Payson Shuffles Pipeline Loans

Construction starts this week on overhaul of water system

C.C.Cragin Reservoir (also known as the Blue Ridge Reservoir).

Photo by Andy Towle. |

C.C.Cragin Reservoir (also known as the Blue Ridge Reservoir).


The Payson Town Council on Thursday voted to give back an unused $2 million federal economic stimulus loan to build the Blue Ridge pipeline — then immediately signed on for a new $6.2 million federal loan with the same low interest rate.

The vote came as construction crews get ready to deploy bulldozers, trenchers and subcontractors to start work on the in-town connections for the $34 million project that will double the town’s long-term water supply.

Initial work will focus on upgrading pipelines and connections in Rumsey Park and along several miles-long sections of water main in town. Semi-trucks in the next few weeks will start hauling some 15 miles worth of big, 36-inch pipes contractors will eventually bury alongside Houston Mesa Road.

Town officials have spent months juggling federal grants and financing to dramatically reduce the cost of the project. Nearly four years ago, Payson got a $10.5 million federal stimulus package of grants and loans for the pipeline. That included a $4 million cash grant the town spent mostly on buying pipe and more than $6 million in low-cost federal loans.

A year-long delay by the Forest Service in approving the town-funded environmental assessment of the pipeline route kept Payson from spending that stimulus grant, which was originally intended to create jobs quickly in the depths of the recession.

The town plans to finance the pipeline over a period of at least 30 years with loans from the federal Water Infrastructure Finance Authority (WIFA). The town has lined up ample financing, but WIFA administrators urged Payson to simplify its bookkeeping by returning the unused stimulus loan and covering the costs instead with a new, WIFA loan.

“This will close out our stimulus loan,” said Public Works Director LaRon Garrett at the Thursday council meeting. “Construction will start on the pipeline next week in town while we continue to work on long-term financing.”

Payson Mayor Kenny Evans noted that town officials have met with representatives of all nine members of Arizona’s congressional delegation to make sure the project stays on track and the town gleans any federal grants and assistance possible.

“We’ve met with the congressmen and they’re eager to provide whatever assistance they can,” said Evans. “It’s almost like it’s an election year.”


Payson has started construction on a pipeline to connect to this line already built atop the Rim.

The new $6.2 million federal loan at an effective rate of about 3.5 percent will cover construction costs through the remainder of the current fiscal year, which ends in July of 2013.

Two local contractors landed two of the three initial contracts to install new water lines and additional connections needed to accommodate the Blue Ridge water once it arrives in 2014. The town has rights to up to 3,000 acre-feet annually from Blue Ridge. Currently, the town uses about 1,800 acre-feet annually from its wells. Initially, the Blue Ridge water will greatly exceed the town’s needs, so water managers want to reconfigure the pumping on several town wells so they can inject the Blue Ridge water into the underground water table. The town hopes to gradually restore historic levels in the water table, which had fallen 100 to 200 feet due to overuse. The town will essentially use half of the Blue Ridge water as it flows into the system and inject the other half into the water table during the nine months the pipeline operates.

Evans said the town still must award contracts for the major portion of the project, which consists of burying the pipeline alongside Houston Mesa Road and constructing three crossings of the East Verde River.

He noted that the complex construction schedule will take account of Forest Service concerns about scheduling things like blasting, night work and heavy construction at times when endangered Mexican spotted owls might be affected by the construction noise. No Mexican spotted owls nest along the East Verde, but the U.S. Fish and Wildlife Service has designated thick forest within a mile of the creek as critical habitat for the small owl, that nests and forages in old-growth forest.

A Forest Service biologist’s concerns about a possible impact on owls that happen to pass through the construction area at one point held up approval of the project for nearly a year. The biologist ultimately agreed with the consultants the Forest Service hired with the town’s money that the project won’t have any significant impact on either the Mexican spotted owl or the Chiricahua leopard frog, neither of which actually live in the creek.


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