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    24.    
City Council Regular
Meeting Date: 02/14/2017  

SUBJECT:
STOCK SHARE PURCHASE, SAN ANTONIO WATER COMPANY
RECOMMENDATION:
  1. Approve a budget appropriation increase of $60,000 from Water Utility Fund Retained Earnings for the purchase of San Antonio Water Company stock shares.
     
  2. Authorize the purchase of four quarter (1/4) shares of San Antonio Water Company stock at a total cost of $60,000.
BACKGROUND/ANALYSIS:
The San Antonio Water Company (SAWCO), located in Upland, California, is a historically established Mutual Water Company incorporated on October 25, 1882. There are 6,389 shares issued to shareholders including the City of Upland, Monte Vista Water District, the City of Ontario, and over 1,000 residents of San Antonio Heights. SAWCO has consistently provided water service to its active shareholders for over 130 years. Shares are not readily available and may be purchased from individual stock holders when available. The water from SAWCO is provided only through ownership of stock shares. 
 
One share of SAWCO stock entitles the owner to 2.594 acre feet (AF) of water annually at a tier 1 rate of $209 per AF. This can be delivered as “wet” water or paper transfer. For the City of Chino Hills, SAWCO Chino Basin water rights could be transferred into the City’s storage account. Additionally, if excess water is available from SAWCO above the 2.594 AF entitlements, the tier 2 rate of $492 per AF is applied which may be a viable option for purchase when compared to other sources. The water from SAWCO is significantly reduced in comparison with the City's other supply sources. While 2.594 AF of water may not provide a significant financial savings, the availability to purchase tier 2 water could provide savings of $300 or more per acre foot.
 
A full SAWCO share is difficult to acquire but quarter (¼) shares are more easily procured at $15,000 each.  The City has the opportunity to purchase four 1/4 shares which would provide a full share in SAWCO.Though the share purchase price is costly, the benefit of an additional source to the City’s water portfolio, with the option to transfer rights and purchase additional water at lower rates, is an investment that will always yield a return back to the City.
ENVIRONMENTAL (CEQA) REVIEW:
This action is not a project within the meaning of the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq., "CEQA") and CEQA Guidelines (Title 14 California Code of Regulations §§ 15000, et seq.) Section 15378 and is therefore exempt.
FISCAL IMPACT:

The purchase of stock shares will decrease the Water Utility Fund reserves by $60,000.

 

REVIEWED BY OTHERS:
This item has been reviewed by the City Attorney and the Finance Department.

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