metroactive.com | sanjose.com | metrosiliconvalley.com | JULY 11-17, 2018
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Santa Clara city officials are cutting ties with the local chamber of commerce, citing a preliminary audit that identified potential self-dealing and conflicts of interest in its management of the convention center and visitors bureau. Last month, the City Council—led by Mayor LISA GILLMOR’ s majority bloc—voted to let the decades-old contract with the Santa Clara Chamber of Commerce expire, giving the business advocacy group two months to wrap things up and pay off the 15 employees funded by the $1.5 milliona-year deal to oversee the Convention and Visitors Bureau. “We did not want those people to lose their jobs, but the chamber put us in a bad position,” Councilwoman KATHY WATANABE tells Fly about the decision, which stems from the Don’t city’s realization that the chamber’s yearly forget management fee soared to tip! from about $45,000 to $145,000 a year FLY@ sometime in 2015 with METRONEWS. little to no justification. COM But sources at the chamber, which for the past year or so has been led by CEO NICK KASPAR , claim that the city jumped the gun by casting the nonprofit in a bad light without giving it a chance to fully respond to concerns raised by independent auditors, whose review—for what it’s worth—has yet to even be finalized. “The city painted us in this awful light, saying we were misusing public funds,” says a chamber source who spoke to Fly on condition of anonymity. “But that’s not the case. ... Our name is being dragged through the mud here.” The audit may still be underway, but the city had enough information to make a judgment call, Watanabe says. “We don’t want to continue to throw money at them knowing that there’s been self-dealing and questionable management practices,” she says. “We may not know the extent of the problem right now, but we know enough not to risk giving them any more of our money.”
COAST TO COAST San Jose Water CEO Eric Thornburg has been presiding over a pending merger with his former company 3,000 miles away.
Water Co. Merger Sparks Bidding War BY JENNIFER WADSWORTH A planned tie-up between San Jose Water Company and another investorowned utility on the East Coast has morphed into a four-way merger battle—and now state regulators want to take a closer look at the deal. The California Public Utilities Commission (CPUC) in June notified SJW Group—the private corporation that owns San Jose Water—that it must seek regulatory approval for its proposed merger with Connecticut Water Service Inc., which stands to create the third-largest investor-owned water utility in the nation with an equity value of about $1.9 billion. SJW Group’s board of directors told shareholders that it would finalize the merger without CPUC approval, a process expected to add months to the acquisition. Despite SJW Group and Connecticut Water agreeing to combine forces, the CPUC review has brought other prospective bidders to
the table. Eversource Energy, which had an offer for Connecticut Water rejected earlier this year, is reportedly poised to make another pitch. Meanwhile, SJW Group has been battling what it calls an attempted “hostile takeover” by the California Water Services Group, known as Cal Water, which is also headquartered in San Jose. Cal Water, in turn, has characterized SJW Group’s response to its “good faith offers” as a “hostile public attack” and has called the pending merger between the San Jose utility and its East Coast counterpart fraught with conflicts of interest. For one thing, Cal Water noted, SJW Group’s current CEO, Eric Thornburg, led Connecticut Water for 11 years before taking the helm at San Jose Water last November— four months before the companies announced the planned merger. “The ‘merger of equals’ appears to be nothing more than the SJW CEO
bringing together his current and former companies at the expense of SJW stockholders,” Cal Water wrote in a communiqué to shareholders. San Jose Water spokeswoman Jayme Ackemann bats away Cal Water’s insinuation of malfeasance as part of a longstanding campaign to undermine the deal. Another of Cal Water’s criticisms of the San Jose-Connecticut merger is that it would burden ratepayers by creating a company with two headquarters—one of them 3,000 miles away. If Cal Water bought out San Jose Water, it would put the latter company’s executives— including Thornburg—out of a job. Cal Water spokeswoman Shannon Dean says all other positions from management down, however, would be safe. “We guaranteed that there would be no employee layoffs below the executive level,” she says. “We definitely wouldn’t need two CEOs.”