Pulte called to testify in Anthem rate case
Commission questions community council’s relationship with developer
by Kathleen Stinson

ANTHEM – The Arizona American Water rate case concluded last week–except for the testimony of Anthem developer Del Webb Corp/Pulte Homes.

AAW is asking the state Corporation Commission to approve substantial increases in Anthem water and wastewater rates, in part to provide for repayment of the developer’s infrastructure costs.

Commissioners last week asked for someone from Pulte to testify regarding what notice the developer provided to home buyers about AAW’s so‑called balloon repayments due Pulte near build‑out. The company did not immediately appear before the commission and, as of press time, that testimony is yet to be scheduled.

Commissioner Kristin Mayes told The Desert Advocate on Monday that Pulte is looking for a date to send one person, or possibly a panel of witnesses, to testify. She expects the testimony to take place in early‑ to mid‑July.

Following Pulte’s testimony, Administrative Law Judge Teena Wolfe will issue her recommended opinion and order. The commission will then make the final decision.

The commissioners had also asked for an explanation of the relationship between Pulte and the Anthem Community Council board of directors. Board member Frank Grimmelmann testified on behalf of the council.

The Anthem Community Council board consists of five Pulte employees and four resident board members.

The Anthem council filed as an intervenor in the rate case at the recommendation of its subcommittee, the Anthem Safety and Services Committee, according to Grimmelmann.

Wolfe indicated she wanted the council to provide additional information about Pulte’s role, if any, in the intervention.

The Desert Advocate was not present for Grimmelmann’s testimony, but in a subsequent e‑mail he told this newspaper the ASSC (committee) is composed entirely of resident representatives. He said the committee made its decision to hire the council’s attorneys with full knowledge and disclosure that the Phoenix law firm Ridenour, Hienton, Harper & Kelhoffer, P.C., had in the past represented Pulte in matters unrelated to the rate case.

“The question of any conflict of interest was thoroughly discussed and dismissed by the committee based on that discussion,” Grimmelmann said.

Grimmelmann also related that separately he had reached agreement with Pulte “through negotiation” that the developer would reimburse the council for all its costs associated with the rate case.  He said the council board delegated to the committee authority to act on all matters related to the case and it could make the decision to either retain the Ridenour firm or not–and whether to accept reimbursement for costs.

“We are also aware that legal fees in cases of this type are generally in the hundreds of thousands of dollars, but felt it was critical to have the best representation for the community in this important matter,” Grimmelmann said.

At the hearing, council attorney John Kaites of the Ridenour firm told Judge Wolfe that Pulte had signed a waiver that, should anything adverse to the developer arise in the firm’s representation of Anthem residents, Pulte waived its right to be represented.

A source close to the commission told The Desert Advocate legal precedence exists to support  such arrangements, similar to a parent paying for attorney’s fees in a case involving a minor child but the parent is not permitted to direct testimony in the case.

On Monday, former Arizona American Water president Ray Jones retook the stand.

The judge questioned Jones about the Del Webb/Pulte and AAW arrangement which places the bulk of infrastructure cost refunds to Pulte near build‑out.

Jones explained that the developer invested about $30 million in infrastructure before the first customer hooked up to the system and, by the fifth year, about $60 million had been expended. At that point Anthem had about 3,000 customers. To divide those infrastructure costs in the early years would have raised customers’s bills to several hundred dollars a month, he said.

Pulte advanced the money without charging the water/sewer utility interest, according to another witness, who also testified that, generally, about 50 percent of development costs go into the price of new homes.