Author: shannon

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

Update from Engineer at 2023 shareholders meeting – $5 million

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

Your Rights as a Member

As a property owner in the Palo Alto Park Mutual Water Company area, you have a membership interest in the company. You have one membership interest for every 2500 sq ft of land you own, and these memberships give you certain rights. However, for rights to matter, you must exercise them. Here are some we know about, but it’s not an exhaustive list.

Vote at the Member Meeting

Your membership gives you votes at the annual shareholder meeting. You can vote on board members, on changes to the bylaws, and on various matters that come up at the meeting, like approval of minutes, agendas, etc.

If you cannot attend a meeting (or don’t want to), you can allow someone else to vote on your behalf by appointing them as your proxy using a proxy statement.

Member meetings must be noticed at least 10 days before the meeting is to take place, and the business of the meeting must be clearly stated.

Attend and Know About Board Meetings

Assembly Bill 240 (AB240) put certain requirements on the boards of mutual water companies. In particular, AB240 does the following:

  • Requires that all board meetings have an agenda that is publicly posted before the meeting. The board must stick to the agenda, except in exceptional or emergency situations.
  • If you request it, the board must send you a notice of all board meetings. You can ask to be notified by mail or email.
  • If you have a fee or penalty, you can demand that the board meet with you in closed session to discuss it.
  • Requires that the minutes of all board meetings be sent to any shareholder that asks.

Inspect the Accounts of the Company

Both the Bylaws of the company, and California Corporations Code 1601 give you the right to inspect the financial records of the company at any reasonable time upon written request.

Inspect the List of Members

California Corporations Code 1600 allows any members with cause (a good reason) to get a list of all the other shareholders in the company. 5% of the members can join together and request a list of the shareholders for any reason at all, and get them within 5 days of the demand.

Unfortunately, our current board of directors has denied us ALL of these rights. That is one of many reasons why they must be removed.

Shannon Pekary

Hello, my name is Shannon Pekary and I am a candidate for the board of directors for Palo Alto Park Mutual Water Company. I and my wife April have lived in East Palo Alto since we were married, in 1991, and we have raised our 8 children here. I have lived in the Palo Alto Park service area since 2009. I am the Executive Director of the Ravenswood Youth Athletic Association, which helps run the soccer club that plays at Cesar Chavez school.

My experience as the director of a nonprofit organization gives me a unique insight into the management and finances of our water company, which is also a nonprofit corporation. I also have an engineering degree, which will help me understand some of the technical aspects of delivering safe water to our neighborhood.

One of the reasons I am running for the water board is that I have become very concerned about how the current board is using our finances. From their own financial statements, payroll and contractor fees account for about $400,000 dollars of the $660,000 of income. That is WAY too much money for staff, especially compared to other similar water companies. After showing us their broken pump at the shareholder meeting, and listening to the complaints of many of you, it is clear to me that they are not using our money wisely.

I am also concerned about the safety and appearance of the water. in 2016, the State Water Resources Board ordered the current management to create a plan to clean up the water. The plan they have created does not include a real plan to remove the manganese and iron, but rather to try to reduce it using over-chlorination, which is a cheap and poor substitute and can cause other problems.

Neighbors are reporting that the water company is charging more than $5,000 to install a water meter at new construction and renovations. Water meters do need to be installed, that is a state requirement, but $5,000 is WAY too much for this. Mutual water companies are supposed to run at cost, and there is no way that a meter costs this much to install.

As a board member, my priorities will be:

  • Investigate claims of illegal charges and return money to those who have been overcharged.
  • Overhaul the bylaws so that paid staff and their relatives cannot be on the board.
  • Do an audit of the books and make sure all the income is accounted for.
  • Make sure that the office is running efficiently
  • Reduce staff expenses and use that savings to fix equipment
  • Create a long-term plan to consistently deliver clean water to our houses at a reasonable price.