Water company's fire recovery plan gives Altadena residents sticker shock. Here's what's happening

Last year’s fires not only destroyed homes and businesses, but also critical infrastructure, such as water delivery systems. Rebuilding that infrastructure is particularly challenging in unincorporated areas such as Altadena, which is primarily served by three tiny, private water companies.

The Las Flores Water Company is one of them — the company lost its two reservoirs in the Eaton Fire. And it has only about 1,500 customers, 75% of whom lost their homes in the fire.

“So we're basically running the company off of 25% of the revenue that we used to have,” John Bednarksi, president of the company’s board, told LAist.

The company is presenting its plans to address that shortfall at a meeting tonight. But rumors about the purpose of the meeting have been spreading online.

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Bednarski said that to keep from going bankrupt, the company is proposing charging customers an extra $50 a month for the next five years, or they can pay the lump sum of $3,000 and the company will pay them back interest at the end of the five-year period. The charges will apply only to households with existing water service. As others rebuild and connect to the system, the charge will kick in.

The company is also looking to consolidate with one of the three other private Altadena water suppliers, Lincoln Avenue Water Company, which serves about 5,000 homes and businesses. The water companies have applied for funding from the State Water Resources Control Board to study whether they can merge.

L.A. County Supervisor Kathryn Barger, whose district includes Altadena, has publicly supported the idea.

“We have to keep the lights on at the company and keep the water company serving water because that's a primary utility for people,” Bednarski said. “But I also think that as we start rebuilding, we want to build back better than we were before.”

The company will present its final bill charge proposal and discuss consolidation with residents tonight. The proposals will not be voted on until a later date, Bednarski said.

Lack of public funds

Another challenge with rebuilding private water companies is that they are ineligible for state and federal funds that public utilities have access to, said Greg Pierce, senior director of the Luskin Center for Innovation at UCLA and lead author of reports on the damage to water systems after the fires and how water systems can rebuild more resiliently.

“These systems really have been on their own,” Pierce said.

That largely means the costs to rebuild will fall on customers. Consolidation, he added, can lower costs over the long term.

But the $3,000 charge over five years has “come as a big shock” to many residents, said Morgan Z Whirledge, who lost his home in the Eaton Fire and was recently elected to the Altadena Town Council.

“This is an added layer of burden,” he said. “ This comes at a really inopportune time for people in this recovery process.”

Still, Whirledge said he understands the need to keep the company solvent and sees consolidation as a good long term solution.

“ I'm hoping that ultimately Altadena is going to be better served in the future, better served with stronger water infrastructure,” Whirledge said.

The big picture

Overall, the fires caused more than $2 billion in damage to infrastructure overseen by L.A. County — excluding the costs of restoring these small water companies, said Anish Saraiya,  director of Altadena recovery for Barger’s office. And, he added, the total budget for the county Public Works Department, which serves all of L.A. County, is around $5 billion,

“Ultimately their pathway to restoration and recovery is going to be one that's going to require help from both state and federal governments,” Saraiya said.

But federal funding in particular has lagged — the Trump administration has still not approved nearly $40 million in recovery funds requested by Gov. Gavin Newsom last February. Some of that funding could flow to these small water companies, something Barger advocated for, Saraiya said.

“It is paramount that the county gets that funding,” Saraiya said. “It is going to take that kind of scale of assistance to help us rebuild this community.”

In the past, state and federal funding has been essential, though slow, to rebuild water systems after fires. For example, the Northern California town of Paradise was destroyed by the 2018 Camp Fire, but it did not receive state funds to help rebuild its Irrigation District until 2020, and federal funds did not come until 2022.

As L.A. County waits for funding to come through, officials are looking for other ways to fund infrastructure. The county recently established an Enhanced Infrastructure Financing District. The same type of district has also been established for unincorporated areas affected by the Palisades Fire.

Such districts allow the county to dedicate a portion of future property tax revenue to rebuild infrastructure. It also allows the county to take out bonds or loans to finance the rebuild.

“ The next step for us is to build out the infrastructure plan and then also pursue the financing side of it to be able to generate revenues, either through bonds or through other creative financing strategies to get us the money we'd need,” Saraiya said, “ because these districts don't generate revenue until development starts to occur and homes are rebuilt.”