Battle Over Transparency Erupts at Gage Canal Company

A dispute over whether a water service company majority-owned by the city of Riverside should operate with public transparency has escalated into dueling legal actions.

Local watchdog Jason Hunter filed a Brown Act petition April 14 claiming the Gage Canal Company is a de facto public agency, while the company obtained a temporary restraining order against him March 27, alleging harassment of employees.

Hunter, who has a history as a utility whistleblower, argues that Riverside's 61% ownership of Gage Canal makes the company subject to open meeting and public records laws. Company management maintains it's a private entity despite city ownership.

"I think the city is operating it really as a subsidiary of Riverside Public Utilities, but without any transparency," Hunter told the Gazette. "As a member of the public, I think I have a right to attend their meetings and review their records."

Gage Canal General Manager Ben Alms declined to comment on Hunter's allegations, describing the situation as "a personnel matter" their attorney advised them not to discuss publicly.

The dispute reveals two conflicting narratives: Hunter's claim that company officials are blocking legitimate access to meetings, and Gage Canal employees' assertions that Hunter's behavior has been intimidating and disruptive.

Company History and Structure

The Gage Canal Company, incorporated in 1890, originally provided water from the San Bernardino mountains to the Arlington region of Riverside. The city purchased the company's water rights and canal infrastructure in 1965, acquiring a majority stake of 61% of the company's shares.

The agreement between the city and the company required Gage to operate the canal, according to Riverside spokesperson Phil Pitchford. The company operates 19 of the city's groundwater wells, and delivers about 24% of the city's water, Pitchford said.

According to Hunter's petition, property owners who relinquished their water rights now purchase water from Riverside.

Hunter's Brown Act petition argues that various city resolutions, condemnation proceedings, and operational agreements effectively transformed Gage Canal into a public entity.

"If that re-creation was not done expressly, then it was constructively achieved, and is an alternative reason to conclude that the Gage Canal board is the type of legislative body subject to the Brown Act," his complaint states.

Board Member Tom Evans confirmed that Gage Canal has not yet been served with Hunter's Brown Act complaint. In Alms' declaration supporting the restraining order, he flatly denies Hunter's central claims.

"(Hunter) is under the false beliefs that he is a shareholder-transferee of (Gage Canal) and (Gage Canal) is a public entity that requires public hearings. (Hunter) is wrong on both counts," Alms' declaration begins.

Shareholder Dispute

A parallel dispute involves Hunter's attempts to become a shareholder in the company. Hunter contends that existing shareholders, including Larry Brock and Richard Moslenko, tried to transfer shares to him but were blocked by company management.

Administrative assistant Katie Heggenberger stated in a court declaration that Brock requested a share transfer to Hunter on Jan. 8, 2024, but the process wasn't completed by the time Hunter attempted to attend a board meeting the following day.

Hunter and his supporters describe a pattern of obstruction they believe is aimed at preventing his scrutiny of company operations. According to a Feb. 7, 2024, letter to the Gage Canal Board of Directors from Hunter, Brock, Pongs and Moslenko, a different version of events occurred. The letter claims that Brock's share was confirmed by a secretary to have been immediately transferred on Jan. 8. It states that the park ranger called to the Jan. 9 meeting declined to involuntarily remove Hunter from the park, and that Hunter chose to leave on his own volition.

The letter further alleges that Moslenko attempted to nominate Hunter to the Gage Board. Gage Canal Counsel Kevin Randolph told board members that votes for Hunter would be invalidated. Pongs was threatened to lose his seat if he continued to support Hunter, according to the letter. Alms had sent an email to Brock that morning saying they needed to review the share transfer process.

"Alms, Salomon, and Randolph, acting in their individual capacities, i.e. without Gage Board approval, schemed to break with longstanding Gage practices regarding share transfers," they wrote.

Moslenko, a shareholder since 1998, told the Gazette that the company had previously allowed direct transfers between individuals, including his 2018 transfer of a share to Pongs without using a business intermediary.

