On the heels of purchasing the Payson Water Company from Brooke Utilities, the Star Valley council will address how it will fund the $775,000 expenditure at a Tuesday council meeting.
The deal is one of the most important purchases the town has made since incorporating in 2007.
With the water company comes 360 local customers, but more importantly, water rights that let the town pursue a sustainable water source.
The town is already considering acquiring a share of Blue Ridge water and hooking new wells into the system.
But before it can do any of that, it needs to purchase the system and set up a water department.
Town Manager and Attorney Tim Grier said the small staff at town hall has already put hundreds of hours into setting up a water management plan that includes billing, hiring a water operator, answering calls and maintaining customer service.
“We have come quite a way with our plan and have a good idea what we are going to do,” Grier said.
At Tuesday’s meeting, the council will consider using money from the town’s $1.2 million rainy day fund to purchase the water company or finance it through the Water Infrastructure Finance Authority (WIFA) of Arizona.
The council will also consider proposed water rates at the 6:30 p.m. meeting in the Lamplighter RV Park Recreation Room, 3933 East Highway 260.
If the town decides to buy the system outright, it could take a maximum of $600,000 from the rainy day fund and make up the difference with the general fund.
When the town set up the rainy day fund several years ago, it set strict constraints on using that money to prevent frivolous spending, Grier said.
So far, the council has only added to the fund, mostly from additional revenue from four photo enforcement cameras in town.
One of the conditions that merit the use of rainy day funds is improving the safety and health of the community.
Pursuing a sustainable water source, clearly meets this requirement, he said.
If the town uses WIFA financing for the purchase, it will have to pay interest, which adds to the overall cost, Grier said.
However, if it uses money from the rainy day fund, it cuts its emergency stash in half.
Very few municipalities have the option of paying outright for anything these days, Grier added, crediting the council for its tight-fisted spending habits.
“We have a responsible council that is not going to spend frivolously,” he said.
Grier believes the budget is healthy enough to support removing funds from the emergency fund.
Beyond purchasing, the town’s chief concerns are running the water company efficiently and effectively.
Will the town have to raise rates or impose a tax on residents? The council will address that at Tuesday’s meeting.
While the town understands the community may not want to subsidize a water company that only a small fraction of town residents currently use, even residents who are not hooked up will receive a benefit long term, Grier said.
“I think the whole reason we bought this was to release the CC&Ns (Certificate of Convenience and Necessity) so the whole community could pursue a sustainable water source,” he said. “We didn’t buy it to better serve 361 customers.”
In fact, the town heard from some customers that were happy with their service from Brooke Utilities.
One thing they did complain about was reaching a customer service agent. Brooke uses a call center in Costa Rica to field calls from customers serviced by 25 water companies managed by Robert Hardcastle.
The town is confident it can offer better customer service, especially since the complaint department is town hall, just a few blocks away for most residents.
One thing the town will not beat is Hardcastle’s operating expense. Having 25 water companies and four water operators to pull resources from lowered his overhead costs, Grier said.
“It is going to be more expensive for the town because we don’t have 25 water companies that we can exchange resources between.”
The town plans to hire a water operator, who will work out of town hall. To keep costs low, Chancy Nutt, the town’s current finance administrator, will also take on billing duties and field customer calls. The water operator will also be expected to help on streets and roads projects and answer customer calls.
When the town will take over the water system is unclear, but it could be as early as Jan. 16.
The town needs a judge to sign off on the deal and that could set it back, Grier said.
Also at Tuesday’s meeting, the council will discuss the council holiday party.