Vol. 15 Issue No. 1 | January 7 – 13, 2009

Bunch donates $1200 to purchase first three acres

By Linda Bentley | January 7, 2009

‘The town cannot afford to subsidize the system. It needs to pay for itself’

ernie bunchCAVE CREEK – After wishing everyone a happy New Year at the beginning of Monday night’s council meeting, Mayor Vincent Francia announced Councilman Ernie Bunch had given the town a check for $1,200 toward the purchase of the 4,012 acres of state land to be preserved as open space, paying for three acres, based on its appraised value of $400 per acre.

Council voted unanimously to appoint Randy Folts and Nick Wold to fill two seats on the Board of Building Code Appeals.

Responding to questions from council, Building Official Mike Baxley said it’s been about five years since the board has met.

As chair of the Water Advisory Committee, Ralph Mozilo told council the committee recommended approval of the Drought Preparedness Plan and said they updated the plan’s definition of drought as a “deficit of available supply of CAP water.”

The plan was approved unanimously with Councilwoman Grace Meeth commenting on what a good job the committee did, stating it was very-well researched.

Francia introduced the next agenda item, making it clear council was not considering doing anything other than considering whether or not to hold a public hearing on Tuesday, Feb. 17 at 7 p.m. with a notice of intent to increase water rates.

Utilities Manager Jessica Marlow explained customers in the Cave Creek water service area have not had a rate increase since 1986, while those in the Desert Hills water service area have not had an increase since 1989.

Marlow said, for example, the current fee for a water meter and installation is $125. However, the cost to the town for the water meter alone is $250, so the Water Advisory Committee suggested raising the fee to $350 (average) so the town doesn’t lose money on every meter installation.

She also said the town does not currently charge late fees, which they would also like to implement.

Current booster rates for approximately 600 customers, requiring the use of multiple pumping stations to get water to their homes do not cover the cost of electricity to operate. Marlow said there are also maintenance and replacement costs that needed to be factored in.

While the downturn in the economy has created an unforeseen shortfall in development fees, the town still had to make significant system improvements, which Marlow said need to be paid for, stating, “The town cannot afford to subsidize the system. It needs to pay for itself.”

Mozilo said the committee looked at its options beginning with doing nothing, which he said would be irresponsible and was not an option.

Another option would be to bring Cave Creek rates in line with Desert Hills rates. However that would still leave the town about $1.4 million short.

What the committee ended up recommending was to increase the base rate and institute a tiered rate system per 1,000 gallons based on usage, with the first tier rate for the first 10,000 gallons with higher rates per 1,000 gallons for subsequent tiers.

“We’re looking at something that will carry us for the next three years or so without council having to raise rates,” said Mozilo.

Marlow showed council a five-year projection, based on recommended incremental rate increases of 15 percent per year for the next five years after the initial increase, so the increase wouldn’t be all at once.

Vice Mayor Gilbert Lopez asked if this was the first time she had done this.

“Yes,” said Marlow, pointing out the town didn’t have control of the billing initially but said she now has “10 months of really good data.”

Although the committee tried to keep the base rate as low as possible, Mozilo stated, “There was no way we could make this painless for anybody,” adding, “If council wants to subsidize low or fixed income users, that’s another issue.”

Marlow said the average residential customer uses 15,000 to 16,000 gallons per month, and with the proposed new rates, their bills could double, although customers would still have some control through conservation efforts.

According to Marlow, the tiered rates, as currently configured, would affect commercial customers more dramatically and said their bills could potentially triple or quadruple, depending on the amount of water they use.

Citing an increase in usage would generally be tied to an increase in business, Marlow said the town may want to consider doing something a little different for commercial customers so it doesn’t punish them for increased businesses.

Expressing his gratitude to the committee for all their work, Francia said he wanted to see a current and projected comparison on everything, including all the alternatives for the public hearing.

He also wanted to ensure Sonoran News was provided with all the information in time to report in double issues prior to the Feb. 17 hearing, so that the information gets out to the public.

Meeth commented, “I’m not going to support this. We’re just putting out fires. We need some overall financial disclosures. We have a water master plan out there that’s not approved by council …”

As Meeth accused the town of having a $3.5 million deficit carried over from a prior year, Francia interrupted to ask that she stay on the agenda item.

Meeth responded, “I just need to see how they came up with what’s before us.”

Lopez said, “I’m going to support the hearing but would like to request from staff how we got here.”

“It’s a very somber moment looking at these numbers,” said Bunch, who noted every piece of bad news mentioned seemed to bring a smile to the face of some people in the audience, and said, “I’d like to ask those in the audience to contain their glee for somewhere else.”
Calling for a roll call vote, Francia reiterated, “The only thing on the agenda is whether to have a hearing on Feb. 17.”

Esser, whose motion carried by a vote of 6-1 (Meeth dissenting), said it was not a pleasant task but it was “something we have to do.”

More grim news came from Town Accountant Marian Groeneveld with a proposal to increase the town’s sales tax from 2.5 percent to 3 percent, which should yield approximately $500,000 per year.

She said 25 of Arizona’s 93 cities and towns have a sales tax of 3 percent or higher, with the surrounding communities of Carefree at 3 percent, Scottsdale at 1.65 percent and Phoenix at 2 percent.

Groeneveld said this time Cave Creek was not unique, it was suffering from the same economic woes as the rest of the world, and the town expects sales tax and construction to decline throughout 2009.

Council passed the first reading of the ordinance as amended by Francia, who asked to make the half-cent increase time-lined for two years, by a vote of 6-1, with Lopez, who stated, “Until I know how we got here, I’m not going to support,” dissenting.

If the second reading passes on Jan. 20, the 3 percent sales tax would become effective March 23.