DHW may avoid fines
by Kathleen Stinson

CAVE CREEK – The $2.5 million purchase agreement between Cave Creek and Desert Hills Water Co. apparently makes the town liable for any fines that utility regulators may impose as a result of the state’s current investigation of the company.

Under terms of the sale, the owners of Desert Hills Water Co. will escape any fines the Arizona Corporation Commission may impose, said Marvin Cohen, the attorney representing Cave Creek regarding the purchase.

Former DHW vice president Mary Beth Rowland declined to comment on the terms of the sale, deferring all questions to legal counsel.

The corporation commission for the past several months has been investigating the company amid numerous complaints it failed to provide adequate water service to 200‑plus customers over the course of the summer.

In September, Cave Creek unexpectedly purchased the troubled water provider and intended to immediately dissolve the company, a move that would have taken it out from under the jurisdiction of the commission. The commission, in response, issued an emergency order preventing the town from taking such action.

Cohen told The Desert Advocate on Tuesday that the town would oppose the commission’s claim to jurisdiction if fines are levied.

This summer the commission held a hearing to determine whether Desert Hills Water Co. had violated state utility regulations because of its inability to provide service to customers. The commission is expected to render a decision at any time.

Under terms of the sale, Cave Creek is holding $300,000 of the purchase price in escrow for 90 days, in the event any representations made by the seller prove to be incorrect.

If the commission imposes a fine against the water company and/or its former owners, Cohen said the fine would not be paid out of the $300,000 in escrow. Instead, the new corporation, owned by the town, would have to pay the fine.

Cohen also said the town has been working to resolve any problems the commission has with the water company.

Reach the reporter at kathleen@thedesertadvocate.com.