CLEARLAKE, Calif. — The city of Clearlake’s action to file a lawsuit against Highlands Mutual Water Co. will culminate in a trial set to take place this week.

The growing tensions between the city of Clearlake and water companies that serve city residents led to the city filing the lawsuit in June.

In filing the lawsuit, the city argued that the action was necessary to obtain records and get a new election of district board members.

The suit names Highlands Mutual Water Co. and each of its five board members, citing concerns “about the ability of Highlands to provide reliable drinking water and fire flow protection.”

A short cause trial will take place at 9 a.m. Friday, July 26, in Lake County Superior Court’s Department 2.

The fight between the city and the water district comes as city officials said they are moving forward with plans to consolidate water services in Clearlake as part of a larger effort to meet the infrastructure needs that come with the plans to grow and develop the city — something community members have said they’ve wanted for decades.

The city said Highlands Mutual Water refused many requests to supply the city with records, despite the city being the largest shareholder in its service territory and having a legal right to the records under state corporation law.

“Concerns from shareholders, coupled with our own observation of poor fire flow, drinking water delivery, and Highland’s inability to serve new development, prompted us to take a closer look,” Mayor David Claffey said in a statement released by the city. “The more we delved into Highland’ operations, the more we were obstructed. City representatives were blocked from meetings or refused information, and a demand letter sent in mid-April was largely ignored. The council believes more transparency is needed and felt we had no other course of action than to file a lawsuit on behalf of the public.”

For its part, the water district called the city’s action a “frivolous lawsuit” that’s part of an effort to manipulate the shareholder vote that saw the five-member board reelected during the annual shareholder leadership election on April 10.

On July 5, the water company filed its own complaint against the city, alleging an illegal meeting of council members who participated in the water company’s annual shareholders meeting on April 10. That lawsuit has not yet been set for a hearing, according to Superior Court records.

Over the course of the past year, the relationship between the city and the water district has deteriorated.

City Manager Alan Flora said he attempted to attend a March 27 district board meeting but the district, who said he failed to give them a 24-hour notice that he intended to be there, escorted him out of the building and locked the door. At that meeting, the city said rates already considered to be “high risk” for affordability by the State Water Board were raised behind that locked door with no direct notice to shareholders.

Highlands Mutual board members, staff and shareholders also have appeared at City Council meetings to criticize the city for what they consider to be its shortcomings, including faulting the city for road conditions at a time when, as it turns out, the city is making more road improvements funded by the one-cent Measure V sales tax than has happened in its history.

In a statement about the lawsuit, Highlands Mutual Water said the city didn’t understand the “complexities of water management.”

The company added, “The water industry is highly technical and demanding. The City's approach, marked by feigned outrage and unsubstantiated allegations, threatens to destabilize a well-run operation and disrupt water service to the residents of Clearlake.”

Last week, the district also sent out another mailer urging people to call the city and demand that the lawsuit be dropped. Flora told the council at its July 18 meeting that he’d spoken to a few people responding to the fliers and that, after he explained the situation, their concerns were satisfied.

The city of Clearlake has developed a section on its website titled “What's going on with the water situation?” that focuses on the water service within the city and what they’ve learned about Highlands. City officials said they are updating the website as they obtain additional documents and reports.

The crux of the case

In preparation for its shareholder election, Highlands Mutual said proxies to cast a vote were sent to all residents and businesses in its service territory with active water
connections in accordance with the company’s bylaws, California Corporations Code and the company’s 99-year practice.

The city collected 177 proxy votes, and Flora and the majority of the council — with the exception of Councilwoman Joyce Overton — attended the April 10 meeting, submitting the proxies in an attempt to elect the City Council as the board.

During that meeting, Board President Mark Coats called the city’s effort a “hostile takeover.”

After several hours of city officials arguing the complexities of corporation law with district staff including attorney Brian Hughes, district officials ruled that the city’s effort failed and board members Mark Coats, Robert Kraft, Jessica Chernoh, Kathryn Davis and Rachelle Sapeta were reelected with 217 votes.

Highlands Mutual has since asserted that the 177 ballots the city presented at the April meeting included only 83 from actual shareholders, stating that “the remaining were unauthorized ballots from owners of vacant lots who are not eligible to vote.”

