RANCHO MURIETA, CA (MPG) - Already reeling from a new requirement to build a third water tank before water meters can be issued, the developers of the Residences subdivision were dealt another blow at the Oct. 15 Rancho Murieta Community Services District Board meeting: a second condition that could halt their project and potentially bankrupt them.

The new demand concerns River Canyon Properties’ alleged failure to reimburse other developers who advanced funds to cover the development share of a new water tank built in 2014.

After the district issued will-serve letters in 2024, construction began on three homes in the first phase of the 198-lot subdivision, and grading was completed for phase two.

After more than an hour of often-tense discussion, the board and the developers agreed to convene a meeting of key stakeholders as soon as possible to address all outstanding issues affecting the Residences.

CSD-Developer Meeting

Contacted Oct. 19, Keil said the private meeting was scheduled for the next day and that the district’s team would include Board President John Merchant, Director Bill Gere, Interim Operations Supervisor Travis Bohannon, District Counsel Patrick Enright and Engineer Joe Domenichelli. The developer team would include Keil, partner Doug Veerkamp, Engineer Mike Robertson, and Carol Anderson Ward and Tony Velez from Rancho Murieta Properties, which owns the most likely sites for a third tank.

FSA 670 Reimbursement

Although the Residences subdivision appeared on the Oct. 15 agenda as an action item, no background materials were included in the board packet. At the meeting, Interim General Manager Amelia Wilder provided an overview of Facility Services Agreement 670 and how it applies to the Residences subdivision.

The FSA was created in 2014 as a cost-sharing agreement between the district and developers to fund the construction of a new water treatment plant. Under the agreement, developers who had projects ready to build at that time contributed money upfront, while those who developed later were required to reimburse the early contributors through the district once their projects moved forward.

Wilder said the reimbursements must be made before the district issues will-serve letters, which allow developers to connect to the community’s water system. For the Residences subdivision, she said, that obligation totaled $1,966,182.

Wilder also explained that a shortfall agreement from 1991-1995 requiring developers to fund infrastructure had been folded into the FSA. It requires Residences to pay an additional $5,900 per equivalent dwelling unit: about $1.17 million.

While acknowledging that the district’s accounting records are incomplete, Wilder said she had no record of Keil paying any reimbursement.

“We should not have issued will-serve letters.”

Keil responded that he had paid an invoice of more than $350,000 and said the matter had not been raised with him before the meeting.

“This was all sprung on me,” he said. “There was no advance warning of what we are going to talk about tonight.”

Keil also said he felt unfairly portrayed publicly.

“I’m sick of being labeled a ‘grifter’ or a ‘greedy developer’ on the internet because of past discussions at district meetings,” he said. “To have this pulled out and put out here in this forum is another example.”

 

Former Director Steve Booth urges the board to hold a district-developer meeting as soon as possible.

Water-Meter Letter

The discussion also covered a Sept. 16 letter issued by District Counsel Patrick Enright stating that the district would not issue water meters for the Residences unless River Canyon agreed to a framework for constructing a third water tank. The letter was not publicly disclosed until Oct. 2 and 3 district meetings. Keil called the condition “extortion.”

Except for Merchant, other board members said they had not known about the letter.

Veerkamp’s Plea

Considerable discussion about both water meter requirements followed, with board members, Keil and several residents weighing in. The most striking testimony came from Doug Veerkamp, who joined the Residences project as the infrastructure contractor and later became a partner in River Canyon Properties after the death of former partner John Sullivan.

Veerkamp said he and his family have been in business for 42 years and have completed numerous projects in Rancho Murieta and elsewhere. He said they chose Rancho Murieta because of its strong reputation and community assets, investing more than $15 million so far, with another $12 million to $15 million planned for phase two of the Residences subdivision.

Veerkamp expressed deep frustration over the ongoing uncertainty surrounding water-meter commitments and the shifting requirements for development.

“I’ve never in 42 years in business run into a bigger mess,” he told the board.

“Please, don’t make me regret investing in Rancho Murieta,” he said. “I can’t wait ’til we’re all done and then we don’t have water meters. I’ll be bankrupt. I’ll be done. My whole life savings, my retirement will be gone and wiped out.”

Calls for a Meeting

As consensus grew around the need for a district-developer meeting, Director Maybee and former Director Steve Booth – who often disagreed when they served together – both urged that it happen quickly.

Booth said he was tired of reading about the accusations going back and forth.

“Mr. Keil deserves to have a meeting as soon as possible,” Booth said. “Let’s get everyone who needs to be in the same room.”

Who Authorized Letter

Director Tim Maybee first raised the question of who had authorized Enright’s third water tank letter early in the meeting.

Enright said he issued it after receiving a Sept. 10 email from Keil’s attorney threatening to sue (because the district had not approved the improvement plan for phase two.) After buying some time from the other attorney, “I was able to consult with everybody, but I was the one who sent the letter,” he said.

When the River Valley Times asked later whether the addition of a new water-meter condition without direction from the full board might violate open-meeting laws, Enright said it did not.

“The decision was made primarily by staff and the Ad Hoc Committee,” he said. “Could it have been more transparent? Yes. I wish I would have sent it to all five board members.”

He added that the letter’s purpose was to start a discussion about the need for a third tank, saying it may have sounded “too legalistic” because it was written to another attorney.

Merchant has mostly been the sole member of the Ad Hoc Committee guiding staff since the departure of the general manager. Director Gere, who joined unofficially after his appointment to the board, said at the Oct. 3 meeting that he had not been informed about the letter.

Other Business

In other business, the board covered a wide range of topics during the nearly five-hour meeting. They included conflict-of-interest complaints filed against three directors, recognition of an employee for 15 years of service; staff updates on finance, utilities, security and IT; formation of a water working group; and a dispute over responsibility for replacing drainage culverts that are failing under a road at the equestrian center. That matter was tabled.

The board also approved expenditures for infrastructure repairs and improvements along with new body cameras for the security department.