Lawsuit Challenges New Town's Existence

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A lawsuit challenging the town of Diamond Star's right to incorporate was served to town officials Wednesday afternoon, just hours before the deadline to do so.

Most notable among the list of those filing were George Randall, Roy Haught and Terra Star Valley 40, one of G. Michael Horton's development companies. Randall and Haught own the well in Star Valley that will feed Horton's pipeline to Payson, and that will provide the excess water the town of Payson has agreed to purchase for $750,000.

The complete list of those who filed the lawsuit includes Randall and his wife, Victoria; Haught and his wife, Marie; Raymond and Patricia Cline; Charles and Susan Hall; Larry and Antoinette Gay; James and Dana Armstrong; Terra Star Valley 40; Gray Horse Homes; and R and H Boulder and Granite.

As of Thursday, most Diamond Star Town Council members had not been served, including Mayor Ronnie O. McDaniel, but Councilor Art Lloyd, a local attorney, had seen the cover sheet with the names of the plaintiffs and other basic information.

"From what I can gather they have filed a lawsuit to try and challenge the legality of what the (Gila County) Board of Supervisors did in incorporating Diamond Star, also known as Star Valley," Lloyd said. "They've sued Gila County, the town of Diamond Star, and all the town council people."

Several plaintiffs were contacted, but they either didn't return messages or had little to say.

"I really don't (have anything to say)," Horton said. "With the litigation it's probably not appropriate for me to talk. Anything I say is going to be misconstrued, so I think we just kind of need to let the chips fall where they may."

Haught also declined to discuss the lawsuit specifically.

"There's enough people talking," he said. "Everything is just blown out of proportion. I've got friends on both sides."

But Diamond Star Councilor Chuck Heron was not so reluctant.

"There's no end to the harassment we're going to suffer out here," Heron said. "I can see that now.

"I don't know what the problem is, but they're widening the gulf," he continued. "I haven't done anything illegal; I've done what the county says."

Lloyd expects a fast dismissal of the lawsuit.

"We don't think these people and entities have any legal standing whatsoever," he said. "The only entity that can challenge it from our research is the town of Payson; the town of Payson is the only entity that could be affected by the incorporation.

"You had a situation where two-thirds of the residents signed a petition, their signatures were ratified and validated, and then you had the board of supervisors, upon advice of their legal counsel, being told that everything that was done was legal and proper, and then they unanimously approved it.

"This town is moving forward," Lloyd said.

He speculated that the lawsuit might have been filed to counter an attempt by Diamond Star to stop the use of water from their community to build new subdivisions in Payson.

"I think they're very concerned because the town of (Diamond Star) is ready to take some action," he said.

McDaniel, a retired judge, said it feels "a little strange" to be on the receiving end of a lawsuit.

"It's something I'm not used to," the mayor said.

The Diamond Star Town Council met in executive session Tuesday for "legal advice concerning water issues." During the regular portion of that meeting, a work-study session, the council heard presentations by Cathy Connolly of the League of Arizona Cities and Towns on the responsibilities of public officials, and by Councilor Bill Heath, chairman of the Interim Budget Committee, on the proposed interim budget.

The council met with the Gila County Board of Supervisors Tuesday morning to discuss planning and zoning.

At the next regular council meeting, which will be held at 6 p.m. Tuesday, Dec. 6, the council will consider adoption of the interim budget.

Water referendum hearing Monday

The Committee for Community-Based Growth will get its day in court Monday.

A hearing has been scheduled for 9 a.m. in the Superior Court of Phoenix to determine if Resolution 2098 -- the Payson Town Council's decision to pay George Randall and Roy Haught $750,000 for water from their Star Valley well -- can be placed on the ballot.

After the council originally passed the resolution, the Committee for Community-Based Growth submitted a petition containing more than 1,900 signatures requesting it be placed on the ballot.

The town council then accepted (without taking a vote) the legal advice of Tom Irvine, a Valley lawyer who specializes in election law. Irvine told the council that he felt a referendum could not be held because Resolution 2098 would merely carry out a policy that is already in place.

The Committee for Community-Based Growth subsequently appealed the town's decision not to hold the referendum.

Judge Colin Campbell will hear the matter in room 309 of the old court building at the intersection of Washington and First streets in downtown Phoenix. The hearing is open to the public.

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