Winery, Neighbors in Water Fight

The popular Agua Dulce Winery will remain closed while Los Angeles County planners study complaints neighbors have brought against it, county officials ruled in a meeting with owners Tuesday.

In a further complication for the beleaguered business, a Los Angeles County sheriff’s detective Tuesday said winery co-owners Don and Cathy MacAdam are the subjects of a criminal investigation on suspicion they embezzled funds while they were directors of the water company that serves the residents of a nearby subdivision.

The MacAdams’ attorney, Larry Layton, said that he was confident his clients would not be charged. Winery representatives could not be reached for comment on the decision to keep the business closed, but in an earlier statement, they said such a closure would “destroy what has taken several years to build.”

Both developments stem from a dispute between the MacAdams and residents of the adjacent Sierra Colony Ranch subdivision. Some homeowners there allege that the winery, using unauthorized pumps and a disputed well, has been drawing water that rightfully should go to the homes, resulting in water service disruptions.

Other complaints about noise, crowds and traffic prompted county officials to order the winery to close earlier this month, revoking a waiver that allowed it to operate while awaiting a July hearing on its zoning permits. After a meeting with the owners Tuesday, County Supervisor Mike Antonovich’s planning deputy Paul Novak said the business might be allowed to reopen before the July meeting.

The issue is emotional for residents of the small desert town of Agua Dulce, where water is precious. Many homeowners drill their own wells or have their water trucked in.

Don MacAdam said no water was stolen from residents. The water shortage, he said, was caused by the residents irrigating their lush lawns.

“They’re using more water than they can pump,” he said.

The winery and subdivision both draw water from the same underground aquifer. But there is disagreement over rights to a system that was built to pump the water out.

Last summer, when residents began experiencing intermittent loss of water service, they suspected that water from their system was being diverted to the vineyard. In July, they hired backhoe crews to dig around the system, and, according to court documents, discovered “unpermitted connections” running from the water system to the vineyard.

MacAdam said a separate system is used to irrigate the grapes. The pipes the residents discovered, he said, led to the winery’s sprinklers.

In August, the winery sued the neighbors for trespassing. Mediation proved unsuccessful, said resident Manny Fernandez, and the groups are due back in Los Angeles Superior Court next month for a status conference, attorneys said.

The vineyard land and the adjacent subdivision parcel were once owned by developer Ray Watt, who is the winery’s third co-owner. According to court documents, Watt had planned to build a large subdivision on both properties.

To gain county approval for his plan, Watt made infrastructure improvements using special public certificates called Mello-Roos bonds, which are typically paid off by residents who benefit from them. The bonds funded 60% of the $2.6-million water system, according to court documents.

Watt sold the land during the recession of the mid-1990s, but bought some of it back and began growing grapes.

The MacAdams became partners in the vineyard. They were also directors of the SPV Water Co., which owns and controls the water system.

The problems boiled over in June, when the water system’s pump broke down for a few days, according to the winery’s complaint. The surplus in the system’s storage tank began dwindling, and MacAdam asked the 40 homeowners in the subdivision to cut back on water usage.

In turn, the residents alleged that the winery was stealing as much as 100,000 gallons of water per day, according to court records.

The winery owners contend that they have used a small amount of SPV’s water in their buildings but not in the vineyard. They argue that they have a right to it because the winery owns some shares in the water company. The homeowners now say the company had no right to the shares and, by extension, no right to the water.

The MacAdams say they resigned from the water company after a heated meeting with residents in July. Fernandez said the couple was voted out of their directors’ positions, and that he and two other homeowners took over as directors. Later that month, they brought in the backhoes.

The winery’s lawsuit names the water company as a defendant, as well as Fernandez and the owners of four other Sierra Colony homes.

Fernandez said the residents shut off the water lines leading to the winery buildings. But he believes the winery is also using water from a well that is part of the water company’s system. The company is demanding the return of that well, even though it sits on vineyard property.

As the new president of the water company, Fernandez is also demanding hundreds of thousands of dollars from the winery for alleged water use, lawyers’ fees and money residents expected to be in the company coffers when residents took over.

Don MacAdam calls those demands extortion.