California-American Water Co. tried and failed to short-circuit the eminent domain process under which San Lorenzo Valley Water District is moving to acquire Cal-Am’s Felton water system.

Judge Paul Burdick denied Cal-Am’s “summary judgment” motion in Santa Cruz County Superior Court on Friday, Jan. 18. Company lawyers had asked for an early ruling in the company’s favor, arguing that the district illegally excluded the company’s Felton water treatment plant from its appraisal of the system’s value.

The judge also scheduled the trial to start March 17, a month later than originally slated, because he will be out of the country in February.

An eminent-domain trial has two phases. The first is the “right to take” phase, in which the district’s authority to acquire the system is determined. The second phase, in which the fair market value of the system is set, is scheduled to begin June 2.

The district’s attorney, Jeffrey Oderman, said the plant was covered by the appraisal, but it was not included in the system’s valuation, because it can’t generate any profit.

The plant was built with a state bond fund loan that is paid back through a surcharge on customers’ water bills, court papers show. Because the company did not invest any money in it, the state Public Utilities Commission doesn’t permit Cal-Am to claim the plant in the rate base on which its standard charges are based.

After the appraisal in 2006, the district made a $7.6 million offer to buy the Felton system.
At the time, Cal-Am objected to the appraiser’s decision to exclude the treatment plant, company attorney Jeffrey Conner told the judge. Conner maintained that the district’s explanation was insufficient and constituted a violation of a state law requiring the district to explain how it arrived at the valuation.

While they argued privately, the company’s public stance was simply that the system wasn’t for sale.

When a sale couldn’t be negotiated, the district filed to condemn the system. The purchase would be paid with part of an $11 million bond issue authorized in 2005 by Felton voters unhappy with the company.

To comment on this story, e-mail editor Chuck Anderson at chuck.anderson@pressbanner.com