Utilities?

Altadena, utilities, and the future

Altadena is a relic of the late 19th Century. It has what are called “mutual” water companies.

It also has septic. There is even copper wire for telephones and, dare I say it, DSL (that would be a relic of the last 20th Century, but who is counting).

Back to water though. Mutual ownership of the utility seems so quaint. It seems so late 19th Century, or at least Depression-era.

So, here we are with mutual ownership of water companies in Altadena. A city of 40,000 residents (approximately) and there are not one, not. two, but three separate companies. And, yet, those three separate companies are not enough. There is actually a fourth (Pasadena Water and Power) with a specific quadrant of Altadena.

In fact, the water companies are a source of pride. They embody the sometimes provincial nature of Altadena.

One story that stuck with me was, when we moved to our school in Altadena (Saint Mark’s which was affected by the fire), we learned the water companies are a source of bragging rights for long-time residents of a specific water company. Residents actually argue over which water is better tasting. Not like it comes from one side of Rubio Canyon or the other. Is it based on the taste of a specific arroyo? I kid you not.

Fast forward to today.

The 3 mutuals are virtually bankrupt.

Their infrastructure is gone. There is no real path to rebuild.

Billions will be required to repair clay pipes. Yes, clay pipes.

The issue is not new. When we bought our house in 2018, we were warned that to do any renovations, we would likely be required to pay for upgrades to the water infrastructure in our area (which was owned by Pasadena Water and Power), and it could run into the tens of thousands of dollars due to the infrastructure being so old and out of date for fires and the ability to bring enough water pressure for one house.

Further, when we built a new preschool at Saint Mark’s, required approvals and a “private” infrastructure requirement was needed to again bring “greater” water pressure for a fire. Our problem, moreover, is not new to Altadena. LA City has been dealing with these issues for a long time too.

What will be required to rebuild our entire water infrastructure? In infrastructure needs to be upgraded. At the same time, our water companies are bankrupt (at least the three mutuals).

Not to be outdone with water, there is also the question of sewer.

Parts of Altadena (just to the north of our house) are still on septic. That’s right, septic. In a modern city. To hook up those houses to sewer is another piece to be accomplished while we are digging up streets and looking to modernize.

What about the need to “underground” utilities? Utilities are multifaceted for under-grounding. Electrical. Telephone (for those still with copper wires and home telephones). Cable (we need that to drive our internet). We have to get that infrastructure down under ground.

But, we have to go back to ownership of the water companies? What about the tongue in cheek quip about “Chinatown in the foothills?” What is the water companies were lost to developers? That is actually a real concern in 2025.

So, first things first, we need to deal with the water companies. I think we need to consolidate. We need to “TARP” them, as I have said to others. TARP means to take over the troubled assets and recapitalize the assets (the three mutual water companies).

Yes, it is conceptually unpleasant, but it is also necessary.

We need to properly capitalize the companies. We need to ensure they can meet their mission and be able to service their clients. We also need governance to ensure water rights are not transferred away to others. They are community water rights. Yes, there are ways to stop the actual Chinatowning of the water, but the bottom line is, let’s just get it right from the start.

The billions to rebuild the water companies can be funded through various mechanisms, as we discussed previously. Yes, CRA is one. We can set up a “revenue share” model to consolidate, and fund the modernization and recapitalization of the water utilities. Without water, there cannot be development, so the water question is crucial.

“Undergrounding” of electrical should be simpler and part of any settlement Edison makes for rebuilding Altadena, assuming there is one. Above ground got done quickly and should be commended. Nevertheless, the opportunity exists to move the utilities underground and out of risk of additional weather/disaster effects. Why not with the scale of the changes being accomplished?

Telephone and cable, well, they can either do it themselves or we will do it and charge the “franchise” a fee or something to that effect.

It will take time to “underground.” It will also take time to address water utilities. But, when done, what a different city it will be.

Bottom line is there is a way. While different from what happened in 2018 with Compton, there is a way to compel a water district to come to a compromise. The rest have leverage points for sure.

Recapitalization is a well worn concept for businesses, including utilities. There are assets here which can be “invested in.” The key is setting up the structure to ensure the investments are made and managed transparently and the management of the entities is done with a level of sophistication to ensure it is not just the physical assets, but also the human assets which are recapitalized as well.