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Once-cozy company town divided on plan to sell water to Nestle

December 2004

U.S. Water News Online

McCLOUD, Calif. -- It's fitting that the snowcapped crown of Mount Shasta looms over this old lumber town like spring water promotion -- two major bottling plants are located at its base and a third is on the way.

But the latest project has divided McCloud, about 185 miles north of San Francisco, a former company town where the sawmill went silent last year.

When elected officials struck a 100-year deal to sell Nestle SA more than a half billion gallons of water annually, it was billed as the way to bring back industry and jobs.

It didn't take long for those who felt left out of the process to protest. Opponents say they were never asked if McCloud should make the economic transition from wood to water, question whether a provision letting Nestle drill wells would dry up aquifers, and worry about the 300 trucks a day that might rumble through town.

"People were caught off guard," said Diane Lowe, a part-time resident from the San Francisco Bay area who, with three other women, formed a protest group called McCloud Water Commons.

Sales of bottled water have exploded in the United States over the past decade, outpacing beer, coffee, milk and trailing only soft drinks in volume, according to the Beverage Marketing Corp. As the fastest growing segment of the drink industry, production grew by 7.5 percent in volume and recorded $8.3 billion in wholesale sales last year.

With nearly a third of those sales, $2.7 billion, Nestle Waters of North America Inc., based in Greenwich, Connecticut, dominated the domestic market from its portfolio of brands including Arrowhead, Calistoga, Poland Spring, Perrier and Pellegrino.

Soon after the mill closed, Nestle began negotiating with the McCloud Community Services District, which provides water, sewer and garbage service in the unincorporated town of about 1,300. It eventually agreed to build a $120 million Arrowhead plant that is expected to open in 2006 and eventually employ 240 workers.

Once the company starts bottling water, the town will receive about $300,000 a year for giving Nestle exclusive rights to about 521 million gallons from its three springs, said David Palais, a geologist for Nestle. Struggling Siskiyou County, which borders Oregon, is expected to get $1 million in property tax revenue.

Pete Kampa, the district's general manager, said the deal is better than what neighboring towns got when Crystal Geyser and Dannon bought private springs for their bottling operations.

Although the negotiations with Nestle were closed, the district said board meetings on the issue were posted, public comment was taken on the deal, and the local newspaper reported the debate. Still, by the time many people became aware of it or got involved, it was too late.

With the project going through state and federal environmental reviews, opponents are trying to figure out if there's anything they can do to stop the project or renegotiate the deal.

"I've been contracting since 1976 and this is the dumbest deal I've ever seen anybody enter into, period," said Brian Stewart, a home designer and builder. If it had happened a century earlier, he said, "you would be witnessing a tarring and feathering."

Nestle supporters Penny Heil and Mike Rorke, who run a jewelry store, talked about a simple place where kids can play in the streets and dogs wander undisturbed. They displayed a card they got through the mail simply addressed to "Mike and Penny, McCloud CA." No last names, no address.

Heil said they don't want the town to change, but they also don't want it to die.

"It's going to be a real peaceful town if no one lives in it."


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