Santa Clarita Organization for Planning & Environment v. Castaic Lake Water Agency (2016) 1 Cal.App.5th 1084.

In a published opinion, Division 2 of the Second DCA upheld the right of GMSR’s client, the Castaic Lake Water Agency, to acquire all of the stock of a privately held water company via inverse condemnation, and rejected the contention that the transaction violated various provisions of the state constitution that bar public entity ownership of stock. The court agreed with GMSR that those provisions only apply where the entity only owns a portion of stock and hence is subsidizing private interests, and here the Agency acquired all of the stock of the private company, hence no private interest was being supported. It also agreed that in any event the transaction was authorized by a provision of the state constitution that allows stock ownership in order to assure the supply of water to the public. The court also agreed with GMSR that the trial court’s rejection of an alter ego claim against the Agency and its newly acquired subsidiary was supported by substantial evidence.

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