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City plans to issue bonds to buy water rights from defunct housing project
HESPERIA • The city of Hesperia signed a $31.7 million agreement to buy permanent water rights held by Ranchos Los Flores, LLC., according to a document obtained from the Mojave Water Agency on Wednesday.
The agreement, which was signed Oct. 3 by Mike Podegracz, the city’s manager, concerns
certain water rights and related interests, as it pertains to 5,971 acre-feet of base annual production rights held by Rancho in Summit Valley.
We are basically attempting to purchase the water rights, instead of leasing them like we have been for the last 15 years, Podegracz said.
We created a joint power authority to authorize the issuance of the bonds so we can acquire the rights.
If the council approves the bonds, and once escrow closes in mid-December, the city will be able to borrow the money at the same existing lease rate, Podegracz said.
Water issues can be confusing, but there are financial implications for any water company, district or municipality as they manage their various portfolios, said Kirby Brill, general manager with the water agency.
With any municipality, the impact of the purchase of water rights are unknown at first.
The 28-page document states that the agreement is between the city and R.E. Loans, a California limited liability company serving as attorney-in-fact for Rancho.
Initiated in the ‘80s, Rancho Los Flores would have developed a fifth of the city during an estimated 15- to 20-year build-out period.
The 10,000-acre project was approved by the city in 1990, and was projected to increase the city’s population by 50 percent.
But the 15,540-home development, between Ranchero Road and Highway 138, never got off the ground, as numerous setbacks plagued the project. The developers filed for Chapter 11 bankruptcy in January.
The housing project, which included an elementary school and golf course, went through foreclosure and is in the process of getting sold.
Terra Verde, a real estate investment and development company, is currently considering future plans for the property.
Source: Rene De La Cruz, Daily Press