As stated in the agreement: “If the town acquires the Water Company or its service area ... the Town will take appropriate action to seek to include any State Trust land within five miles of Town’s boundaries in the Town’s service area, and/or to take any other actions reasonably required to provide water service to any such State Trust land.”

The agreement was signed by Mayor Vincent Francia in April 2005.  In return for dropping its objections to the Cahava Springs development, the State Land Department insisted on this arrangement.

Francia, when asked about this aspect of the deal last week, told The Desert Advocate that those costs would all be borne by developers and that it wouldn’t cost the taxpayers anything.

At Monday’s town council meeting, an emergency resolution, passed unanimously, “authorizes the mayor to enter into a bargain sale agreement ... to acquire all of their (Global Water Resources/Cave Creek Water Co.) utility assets for the price of $19,500,000 (subject to an increase or decrease for pro‑rations, a $50,000 adjustment charge and a possible price increase of $1,000,000 if price not paid by August 15, 2007).”

That agreement passes ownership of Cave Creek Water Co. and relevant assets from Global to the town. In addition, the town will enter into a letter agreement with the Arizona Corporation Commission in which “the town agrees to be interim manager of Sabrosa Water Company” in New River.

Cave Creek’s legal counsel, Marvin Cohen, said the town’s management of Sabrosa on an interim basis didn’t make them “happy,” but that Global insisted on it as part of a settlement in the town’s condemnation suit against Cave Creek Water Co.

Cohen also said, in response to a request from mayoral candidate Kimberly Versage to drop the “emergency” clause in the resolution, that if the town didn’t agree to the deal on Tuesday, Global was going to kill the deal and walk away from the bargaining table.

In addition, Cohen stated that with summer approaching the town needs to make certain preparations, something Global would have no interest in doing if they were going to sell and something the town wouldn’t have time to do if they waited another 30 days before closing.

According to a financial analysis performed by CH2M Hill, “Approximately 25% of the Cave Creek Water System customers are located outside the Town of Cave Creek.” It further states a Water Infrastructure Finance Authority loan will be secured by a pledge of the city’s excise tax and water and wastewater development fee revenues, and funds generated through the operation of the system.

David Green, senior economist for CH2M Hill, explained the town had to pledge its entire excise tax revenue as a legal obligation, but that the town only would be using 2.5 percent of its excise tax toward the repayment–$100,000 this fiscal year and $300,000 each fiscal year through FY 2012‑13. Green said further that after five years of the town proving it can meet its debt service obligations with the system’s revenue, the excise tax obligation would be released.

Explaining the operational revenue end of the finances, Green said, “Revenues from connection and development fees are dependent on system growth,” at $150 per new connection and assuming at least 100 new connections per year– which he considered conservative.

However, the analysis then points out the town is anticipating applying for a WIFA loan in July to fund construction of a waste‑water treatment plant. This loan would be paid back through

the town’s “projected excise tax revenues,” which Green said are “sufficient to support this additional debt on top of the town’s existing and proposed Cave Creek water system WIFA loans.”

Owning a water company also brings with it the necessary operation and maintenance of infrastructure, including water tanks, lines and booster pumps, the costs of which are unknown, pointed out resident Anna Marsolo during the public comment portion of the meeting.

“We thought we were getting one water company; instead, we’re getting three,” said Marsolo, asking if the town knew how bad the systems were and what the costs were really going to be to fix them.

Green explained the operating costs are figured into his projections, including $2 million this year from the WIFA loan.

He assured the council, according to his projections, the money would be there to support Cave Creek Water Co. for the next 20 years, the life of the WIFA loan.

“Congratulations to the citizens of Cave Creek. You now own a water company,” said Mayor Francia after the vote.