Water Improvement District Notes 2/9/06

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Meeting held with Jennifer Bartos (928-443-9484 or 800-659-7149), Director of Improvement Districts Services, Inc., 117 E Gurley Str, Suite 206, Prescott, AZ 86301 The director served for many years with Yavapai County as the staff person who helped groups develop utility needs(sewers, water, roads.) When the County moved to having this project turned over to local boards, she became a private service company and now provides services for Oak Creek sewer, Beaver Creek water, etc.

A water improvement district becomes a reality when 51% of the homeowners approve taking such a step and have voted to elect a board of directors. Then there are a number of steps to be taken all of which cost money.

  1. Infrastructure
    1. Putting in the infrastructure is costly. In this instance it is assumed that there would be a pipeline brought down from Sedona. The subsequent extension of the water pipe down various streets to be served would also need to be planned. It is anybody’s guess exactly how much this might cost. But some wild guesses will be used for the purpose of discussion. Maybe 1.5 M to bring the pipeline down from Sedona to the Upper Red Rock Loop Road area and more than 1 M to run the pipes down the streets served. Add to this cost estimate legal fees, engineering planning, etc.: 14 % more money. So probably the infrastructure cost comes to more than 2.8 M dollars.
    2. To pay for the costs the Water District would need to take out a bond at about 4% interest. The way it works is that a lien is place on each homeowner’s house. There is a 45 day period known as the cash demand period in which the homeowner can pay off the lien outright interest free. After that period of time and the homeowner assumes the lien on his house because he or she has not paid off the lien. S(he) is then assessed a “tax” twice a year for twenty years in order to pay off the lien on his property. There is no way to pay it back to avoid further interest. You are essentially locked into the payments with interest on the lien. This actually about doubles the cost to the homeowner over twenty years. As a concrete example each homeowner might have an initial lien of $14,250 if there were 200 homes in the association or $28,500 if there were 100 homeowners in the association. They could be paid off within the 45 days. Otherwise lien payments could run $1,425 per year if there were 200 homeowners or $2, 800 if there were 100 homeowners.
    3. In addition to the lien the homeowner would be responsible for the cost of connecting to the street pipe line. Maybe an additional $ 800-1,000.
  2. Maintenance Fees
    1. Improvement District Services takes over billing, electrical bills, publications, budgeting, implementing policies and for all intents and purposes the running of the district with the consent of the board. They would probably charge about $ 35/ month to do this. It is a minimum cost whether you used water or not.
    2. Arizona Water Company would be responsible for the water delivery system. At the present time they charge $ 2.80 per 1000 gallons of water. The average household uses about 7,000 gallons a month adding $ 18.80 per month to the costs of $ 35 per month.
  3. Miscellaneous
    1. A rural Development grant operated by the USDA might help defray some of the expenses for some qualifying low income households
    2. Cory Vandemoer (634-1923) is an attorney knowledgeable about improvement districts.
    3. An improvement district must deal with the franchise owner (in our instance, Arizona Water Company). Were we receive water from wells and not the water pipline we would be obliged to buy the franchise rights from Az Water Company and pay them the value of the franchise. Clarified via phone on 2/10/06 after Jennifer Bartos had talked with Randy Shur, an attorney for Yavapai County.
    4. The infrastructure costs would be considerably less were we to draw water from designated wells in the area. This is relevant to item 3.
    5. Jennifer Bartos is willing to talk with citizens any time but is really available on the third Tuesday of every month since she must come to VOC.
Compiled from notes by Sam Braun. Also present Chuck Kennedy and Roger Moe
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