The city gave the district a demand letter on April 10 and, in followup, filed the lawsuit in Lake County Superior Court on June 11.

In its action, the city alleges the following:

• election of directors at the April 10, 2024, annual shareholders meeting was invalid (directors were not properly elected as directors) so the defendant directors (board seated April 10, 2024) are not entitled to serve as directors at Highlands; the lawsuit includes an injunction against all director defendants acting as directors or exercising any of the powers conferred on directors of Highlands;
• demand for a new, properly noticed, election where each shareholder gets a vote and each vote is counted;
• inspection of corporate records including copies of accounting books, records, and all shareholder and director meeting minutes, including any reports prepared by or on behalf of Highlands related to the condition of Highlands’ water system and its vulnerability to service interruptions;
• Highlands’ record of shareholder names, addresses, and shareholdings including the document referred to in Article IV, Section 8 of the Bylaws as the share register.

The city is additionally accusing the water district board of mismanaging the system because Highlands Mutual’s water has repeatedly exceeded minimum levels of haloacetic acids according to the State Water Resources Control Board several times in recent years.

“While this has been partially explained as a one-time event, in fact, it has been an ongoing problem over a five-year period. This is a concern since long-term exposure to haloacetic acids can cause severe health impacts,” the city said in its initial statement on the suit.

A development that includes a popular fast casual food chain has been halted by the requirement of Highlands to include large sections of their system that has been undersized for many years, the city said, noting, “Highlands should be working with the developer to identify a path for a successful project.”

The city also said a “proposed, much-needed medical clinic in Highlands’ service area was not able to meet fire department requirements due to Highlands’ inability to provide adequate service. With the City’s intervention and investment in Highland’s undersized infrastructure, the facility was completed and became operational in 2023.”

There, the city is referring to Tribal Health’s new Southshore Clinic.

During a May 28 visit to the city to deliver a $4 million check for its Burns Valley Sports Complex, Congressman Mike Thompson met with city and tribal officials about development efforts.

At that time, Tribal Health CEO Ernesto Padilla described his challenges with Highlands as well as Golden State Water, as the clinic borders both districts. He said he was quoted vastly different amounts — from $70,000 up to $700,000 — he had been told it would cost to hook the new clinic up to their systems.

Padilla said the districts also wanted Tribal Health to install equipment no one else has.

Ultimately, the city partnered to get the water connection done — Flora said the city itself put in the water line — and Padilla expressed his appreciation for those efforts.

Flora said development in the city is being held up by Highlands’ inability to meet the needs of projects with its 100-year-old water system, which he said has failed twice since 2019 and is now at risk.

He said the city is moving forward with its plans to consolidate the water districts. ““The good old boys club isn’t too excited about this,” said Flora.

Flora said the city can acquire the companies and will need to convince shareholders to support their plan, which has support from the state water board.

Elem Indian Colony Chair Agustin Garcia, whose tribe is developing projects in the city including a new travel center, said they had no idea about the water issues until talking to Padilla. He said he doesn’t think the general public is aware of the issues.

Garcia added that businesses are being held hostage by the water company. “It’s a difficult situation.”

Flora said the city initially had good conversations with the district staff — then they got cut off.
Since then, he said, the city has attempted to restart conversations and the district said not to talk to them anymore

“The voices of Highlands’ shareholders have been muted by the Board’s actions,” said Vice Mayor Joyce Overton. “This isn’t just about public properties owned by the City, but each individual shareholder being able to exercise their right to information and having a voice in how the company operates. It’s shocking to see some aspects of the company’s business practices, including that the Board makes decisions behind locked doors. Unfortunately, Highlands responded to questions and inquiries by further restricting access to information rather than simply sharing information that shareholders are entitled to review. It makes me wonder, what are they trying to hide.”

The case’s first hearing, on invalidating the April corporate election, took place on June 20 before Judge Michael Lunas.

During that hearing, Lunas set the case’s trial date for July 26.

