Devore H2O Company Customers Questioning Land Lease Deal With Company Board Member

Customers of the Devore Water Company have grown alarmed over a decision by the company’s board of directors to commit millions of dollars to a project to construct a water storage facility on property owned by one of the board’s members.
Of note is that the board member on whose property the water tank is to be constructed is also the water company’s treasurer, who has sole access to the company’s financial books.
Multiple customers of the Devore Water Company have told the Sentinel they believe Doug Claflin, a board member who owns or controls a significant number of the company’s shares, has involved himself and the company in a conflict of interest that is subjecting the company to both current and long-term financial hardship.
The Devore Water Company has existed for over a century and supplies water to users in the community of Devore located around the junction of Interstate 15 and Interstate 215.
The company is an uncommon amalgam of a private entity and a service provider which serves in a semi-public capacity of supplying water to local residents, businesses and landowners. Because it is not a public entity, per se, information relating to its operations is not easily available. Moreover regulations governing public entities and how they are run, particularly with regard to the availability of information pertaining to management decisions, for the most part do not apply to the company. Reportedly, there are 150 shares in the company which are owned by roughly 75 customers. To obtain water from the company, a meter is required. All meter owners are given a single share of stock in the company. Those who have either sold their property or moved without selling their property lose their shares, which are then made available to the company to distribute. Shareholders have told the Sentinel that this distribution of shares occurs in a rigged lottery process in which the board members over the past two to three generations have consistently and without exception come into possession of the shares when they are made available. Additionally, the Sentinel is informed, a minority of the board members have effectively persuaded shareholders to surrender to them the authority to vote on their behalf by proxy. There are, the Sentinel is told, at least two dissident board members, but the board majority dominates the company. Previously, minutes of the board meetings were kept, but that is no longer the case. Devore residents have complained that action is taken by the board that is not disclosed, and that only after, in some cases months after, the board’s action does the public become aware of what has occurred. In such circumstances, efforts to participate in the company’s decision-making process are ineffective. On April 12, a board meeting was held at which an effort to video the proceedings was made. The board insisted that the videographer desist.
According to several company customers/shareholders, contamination of one of the company’s wells has necessitated that the company blend that well’s water with water from uncontaminated sources to reduce the saturation level of the contaminant in question to levels that bring the company’s water supply into compliance with State of California Department of Health standards. The water to be blended is to be stored in a cistern or tank at an elevation in the community, which lies at an altitude of between approximately 2,434 and 2,828 feet, that would assist in a gravity feed of the water to a majority of, or all, the company’s customers. The company has already committed or spend $500,000 for engineering and design work on the cistern, which is to cost between $5 million and $6 million to construct. A landowner of property at the elevation appropriate to accommodate the cistern was willing to donate a piece of ground to the company. Instead of accepting that offer, however, the Sentinel was told, the company entered into a 99-year lease with Claflin to utilize a portion of his property, which is adjacent to that of the resident who was willing to provide his land gratis to the company. Precise financial figures relating to the water tank project are not available, and Claflin, as a board member and the company’s treasurer, has not made that documentation available to either the general public, which has no legal right to the company’s financial data, or the company’s customers and shareholders, who do have a right to that information.
Unconfirmed by the Sentinel was that Claflin, who is also the assistant superintendent for business services with the Etiwanda School District, and/or his heirs, stand to make somewhere in the neighborhood of $1.5 million from the lease of the property.
On Thursday, in response to an inquiry by the Sentinel, a secretary at the company said that Tiffany Leone, the company’s office manager, would respond to questions relating to the arrangement with Claflin. When Leone did not make contact with the Sentinel as had been indicated, the Sentinel tried to initiate contact with Leone, who was not available by press time.
-Mark Gutglueck


Leave a Reply