The Friday Flyer • July 7, 2017

CANYON LAKE’S NEWSPAPER • JULY 7, 2017
Canyon Lake Middle School announces new cheer team Pg. A5
Yacht Club awards scholarship to CL graduate Pg. A7
Former editor enjoys romance, thrills in Baja Pg. A9
New lake lease contributes to significant savings for Canyon Lake
BY STEVE LIBRING
SPECIAL TO THE FRIDAY FLYER
Outstanding concerts are being host- ed at the lodge, Fiesta Day was again a huge success, triple digit heat is bring- ing residents out to enjoy the lake and pool, and residents just celebrated the largest attended event in Canyon Lake – the annual 4th of July Fireworks show. Just another day in a “Bit of Paradise” as residents are now busy getting ready for their summer vacations.
One key issue, not to be overlooked, is the announcement that the Canyon Lake Property Owners Association (CLPOA) is amending the lake lease with Elsinore Valley Municipal Water District (EVM- WD). This long-standing issue has fi- nally reached a resolve that both sides could support, and many benefits were achieved in the process, including but not limited to:
- EVMWD getting a guaranteed steady stream of revenue from this lease for another 49 years (to 2066).
- Provisions for CLPOA to extend the lease another 44 years beyond 2066 (to 2110).
- Both sides responsible for their own mistakes (instead of Canyon Lake being responsible for any fault).
- The lake north of the north cause- way is now under the same rules/lease.
- Disputes will be resolved through an improved mediation process.
- New insurance requirements to help prevent future disputes.
- Annual increases are fixed to be no more than 4% in any one year.
- Lake lease payments will now be tied to the Consumer Price Index (CPI), not to the cost of water.
It is that last point that most signifi- cantly affects the community. The po- tential savings to each resident and the community cannot be understated. Sim- ply put, the lake lease was approved many, many years ago, tying the annual increases to the cost of the Metropolitan Water District’s cost of water.
During the initial years of the former lease, this increase wasn’t as significant and could be absorbed by the CLPOA in their annual budget. But as the years went on, it became clear that the cost of water (especially since we live in a drought area) would become increasing- ly costly and reach numbers that would be out of our ability to pay.
Consider that during the last 10 years alone, the cost of water had averaged eight percent increase per year (with some years as high as a 19 percent in-
crease). Even though there were many residents feeling the CLPOA Board of Directors should just finish out the ex- isting contract, which still had over six years left at the time, the cost of the lake lease could increase by almost another million dollars a year – from $1.4 mil- lion to nearly $2.4 million during that six-year time frame. An average eight percent estimated rate of increase would lead to exorbitant costs down the line that the residents and CLPOA would no longer be able to afford.
To better help understand how in- creasing costs at eight percent can quickly compound, here’s an example: it only takes nine years to double the price of the lease under the former terms. So, in 2016, when faced with the prospect of extending a new lease for an additional 50 years to 2066, the numbers become absolutely staggering.
The lease was nearing $1.5 million a year, and with eight percent per year average, it would become $3 million per year in just nine years. Then that $3 million a year annual payment would double up again to $6 million during the next nine years. After 27 years, it would double to $12 million; after 36 years, it would be $24 million; after
45 years, it would reach $48
million: and at the end of the contract a staggering $68 million a year under this present formula, based on the last 10- year pattern we were seeing. This gives a glimpse of what the CLPOA Board of Directors were dealing with all these years and why they elected to try to ne- gotiate for a better contract.
However, under the new contract, the annual increase is fixed to the Con- sumer Price Index (CPI). This indicator has been much, much lower over these last same 10 years (averaging approxi- mately two percent). So it would take 36 years to finally double up if it continues to average two percent. Canyon Lake’s contract of $1.5 million now - would only be about $3 million 36 years into the new contract and approximately $4 million annually in year 2066, not $68 million as with the previous eight per- cent example (see chart on A4).
Keep in mind, these are only the cur- rent annual lease payments increased by the percent increase, and showing what the new payment would be the following year. But when you add up each year’s expenditures cumulatively over the next 49 years it has serious implications.
At the eight percent former rate – the
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PHOTO BY MIKE CLARY