Clear Lake debate intensifies over city proposal to consolidate Highlands Water Company

City officials and dozens of residents traded sharply different accounts on Thursday over a city proposal to consolidate three local water providers into a single public utility, a move city staff say is needed to fix aging infrastructure and expand access to grant funding.

The dispute dominated public comment and a lengthy staff presentation at the Clear Lake City Council meeting. "Highlands' existing system is not reliable," the city manager said in a presentation summarizing engineering reports that flagged insufficient supply, a treatment plant at capacity, a leaking storage tank and an aged distribution network that does not provide adequate fire flows.

Residents and water-system employees pushed back. Jeff Davis, general manager of Highlands Water Company, told the council he would not "engage in negotiations aimed at the takeover of the water company" and appealed for respectful engagement. Pamela Centelli, a Highlands operator, described the work of certified operators and warned that infrastructure changes alone do not alter source water quality.

Company counsel also made a formal legal argument. Brian Hughes, attorney for Highlands Mutual Water Company, read a letter rejecting the city's request to reconvene or void an April 10 shareholder meeting and said the city's claims "appear to be a political decision" rather than a valid legal basis to force a new meeting.

Supporters of the city's approach said consolidation would improve safety and affordability and unlock outside funding. The city manager noted the city has secured more than $30,000,000 in grant awards in recent years while Highlands has received no planning or construction funding since at least 2017. He said consolidation could reduce rate pressure by allowing the utility to access larger grants and streamline systems.

Opponents raised a mix of legal, fiscal and procedural objections. Frank Costner, general manager of Kanaka County Water District, disputed factual statements the city posted online and said his district had spent $17,000,000 in grant funds to upgrade its plant. Several residents said the city should hold a town hall before pursuing structural changes and suggested the city focus on basic services like roads.

Council members did not take a formal vote on consolidation Thursday. The mayor and city manager said the matter would return on future agendas for further public discussion and potential formal action.

Next steps: The city indicated it will add more material to upcoming meetings and continue to post information on the Clear Lake water providers page; council encouraged attendance at future hearings.