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Moulton Niguel Water District to pay $4.8 million in settlement of treatment plant dispute

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The city of Laguna Beach and the Moulton Niguel Water District, South Coast Water District and Emerald Bay Service District share ownership in the Coastal Treatment Plant at Aliso Creek, pictured.
(Courtesy of South Orange County Wastewater Authority)

The Moulton Niguel Water District will pay $4.8 million as part of a settlement agreement in a dispute over its share of the costs for a sewage treatment facility and will continue paying invoices related to its contractual obligation through the contract’s end in 2030, according to court documents.

The settlement, announced Monday, comes two years after the South Orange County Wastewater Authority and its member agencies Emerald Bay Service District, South Coast Water District and city of Laguna Beach filed a lawsuit against Moulton Niguel in May 2017. The districts and Laguna own percentages of the plant.

The suit alleged Moulton Niguel violated contractual agreements as an authority member and failed to pay $755,871 in bills for infrastructure projects at the treatment facility. The figure reached $2.1 million by the time the agreement was filed May 10 in Riverside County Superior Court.

Moulton Niguel agreed to pay the $2.1 million owed for past invoices reaching to July 2016, as well as $2.7 million to reimburse the plaintiffs for legal fees, according to the settlement.

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“The parties have agreed to resolve their differences on mutually agreeable terms,” the agencies said in a joint statement Monday. “They all look forward to working together in the future toward the betterment of the region and the coastal environment.”

The Moulton Niguel district declined further comment.

“Nearly two years ago, we were forced to litigate to protect ocean water quality and the financial interests of our ratepayers,” Laguna Beach City Councilwoman Toni Iseman said in a statement. “Today, we’ve signed a settlement agreement that achieves these goals remarkably well.”

The agreement followed a February ruling by Riverside County Superior Court Judge Randall Stamen that the contract, which began in 1980, is valid through Feb. 19, 2030, not until 2026, as Moulton Niguel argued. The district said it wanted to extricate itself from the financial obligations associated with the wastewater facility, according to Stamen.

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Moulton Niguel filed its own lawsuit in August 2017, alleging that Laguna Beach and the South Coast and Emerald Bay districts had breached contract terms by requiring Moulton Niguel to pay for infrastructure improvements it did not vote to approve.

The work was intended to help extend the life of the plant, which treats 6.7 million gallons of raw sewage per day. The facility, near Aliso and Wood Canyons Wilderness Park, serves Laguna Beach, Emerald Bay, Dana Point, Aliso Viejo, Laguna Niguel, Laguna Hills, Mission Viejo and portions of San Juan Capistrano.

The dispute was set off when Moulton Niguel voted against the adoption of the South Orange County Wastewater Authority’s 2016 budget. It was the lone “no” vote, and Moulton Niguel proposed that SOCWA transition from a system in which each agency got one vote to a weighted voting system, which would have given Moulton Niguel the most voting power.

As part of the agreement, the parties consented to a unified interpretation of the contract that states that a two-thirds vote of Project Committee 15 — composed of the four agencies — is needed to pass operations and maintenance budgets or approve repair, replacement and rehabilitation projects at the treatment plant. Moulton Niguel previously disputed certain costs that it claimed should have required a unanimous vote.

“We believe this is a good settlement agreement for all involved,” South Coast Water District director Dennis Erdman said in a statement Monday. “It ensures that the Coastal Treatment Plant will have the necessary funding to operate effectively and that our three agencies will be reimbursed for legal expenses. More importantly, it puts us on a path to planning for the facility’s future to optimize its value to south Orange County.”

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