Shareholder meeting ends without a vote
East Palo Alto, California – Oct. 7, 2017 – The Palo Alto Park Mutual Water Company (PAPMWC) shareholder meeting held on Sept. 23 ended without a planned vote for the board of directors. Palo Alto Park is an old East Palo Alto neighborhood whose drinking water is supplied by the PAPMWC. After a meeting that lasted 6 hours, the incumbent board attempted to call for a vote, but would only allow the shareholders to vote on 2 of the 5 open seats on the board. Challengers from Neighbors for Better Water, a coalition of concerned homeowners, blocked the vote, stating that such a vote would be a violation of state law and the company’s bylaws. The president of the board, Mr. Fidel Alas, then proceeded to other business, and adjourned the meeting soon afterwards. At stake is the future of water service for over 680 homes in East Palo Alto, and is another example of East Palo Alto’s water woes.
PAPMWC is one of over 2000 mutual water companies in the state of California. These companies are private corporations, whose shareholders are the property owners in the district. As private corporations, they do not have the government oversight that most utilities have. The State Water Resources Control Board (State Water Board) does have the ability to inspect the operations and review the water quality reports these companies produce, but they have little ability to force mutual water companies to fix identified problems. After a recent E-Coli scare in Butte City, the Board asked a judge to appoint a court-appointed receiver to run the mutual water company there , but the judge denied the request, instead insisting that the water company remain under local control.
In 1924, a real estate company subdivided the area and the first four property owners formed the PAPMWC. Its water comes from a number of wells that tap deep aquifers underground, and it stores some of the water in a large tank at the corner of Addison Avenue and Garden Street. A similar company, called the O’Connor Tract Water Company, was started at the same time, and serves about 300 homes in East Palo Alto and Menlo Park. After a number of recent pump failures and water quality citations from the State Water Board, many local residents have become concerned that the current management, which has been in place over 20 years, is unable to adequately maintain and operate the company.
“Based on recent neighborhood canvassing, our estimate is that 90% of area residents do not drink or cook with the water”, said Norm Picker, one of the challengers for the board of directors. “The water tastes horrible due to high levels of iron and manganese. Also, lots of sand is seen in the water periodically due to routine semi-monthly distribution line flushing and frequent unplanned and unannounced system shutoffs. The result? Residents spend hundreds and even thousands of dollars to purchase bottled water or in-home filtration systems. Additionally, the water is very hard and corrosive, damaging fixtures and leaving calcium deposits on shower walls and drains. Iron and manganese are not hazardous to most individuals but are regulated as secondary drinking water standards. The secondary standards are related to taste, odor and appearance. ”. On June 5, 2016, the State Water Board cited the water company for violating the iron level, and demanded that within 30 days the water company create milestones and a timeline to install an iron and manganese removal treatment system. According to the State Water Board, the company has so far not complied with this order.
Other resident’s concerns include frequent unannounced system shutoffs and losses of pressure. In 2016, the Menlo Park Fire District sent a letter to the city warning them of a potential disaster when the PAPMWC was unable to guarantee pressure to the fire hydrants in the area on the 4th of July due to a pump failure. Every July 4th, there is widespread use of powerful illegal fireworks in the Palo Alto Park area.
In response to these concerns, area residents have banded together and created a neighborhood association, Neighbors for Better Water, collecting shareholder proxies in an attempt to unseat the current board or directors. Shannon Pekary, a coalition member, explains, “City, county and state officials have all told us the same thing, that only the shareholders can fix this. Well, we tried, but we were denied a fair vote. Unfortunately, it looks like our only recourse is the civil courts, which are very expensive.” According to their Facebook page, Neighbors for Better Water is actively searching for pro-bono legal representation. They are also urging area residents to continue to sign and send in proxies to help them in their legal battle.
So far, the Palo Alto Park board has not set a date for a follow-up shareholder meeting.