We discover Crestview’s revised budget for Well #8 is delusional and that the website description of the Calleguas contract for Well #8 is materially false.
Crestview’s revised budget for Well #8 omits major cost items.
Crestview has presented this grossly inadequate budget to the Department of Water Resources in a grant application (which was denied):
Compare the $295,950 for “Planning / Design / Engineering / Environmental Documentation with the $800,000 spent for these items for Well #7 for which the key permit was denied. There is nothing in this budget for mitigating neighborhood impacts, which would be on the order of $2 million. How could any reasonable person expect success with Well #8 following the same game plan as they did with Well #7 and to do it for $500,000 less money?
The obvious answer is that our board is not populated by reasonable persons.
The Crestview website materially misstates the terms of the onerous contract with Calleguas
The Crestview website description of Well #8 erroneously states:
Per the terms of the contract, Calleguas will reimburse Crestview for the cost to design, acquire right-of-way, permit, construct, own, operate, maintain and repair of the Well #8 facility and piping subject to a total cost cap of $2.1 million provided the project is completed within 5-years from date of contract signing.
We can forgive them for not yet updating this to reflect the recent amendment raising the cost cap to $3.3 million and the deadline to 6 years, but the contract does not require Calleguas to reimburse costs to “own, operate, maintain and repair” the well or any cost related to piping or removal and replacement. These are potentially huge costs. Here is the actual language of the two relevant contract sections:
Section 1.2.a. Crestview shall design, acquire all necessary right-of-way, obtain all necessary permits, construct, own, operate, maintain, repair, and, if necessary, remove and replace Well 8, pipe connecting Well 8 to the Crestview System, and associated facilities (Well 8 Facilities”).
. . . .
Section 2.4.a. Calleguas shall reimburse Crestview for design, right-of-way acquisition, permitting, and construction of the Well 8 Facilities.
Comparing the two, the bolded type in Section 1.2.a lists things Crestview is required to do but that will not be reimbursed by Calleguas.
Does anybody read these contracts before they sign. Does our board not understand what they have agreed to? Are they trying to mislead us? Should any shareholder believe anything the board tells us without first double-checking?
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