In an attempt to gain control of all water operations in town, the city of Azusa plans to spend $10.5 million by early next month to buy the 107-year-old Azusa Valley Water Co.
By combining operations, the city will expand its current water service to most city residents so that it serves all of Azusa and parts of Covina, West Covina, Glendora and nearby unincorporated areas now served by Azusa Valley Water. In all, the city would provide water to 23,000 customers. It serves about 8,000 now.
The city operates its own water plant, which relies on well water, across the street from Azusa Valley Water's surface water treatment plant on North Azusa Avenue. Both plants draw on water from the nearby San Gabriel River. The city has wanted to purchase the Azusa Valley Water facility for years, and finally opted to pursue a sale through negotiated condemnation.
The terms of the sale, which recently won approval from the California Public Utilities Commission, call for the city to take ownership of Azusa Valley Water if it can purchase 80% of the company's shares of common stock by June 18, and 90% by Aug. 2. The city already holds about 74% of the shares and city officials expect to purchase the rest, at $264 a share, by early July.
Ed Heck, general manager of Azusa Valley Water, said the company's board of directors wants to sell because investments of roughly $1 million a year for the next 20 years will be needed to upgrade and replace old equipment. He said the company is already deeply in debt and dividends to shareholders would be extremely low once major upgrades began.
The city will issue bonds to raise the $10.5 million it needs to buy the company and may issue more within a few years to pay for major upgrades at the plant and to water mains, many of which are more than 50 years old.
Rates will not increase to pay for acquisition of the company but may be raised several years from now, to pay for major improvements to the system, said Robert Bowcock, Azusa's water superintendent.