Bellflower Invokes Eminent Domain — Long Beach (CA) Press Telegram, 12/18/04

With no end to negotiations in sight, the town will take over Peerless Water's assets.
By Karen Robes

Unable to reach an agreement with a water company that has millions of dollars in water-related assets, the [Bellflower CA] City Council has voted to exercise its power of eminent domain to obtain those assets and control the water services of about 1,800 residential accounts.

City Administrator Michael Egan said the city will deposit with the state treasurer about $3.5 million to acquire the assets of Peerless Water Co.

By exercising eminent domain, the city can take private property for public use and pay for it at fair market value. For more than four months, city officials have met with Peerless, one of five water companies that operate in Bellflower. Peerless officials expressed an interest in selling their company's local assets, including fire hydrants, meters, pipelines, service connections, wells and pumps.

After a formal appraisal, the city offered $3.5 million to Peerless company President J. William Zastrow, who turned it down and countered.

Refusing to disclose the amount, Egan called the counteroffer "far off on price."

Zastrow declined to comment.

Egan said the city hopes to take control of Peerless assets as early as April. Both sides may be able to negotiate a final price without going to court.

A city review of Peerless' water service in the city determined "several problems with its existing infrastructure and operation," according to a city staff report.

Problems included aging wells, water-pressure systems below industry standards, insufficient surface storage facilities and noncompliance with the city's 1995 recommendations for major pipeline improvements and interconnection installations.

An estimated $6.6 million is projected over the next 20 years to make engineering, water quality and other improvements, according to staff reports.

If the city obtains the assets, it plans to fund the purchase and the improvements with a $10 million water bond, which would be paid over 30 years.

"We're insuring the long-term viability and low-cost services to Bellflower residents," Egan said.

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