State Agency Issues 3 New Citations Against PAPMWC

In a string of attention getting citations, the State Water Resources Control Board is calling the leadership of the Palo Alto Park Mutual Water Company to task for gross negligence or incompetence in running our water company and putting us all at risk.

Niambi Lincoln, the new general manager and daughter of the previous general manager Katherine Loudd, made no mention of these citations in the latest newsletter, and appears to be trying to sweep these serious charges under the rug.

Below you will find the full text of the three citations:

Citation 1

Citation 2

Citation 3

Update from Neighbors for Better Water

Dear Property Owner,

As most of you know, we have been working to replace the current management’s board of directorswith homeowners that will manage the Palo Alto Park Mutual Water Company responsibly. Thanks to the many of you who signed our proxies, the San Mateo County Superior Court, at our request, has ordered the company to have a board election. We took this action because current management prevented the shareholders from electing board members at the last shareholder meeting and refused our demand to hold a fair election.

You recently received mailings from the management of the company announcing the shareholder meeting on Tuesday, May 8, 2018, at 10:00 a.m.,and asking you to sign a proxy for them to vote on your behalf to preserve their control of the Company. Many of our neighbors have contacted us with concerns that these mailings were confusing, and that they stated that state funding and resulting customer savings depend on your signing the management’s proxy. Please know, this assertion is NOT true.

A supervisor of the State Water Resources Control Board Division of Drinking Water’s Santa Clara District Office has confirmed that, contrary to what management tells you, the Company is not“in the final stages of obtaining a GRANTfrom the state” to pay for all this long-delayed work.  In fact, NO FUNDShave been awarded for these projects, and the process of getting the grant that management promises could still take another year and a half.  He emphasized that “PAPMWC has not been approved for grant funding,” and that the “statement that they are is premature and possibly wishful thinking.” The company’s lack of maintenance has saddled us all with a 2-million-dollar backlog of undone work and no money to pay for it.

We urge you NOT to sign the management’s proxy, as you will be supporting the people who have created this mess.  Instead, either come to the shareholder meeting and vote yourself, or sign one of our proxies. It’s time for a change.

If you can attend the meeting and vote for change in person, please join us on Tuesday, May 8, at 10:00 a.m.

If you cannot attend the meeting, and you have not given us your proxy already, please join us in voting for change by giving us your proxy.  Download a Proxy sign it and mail it back to us.

Even if you have already signed the company proxy, you can still vote for change by either attending the meeting and voting in person, or signing and returning ourproxy form, making sure that you sign and date the proxy form at least one dayafter the date on which you signed the company proxy.

Neighbors for Better Water


State Agency Says Help For PAPMWC is a Long Way Off

Eric Lacey, the head of the State Water Resources Control Board, had this to say about the water company’s plans for obtaining grant money from the state when I asked him to corroborate the company’s recent statements that they are about to receive a grant.

It’s my understanding that Rural California Assistance Corporation, RCAC, has been contracted to perform the income survey. I’ve heard they are backlogged and  it could take a year to a year and a half to complete the survey.  Only after it is completed will we know what state funding can be made available. 

The Division of Financial Assistance (DFA) has also agreed to perform an income survey for the Palo Alto Park MWC service area.  I’m not sure of the status, but I believe they have, or about to, award the contract to a third party consulting firm.  This is a lengthy process that could take many months to complete.  (The last one I saw completed for a 30 home system took 9 months!)  You’ll know that it is underway when community members get contacted directly about the income survey.  The completion of the income survey and its findings will determine if PAPMWC is qualified for a grant or loan, or a combination of the two.

As a side note, I learned last week that much of the grant funding that was once available has already been earmarked for other projects.  (We’re in that part of the funding cycle.)  At the moment, very little grant funds are currently available for new projects.

So, to answer your question: No, PAPMWC has not been approved for grant funding.  I believe that statement that they are is premature and possibly wishful thinking.

Neighbors for Better Water Files Suit

Neighbors for Better Water Files Suit Against Palo Alto Park Mutual Water Company

Neighborhood group seeks to replace the board of directors of East Palo Alto water company

East Palo Alto, California – March 14, 2018 – A coalition of home-owners have filed suit against the Palo Alto Park Mutual Water Company (Palo Alto Park), which provides water to over 600 homes in East Palo Alto. The group, known as Neighbors for Better Water, is seeking to recall the board of directors and elect a new board. The challengers from Neighbors for Better Water claim that the water company has selected particular residents for unfair treatment and have mismanaged the company.

