RANCHO MURIETA, CA (MPG) - A previously undisclosed letter imposing a new condition on the owners of the Residences subdivision was described as “extortion” at two Rancho Murieta Community Services District meetings on Oct. 2 and 3.

The Sept. 16 letter from District Counsel Patrick Enright states that the district will not issue water meters for the lots unless River Canyon Properties agrees to a framework for constructing a third water tank. Construction has already begun on the first phase of the 198-lot subdivision, following the district’s issuance of will-serve letters in 2024 (see "CSD Board Votes 3:2 to Provide Water to Entitled Subdivisions").

Speaking at the Oct. 2 Improvements Committee meeting, developer Bob Keil said the new condition would bankrupt him.

“Having Mr. Merchant (Board President John Merchant) withhold my meters and my improvement plans for a month until I sign for 100% of a new tank is nothing short of extortion,” Keil said.

Merchant, who co-chairs the committee, did not respond to Keil’s contention because he was absent from that meeting. However, at a special board meeting the following day, Oct. 3, Merchant said, “That was not a letter I asked Mr. Enright to write.”

However, Merchant explained what had prompted the letter.

“I think what generated the response is that you showed up here and told Amelia (Interim General Manager Amelia Wilder) if you didn’t have meters in 24 hours, you were going to sue us,” Merchant said.

At both meetings, it became clear that the new requirement had been imposed without prior discussion or action by the full board, a process that could violate California’s open-meetings law.

The River Valley Times was unable to seek comment from Enright, who was out of town until Oct. 7.

The paper also did not follow up with LGI Homes representative Jonathan Liesch, who addressed the board at its meeting on Sept. 17. Liesch had asked for the board’s help after district staff refused to accept fee payments so he could obtain water meters for model homes under construction and declined to inspect open trenches that posed a safety hazard.  Merchant and Wilder confirmed after the meeting that the district inspected the trenches the following day and accepted payment for seven water connection fees on Oct. 2.

Improvements Meeting

A major topic at the Oct. 2 Improvements Committee meeting was a presentation by Joe Domenichelli, the district’s contract engineer. He outlined five potential locations for constructing a third water tank and presented cost estimates ranging from $7.8 million to $9.8 million. However, his comments made it clear that construction would be a long way off due to the project’s complexity.

The engineer first recommended building a third tank in 2024 after investigating why water levels in the Rio Oso tank had dropped so sharply during hot weather in July. When Domenichelli presented his formal report last spring, he again emphasized the need for a third tank and proposed an interim solution to address the issue until construction could occur (see "Water Tanks, Emergency Supplies are CSD Meeting Topics").

The board approved that interim measure – installation of a throttling control valve at the water treatment plant – to help equalize water levels between the two existing tanks. The improvement is expected to alleviate over-drafting at the Rio Oso tank and provide sufficient capacity to serve the first phase of the Residences subdivision. To date, however, the only formal board action related to a third tank has been to authorize Domenichelli to prepare related reports.

After the engineer finished his presentation about five possible well sites on Oct. 2, Keil jumped up to comment.

“I have received a letter from Mr. Merchant, drafted by Mr. Enright, that in order for him to release water meters to my projects where houses are underway, I would need to pay the entire cost for a water tank at about $9 million,” he said, adding that the demand “would bankrupt him and was nothing short of extortion.”

Merchant couldn’t respond because he did not attend the Improvements Committee meeting. Director Randy Jenco, who serves on the committee with Merchant, said he didn’t know anything about the Sept. 16 letter sent to Keil’s attorney.

“I don’t know if other board members are in the loop on that, but I have not been,” Jenco said.

Keil also spoke at length about related topics, including how he had met all the requirements outlined in the will-serve letters, offered to donate land for a tank site, and implemented water conservation measures in the Residences that would reduce demand on the Rio Oso tank. He argued that the district could adopt a similar staggered watering schedule in the upper zone currently served by Rio Oso, saying that even with just 30% participation, it could potentially delay or even eliminate the need for a third tank.

Ad Hoc Committee Meeting

The board held a special meeting on Oct. 3 to appoint a new Ad Hoc Committee to replace the one that has been providing direction to staff since January in the absence of a general manager. Former Board President Steve Booth and current President John Merchant initially served on the committee, but after Booth stepped down, Merchant continued alone. Merchant noted that Director Bill Gere began assisting him after his recent appointment to the board.

