The board’s failure to budget for eminent domain costs is financial mismanagement that continues to risk Crestview’s solvency.

Crestview threatened several times to big-foot Well #7 into being by using its power of “eminent domain” or “condemnation.”  However, it never acknowledged that when a water utility takes private land for a public purpose it has to pay fair value.  Those compensation costs would have made the company insolvent if the Board of Supervisors had not denied the permit.

There are two condemnation procedures, regular and inverse.  In a regular condemnation proceeding, the utility tells the landowner what it wants and tries to negotiate a price.  If there is no agreement, the utility sues to have the fair value of what is to be taken determined by a jury, and the court forces the sale.  In “inverse condemnation” the utility has already taken private property, and the owner sues to have a jury determine the value, which the utility pays—and also reimburses the landowner’s legal fees and costs.

Well #7 would have converted up to 30 private septic systems into “non-conforming uses.”  No owner within 600 feet of the well could have replaced a seepage pit without going through a more onerous permitting procedure that might require an “advanced treatment unit” costing about $97,480 and paying a professional about $3,500 per year for maintenance, sampling, analysis, and reporting.  (Based on evidence presented in the VCBoS hearing, page 44.)  A local real estate professional said that would reduce the market value of each property by about $100,000 ($3 million for all).  Add the plaintiff’s legal fees and costs to that, and the escalating $4 million budget for Well #7 (for which it did not have enough cash) would have easily become $8 million (which would have made our company insolvent).

Despite having received a shareholder letter explaining all this, the Crestview board approved an amendment to the Calleguas contract for Well #8 that leaves Crestview responsible for all of the unbudgeted condemnation costs and legal expenses–plus all other cost overruns.  Is this not another epic blunder by our current board?

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