The Pine Strawberry Water Improvement District will not take control of Brooke Utilities’ two water companies by today, Sept. 22, as originally scheduled.
The takeover was delayed because Compass Bank, which agreed to fund the purchase, has not yet released the $6.4 million two-year loan to PSWID.
“The bank loan is not a typical commercial loan and, as a loan to a governmental entity, it will have a number of provisions that it addresses that are specific to improvement districts and to the acquisition,” board president Bill Haney said. “This is all taking significant time and the lawyers have not yet completed drafting the documents.”
Haney denied there are any major stumbling blocks involving PSWID and Brooke that would end the long-awaited deal.
“The District and Brooke are just trying to tie up loose ends concerning the transfer,” he said.
Haney would not predict when the bank would forward the funds, but hoped it would be by Sept. 30, which is the purchase deadline.
Once the funds are received from Compass, Brooke and the board would forward a stipulated agreement to Division I Yavapai County Superior Court Judge David L. Mackey for his OK.
If the judge gives his stamp of approval to the agreement, the ongoing condemnation lawsuit lawsuit the district has filed in court would be wiped away and the sale of Pine and Strawberry water companies to PSWID would be a done deal.
The purchase price for the two privately owned water companies is $3.5 million.
The delay in the takeover represents the second such postponement in the past five months.
Originally, PSWID was to assume control May 22, but the deal fell through when the board failed to post the stipulated agreement’s $3.2 million dollar bond.
That prompted a flurry of activity in which Brooke lawyers asked the court to take sanctions against PSWID for failure to post the bond.
Board attorney John Giliege responded to the motions for sanctions by saying there were legitimate reasons why the district did not post the bond and take over the companies by the agreed upon dates.
In July, a closed-door meeting involving the seven members of the PSWID board, Brooke President Bob Hardcastle and Tom and Lee Jamison, both officers of Jaco Oil, the parent company of Brooke, appeared to have cooled tensions and was a big step toward settling the purchase issue.
“It was a very positive meeting. Very cordial, we made progress,” Haney said after the meeting.
Taking over the two water utilities has been the district’s goal since a successful recall election about two years ago.
Also in the proposed takeover, Gila County Chief Deputy Attorney Bryan Chambers at a special board of supervisors meeting Sept. 18 signed a “Disclaimer of Interest” form in the court case PSWID vs. Pine Water Company. It stipulates the county will have no property tax claims — should the takeover occur — if Brooke pays its due taxes.