Riverside City Council Designates Shareholder Representatives For 5 Local Water Companies 

The Riverside City Council voted unanimously Tuesday to give city staff positions, including the Riverside Public Utilities’ (RPU) general manager, the power to vote as shareholders on behalf of the city in the Gage Canal Water Company and four other Inland Empire-based water service systems. 

It’s part of a process the council undertakes annually to allow a representative, also called a shareholder proxy, to vote in each company’s annual board elections. The proxy is also able to make board nominations for three of the companies.

“The city follows a three-step process for representation of each mutual water company board,” David Garcia, RPU’s general manager, said at the December 2 meeting. “One is [the] designation of the proxy authority, two is [the] selection of mutual water company board representatives and three is [the] assignment of stock certificates, if necessary.”

This year, the process has slightly changed, according to Garcia, as the city named representatives by titles rather than individuals to streamline the process in the event of employee turnover. 

“What we found, in particular this last go-around with the turnover of the executive team at RPU, [was] that it seemed to be limited in allowing us to ensure that we were able to cast our proxies in a timely manner,” Garcia said at a February 10 Board of Public Utilities meeting. “Therefore, the report uses the position titles that the proxy will be granted to.”

The city holds shares in each of the five local water companies, including a 61% share of the Gage Canal. The city also owns 39% of shares in the Meeks and Daley, 3% in the Jurupa Ditch, 8.5% in the Riverside Highland and 78% in the Trujillo. 

These five mutual water companies — a type of company that is typically operated as a private not-for-profit organization co-owned by shareholders — treat and deliver water to areas around the Inland Empire, including the city of Riverside. Each water system has its own board of directors, according to a staff report. 

Board members for mutual water companies, according to the California Association of Mutual Water Companies’ Executive Director Adán Ortega, work to ensure the companies comply with state health and workplace regulations, oversee the budgets and maintain the systems’ infrastructure. 

“Pretty much anything that any other water entity discusses, they have to discuss,” Ortega said. “With the added burden that they also have to talk about the division of cost for the maintenance of the system that all the shareholders share.”

Christina Henry, the director of community relations for the Elsinore Valley Municipal Water District, said in an email that the Meeks and Daley Board of Directors oversee the general operations of the company such as reviewing and approving budgets and reviewing sales and groundwater production.

The city, through the shareholder proxy, is eligible to nominate three city representatives out of 11 members to the Gage Canal Board, two of the five members on the Meeks and Daley board and seven of the nine Trujillo board members.

At the December 2 meeting, the council also approved a list of potential board member nominees that includes council members, city staff and public utility board members for the Gage Canal, Meeks and Daley and Trujillo boards. 

This list, according to the staff report, would promote transparency on who was eligible to represent the city’s interests on these boards. Prior to making nominations, the shareholder proxy would  consult with the city manager to ask listed individuals if they were interested in serving on the boards. 

Jason Hunter, a local government watchdog who filed a Brown Act petition earlier this year against the city of Riverside and the Gage Canal, told The Record that he was skeptical that this process would create transparency with the elections, specifically within the Gage Canal.

Since the city owns the majority of shares, Hunter argued that the Gage Canal’s board meetings were subject to be open to the public, a claim Gage Canal has disputed. He also argued that because the city owns the majority of the shares, the selected proxy would be able to pick the majority of the Gage Canal’s board. 

“I think the city likes to provide the illusion that it doesn’t completely control the Gage Canal, and it does,” Hunter said. “The council tonight is trying to give David Garcia the ability to pick all the directors and do legislative policy over at the Gage Canal Company and I don’t think they can give that power away.”

Hunter’s lawsuit has not yet been resolved by the court.

During public comment, he argued that the move was unlawful and gave the proxy the ability to vote for board members that would not represent the city’s interests. 

The city did not immediately respond to a request for comment.

Before the vote, Councilmember Clarissa Cervantes asked if the council was able to attend shareholder meetings. Garcia said they would be able to attend as guests with advance notice.