Cave Creek, Global Water reach settlement agreement
by Kathleen Stinson

CAVE CREEK – Global Water Resources and the Town of Cave Creek scheduled the signing of a settlement agreement in the town’s condemnation suit against Global subsidiary Cave Creek Water Co. for Feb. 28, according to a Global spokesman.

The settlement will include the transfer of Cave Creek Water’s assets to the town at a cost of $19.5 million, plus assumption of operating Sabrosa Water Co. in New River. Final approval of the agreement, however, is subject to a vote of town council, expected to take place at the council’s Mar. 5 meeting.

“It’s been a long, long, difficult process and it’s time for it to be concluded,” said Cave Creek Vice Mayor Dick Esser.

The parties struck the deal after more than a year of legal wrangling, initiated when the town filed the condemnation action in 2005, and after the court ordered the parties into mediation.

By an unanimous vote, town council last week approved putting $2 million in escrow as a down payment toward the purchase of Cave Creek Water Co.

At that council meeting, Cave Creek resident Herb Natker said the town has not done its due diligence with respect to investigating the finances of the utility and asked council to postpone the vote until the company’s books could be examined.

Vice Mayor Dick Esser said Global has refused discovery.

 “They’ve been jerking us around,” Esser stated, adding the $19.5 million cost could be a good price. The town will find out when it owns the company and can examine its finances, he said, noting that to resolve the matter in court could drive up the price.

Global spokesman Paul Walker told The Desert Advocate that during the mediation process it was made clear the way Arizona law is structured, “it is not that difficult for government to take over private business.

 “We felt like the company’s assets are worth much more – $40 million, but the time, legal expense and uncertain outcome made it a safer move for Global to sell.”

As part of negotiations, Global conditioned a settlement on the town extending the Cave Creek Water Co. system to connect to New River’s Sabrosa Water Co., Walker said, an undertaking Global had been working on since assuming operation and maintenance of the troublesome Sabrosa infrastructure.

Following the disappearance of Sabrosa’s owner several years ago, the state Corporation Commission appointed Arizona American Water, the successor to Citizens Water Co., to operate the Sabrosa system, at that time in severe disrepair. Arizona American was later relieved of that responsibility by the commission and Cave  Creek Water assigned as the certified operator.

“We have an obligation to those folks; we are not going to sell and leave those (Sabrosa) customers twisting in the wind,” Walker stated.

He related that Global has always maintained a public/private partnership with Cave Creek would be more advantageous than the town buying Cave Creek Water Co.

 “We have one (such partnership) with Maricopa City and the City of Casa Grande, and in those agreements we used Global capital to build infrastructure,” Walker explained. “We coordinated all our activities with the city and shared revenues with the cities.”

He went on to say Global proposed the idea to Cave Creek “countless times and was turned down.”

The town’s response was always the same, Walker said: “We (Cave Creek) have to own the assets to protect the water.” He pointed out that Global disagreed with the town’s position.

Brian DiTullio contributed to this story.