As I mentioned in my last column, the Town of Chino Valley will be focusing on several initiatives in 2019 and we are excited about what some of these initiatives will mean for our community. Two of these initiatives will be voted on by our citizens in a May mail-in ballot.
Last month, I wrote about the Road Maintenance Program the Town is proposing, which would be funded by a property tax. This month, I will speak about the second ballot item, the ability to purchase water utility companies within our corporate boundary. This is a separate ballot item from the Road Maintenance Program and has no cost to the taxpayer.
Obviously, water is always an important topic in this area. Each community, the entire region and the state endeavors to manage water on some level. Many people don’t know this, but in the Town of Chino Valley, there are three private water companies and one municipal water company, in addition to the town’s water utility system. One of the town’s biggest challenges for economic development is the lack of infrastructure in strategic places within the town to foster economic growth.
With several different water companies and the town being fairly new to the utility business (we started water and sewer in the last 15 years), the ability to serve potential commercial businesses along the highway is challenging. Most businesses are interested in locating close to Highway 89, which runs down the center of our community. Most businesses also desire, some even require, to be on a municipal utility system. Most corporations do not want the risk that an exempt well might present; their business model might require municipal utilities. If the town does not have utilities close to its desired location, there is no guarantee that another utility will or can serve it.
Chino Valley recognizes that if it were able to purchase any of the four other water companies within our corporate boundaries, we would be able to interconnect the system with the town’s and grow our infrastructure footprint. We would then be able to service commercial development through our service area correctly, as the town is not a designated water provider. We would also be able to provide fire flow, which could save a substantial amount of investment for a commercial building. Furthermore, several of the water utilities within the town have expressed an interest in selling their water system as the principal owner ages. Often, the family has no desire to or competence in running a utility and may want sell the asset.
Although this doesn’t sound complicated – someone wants to sell and the town wants to buy – it isn’t quite that simple. In 2014, there was a Supreme Court case between the Town of Marana and Pima County regarding the sewer system and the ability for the Town of Marana to serve its citizens. The county had established a sewer system before Marana had incorporated, and over time the Town of Marana knew it was in the citizens’ best interest to own and operate its own utilities. Although Marana ultimately prevailed, one of the steps that had to be performed was to ask citizens for express permission to purchase a utility within the corporate boundaries.
Therefore, our ballot measure will be expressly asking our citizens for permission to purchase any of the utility companies within our corporate boundaries, should any of the companies be in a position to sell.
The companies the town is considering include:
Wilhoit Water Company
Appaloosa Water Company
Chino Meadows II Water Company
City of Prescott water distribution lines
The town has had an outside firm perform appraisals on all the water companies and would be required to make a reasonable offer based on the formal appraisal. If the utility company were to sell to the Town of Chino Valley, we would likely borrow money from the Water Infrastructure Finance Authority (WIFA) for a low-interest loan. The appraisals we have had performed all demonstrate that, using the town’s current rate schedule for our water system, the loan would be paid back by the ratepayers, who would be paying the same rates as other Chino Valley water customers. In most cases, these rates are lower than what the customers are currently paying. Put simply, the purchases all pencil out from a business standpoint.
Another important consideration is the fact that should a water utility want to sell to the town, whether it is the heir of a current system or the current owner, the town would not be able to purchase without permission from the voters. This may leave current customers and companies in a challenging position. The town would likely step in and help operate a water utility if it were an emergency, but would not be able to make any capital improvements or interconnects until there was assurance that it would become a town asset. For that, we need voter approval.
Chino Valley’s Town Council considers this ballot initiative to be more of a housekeeping item to ensure we have the authority if the opportunity arises to purchase a water utility. As mentioned, we understand the need to grow our infrastructure footprint from an economic development standpoint, and know it is necessary for our continued and managed growth. The most cost-effective way is to interconnect with other water utilities that are more strategically placed in areas where commercial development is more likely. As the town’s motto states, “Looking to the Future,” we feel this is a reasonable and responsible initiative. QCBN
By Darryl Croft
Darryl Croft is the mayor of Chino Valley.