Highlands Mutual strikes back

Highlands Mutual Water Co., in its response to the lawsuit, said that if the city is successful with its suit, it will seek “to elect a majority of Highland’s Board Members who would force the residents who own Highlands Mutual Water Company to subsidize hook-up fees for investors of new developments.”

The statement continued, “The City’s frivolous lawsuit is a second power play to hijack the Company from the shareholders/ residents who co-own it and replace the current dedicated, responsible, leadership and their unique expertise with members of the Council. Highland’s board of directors is highly committed to the community that we serve. Each of their biographies describes long histories of community involvement.”

Highlands Mutual challenged what it said is the city of Clearlake’s assertions that it can manage the water system “better than our seasoned experts who have competently run it for decades. The City already faces challenges in maintaining the basic services it is responsible for, and the idea of adding the management of a water system to its responsibilities seems unrealistic and irresponsible. We are concerned about who would take over if existing members of the City Council were to sit on our board of directors, some with histories of professional and legal improprieties.”

The company, calling the city “mismanaged,” also has made a series of additional — and, based on the record, factually questionable — allegations about city services and other matters not directly related to water, which echoed the types of verbal attacks supporters have made in city council meetings.

Water expert weighs in

At the Clearlake City Council’s June 6 meeting, ahead of the lawsuit filing, it had appeared that the situation with the city and the water district had cooled somewhat when Robert Roscoe, a respected water resources expert and consultant, gave a presentation called “Water Supply and the city of Clearlake.”

Roscoe took a conciliatory, middle-of-the-road approach, describing the city’s three separate water purveyors — Highlands Mutual, Golden State and Konocti County Water District — and their structures and lauding them all for doing a good job with a water body whose water is challenging to treat.

He focused the presentation on “what are you missing out on if you did it differently” — in other words, if a more unified approach was taken instead of having three different water companies acting independently.

Some of what would be different, according to Roscoe, include grant availability, a less disjointed water service and unified planning between the systems, which now only plan for their own needs, not the city’s.

Roscoe discussed the potential benefits of system consolidation, including improved coordination in planning, resilience, investments, reduced duplication, improved economies of scale and more efficient staffing.

“I don’t think this is as much about anything they’re really doing wrong,” it’s that it’s not in the city’s overall best interest, with opportunities missed.

His recommendations included encouraging the city to continue to work with water purveyors to coordinate capital project planning between water projects and city development/redevelopment projects.

Roscoe said the elephant in the room was the city’s struggling infrastructure. “You’ve got a lot of infrastructure that is nearing the end of its useful life.”

He said that, in his opinion, three separate water systems in a city the size of Clearlake is “two too many.” Roscoe emphasized again, however, that his recommendations were less about how the three systems were performing and more about a missed opportunity.

Jeff Davis, Highlands Water’s manager, told Roscoe, “I appreciate that,” adding he believed it was a good presentation.

During that meeting, City Attorney Ryan Jones said the city had reached out to Highlands Mutual Water to discuss consolidation as a more global topic, but was told by the water company’s attorney that they were not to have communication with them. Jones said the city took that to mean that they couldn’t talk to the water company at all.

Brian Hughes, Highlands Mutual’s attorney, asked the city what was the purpose of the discussion at that point. He said all the district had seen was discussion of takeover and consolidation.

Hughes said they would have to agree to disagree, and that the water company hadn’t been asked to present at that meeting, but he acknowledged Roscoe’s presentation was a great one.

He said the water company believes that any takeover attempt would negatively impact the community.

Overton told the water company that all the city wanted was information.

“I’m just going to stay it now because I'm tired of hearing it,” she said, adding that the water company should be ashamed of what it told shareholders, and that shareholders should ask questions.

Flora said city staff were never directed to attempt a hostile takeover. Rather, the city exercised its right to vote during a shareholder meeting.

The narrative about the hostile takeover has been created by Highlands Water Co., Flora said.

Councilman Russ Perdock added, “We should all be on the same side,” noting they are all neighbors.

Editor's note: The story has been updated to show that trial is now set to take place in Department 2.

Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.

LAKE COUNTY, Calif. — A new piece of federal legislation could bring millions of dollars to Lake County for water projects.

