Payson Town Manager Fred Carpenter is expected to recommend that the town annex Diamond Star at a special council meeting on July 21.
In a draft annexation study that is still awaiting staff and council input, Carpenter weighed the additional costs and revenues plus some intangible benefits of annexing the Diamond Star Fire District. He concluded that it is a better alternative than having an incorporated Diamond Star on its eastern border.
"Incorporation would create another, often-competing unit of local government in northern Gila County, which would tend to work against unity in the solution of common problems," the town manager wrote.
The Diamond Star Water Coalition, a group that formed to protect its water from being piped to Payson by developers, is preparing to launch a petition drive to incorporate the community. If the town council elects to proceed with annexation, a majority of Diamond Star property owners would have to sign a town petition approving the annexation.
Coalition leaders quickly reacted to the town's latest move.
"I'm in a state of shock," Bill Rappaport, coalition president, said. "My gut reaction is that it's just a stalling tactic."
Chris Benjamin, a coalition steering committee member, said the town did not respond to a request for annexation within the 120 days prescribed by Arizona law.
"(Town Attorney) Sam (Streichman) thinks our annexation petition was illegal," Benjamin. "We asked to be annexed and we could have written it on the back of a cardboard box and handed it to them and that's all it takes legally."
Both Benjamin and Rappaport indicated the coalition's drive to incorporate would be undeterred by a town decision to proceed with annexation.
"We're going to just continue doing our thing, and they can say and do whatever they want," Benjamin said.
In the study, Carpenter chooses "to ignore water service" for Diamond Star in the event of annexation, noting that the town is not required to buy out Brooke Utilities, a California-based private water company that services part of the Diamond Star area. Carpenter will also tell the council that the town is not required to provide water service to Diamond Star residents with private wells, just as some areas of Payson don't have town water service.
But both Carpenter and Mayor Barbara Brewer indicated that the residents of Diamond Star would have the town's water resources behind them should a need arise, and that some areas would likely be provided with town water service eventually, especially once water is available from Blue Ridge Reservoir.
"We're trying to find ways to provide (Blue Ridge water) to not only Payson but Star Valley," Brewer said, "so we'll protect them."
Carpenter's study also assumes that fire protection will continue to be provided to the area by the Diamond Star Fire District for a period of time if the area is annexed. He noted, however, that if the town eventually extends its fire protection services to the annexed area, it will save residents a considerable amount in property taxes.
"The fire district out there has a fairly high tax rate, and that goes away," Carpenter said. "We only have like 27 cents per $100 (of assessed valuation). If you look at the total tax rate of $12 or $14, depending on where you are, and you're going to save $2.50, that's a pretty big chunk of money."
Excluding water and fire protection, the town could run an annual balance of $369,248, according to Carpenter's projections. This includes annual costs of $919,000, factoring in such items as $120,000 for police protection, $85,000 for 911 dispatch, $97,000 for planning and zoning/building inspection, and $80,000-$100,000 for street maintenance.
If the town did eventually provide fire protection to the annexed area, it would cost an additional $782,000.
Carpenter anticipates that the town will receive $1.3 million in additional annual revenue from the Diamond Star area, including state revenue sharing, local sales taxes, and property taxes. Among the intangible benefits that would accrue from annexation, according to Carpenter's study:
- Diamond Star would experience a significant increase in service levels of animal control, police protection and zoning regulations.
- "Instead of looking at volatile issues like water resources from an ‘us' versus ‘them' perspective, if we were all one community there's only ‘us.'"
Carpenter said it would take an indication of some interest in annexation from the residents of Diamond Star for the town to actually launch a petition drive. He did not rule out working with the coalition.
"They're the ones that said annexation was at least one of the options they thought of," Carpenter said. "I would have no problem working with them on something like that."
Diamond Star costs and revenues with annexation
Expenses added to the town
Town Service Cost Estimate
Animal Control $20,925
911 Dispatch $85,677
Police Capital Costs $120,000
Fire Protection 0
Parks and Recreation 0
Planning and Zoning $72,840
Plan Review/Building Inspection $24,000
Magistrate Court and Prosecution $85,000
Income brought in from annexation
Revenue Source Estimate Revenue
State Sales Tax Share $245,585
Income Tax Share $256,596
Vehicle License Tax $160,200
Other Local Revenues $384,960
Local Sales Tax $200,000
Property Tax $42,045
Total General Fund $1,289,186
Revenue added to General Fund $1,289,186
Less additional Expenses $919,938
Positive Balance $369,248