The agency seeking to dissolve the Sativa Water Board in Compton will hold a hearing Wednesday in downtown Los Angeles to take public comments before a planned vote on the matter.
The Local Agency Formation Commission hearing is set to begin at 9 a.m. Wednesday at the Kenneth Hahn Hall of Administration.
LAFCO, which reviews and sets boundaries for special districts and municipal service providers like water agencies, has been aiming to disband Sativa for years, based on its lack of financial wherewithal and other problems.
However, recent complaints by residents faced with brown water coming out of taps after Sativa flushed sediment from its pipes may create the momentum needed for a change.
Sativa, which serves roughly 1,600 customers in Willowbrook and Compton, has faced challenges in meeting its mandate since 2005, according to LAFCO Executive Officer Paul Novak. In 2012, a review cited “management inefficiencies, lack of financial strength and failure to follow state requirements regarding independent audits.”
Those weaknesses have become more critical in the face of aging infrastructure requiring $10 million – $15 million in repairs virtually “right away,” Novak said.
LAFCO encountered fierce resistance to its earlier efforts to dissolve Sativa and residents continued to vote for its board, despite reported mismanagement, nepotism and turnover.
“I think that dynamic has changed,” Novak told City News Service.
Public health officials sampled the discolored water and concluded that it posed no health risk, but customers were still reluctant to drink or use it for cooking or bathing, resorting instead to bottled water and calling public officials to complain.
Residents will have a strong voice in the matter, because if 10 percent or more of registered voters or property owners served by Sativa oppose the dissolution plan during a “protest period,” an election will be triggered.
If LAFCO is successful in dissolving Sativa, the problem remains as to what agency will serve customers who pay rates that are “the lowest of any water retailer in the area,” according to Novak.
Sativa customers pay a flat $65 per month fee for unmetered service.
Compton has indicated a willingness to pick up the 30- to 50-odd homes in that city that are served by Sativa, but has not been willing to take on customers in Willowbrook who make up roughly 95 percent of the customer base.
An outside consultant working for LAFCO in 2012 recommended wrapping Sativa’s largely residential service area into the Central Basin Municipal Water District’s jurisdiction.
However, that agency is a water wholesaler without retail customers and has had management problems of its own, leading LAFCO to reject the proposal. In 2015, state auditors said the Central Basin agency was mismanaged to the point of financial instability.
Novak said four private, investor-owned utilities are interested in serving Willowbrook customers, but LAFCO doesn’t have the authority to turn over service to a private entity. It’s possible that the Public Utilities Commission or other state regulators could facilitate that shift.
Three of the four serve adjacent communities and all four would have the ability to structure favorable financing for repairs and spread costs over a broader customer base. That would be key to avoiding a huge, unsustainable shock to Willowbrook residents’ budgets.
The four companies are California American Water, a subsidiary of American Water; Golden State Water Company, a subsidiary of American States Water Company; Liberty Utilities Co., a subsidiary of Canadian company Algonquin Power & Utilities Corp.; and Suburban Water Systems, a subsidiary of SouthWest Water Company.
The first three parent companies are publicly traded and the fourth is owned by institutional investors advised by J.P. Morgan Asset Management.
Sativa’s general manager, Maria Rachelle Garza, has been placed on administrative leave following a report by the Los Angeles Times that the agency hired people to pose as Sativa supporters at a town hall hosted by Rep. Nanette Diaz Barragan, D-San Pedro.
Four Compton residents filed a lawsuit against Sativa and its five board members on Monday, accusing them of failing to provide quality drinking water, misappropriating tax dollars and placing a financial burden on its low-income customers, the newspaper reported.