On Monday night, Rep. Mike Thompson (CA-04) voted to pass H.R. 8812, the Water Resources Development Act of 2024, bipartisan legislation that will authorize the Army Corp of Engineers to make crucial investments in America's ports, inland waterways, flood management systems, ecosystems and other water resources infrastructure.

The bill passed the House on a vote of 359 to 13.

“Every community in our district deserves to have clean water and modernized water infrastructure. I’m proud to have secured three infrastructure requests to support municipal drinking water and wastewater projects and one study request to support flood risk management in our community,” said Thompson.

Rep. Thompson secured authorization in the legislation for several Fourth District projects.

The legislation would provide up to $20,000,000 to Lake County to address stormwater flows and habitat restoration in and around Clear Lake.

The project would develop infrastructure that protects communities near the lake from storm flows and ensures water is entering the lake. Additionally, it would address habitat restoration efforts of species in Clear Lake and support river and stream restoration.

The bill’s language does not specifically name the project in question — and Thompson’s office did not respond by the time of publication — but its reference to flood risk management and ecosystem restoration on Clear Lake suggests it is the Middle Creek Restoration Project, which would restore an estimated 1,600 acres of farmland to the lake and remove failing levees on the Northshore. The project would remove sedimentation and phosphorus loading.

There also would be up to $20,000,000 to the Yolo County Flood Control District for water and wastewater infrastructure, including water supply and stormwater management. The project would ensure a more sustainable water supply for the County and protect communities from stormwater.

Once complete, the flood control district would be able to divert storm flow into existing pits during wet seasons, ensuring accessibility to county roads during storms. This funding would also assist the flood control district in redirecting water back into the system when water levels subside.

The legislation also authorized a study for the Army Corp to assess flood risk management and ecosystem restoration for Clear Lake.

In addition, there would be up to $10,000,000 to the city of Rohnert Park to remove arsenic from the city’s wells and improve efficiency. Rohnert Park has a significant well water capacity unique to the rest of the region and ensuring that the community’s wells are operating to their full potential would provide a substantial benefit for the entire region.

Thompson’s office said the legislation must pass the Senate before being signed into law.

Once signed into law, authorized projects will become eligible for federal funding, Thompson’s office said.

LAKE COUNTY, Calif. – The Bureau of Land Management is increasing fire restrictions and temporary target shooting limitations for BLM-managed public lands within the Central California District.

Increased restrictions are in effect for the Central Coast Field Office, Mother Lode Field Office and the Ukiah Field Office effective July 24, due to high fire danger.

These increased restrictions are in addition to the initial fire restrictions issued by the field offices and the year-round statewide fire prevention order and will remain in effect until further notice.

The Ukiah Field Office oversees areas including Walker Ridge, or Condor Ridge, which is where the Ridge fire has been burning since Saturday.

The Ridge fire remained at 2,756 acres on Wednesday evening, with containment up to 50%.

The additional fire restriction announced Wednesday prohibits campfires, barbecues or open flame of any kind, even if you are in a developed campground.

Portable stoves and lanterns with shut-off valves, using gas, jellied petroleum or pressurized liquid fuel are still allowed both in and outside of a developed campground with a valid California campfire permit, available free at any USDA Forest Service, BLM or CalFire office, as well as online at https://www.readyforwildfire.org/prevent-wildfire/.

The BLM said its top priority is always the safety of staff and the recreating public.

The agency asked members of the public to please remember to only park legally when using BLM-managed recreation sites. Parking along state routes and county roads can inadvertently cause wildfires and may block access for firefighting engines and emergency vehicles, delaying life-saving services.

This has already been an active wildland fire year with fires occurring close in proximity to roadways, communities and recreational areas, posing considerable threat to public safety.

Taking individual responsibility to reduce wildfire risk, while recreating on public lands, around homes and communities, before a fire occurs can help keep property, the public and firefighters safe.

