FOR IMMEDIATE RELEASE
Press Release Date: February 27, 2015
Contact: Tiffany Cribbs, Communications Specialist
Phone: 951-244-6841, ext. 217
Subject: CLPOA Seeks Return Of Illegal Tax From EVMWD
Canyon Lake, CA – On February 18, 2015, Canyon Lake Property Owners Association (“CLPOA”) notified Elsinore Valley Municipal Water District (“EVMWD”) that it was making a claim for the return of $6,231,134 plus interest at the legal rate. In 2010, the voters of the State of California passed Proposition 26 which made the charges imposed by EVMWD an illegal tax. Proposition 26 amended the California Constitution to add Article 13C.
EVMWD Board President, Phil Williams indicated that EVMWD had made an offer to CLPOA and was awaiting a response. He termed this as being in “negotiations” with CLPOA.
While EVMWD may believe that it was negotiating, from the perspective of CLPOA, EVMWD was not. CLPOA Board President Dave Eilers said, “EVMWD was dictating the terms of the agreement and coupling it with an extension for an additional 44 years, taking the term to December 31, 2066. Given an 8% compounded increase per year, the total amount spent on the lease over the 50 years would be over $833,000,000. Even at an increase of 5%, the total cost to the members of Canyon Lake would exceed $300,000,000, over the 50 years of the lease. Under the current rate and scheduled increases, the cost per year will exceed $3,000,000 in less than 10 years and over $6,700,000 in less than 20 years. It is not possible for CLPOA to continue to pay this amount of money to EVMWD given the minimum cost that EMVWD incurs as a result of CLPOA’s use of the lake.”
EVMWD’s total cost to maintain the lake, according to EVMWD’s own public records is less than $20,000 per year. Even if we were to assume that they too will increase at 8% per year, the total in 10 years would be just over $43,000 compared to an annual charge of over $3,000,000. This could be the single largest tax levy in the state of California!
In addition, EVMWD added an Indemnity clause that spans 3 pages of the proposed Amendment that it offered. This Indemnity clause is overly broad and overreaching to the point that CLPOA cannot obtain any type of insurance to even begin to cover the potential responsibilities that this clause alone creates.
When asked in a meeting to discuss the proposed Amendment to the Lake Lease, EVMWD’s response was basically take it or leave it. EVMWD would not agree to a reduced base. EVMWD would not agree to modify or delete the indemnity provision. They told us that we could take it or leave it. Assuming an average CPI increase of 5% per year, CLPOA would still be paying well over $2.3 million per year in less than 10 years and more than $3.8 million per year in 20 years!
Eilers pointed out that “in prior years, CLPOA has pleaded with EVMWD to explain why CLPOA should be paying close to $1.5 each year (escalating about 8% per year compounded). EVMWD represented that it would prepare an education series to the membership of CLPOA. This education series never materialized. CLPOA asked EVMWD to justify the charges yet the only thing that CLPOA got was an extension agreement that seals the minimum cost to $1,455,000 escalating upwards at a compound rate.”
In addition, EVMWD does not agree to even maintain the levels of water of the lake at levels that make it viable for recreational use. If EVMWD fails to maintain the water levels (for more than 10 days), it is penalized only 1/365 of the annual charge imposed to CLPOA for each day that the lake is not maintained at 1372.
Coupled with the Indemnity clause demanded by EVMWD, CLPOA would face the potential of losses to its members should EVMWD fail to maintain the lake level at 1375 as is currently agreed by a “Gentlemen’s Agreement.” Unfortunately, EVMWD does not believe that such an agreement exists. Under the indemnity agreement, if a homeowner were to sue EVMWD, CLPOA would be responsible. EVMWD essentially insulates itself from any liability related to the lake while taking in annual payment imposed upon CLPOA in the millions of dollars per year.
To make matters worse, EVMWD is not allowing its full Board to be involved in the negotiations. Last year, before his term expired, EVMWD counsel informed long time EVMWD Board Member Ben Wicke that he could not participate in any discussions related to Canyon Lake’s use of the Lake. Given that Mr. Wicke’s term was about to expire and he was not seeking reelection, no issue was made as there was nothing yet to discuss.
In November, 2014, the voters of the District, elected two new members to its Board of Directors. One of these members lives in Canyon Lake and ran to be on the Board specifically to be involved in these discussions. That board member is former Mayor of Canyon Lake, Nancy Horton. Upon Nancy Horton’s election to the Board, she was immediately cast aside by EMVWD and told that she could not participate in anything related to Canyon Lake. In addition, we understand that the other newly elected member was also told that he could not participate in any discussions regarding the lake.
If EVMWD wants to negotiate, then why are they removing 2 of the 5 directors that serve the District? It seems that EVMWD wants to ensure that it has 3 board members who want nothing but the status quo and no changes to the fees that it imposes upon the members of Canyon Lake. EVMWD is intentionally trying to stack its board with unequal representation of the members of the District. Why?
While Mr. Williams is correct that in a past lawsuit, the Association did not fare well, times have changed. Armed with the California Constitution (which did not affect the prior litigation), the Association now has the ability to stop the unnecessary imposition of taxes by EVMWD.
This lease was never intended by the original developers of Canyon Lake to be a profit center for the owner of the lake. Rather, the lake was simply a reservoir that could be used to keep water that was then used to water orange fields. The water while being kept in the reservoir was deemed suitable to build a community around that centered upon boating and other water recreation.
In 1989 EVMWD became the beneficiary of the reservoir by Eminent Domain. The same rules that allowed the government to take this property into the hands of the public now govern EVMWD. Proposition 26/Article 13C of the California Constitution prohibits what EVMWD is doing.
Eilers said that “CLPOA’s Board of Directors goal is to have one of the following happen: (1) A Judge can decide if the amount charged violates the California Constitution; or (2) EVMWD can negotiate on an even field with CLPOA for a fair rate that is not going to burden the members of CLPOA nor benefit EVMWD’s balance sheet by well over $1,800,000 per year.”
Eilers also said that “when EVMWD wants to come to the table to negotiate, CLPOA is ready, willing and able. If EVMWD wishes to send a take it or leave it modification, then this action will continue.”
About Canyon Lake Property Owners Association
The Canyon Lake Property Owners Association (the Association), incorporated in 1968, as a California nonprofit corporation, is responsible for the operation and maintenance of the common areas within Canyon Lake. The purpose of the Association is to promote the recreation, benefit and enjoyment of the homeowners within the community. The Association’s mission is to support the Canyon Lake community with exceptional services and solutions, which make this a premier place in which to live and work. For more information about the Association, visit www.canyonlakepoa.com or call 951-244-6841.
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