"It's been that way for decades. Now, all of a sudden, when it's Mr. Hunter's name on the paper, they're not going to let it happen? That's not right. They just don't want Mr. Hunter asking questions and poking around Gage Canal's business," Moslenko said.

The city appears to have taken notice of the dispute. In an Aug. 14, 2023, letter to Gage Canal, Deputy City Attorney Anthony Beaumon acknowledged that while Gage Canal is a private company, the city has three representatives on the 11-member board. Beaumon asked the company to either consistently enforce or amend its bylaws regarding share transfers, noting that individual transfers had been allowed in the past.

Gage Canal attorney Kevin Randolph responded on Aug. 30, 2023, stating the company would "abide by the Bylaws as they currently exist."

Confrontations Lead to Restraining Order

The restraining order application includes declarations from four Gage Canal employees describing multiple confrontations with Hunter between January and March 2024.

According to Alms, Hunter attempted to attend company meetings on Jan. 9, Jan. 14, Feb. 11, and March 11, despite being told he wasn't a recognized shareholder. The declarations describe Hunter as pushing past employees, yelling demands, and creating an intimidating atmosphere.

In his filing, Alms claimed Hunter assaulted, battered or stalked employees and made credible threats of violence, though the specific nature of these alleged threats isn't detailed in the provided declarations.

"In a menacing voice, (Hunter) insisted that he was a shareholder and we were violating his rights. He repeatedly yelled these proclamations and demanded entrance into our office. While yelling, (Hunter) kept putting his hands in and out of his pockets. Employees were so terrified that he could be concealing a weapon, they ran into our security vault," Alms wrote.

Lopez echoed this concern in her declaration: "While Jason Hunter was yelling, I kept noticing that he was taking his hand in and out of his pocket. This made me fixated on his hands to see if he was going to pull out a weapon or if he had something in his pocket that he needed during the altercation."

The temporary restraining order requires Hunter to sell or store his firearms and prevents him from contacting seven company representatives: Alms, administrative report specialist Guadalupe Cruz, Heggenberger, Lopez, company president Eric Johnson, Gage Canal Foreman Jose Zambrano and Gage Canal Treasurer Jason Gless.

Hunter called these allegations "trumped up" and fraudulent.

"I have no concern whatsoever that I am going to have that TRO dismissed when I get to that TRO hearing," Hunter said, referring to his May 28 court date before Riverside Superior Judge Randall Stamen.

Hunter suggested the restraining order was filed without proper board approval, saying, "When you file an exaggeration against me, which could destroy my career, destroy my credibility, that is a line you have crossed."

"They just said, 'he's a menacing person who's harassing us,' showing up once a month to their building, and them slamming the door in my face," Hunter said. "I don't think they even said in there that I threatened anybody," he added by phone.

Accounts of specific incidents differ dramatically between the parties. A Jan. 9 interaction at the company's annual board meeting resulted in a park ranger being called. Alms stated Hunter was escorted away, while Hunter and his supporters claim he left voluntarily after the ranger declined to remove him.

Similarly, employee declarations describe Hunter as menacing during a Feb. 11 incident. Alms wrote that Gage Canal employees locked the door to prevent Hunter from getting in, after which Hunter yelled through the door.

Bookkeeper Alyssa Lopez stated she feared he might have a weapon when he put his hands in and out of his pockets while demanding entry to a board meeting. Heggenberger reported that Hunter's only explicit threat was to file a lawsuit against company president Eric Johnson.

On March 11, Hunter showed up again, and according to Alms, continued to "pound the security door and rattle the doorknob," causing an employee to run into the vault for safety. Lopez wrote that she entered the vault to monitor the cameras and planned to call the police if Hunter returned.

Moslenko defended Hunter's conduct throughout these interactions: "I think Jason is getting a raw deal. I've never known him to raise his voice. I've never known him to get red faced or angry."

Hunter's petition for a determination under the Brown Act and the company's request for a permanent restraining order both await court hearings later this month.