WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

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Exhibit 10.19B

WAIVER AND FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT

        THIS WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this "Waiver and Amendment"), dated as of September 29, 2004, is entered into by and between SOUTHWEST WATER COMPANY, a Delaware corporation (the "Borrower"), and UNION BANK OF CALIFORNIA, N.A., a national banking association (the "Bank"), with reference to the following facts:

RECITALS

        A.    The Borrower and the Bank are parties to the Amended and Restated Credit Agreement, dated as of July 7, 2004 (the "Credit Agreement"), pursuant to which the Bank provided the Borrower with revolving loan, term loan and standby letter of credit facilities having total current commitments of $25,000,000. Such commitments were reduced from $35,000,000 to $25,000,000 with the Borrower's mandatory prepayment of the term loan from the proceeds of an offering of the Borrower's common stock on August 25, 2004.

        B.    The Borrower currently is in default under Section 7.01(c) of the Credit Agreement due to the Borrower's breach of the maximum Permitted Acquisitions covenant set forth in clause (ii) of Section 6.02(g) of the Credit Agreement by paying total cash consideration of greater than $5,000,000 for such Acquisitions in the current fiscal year of the Borrower (such default hereinafter is referred to as the "Existing Event of Default").

        C.    The Borrower has requested that the Bank waive the Existing Event of Default, amend the Credit Agreement to permit certain bond offerings by the Borrowers' Subsidiaries, NMUI and Suburban, and make certain other modifications to the Credit Agreement.

        D.    The Bank is willing to grant such accommodations to the Borrower as set forth below.

        NOW, THEREFORE, the parties hereby agree as follows:

        1.     Defined Terms.     Any and all initially-capitalized terms used in this Waiver and Amendment (including, without limitation, in the recitals hereto) without definition shall have the respective meanings assigned thereto in the Credit Agreement.

        2.     Waiver of Existing Event of Default.     The Bank hereby waives the Existing Event of Default. Such waiver by the Bank shall constitute a one-time waiver of only the Existing Event of Default and shall not constitute a waiver of any breach of clause (ii) of Section 6.02(g) of the Credit Agreement on any other occasion.

        3.     Amendment to Term Loan Repayment Provisions.     

        A.     Amendment to Mandatory Repayment Provision.      Section 2.03 of the Credit Agreement is hereby amended to read in full as follows:

        "SECTION 2.03    Mandatory Repayment.    The aggregate principal amount of the Revolving Loans outstanding on the Maturity Date, together with accrued and unpaid interest thereon, shall be due and payable in full on the Maturity Date. The entire principal balance of the Term Loan , together with accrued and unpaid interest thereon, shall be due and payable in full upon the funding of the anticipated bond offering by NMUI. If at any time the aggregate outstanding Revolving Loans exceed the Revolving Commitment then in effect, the Borrower shall immediately repay the excess to the Bank without penalty or premium."

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        B.     Deletion of Securities Offerings Provision.      Section 6.01(i) of the Credit Agreement is hereby deleted in its entirety.

        4.     Amendment to Permitted Acquisitions Covenant.      Clause (ii) of Section 6.02(g) of the Credit Agreement is hereby amended to read in full as follows:

        "(ii)    make Permitted Acquisitions (including the Tecon Acquisition), provided that the aggregate consideration (whether consisting of cash, stock, convertible debentures, the assumption of debt or other consideration) paid or payable by the Borrower and its Subsidiaries in connection with all