The Town of Star Valley is wading into the unknown with the potential purchase of the local water company and the sale has some councilors and community members concerned.
Will the town have to raise rates to fix the infrastructure? Who will run it and maintain the system? Will the town expand it? How much will it cost to buy and what impact will it have on other town projects?
Town councilors, commission members and several residents dived into these issues at the council’s annual retreat held Friday at Tonto Natural Bridge.
The group agreed it is crucial the town buy the system to secure sustainable water for residents.
“That’s why this town incorporated and we are taking that first step” with the purchase of the system, said town manager and attorney Tim Grier.
“If we don’t have the water, we can’t do nothing,” said Vice Mayor Del Newland.
The town is in the midst of negotiations for the water company with Brooke Utilities’ owner Robert Hardcastle. Grier will give the council an update on the sale at Tuesday’s council meeting, but likely behind closed doors during executive session.
Grier has been in talks for the system for several months, but has given few public details on the progress of the sale. At Friday’s meeting, Mayor Bill Rappaport cautioned that the price could put a moratorium on other town projects.
“We should all gear ourselves that it is not going to be cheap,” he said.
Rappaport encouraged commission leaders to break future projects into manageable bites, instead of delivering huge projects to the town council that also come with huge price tags.
Councilor Barbara Hartwell agreed.
“We are going to have to be very careful on our budget planning because this is going to be a huge expense,” she said.
Resident Gary Rolf questioned if the town would get the system appraised and urged the council to get one if it had not.
Grier balked at the idea; however, saying the cost of an appraisal could run as high as $150,000 — money that could be put toward the purchase price. In addition, it is nearly impossible to put a value on the water rights that come along with the purchase, he said.
And it is those water rights that the town is interested in buying. Running the water company or improving it are not the town’s motivating factors, as was in Pine-Strawberry. There, residents were fed up with water hauling fees, an antiquated system and strict water use limits in the summer. The community rallied and bought the system from Brooke Utilities several years ago.
Since then, the Pine-Strawberry Water Improvement District has drastically improved the system by adding new wells and shoring up old ones, but it all came at a cost, with water rates rising steeply.
In Star Valley, the motivating factor behind the purchase is water rights.
“We are not really buying the water company, we are buying the CC&Ns (Certificate of Convenience and Necessity),” said Councilor George Binney. “The second reason is the water company.”
Whoever owns the water company also owns the rights to hook up new wells to the system and go after a share of Blue Ridge pipeline surface water. In addition, owning the water system would give the town the opportunity to add fire hydrants.
Star Valley incorporated on the platform of protecting residents’ fragile water supply from Payson’s Tower Well and any future threats. Buying out Brooke would cap years of work to protect that supply.
“This will put us in a position that nobody else can come in here and take our water —period,” said resident Fred Horton.
The town has already spent tens of thousands on water studies and even fostered a relationship with Payson. Recently, Star Valley bought three of Payson’s wells and Payson in turn agreed to act as a backup water supply, pumping water from its system near the Tower Well into the system currently operated by Brooke.
However, Star Valley cannot do anything with the water from the three wells it bought from Payson without water rights.
Brooke currently has the sole right to distribute water to residents not hooked up to a well. Brooke serves some 300 customers.
Larry Stephenson, streets and roads commission member and 10-year Brooke customer, said he has been satisfied with Brooke’s service.
He said he has never been without water and Brooke has not raised rates in nine years.
“I hope the town can do as well,” he said.
Several councilors wondered if the town would have to raise rates if it did buy the system.
Grier said he did not know.
“A lot of questions remain,” he said.
The town could expand the infrastructure, go after new customers, purchase additional wells or buy into Blue Ridge, and all of these come with a cost.
“I can’t give you a figure at this point of what our additional costs will be,” he said. “Hopefully we are buying a system that is not in disrepair.”
As town manager, Grier would be in charge of running the system and possibly hiring someone to oversee operations long-term.
The town would do everything it could to keep costs low, he said.
Councilor Gary Coon said there would be a backlash if the town raised water rates.
Hartwell promised the town would not increase rates more than it “absolutely had to.”
“We don’t have to raise rates instantly,” she said. “We can slowly let the public know what we are doing, what we have done, what we are seeing, what problems there are and how we are planning on tackling those and gradually educate them so they are more susceptible or acceptable to any changes we have to make.”
Councilor George Binney added that if the town does not buy the water company, a private company would and likely raise rates anyway.
Coon said hopefully the town breaks even on the project.
“I think we are all on the same page as far as the important significance of purchasing, but I think the question is how do we handle it after we purchase it. I think you have to think short term and long term,” he said.
Management is short term and infrastructure costs, long term.
Binney said the town is buying the system blind, with no idea what repairs are needed.
Grier said he anticipates there will be repair costs, but the value of the CC&Ns outweighs any concerns.
Rolf said buying the system without an appraisal concerns him.
“I wholeheartedly support this and believe it is something we need to do, but good Lord, don’t let me keep hearing we don’t know what it is worth or we can’t find out,” he said.
In his own business sales, Rolf always got an appraisal. Without one, he could potentially overpay.
“I think you are wrong,” Grier said. “I think that a water company is going to be impossible to value and you are not going to do it through an appraisal. You have to look at the value and in what value it has for a potential buyer,” Grier said.
“Tim, let me,” Rolf said.
“No, let me finish I am not done. So I think you are wrong with the idea that spending it on an appraisal ... some businesses are impossible to appraise,” Grier said.
Rolf said he disagreed.
“It scares the hell out of me to do something without having an expert tell you how much it is going to cost you,” he said.
Grier said he has been very miserly with the town’s money and would never spend more than is necessary on anything.