The board agreed that two of the new committees’ primary responsibilities would be to answer staff questions and initiate the process to hire a new general manager. Directors plan to bring additional suggestions for the committee’s duties to the Oct. 15 board meeting. The board also agreed that Merchant and Gere would serve as the committee members.

Keil raised numerous concerns during the public comment period. He began by reviewing the original purpose of the Ad Hoc Committee, which Booth had formed at the Dec. 6 board organizational meeting. Its intent, he said, was to serve as a liaison between the board and staff on six issues, four related to water, one addressing overdue audits and another concerning security alignment.

“However, none of those things granted Mr. Merchant the ability to unilaterally impose conditions on approved projects requiring me to build a $9 million tank at my expense or I don’t get any of my meters,” Keil said. “None of those granted Mr. Merchant the ability to instruct staff to break district policy on will-serves by instructing staff not to do inspections, not to issue invoices for meters, not to issue meters… and instructing the district engineer to add language to improvement plans restricting the issuance of meters.”

Keil added that the process had not been transparent.

“It is my recommendation that you don’t pass it today until you have specific guidelines. Two, that you look at the composition of the ad hoc committee and at least add somebody else to watch them, either from the public or somebody else from the board,” he said. “This ad hoc committee has let him run amok, and I need it to stop.”

Keil also pointed out that the Sept. 17 letter Enright sent to his attorney outlining the new condition for a third water tank had been copied only to him and to Wilder.

Merchant responded, “That was not a letter I asked Mr. Enright to write.”

“So, Mr. Enright did it on his own without board direction?” Keil asked.

Director Tim Maybee intervened. Saying he hadn’t seen the letter, Maybee asked Keil to send information about his concerns to the board and attempted to steer the discussion back to the agenda item.

But Keil persisted, arguing that it was a mistake to allow the Ad Hoc Committee to continue operating without clear direction until the details were finalized at the next meeting. He also noted that the board packet didn’t contain any supporting materials about the formation of a new committee, such as a resolution.

Wilder responded that a resolution was not required for an Ad Hoc Committee because the board president has the authority to form one.

“The Ad Hoc Committee doesn’t have the authority to make decisions, only a quorum of the board,” she said.

When Keil asked Wilder whether the district’s attorney had the authority to act without board direction, she told him no.

“Have you seen the letter?” Keil then asked the board.

Merchant replied that he had.

“The attorney’s job is to evaluate what is happening and to tell us if what we are proposing to do is within the limits of the law,” he said.

Keil asked for a show of hands from board members who had not seen the letter but Merchant spoke over him.

Wilder then announced she would read the letter aloud.

“Because I do have a public request for this, it is going to be on Nextdoor tomorrow,” she said.

The letter began by stating that the district engineer would approve the completed Phase II infrastructure improvement plans, as Keil’s attorney had demanded in a Sept. 10 letter.

However, the letter went on to state that the district and River Canyon Properties needed to address storage capacity in the Van Vleck and Rio Oso tanks. It outlined four requirements for establishing a framework to do so, including one stating that the cost would be apportioned among the district, River Canyon Properties, and any future developments that would benefit from the new tank, effectively meaning Keil wouldn’t be required to pay the entire cost.

“With the construction of the first homes not being completed until early 2026, this gives the parties 90 days to agree on a new framework for a new water tank to service the Residences lots,” the letter concluded.

Gere suggested that the board hold a special “Bob meeting” in a month to consider Keil’s concerns. But Keil said he needed a meeting the following Monday because he couldn’t wait.

“I’ve got contracts. I’ve got builders. I’ve got responsibilities,” he said. “John’s whole thing is just to bankrupt me by pushing this thing down the road until everything fails.”

Although Gere tried to steer the discussion back to the agenda item, Merchant and Keil continued to argue.

Merchant pointed out that Enright had written the letter to Keil’s attorney, not to him.

“This is good information to have,” Keil responded. “Without board authorization, your attorney responded to my attorney’s request by conditioning my project.”

Merchant said the letter had originated after Keil showed up at the district office and told Wilder, “If you didn’t have meters in 24 hours, you were going to sue us. Don’t say that you didn’t do that.”

Keil replied, “You have opened a can of worms here.”

The board then returned to discussion of the agenda item, the formation of a new Ad Hoc Committee.