The suit states that at the annual shareholder meeting in September of 2017, the Palo Alto Park board members would only allow shareholders to vote on two of the five open seats on the board, even though the terms for all five members were expiring. Neighbors for Better Water attempted to amend the agenda to elect five board members, but the president of the board would not allow the change and eventually adjourned the meeting without holding an election.

Palo Alto Park 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. Only the State Water Resources Control Board (SWRCB) has the ability to inspect the operations and safety of the water these companies produce, but the SWRCB has limited enforcement powers.

Palo Alto Park was started in the 1920’s to serve some of the poultry farms of the Ravenswood area that would later become a part of East Palo Alto. Its water comes from wells that tap deep aquifers underground. Since the founding of Palo Alto Park, the 101 freeway was built, passing through the water district, and the farms have become subdivisions serving many more homes and residents than had been originally intended. After a number of recent pump failures and water quality citations from the SWRCB, many local residents have become concerned that the current management, which has been in place over 20 years, is unable to keep up with the demand created by the growth in the area.

“Our rough estimate is that 90% of area residents do not drink the water”, said Norm Picker, one of the challengers for the board of directors. “The water appears to be very hard and is high in iron and manganese, and while these do not necessarily make the water unsafe, it makes residents nervous”. In fact, since January of 2014, the SWRCB has cited Palo Alto Park for elevated levels of iron, manganese and coliform in the water[1].

In response to these concerns, area residents banded together and began collecting shareholder proxies in an attempt to unseat the current board or directors. Shannon Pekary, a representative of Neighbors for Better Water, 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.”

The suit states that shareholder Irene Laudeman, a proxy holder for over 43% of the shares in Palo Alto Park, ordered the company to hold a special shareholder meeting to complete the vote that was supposed to happen in September of 2017. The company did not respond. The suit is asking the court to force the company to have a shareholder meeting to recall the board and complete the vote. The Palo Alto law firm of Mayer-Brown is providing pro-bono legal assistance to the group. A hearing is scheduled for March 28.

Shannon Pekary,
Irene Laudeman,
Neighbors for Better Water,


Water Company Loses Suit Against State of California

This happened back in 2016, but it wasn’t mentioned at the last shareholder meeting.

According to court documents, Palo Alto Park sued the State of California for damage done to the pipes that run under 101 and that serve water to the group of customers on the west side of 101. Palo Alto Park lost and was ordered to pay the state’s court costs. The State’s arguments included a number of things, but basically they said that damage happened so long ago that its unclear what the cause was. It could have been weather, earthquake, lack of oversight by the water company, 3rd party error, etc., none of which the State claims they are liable for.

Water Company Reports over $2 Million in Repairs Needed

In response to recent demands from the State Water Resource Board after their recent inspections, the water company issued 2 letters to describe short term repairs, and their plans to fix the iron and manganese problems.

Some concerns highlighted in these reports:

  • The company lists over 2 million dollars worth of immediate repairs and upgrades needed.
  • The upgrades do NOT include building a plant to remove the iron and manganese, but rather to do a lower-cost, less effective treatment that involves over-chlorinating the water. The Water Resources Board has said in previous letters to the Company that over-chlorination can cause other problems.

Here is a summary of the repair estimates:

Iron and Manganese for Well 7 only $314,640
Well 3 replacement $166,980
Repair pipes under Highway 101 $122,820
Well 2 replacement $166,980
Install Water Meters for All Properties $408,480
Replace Green Street Main $289,800
Replace Glen Way Main $335,340
Replace Bell Street Main $289,800
Build a Second Storage Tank $747,960
Total $2,842,800

The actual letters from the Company are  below.

Recent inspection of the water company finds many violations!

The State Water Resources Control Board recently inspected the water company and found many violations of their standards and regulations. Here is a summary:

  • Elevated levels of Aluminum above legal limits.
  • Well 3 which provides about 1/3 of all the water to our houses is in the process of failing. Its casing is cracked and sediment is entering the system.
  • The pumps and their housings are in bad repair.
  • On a number of occassions, the company has replaced water mains without doing the proper disinfection to make sure contaminants do not enter the system.
  • Their is not enough information regarding backflow prevention devices on private wells that some people have on their properties.
  • They have not responded to customer complaints.

The list goes on. Click below to get the full report.

SWRCB Letter 2017