, come under the control of Royal Gorge LLC.
Royal Gorge LLC, in their PR of course tells us they'll take care of the lakes, and wouldn't do anything to harm them. However, Royal Gorge LLC, whether they intend to keep their promises or not, has inherent conflicts built into getting and storing the water they need to carry out their development as proposed, and being responsible guardians of the Serene Lakes and their dam and greenbelt.
Royal Gorge LLC has sought investors for their proposed development, and has made assurances regarding water. In their "Wilderness-Edge Community" book, which was presumably disseminated to potential investors, Royal Gorge LLC touted "all the building blocks are in place", and made statements as to the duty of SLCWD to provide them water that are not necessarily supportable. One wonders what material representations, if any, they made regarding the water supply or ownership of the lakes in those materials not made available to anyone not signing a nondisclosure agreement. At any rate, Royal Gorge's desire to pursue a profitable large scale development, and to satisfy the expectations of any investors may not be consistent with doing everything in their power to maintain the Serene Lakes in a way to protect water quality and look after the interests of the entire Serene Lakes community.
SLCWD, on the other hand, is an elected board whose core mission is the provision of clean, adequate water supplies to their constituents. They have obligations to protect fish, wildlife, and habitat, and respect aesthetic and recreational values. They are not driven by any profit motive, and, hence, are dedicated stewards of Serene Lakes. As an elected board, they may be petitioned, and recalled, and the public can bring referendums. We cannot recall Royal Gorge LLC, however tempting that thought might be--and they have very little obligation to give us notice of actions they might take regarding the lakes.**
There are those who might think condemning the lakes in eminent domain might be too expensive. It would, of course, be cheaper if Royal Gorge LLC woke up and smelled the coffee, sooner rather than later, and agreed upon a fair market value price. I'm kind of hoping for world peace for Christmas too. However, as apparently in past discussions representatives of Royal Gorge LLC indicated they wanted to hold onto the lake for "negotiations to do with getting water", using ownership of the lake bottom as some sort of bargaining chip or, in my words, "watermail", it looks like they may try the tried and true developer's tactic of kicking and screaming up to the courtroom door.
As SLCWD's eminent domain action to acquire the lakes they've always used, to hold the water they have permits for, to provide to the general public should be almost something you could order off the shelf due to its exemplary straightforwardness, the kicking and screaming of developers should be given as much credence as one would a three year old threatening to run away forever if one refuses to alow him to run all the water down the bathtub drain.
SLCWD should begin action in eminent domain as soon as practicable. If SLCWD does not acquire the lakes in eminent domain, they run a huge risk of monumental hassles and gargantuan legal expenses, related to some of the issues I've raised. There are many more reasons to carry out eminent domain than those I've listed--a developer who wants water, and who is willing to pay for expert legal advice can have a whole docket of handy, byzantine legal theories ready to throw at a plucky little water board, eventually hoping to wear them down, drip by drip by drip. The water board, thus distracted, may falter from focussing on its core duties, and its objective assessments of that which it must do to responsibly serve all its constituents.
SLCWD should acquire the lakes to avoid legal expenses, distraction, and hassles.
SLCWD should acquire the lakes to protect them, and to protect something that is beyond value, the serenity of Serene Lakes.
*We could leave that "maybe" to the lawyers, but it really would be much more economical not to.
**Except when they really, really do have obligations. More lawyer stuff. Let's not go there.