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Many Carefree residents living in the area serviced by Cave Creek’s water system say they are tired of dealing with brown water, a lack of representation and the looming threat of a limited water supply.

This is why many say they are ready for the town to acquire its water assets and provide water to the entirety of its residents instead of just a portion.  

The Carefree Utility Community Facility District provided residents with an update on its water acquisition project in a public Zoom meeting on Feb. 9. 

Town Engineer and Carefree Water Company Manager Greg Crossman led the presentation, discussing the project’s scope, costs, benefits as well as impacts on rates. 

Ultimately, the town has a goal of “Unifying Carefree under one water provider,” Crossman said. 

“The strong belief by our leadership is this will lead to a stronger Carefree and a stronger Carefree water system,” he added.

Carefree initiated this acquisition process in January 2019 after “hundreds of Carefree residents raised concerns about the water service being provided by the Cave Creek system,” town information states.

“There was not one single event” that caused the town to initiate this process, Crossman said, explaining how the reasons were “numbered.”

One of the key reasons was a concern about lack of representation, as Carefree residents cannot vote for the Cave Creek town councilmembers who determine water rates and how much money is spent on its system, Crossman explained. 

Other reasons include concerns about water reliability and quality, system maintenance, fire protection as well as controlling the town’s “economic destiny,” he said.

Crossman estimated the acquisition will increase the Carefree water customer base by around 25% as it will add around 2,000 to 2,500 customers.

More customers will allow the Carefree water system to spread its capital costs which gives it the opportunity to install beneficial infrastructure improvements, he added.

Dan Jackson, part of the Phoenix-based Coe Van Loo independent consultant team, presented how the acquisition project will impact rates and how it’s ultimately advantageous for all residents. 

To complete the acquisition and improve the water system, an annual rate adjustment of 4.4% is estimated from the years 2022 to 2026, he explained. 

“In other words, it’s the same rate adjustment that you’ve done for the last couple of years,” Jackson said, adding that water rates would still rise even if the acquisition didn’t happen.

From the years 2027 through 2030, there is an estimated 2% rate adjustment per year, he said. 

“While it’s never easy to ask ratepayers to pay more, these rate adjustments are actually less than what the national average is expected to be for water utilities over the next decade,” Jackson stated, adding that average water and wastewater utilities rates in the U.S. are expected to increase by 5% to 6% every year.

Crossman also presented the financing structure of how the project will be funded. 

Carefree fronted a “considerable” amount of money for the proceedings, he said, explaining how it put forth $2.3 million to pay for legal fees and experts. The town also expects some developer contributions as well as offsets based on settlement agreement negotiations with Cave Creek, he added.

A “majority” of funding will come from water revenue bonds, which will generate the “upfront capital” needed to construct and perform the project, Crossman said.

The disconnection and reconnection costs are estimated at $11.5 million; construction “soft costs” are estimated at $1.4 million and improvements to its existing system will cost $3.5 million, he stated. The grand total of the project cost is $19.4 million. 

Residents were notably vocal about the town’s acquisition project, as the town received 58 letters, many of which were in favor of the project.

“This is an extremely critical issue for the future of Carefree and will impact all Carefree residents positively in the future if this project moves forward,” said Carefree residents Ronald and Barbara Neagle in a letter. 

Their letter mentions how they reside in one of the geographic areas of Carefree which are served by Cave Creek’s water service. This issue is what the couple based their voting decisions on, they stated.

“We do not trust the quality of water provided by the Cave Creek system as we have complicated medical conditions resulting in the constant expense of bottled water along with plumbing issues due to brown water causing additional expenses.”

This was a major concern voiced by a significant number of residents in their letters, as many stated they’ve reportedly received a notice from the town of Cave Creek that water serviced to households has a presence of trihalomethanes, a carcinogenic group of chemicals that can contaminate drinking water. 

The history of this acquisition goes back to 2005, when the town of Cave Creek sought to condemn the privately owned water company that serviced both its residents as well as Carefree, according to official Carefree information.

“As a cooperative neighboring community, Carefree agreed to permit Cave Creek to include the Carefree portion of the service territory as part of that condemnation,” it stated. 

The two towns then entered into an intergovernmental agreement (IGA), which permitted Carefree to eventually acquire these water assets that service parts of Carefree.

The IGA states if the two towns couldn’t reach an agreement on the compensation Carefree would pay Cave Creek to acquire the assets, a panel of arbitrators would decide the amount, it states. 

After Carefree initiated the acquisition in January 2019, the arbitration hearing began late October of last year and concluded the first week of November. 

According to the “‘Arbitrators’ Decision on the Merits” released Dec. 4, the “just compensation” Carefree must pay Cave Creek for the condemned assets is $1,464,593.

After an additional briefing, the panel determined all litigation expenses, attorney fees, expert fees and other costs were “rendered in favor of Carefree” and will be deducted from the compensation amount, according to its Partial Final Award issued Jan. 14. 

Before the Partial Final Award was issued and since then, both towns are working on a settlement agreement for the purpose of achieving “finality, cooperation between the communities moving forward, and expeditious integration of the Carefree Service Area into the Carefree Water system,” according to town information. 

During the same meeting, it also unanimously approved the acquisition of a parcel of land located on the border of The Boulders gated community off of North Tom Darlington Road to construct a 1,300 square-foot water storage reservoir.

The addition of this reservoir will help meet peak demand and ensure proper fire protection, Crossman said.

“Extraordinary measures” were taken to obscure the view of the reservoir, he said, mentioning a wall that will shield the view from residential communities as well as the landscaping that will block the view from the road. 

The town’s engineering team sought out a vacant piece of land with minimal topographic and geographic challenges at a proper elevation with a nonresidential access point.

After investigating multiple potential properties, the approved parcel was chosen because it provides the “greatest public good and least private injury.”

—Staff writer Sarah Donahue can be reached at sdonahue@timespublications.com