A bank’s change of heart means the Pine Strawberry Water Improvement District will not assume control of Pine and Strawberry water companies by today, May 22, as originally agreed upon.
Water users learned of the allegedly temporary delay on the PSWID Web site and last evening at a board meeting that plans had been postponed to take control of the two companies, owned by Brooke Utilities.
“A lot of things have transpired,” said chairman Bill Haney, in response to a question from board critic Sam Schwalm. “There were too many questions that needed to be resolved” before the takeover could be completed.
Board members said the reasons included not wanting to assume control on a busy holiday weekend and non-cooperation from Brooke Utilities president, Bob Hardcastle. Most important, Compass Bank balked despite its earlier agreement to fund the purchase.
Haney said the bank was hesitant “because of a filing of a legal motion to intervene in the transaction by a third party.”
Haney was apparently referring to a claim filed in early May by Gary Rogers in which Rogers argued that he is the owner of property included in PSWID’s condemnation lawsuit and he had not agreed to the stipulation between Brooke and PSWID. Rogers also claims he has not been involved in any of the discussions between the two parties.
Rogers asked the court to schedule a hearing before PSWID takes over the two water companies.
Brooke Utilities spokesperson Myndi Brogdon argued that Rogers’ legal action should not have have affected the financing.
“His concern can be addressed easily and there are many options,” Brogdon said. “That should not stop this action from moving forward.”
Nonetheless, without Compass’ financial backing, the board could not post the required $3.2 million bond with the clerk of the Superior Court by today.
PSWID board members said in mid-April that Compass had approved a loan of more than $6 million for the purchase and operation of the water companies.
“The petition to intervene ended everyone’s ability to move forward,” Haney said.
Brogdon called the use of Rogers’ lawsuit as a reason to back out, “a bit of a smoke screen because the bottom line is, they signed a stipulated agreement to fund a $3.2 million bond and couldn’t or didn’t come up with the money.”
Following the meeting, she posed the question, “Why did they file for immediate possession when, as they said at their meeting, ‘we were not prepared to take over the water system.’”
Early this year, board attorney John Gliege filed a lawsuit for immediate possession that led to the stipulated agreement between BU and PSWID.
Although board members hinted at the meeting that Hardcastle had not lived up to his agreement to supply PSWID a list of customers, including names and addresses, maps of systems, meter read dates and accounts receivable information. Nor did he offer aid in transitioning the water systems.
However, Brogdon denied that saying, “They only asked four things from us, and we complied with all four.”
Haney contends the failure to post the bond is only a bump in the road to the board eventually gaining control of Pine and Strawberry water.
“The district and the water companies have continued a dialog and both are working to try and reach an agreement satisfactory to both,” he said.
Whatever transpires in the future, it will no longer occur in Gila County Superior Court. As part of the immediate possession court agreement, an order by Gila County Judge Peter Cahill changes the suit’s venue to Yavapai County Superior Court in Prescott.