Deadline set for answers in Anthem water rate case
by Brian DiTullio

PHOENIX – Pulte Homes has until Aug. 17 to file answers to Arizona Corporation Commission questions lingering from the developer’s July 13 testimony in the Anthem water rate case.

Commissioner Kristin Mayes told The Desert Advocate she didn’t really hear “anything of substance” during Pulte/Del Webb Corp. testimony and is hoping more answers will be forthcoming.

Pulte, originally not a party to the rate hearing, was asked in June to appear before the commission to testify regarding what notice the developer provided Anthem home buyers about balloon repayments due the company near build‑out.

Arizona American Water, the Anthem water and sewer services utility, has asked the commission to grant rate increases of 66 percent for water services and 40 percent for sewer services, in part to repay Pulte for infrastructure costs incurred during construction of the community.

One witness opposing the requested rate hikes testified in June that, generally, about 50 percent of development costs go into the price of new homes. Another homeowner claimed the developer did not inform residents of potential water infrastructure costs and referred to pages in sales booklets she said were given to her when she bought her home.

Among the questions that linger following Pulte’s testimony in July is just how much money Pulte/Del Webb has made from the Anthem development. Charles Enochs, a Pulte vice president designated by the developer to testify at the hearing, was advised by legal counsel at the hearing not to answer any financial questions, claiming that information was privileged.

Mayes threatened to subpoena the financial information, if necessary.

Commission requests for production by Pulte/Del Webb include:

1. A document showing the estimated time frame for build‑out as of 1997 and 1998.

2. Any other infrastructure agreements similar to the one between Anthem and Arizona American Water.

3. The entire set of documents provided to home buyers, including a letter acknowledging receipt of the public report and purchase contract, CC&Rs and welcome letters.

Other questions of the commission involve clarifications of testimony given at the hearings, requests for proposal during the bidding process, the percentage of development costs that would be refunded to the developer, and details regarding the timing and amount of the true‑up, or balloon, payments due Pulte.

In addition, the commission has requested minutes of any Del Webb directors meetings addressing any issue pertaining to Arizona American Water’s predecessor, Citizens Utility Co., in 1997, 1998 and 1999, and minutes of any Del Webb directors meetings in which there was consideration of forming a water utility for Anthem.

Once Pulte’s answers are filed, according to the commissioner, the administrative law judge hearing the rate case will schedule a procedural conference.

“That’s when we’ll decide if we need additional days of hearing,” Mayes said.

One focus of the July hearing was a $4.2 million refund payment due Pulte in June and another, due next year, expected to be $19.8 million.

Enochs stated at the hearing that the problem is Pulte now has invested more money to date than initially anticipated. Using round numbers, he said the company originally would have had invested $50 million to this point in the form of a no‑interest loan.

However, since the development is almost finished, they have invested closer to $100 million.

The catch is, according to Enochs, Pulte is paying finance charges on the money invested and delaying repayment will cost the developer more money.

He also stated that Del Webb/Pulte made a recommendation for Anthem’s original water rates in 1997, but continuously insisted the company doesn’t set water rates and “has no idea” how water rates are set.

“So, let me get this straight,” Mayes said  during the July 13 hearing. “Del Webb doesn’t understand rates. It doesn’t understand how to set rates. But 10 years ago, Del Webb told the utilities what rate they wanted. You can’t have your cake and eat it, too.”

Enochs replied Del Webb/Pulte made a recommendation based on the competitive market rates at the time.

In addition, Enochs stated during his testimony he was willing to sit down at the negotiating table with Arizona American Water regarding the refund payments, but no date for those meetings was set at the hearing.