- The lake lease originally was signed between Temescal Water Company and Temescal Properties in 1968.
The term of the lease was for 55 years, until December 31, 2022.
- The lake lease was for surface rights of the lake to belong to and be paid for by the property owners in the new development of Canyon Lake.
- The dam and water in the lake was owned by Temescal Water Company.
- Over time, the Corona Land Company and then the Canyon Lake Property Owners Association (CLPOA) became the lessors.
- As early as 1984, the CLPOA attempted to get a fairer lease agreement by filing a lawsuit against Temescal Water. EVMWD entered that litigation after purchasing the lake from Temescal Water in 1989.
- In 2009, EVMWD changed the water rate in the Cost Increase Formula from “lowest current price per acre foot for water available for purchase by lessor” to “Tier 1 rate for full service untreated volumetric cost set by the Metropolitan Water District.”
- In 2013, with regard to lake maintenance, the CLPOA sought to get answers to questions such as:
What is EVMWD supposed to do as the landlord?
What is CLPOA supposed to do as the tenant?
- Rather than answering those questions, EVMWD presented the CLPOA with a non-negotiable lease extension that would extend the current lake lease an additional 44 years, taking it to December 31, 2066. It offered an amendment to the lake lease that would change the rate escalator from Tier 1 to Consumer Price Index, along with a one-sided indemnity provision (no lawsuits allowed by lake users against EVMWD).
- In 2014, the CLPOA sought further negotiations with EVMWD to discuss the Base plus Cost Increase Formula, pointing out that Canyon lake could not afford the predicted increases, which would escalate at an average of eight percent per year compounded.
- The CLPOA said, “Under the current rate and scheduled increases, the cost per year will exceed $3,000,000 in less than 10 years and over $6,700,000 in less than 20 years. Given an eight percent compounded increase per year, the total amount spent on the lease over the 50 years would be over $833,000,000. Even at an increase of five percent, the total cost to the members of Canyon Lake would exceed $300,000,000 over the 50 years of the lease.
- The CLPOA hired top water attorney Scott Slater to provide legal advice on the lake lease. Slater is described as “one of the nation’s foremost experts in water policy and groundwater law.”
- According to the CLPOA, EVMWD Attorney John Brown put a stop to talks between representatives of the EVMWD Board of Directors and CLPOA Board of Directors.
- In February 2015, CLPOA Legal Counsel Scott Levine began making presentations about the lake lease situation at the regular Board meetings. He warned members that EVMWD would begin a “scare” campaign.
- On February 18, the CLPOA notified EVMWD that it was making a claim for the return of $6,231,134 plus interest at the legal rate. This was based on passage of Proposition 26, an amendment to the California Constitution that CLPOA alleges made the charges imposed by EVMWD an illegal tax.
- On February 27, the CLPOA issued a press release on this claim that can be read at www.canyonlakepoa.com. (Under Media Releases, see “CLPOA Seeks Return of Illegal Tax From EVMWD.”)
- On March 15, the CLPOA did not make its quarterly Lake Lease payment of $344,303 (apparently part of the strategy devised by attorneys to get EVMWD “back to the table.”)
- On March 18, EVMWD filed a Notice of Default and sent a letter to Canyon Lake residents warning the CLPOA that the lease could be terminated, resulting in the loss of recreational privileges on the lake.
- On March 20, the CLPOA filed a “Complaint for Declaratory Relief” asking the court to define the respective rights and responsibilities of the CLPOA and EVMWD with regard to shorezone boundaries and improvements made by “Lakefront Homeowners.” (This lawsuit and the others can be read at www.canyonlakepoa.com.)
- On March 26, EVMWD filed a cross-complaint on the CLPOA’s first lawsuit and rejected Canyon Lake’s claim that the district owed more than $6 million.
- On April 2, the CLPOA held a town hall meeting at the Lodge to go over what was taking place with the lawsuits. Corporate Counsel Levine explained why the CLPOA withheld the lease payment and said that just because EVMWD claims Canyon Lake is in default doesn’t make it true. The CLPOA contends that it is not in default because it has overpaid on the lease. Levine said that only a judge can determine who is in default on the lease. He also assured members that the CLPOA would not lose lake privileges and that, even if a judge determined the Association was in default, the lease agreement gave the CLPOA two years to cure the default.
- On April 7, the CLPOA Board of Directors voted unanimously to make the lease payment as an act of good faith, saying that EVMWD had indicated it would agree to meet in a mediation setting with the Board Members if the Association made the lease payment. On April 8, the CLPOA issued the quarterly payment check to EVMWD.
- On April 23, the CLPOA issued a press release saying that EVMWD was refusing to meet with the CLPOA.
- On April 29, EVMWD Attorney Brown notified the CLPOA by certified mail that it was returning the check for the lease payment, saying in part, “The District cannot accept the check until the entire amount of the default is paid. In order to cure the default, the POA must reimburse EVMWD for its expenses incurred in enforcing the provisions of the lease . . . Those expenses in the amount of $132,157.62 have been deducted from the POA’s deposit.”
The letter continued, “Your attorney seems to suggest the POA was not in default, although it had failed to make its required lease payment. The POA was and continues to be in default and there simply is no provision in the Lease Agreement that offsets or reduces required lease payments, which are fixed, because the POA asserts it has overpaid.”
Attorney Brown further explained that at no time had EVMWD agreed to mediation if the lease payment was made.
Finally, he stated, “Given the possibly grave consequences of the POA’s decisions to default, let alone declare the Lease Agreement unconstitutional, I must remind you that one of the real consequences of the POA achieving what it hopes to achieve legally, may be the circumstance that the POA, as well as members of the POA, may no longer be permitted or able, as a matter of law and public policy, to make recreational use of Canyon Lake.”
Among other comments, he said, “I can assure you every effort has been made to sit at the table and negotiate. Your Board is well versed and understands everything going on. You’re all acting on assumptions. You’re making up facts that don’t exist. The only people who know what’s going on is our Board and their Board. What EVMWD is telling you is not the truth. Do you think they care about the citizens of Canyon Lake? They care about money – how much they can get from you. Everything they’re doing is designed to get your money. When you get on social media and chatter about how the water district is right, you empower them more.”
He once again explained that just because EVMWD claims Canyon Lake is in default doesn’t make it true. Only a judge can determine who is in default on the lease.
- By the time the lengthy explanations and discussion were concluded at the May Board meeting, a number of residents agreed with a recommendation by one of the speakers, and endorsed by President Eilers, that Canyon Lakers should attend the EVMWD Board meeting on May 14 to demand that the EVMWD Board sit down with the Canyon Lake Board to continue negotiations on the lake lease.
- On May 8, POA General Manager Christopher Mitchell responded to the certified letter EVMWD Attorney John Brown sent to the CLPOA Board and General Manager on April 29. (See letter on Page A-12, provided to The Friday Flyer at the direction of President Eilers and General Manager Christopher Mitchell.)
- On May 14, a rainy afternoon, It was estimated that some 100 Canyon Lakers were in attendance at the EVMWD Board meeting in Lake Elsinore.
- On May 20, President Eilers reported the check for the lease payment had not yet been cashed by EVMWD.
See www.canyonlakepoa.com to view various presentations and videos explaining the lake lease and lawsuits, as well as copies of the lawsuits themselves.