The following restrictions will remain in place until the fire danger subsides:
• No campfires, barbeques or open flame of any kind, even in developed campgrounds.
• No target shooting — hot bullet fragments, exploding targets and metal from recreational shooting can spark a wildfire. Use of firearms for hunting is still allowed. Hunters must abide by state of California laws and regulations. Visit www.wheretoshoot.org for alternative recreational target shooting locations.
• No motorized vehicles off BLM designated roads or trails.
• No tools powered by internal combustion engines off BLM designated roads or trails (such as chainsaws or lawn mowers).
• No smoking, except within an enclosed vehicle or building, or at a developed recreation site, or other designated areas.
• No welding or operating acetylene or other torch with open flame.
• No explosives.

Anyone found guilty of violating a fire prevention order may be fined not more than $100,000 and/or imprisonment for not more than 12 months. Restitution for total fire suppression and damage costs incurred may be borne by the trespasser.

To learn how you can do your part to prevent wildland fires visit www.readyforwildfire.org. Fire restrictions for all California BLM-managed public lands can be found on our website. The latest information is available online or by contacting the Central Coast, Mother Lode, or Ukiah field offices directly.

 

LAKE COUNTY, Calif. — Lake County experienced an uptick in joblessness in June, while unemployment remained unchanged statewide and the federal rate had a slight increase, according to the latest report from the California Employment Development Department.

Lake County’s June unemployment rate was 5.7%, compared to the revised May rate of 5% and 6% in April, and the June 2023 rate of 5.2%.

Overall, 180 additional people were reported to be out of work in Lake County in June, for a total of 1,590 unemployed individuals.

Most of Lake County’s job categories declined in June, with the key month-over exceptions of information, which grew by 14.3%; federal government jobs, 6.7%; state government jobs, 5.6%; mining, logging and construction, 5.4%; good producing, 4.7%; retail trade, 2.3%; and trade, transportation and utilities, 2.1%.

Lake County ranked No. 36 for its June rate, according to the report.

Lake’s neighboring county jobless rates and ranks in June were: Colusa, 11.6%, No. 57; Glenn, 6.5%, No. 46; Mendocino, 4.9%, No. 23; Napa, 5%, No. 5; Sonoma, 4%, No. 7; and Yolo, 5.2%, No. 27.

On the national level, the Bureau of Labor Statistics reported that June’s unemployment rate was 4.1%, compared to 4% in May and 3.6% in June 2023.

On the state level, California’s employers added 22,500 nonfarm payroll jobs in June as the unemployment rate held steady at 5.2%, according to data released by the Employment Development Department, or EDD.

The report said California’s job market expansion officially entered its 50th month.

The California unemployment rate was 5.2% in May 2024, down slightly from the previous month. California payroll jobs totaled 18,033,900 in May 2024, up 43,700 from April. and up 207,700 from May of last year, the EDD said.

The EDD reported that since April 2020, California has gained 3,122,500 jobs, which averages out to 62,450 per month. June’s job gain follows a revised job gain of 43,300 for May 2024.

California gained 107,100 nonfarm payroll jobs in the first six months of 2024, which is more than double the number of nonfarm payroll jobs the State gained during the same time period last year, when the number was 38,400.

The number of Californians employed in June was 18,346,200, an increase of 17,500 persons from May’s total of 18,328,700, but down 93,900 from the employment total in June 2023, the state said.

The EDD said the number of unemployed Californians was 999,990 in June, a decrease of 10,300 over the month, but up 119,100 in comparison to June 2023.

Total nonfarm jobs in California’s 11 major industries amounted to 18,056,000 in June — a net gain of 22,500 from May. This followed a downward revised month-over gain of 43,300 jobs in May, the EDD reported.

The EDD said total nonfarm jobs increased by 223,600, a 1.3% increase, from June 2023 to June 2024 compared to the U.S. annual gain of 2,611,000 jobs, a 1.7% increase.

Seven of California's 11 industry sectors gained jobs in June with the largest increase in Trade, Transportation, and Utilities (+9,800), adding jobs for the fourth consecutive month. This sector overall has gained 21,700 jobs from March through June, due in part to increased traffic at California’s ports and other seasonal activities.

The number of jobs in the agriculture industry increased from May by 4,200 to a total of 414,800 jobs in June. The agriculture industry had 4,300 fewer farm jobs in June 2024 than it did in June of last year.

At the same time, Lake County’s farm industry was down by 4.8%, a loss of 50 jobs.

