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REPORT: Public takeover of Cal Am system “feasible”

A newly released report finds that a public takeover of the California American Water System on the Monterey Peninsula “appears to be economically feasible.”

The report was put together by Raftelis Financial Consultants and released exactly one year after residents voted for Measure J – requiring the Monterey Peninsula Water Management District to, if feasible, explore and secure Cal Am’s assets and services in the district’s boundary.

The report was revealed in the agenda for next week’s MPWMD board meeting. The district broke down the findings from Raftelis as follows:

“• The water system total value estimate plus adjustments is approximately $513 million.

• The cost of service modeling results indicate that significant annual reductions in revenue requirements and projected monthly water bills.

• Based on the information and estimates summarized in the report, which are reasonable considering the currently available information, the acquisition of the Monterey Water System by MPWMD appears to be economically feasible.”

Cal Am is playing down the report. Spokesperson Catherine Stedman tells KION Wednesday that “this is a hypothetical exercise since we are not for sale and do not thing the District has a right to condemn us.” Stedman also says that the $513 million value placed on Cal Am’s local assets is “off by a huge amount.”

Timeline given to KION from the MPWMD:

Next Tuesday – the feasibility report will be introduced and discussed. The public is able to ask questions and raise issues.

Nov. 18th board meting – Discuss additional work needed to make a formal decision to acquire the Cal Am system next summer.

December – Discuss budget for additional work to move forward with purchasing the system.

This is all contingent on the Board thinking the information surrounding the “feasibility” is compelling enough to move forward with an offer.

The district’s investment banker, Barclays, concludes that “the District is able to finance the proposed purchase of the System based on comparisons with financing structures and coverage margins for similar water systems,” based on accurate findings from the report.

The Monterey Peninsula Water Management district serves a population of approximately 99,794. The larger locations in their main service area include “Carmel-by-the-Sea, Del Rey Oaks, Monterey, Pacific Grove, Sand City, and Seaside, and the unincorporated areas of Carmel Highlands, Carmel Valley and Pebble Beach.”

This is a developing story.

Read the report:

Article Topic Follows: Monterey County

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