Mayor forecasts water deal

The following article appeared in the April 19, 2006 edition of The Olympian.

At this point, it looks like the municipalities involved in the eminent domain condemnation process are negotiating the owner into a "willing seller" position for the water rights. Of course, how many options does the owner have while the property is under condemnation? Would anyone else want to purchase it now? What chance does the current owner have to actually obtain a fair and full market price for the water rights under these conditions?

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Mayor forecasts water deal
Tumwater’s Ralph Osgood expects cities to reach accord within one month

By Jim Szymanski
The Olympian

TUMWATER — A deal for Thurston County’s three major cities to purchase water rights from All American Bottled Water Corp. could be reached within a month, Mayor Ralph Osgood predicted Tuesday.

He made the announcement at an annual “State of the City” speech to the Tumwater Chamber of Commerce. At first, he predicted a deal in two weeks, but later in the day was more confident about a one-month negotiation period.

“We’re talking high-stakes negotiations here; they’re up and down from day to day,” Osgood said. “But I think they’re getting very close. I would hope we could get something within a month.”

Lacey City Attorney Ken Ahlf, who with his peers from Olympia and Tumwater is negotiating with All American, said there is validity to Osgood’s statement about a settlement in two weeks.

“Things are going well,” he said.

Ahlf declined to disclose details about the points of negotiation between All American and the cities because they haven’t been discussed with elected leaders from the three cities.

Asked whether the proposed settlement would allow All-American to retain water rights, the city attorney responded any agreement would protect the company’s interests.

Tom Lemly, the Seattle attorney representing All-American, couldn’t be reached for comment Tuesday.

Osgood said he was holding out hope that the water company might retain enough water rights in a deal to begin bottling water at the city’s former Miller brewery site.

“I want to see something happen at the brewery,” Osgood told about 50 members of the Tumwater Chamber of Commerce. “There are potentially 200 family-wage jobs to be had there. Around the state, people are actively competing to get those kinds of jobs.”

All-American has been a source of frustration for Olympia, Lacey and Tumwater after it failed to obtain sufficient financing since it acquired the former Miller brewery property in 2004. All-American has proposed selling its water rights to the cities, leasing 2.5 million gallons a day for its water bottling operations at a nominal fee and reaching a purchase price for the rest of the water.

Olympia, Tumwater and Lacey city officials have joined in condemnation proceedings against All-American out of fear they might permanently lose rights to the water if the company were to seek bankruptcy court protection. The cities want the water because it is an important natural resource for growth and development.

But city representatives are trying to avoid a lengthy and costly court condemnation process.

“The litigation will take at least a couple years and be incredibly expensive,” Olympia Councilman Joe Hyer said Tuesday. “If they (All-American) fail to perform, we don’t want them to have water rights.”

At the same time, Osgood said he was holding out hope that All-American could obtain sufficient financing in a sale of water rights to start bottling water.

Nearly 400 employees lost their jobs when Miller closed the brewery.

Were All-American to retain some water rights, it would be a “very strong competitive edge” in the company’s stated goal of converting the brewery into a water bottling plant, Osgood said.

Talks aimed at a deal are delicate enough that he can’t predict success just yet, Osgood noted.

Initially, Olympia moved on its own to condemn the brewery property, which angered city officials in Tumwater and Lacey. Though the cities now are cooperating on a deal to share the water rights, Osgood said the wounds from Olympia’s solo move are healing slowly.

“There’s no question that the action Olympia took hurt the trust between the cities,” Osgood said. “The relationships are a little tense right now. We’re walking very carefully with one another.”

Hyer, too, cautioned that the cities’ talks with All-American are not guaranteed to succeed.

“There are so many things that could upset that,” Hyer said.

Officials want to pinpoint how much water there is and who would pay to treat the water to improve its taste, Hyer said.

Until Olympia’s interests can be best protected, Hyer said he would not predict that a deal will be worked out.

“We want to make sure that any deal we make with them protects the city’s interests,” he said.

Further, Hyer noted, any deal would take the approval of 21 elected officials in the three cities.

It’s still too early to assume political support for a water deal, Hyer said.

Olympian reporter Christian Hill contributed to this report.