The lowest unemployment rate in California in June was in San Mateo, 3.5%, while the highest was in Imperial, 16.4%.

The EDD also released data on Unemployment Insurance benefits during the June 2024 sample week, when there were 381,123 people certifying for benefits. That compares to 379,955 people in May and 384,841 people in June 2023.

Concurrently, 45,162 initial claims were processed in the June 2024 sample week, which was a month-over increase of 6,269 claims from May and a year-over increase of 1,707 claims from June 2023, the EDD said.

Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.

NORTH COAST, Calif. — On Tuesday, the National Oceanic and Atmospheric Administration, or NOAA, announced the awards that are recommended for funding under the Transformational Habitat Restoration & Coastal Resilience grant program, with Mendocino College to be among the grantees.

The Nature Conservancy California has been recommended to receive $18 million over three years to launch the Pacific Coast Ocean Restoration Initiative, a comprehensive, collaborative statewide effort aimed at restoring and recovering degraded marine ecosystems across California.

This funding will enable TNC and a coalition of partners spanning the state — including the California Department of Fish and Wildlife, California Ocean Protection Council, Greater Farallones Association, Mendocino College, The Bay Foundation, Aquarium of the Pacific, the California Academy of Sciences, Sunflower Star Laboratory, Paua Marine Research Group, and University of California Santa Barbara — to lead efforts to help recover the federally endangered white abalone and the International Union for Conservation of Nature critically endangered sunflower sea star.

Additionally, the initiative will further advance restoration efforts for California’s kelp forests and will also pilot an innovative marine conservation workforce development program in collaboration with a community college, potentially scaling across the state's community college system.

“This ambitious, partnership-driven initiative will leverage the incredible work done to date, and the contributions from a diverse suite of partners, to advance a new model for coordinated and effective marine restoration and endangered species recovery that can deliver transformative impact for rocky reef ecosystems and coastal communities in this region,” said Norah Eddy, Ocean Recovery Program director at TNC California. “It also serves as a model for similar efforts elsewhere around the country and world.”

Kelp forest and rocky reef ecosystems are vital, supporting thousands of marine species and coastal communities from San Diego to the Oregon border, contributing hundreds of millions of dollars to California’s economy annually.

However, warming waters, disease, and human impacts have severely disrupted these ecosystems.

The white abalone, listed as endangered under the Endangered Species Act in 2001, and the sunflower sea star, which experienced a catastrophic decline from 2013 to 2016 due to disease, illustrate the urgent need for intervention.

These changing ocean conditions have led to a proliferation of purple urchins, which in part, have decimated bull kelp forests by over 96% in northern California.

“This project and its partnerships enable Mendocino College to enhance our workforce development curriculum, specifically supporting the creation of a marine ecosystem restoration program, aimed at building a diverse and climate-resilient workforce,” said Tim Karas, president/superintendent of Mendocino College. "As a Minority Serving Institution and Hispanic Serving Institution, we are committed to providing opportunities for historically underserved communities. This project will help us develop the necessary infrastructure and curriculum to equip our students with the skills needed for ocean restoration, significantly impacting workforce development and marine restoration efforts in our region."

The Pacific Coast Ocean Restoration Initiative is poised to address these challenges. For over a decade, scientists and practitioners through the leadership of groups like the above-mentioned Initiative partners have laid the groundwork for important restoration efforts across California’s coast.

The NOAA grant, funded through the Bipartisan Infrastructure Law and Inflation Reduction Act, will support critical infrastructure investments necessary to expand these restoration efforts.

"NOAA is proud to be supporting The Nature Conservancy and partners as they launch this innovative initiative," said Carrie Selberg Robinson, director of the NOAA Fisheries Office of Habitat Conservation. "Their work to catalyze and coordinate restoration across California will support the many species that rely on rocky reef and kelp habitats."

As the coalition partners embark on this groundbreaking initiative, the vision is clear: this is just the beginning of a series of milestones aimed at recovering endangered and threatened species and revitalizing marine habitats.

Officials said the Pacific Coast Ocean Restoration Initiative represents an exciting and transformative step forward in ensuring the health and resilience of California’s coastal ecosystems for generations to come.