The infrastructure of both the Pine and Strawberry Water Companies are in disrepair and while one company barely broke even in 2007 the other lost $150,000, a consultant hired to advise the Pine Strawberry Water Improvement District reported at a crowded meeting Thursday, July 17.
Brooke Utilities spokesperson Myndi Brogdonm, Friday morning, denied the water systems are in disrepair.
"If they are so bad why is our water loss only 7 percent and the national average (for water loss) is 15 to 20 percent."
"Our system is tight and works and providing the most water possible to our customers."
"It might not look pretty but is function and operating."
Despite Coe & Van Loo's and economists.com dim assessment, the Pine Straw-berry Water Improvement District board of directors will continue efforts to purchase both companies for $2.17 million from current owner Brooke Utilities.
Board members voted unanimously to direct the Phoenix consulting firm to now estimate both the cost of needed new infrastructure and ongoing operational costs should the PSWID succeed in condemning and buying the two water companies.
CVL Vice President Ken Knickerbocker and Dan Jackson, the Managing Director of economists.com., made their sometimes startling report to the intent crowd.
When William Haney, board chairman, asked Knickerbocker what he would pay for the water districts if it was his own money, the consultant knocked the socks off most board members and spectators when he replied "I'd offer $200,000."
That's considerably less than the $2.17 million offer the board has extended Brooke Utilities President Robert Hardcastle, based upon the consultants earlier estimates.
Local realtor Ray Pugel, who has been at the forefront of acquiring the two water companies from Brooke Utiltities, said Knickerbocker's reply reflected the substandard quality of Pine and Strawberry water.
"But the board's offer is the more realistic price," Pugel said.
In appraising the value of the two water companies, CVL used six methods to ultimately reach the conclusion that the Reconstructed Cost New Less Depreciation (RCNLD) value of the two companies is $2.17 million.
The value for each of the 3,000 active connection for the combined water companies was set at $812.22.
Knickerbocker and Jackson's two-hour presentations focused on the millions of dollars needed to upgrade the aged infrastructure should PSWID acquire the companies.
"They are not in the best of shape and you (the board) will have an obligation to bring this up to safe standards," Knickerbocker said.
During a question and answer period from the audience, both Knickerbocker and Jackson fielded questions regarding the financial status of the two companies and PWC's recent history of losing money.
Some suggested the losses could be tax write offs for Brooke Utilities parent firms of Oil and Crystal Investments.
Jackson said they didn't know more about the losses, because "we haven't been inside their (Brooke Utilities) facilities and we haven't examined their books."
Hardcastle has not cooperated with the CVL appraisal team by allowing them access to water company facilities or records.
The board made its offer to Hardcastle several weeks ago and he has until July 25 to accept, reject or counter it.
If Hardcastle and PSWID can't come to a purchase agreement, the district has indicated it will begin legal condemnation proceeding by filing suit against Brooke Utilities.
Also at last evening's board meeting in the Pine Cultural Center, members voted to table recruitment of an interim district general manager and an interim contract operator for the maintenance and operation of the two water companies should they soon be taken over by PSWID.Although chairman Haney asked for immediate action on the two positions, the board decided to defer those decisions to a later meeting.