An effort, started more than a year ago to find new water sources for residents of Pine and Strawberry, reached a milestone Tuesday.
In a special meeting May 1, the Pine Strawberry Water Improvement District board members met with representatives of the Pine Water Company to finalize and approve an agreement to drill, equip and interconnect a deep aquifer well on a site in east Strawberry, known as the "K2 Well Project."
This is a "historic" event because it's the first time PSWID and the local water utility are cooperating with an investment to develop water for district communities.
The construction of the production well is planned to start in late spring of 2008, provided it is determined the site can produce 150 gallons per minute.
With a favorable review by the Arizona Corporation Commission, Pine Water Company hopes to complete drilling and begin servicing customers in the summer of 2008.
Work on the agreement started March 20, 2006 with an offer from Brooke Utilities, Inc. -- which owns the Pine Water Company -- for investigation and development of a deep well on their K2 Site by the PSWID and Pine Water Company. A proposal to pursue the project was approved by the two entities in September 2006. This proposal set the stage for negotiations on a "definitive agreement" to drill a test well and, if the test is successful, proceed with development of the well.
After five negotiation meetings, the PSWID board unanimously approved the agreement on Tuesday.
PSWID will make a capital investment of $300,000 in the project -- not a loan, as determined by the district's attorney, William Sullivan. The water company will make a capital investment of up to $1 million, in addition to the PSWID money.
"Total project cost is estimated (to be) between $1 million and $1.3 million for exploration with a test well, development of a production well, tanks and interconnections," said Jim Richey, PSWID board member.
The PSWID money will be placed in escrow, if the corporation commission approves the agreement with Pine Water Company and the water company notifies the district, in writing, of the additional $1 million funding commitment for the entire project.
The district is to receive a capital return of 6 percent for 36 months, beginning no later than July 2008.
The district money is to be placed in escrow by the end of 2007 and test well work is to start in early spring of 2008, depending on weather.
The schedule depends on how quickly the ACC approves the agreement. A quick approval could mean new water much sooner.
Assuming a favorable review by the ACC, the agreement has the potential to be a win-win situation for community water users and the water company, said PSWID Chairman Gary Sherlock.
Water users win when the additional production eliminates usage restrictions and lofty charges for hauling water, Sherlock said. Developers win with the lifting of the moratorium, allowing for new meters in the subdivisions and the water company wins with the increased customer base, allowing for the expansion and maintenance of the distribution system.
Taxpayers win by supporting the cost of this well with the existing district budget, rather than the more costly approach of initiating a bond with an indebtedness of interest and principal that would take years to release. Pine Water Company will repay the district's contribution in the investment, through this agreement, with interest.
The K2 Well Project site has good qualifications, including hydrogeologic potential and existing electric power, water storage, public water utility easements, and proximity to the northern terminus of Magnolia Pipeline, a high-capacity water supply line connected to the communities of Pine and Strawberry.
"About the only public at the May 1 meeting were the lawyers," Sherlock said. "Also attending was Robert Hardcastle of the Pine Water Company. He waited for more than two hours while we were in executive session reviewing the agreement one last time."
Jim Richey and Wes Suhr, the delegates who worked on the development of the document, and the chairman were pleased with the unanimous approval of the agreement, Sherlock said.
"I expect this will be a big topic at the meeting the corporation commission is having at the Pine town hall meeting on May 3," Sherlock said.