Court ruling stalls Queen Creek acquisition of water company

facebooktwittergoogle_plusredditpinterestlinkedintumblrmailby feather

By Chase Kamp

Southeast Valley Ledger

A recent ruling by the state appeals court in a Marana water case has halted the efforts by the Town of Queen Creek to acquire H2O Inc., a local water company that currently serves 3.5 square miles of the town and large swaths of northern San Tan Valley. The acquisition, which officials say would enhance the Town’s municipal water system and better prepare for expected population growth, will now be put to the voters in a mail-only special election beginning Apr. 25.

Town manager John Kross said the Town completed an agreement with H2O Inc. to envelop the company’s assets and service area into the Town’s own municipal water company for $44 million in Dec. 2012.

However, a ruling passed down that month by the Court of Appeals in Town of Marana vs. Pima County that forced municipalities to ask voters for approval to expand on existing municipal water systems was upheld by the state Supreme Court in Jan. 2013.

H2O Inc. would ultimately serve about 20 percent of the Town population upon the completion of the Church Farms subdivision on Meridian and Rittenhouse Roads.

Kross argued that rounding out municipal water service for the entirety of the town would ease growing pains for the town’s anticipated population growth. “It shores it up so that there’s absolutely no question about it for many years in the future,” he said.

He said Queen Creek aims to provide sufficient utility services to future employers, as well as housing developments, and ample water supply is critical. “We’re trying to be much more than a bedroom community,” he said, “and these facilities are absolutely key to have ample number of employers for jobs in the region.”

H2O Inc. is a family-owned company that has served the Pinal and Maricopa County area for more than 40 years. In addition to Queen Creek service, the company’s service area includes large San Tan Valley subdivisions like Encanterra, Pecan Creek and Queen Creek Ranchos.

Kross characterized the enveloping of H2O Inc. as a doubling of the Town’s existing system, with the two having roughly the same amount of customers and infrastructure. He said H2O Inc. has about 9,500 accounts.

Filling out the town limits for water service not only corrects a service situation that is unusual for most municipalities, Kross said, but has practical implications. “It means we won’t have to expend $11.9 million in new capital infrastructure for new wells and pumps,” he added.

The Town has reiterated that should voters approve the deal, rates for current H2O customers would match the current rates paid by Queen Creek customers, resulting in little to no change for average users.

Kross said the Town would finance the acquisition through what he characterized as a self-financing deal, saying the town will be taking out low-interest Water Infrastructure Finance Authority loans for the company that would effectively be covered by the net annual revenues of H2O Inc.

“That was key for us because we were not interested in a situation where we would finance it through a rate increase for Queen Creek or H2O rate payers,” he said.

The Town established its own municipal water company in the mid 1990’s by voter approval through language Kross said was used by every other Arizona municipality. The ruling in the Marana case renders that language too broad to allow municipalities to expand service.

“For every single expansion of your system or to start something new, you have to ask that specific question of your residents and voters,” he explained.

The Town and the company had reached an agreement just before the ruling complicated the deal, Kross said. “We were already well down the road and the deal was done,” he said, adding that the acquisition was conveniently slated to close at the end of the summer, effectively accommodating the election process.

Should voters approve the acquisition, the Town will still need to perform a thorough audit of H2O Inc., apply for WIFA loans and get the purchase approved by the Arizona Corporation Commission.

Kross said he was optimistic that the ACC would approve the deal by Oct. of this year or sooner.

“We’re hoping because there’s been a fair amount of due diligence on our behalf, and H2O being an outstanding company, that there aren’t a lot of information gaps to close,” he said.

The official ballot and election materials will be mailed to all qualified electors beginning Apr. 25, 2013, with results tallied on May 21.

admin (1941 Posts)

facebooktwittergoogle_plusredditpinterestlinkedintumblrmailby feather
facebooktwitterby feather

Leave a Reply

  • Stories Just Posted

    Queen Creek Kids Marketplace Seeks Youth Vendors

    13 hours ago

    The Queen Creek Kids Marketplace “For Kids, by Kids” encourages youths up to 18-years-old to clean out their closets or […]

    GM Foundation Donates $25,000 Total to Make-A-Wish Arizona, East Valley Institute of Technology

    13 hours ago

    CHANDLER– The General Motors Foundation today made two donations to local organization totaling $25,000 through its Plant City Grants program. […]

    Suspicious Activity Involving the Driver of a Vehicle Near School Bus Stop in San Tan Valley

    17 hours ago

    On Nov. 20, 2014, at approximately 7:41 a.m., the Pinal County Sheriff’s Office received a report of suspicious activity related […]

    Dave Koz and Friends Christmas Tour 2014 Performing Live at Mesa Arts Center December 17

    20 hours ago

    Mesa– Multi-GRAMMY® nominee and saxophonist extraordinaire, Dave Koz, returns to Mesa Arts Center this season with the 2014 Dave Koz […]

  • Stories Just For You

    Wanted: Shoes for students! ‘Queen Creek Women in Business’ spearhead shoe drive

    February 12th, 2014

    By Bridgette Crosby Southeast Valley Ledger Arizona may be known for it’s warmer weather, but winter is still chilly, especially […]

    Queen Creek DECA recognized for outstanding achievement

    February 12th, 2014

    By Andrew Luberda Southeast Valley Ledger   Queen Creek High School’s school-based enterprise (SBE) recently entered into a rigorous International […]

    Connie Herrell named President and CEO of Queen Creek Chamber of Commerce

    February 10th, 2014

    The Queen Creek Chamber of Commerce announced today Connie Herrell has been named the President and CEO of the Queen […]

    Harkins Theatres breaks ground at Queen Creek Marketplace

    February 7th, 2014

    Residents are invited to join Mayor Gail Barney, members of the Queen Creek Town Council, Dan Harkins and representatives from […]

  • Facebook

  • [Advertisement.]
  • Arizona Headlines & Current Weather