TONTO HILLS IMPROVEMENT ASSOCIATION

42033 N. OLD MINE ROAD

CAVE CREEK, AZ 85331

 

15 October 2008

To All Members of the Tonto Hills Improvement Association

 

I’ve received and read a letter from a Beus Gilbert PLLC attorney for Ms. Kendra Boyd.  The letter, dated 26 September, 2008, was mailed to my home address on 1 October, 2008.  I returned from vacation to find the letter on 6 October, 2008.

 

It is important that a thoughtful response be developed.  The THIA Board has asked the Water Committee to review this letter and draft an official response for THIA Board of Directors approval at our next meeting, in November.

 

I want to make it clear that over the last 3 years, the Water Committee has already addressed every issue mentioned in the letter.  Every piece of data presented to the association by the Water Committee represented the good faith due diligence effort to bring facts and expert opinion to the association members.

 

Still, I think it is important to address some assertions in this letter now.  Details on all of these responses are contained in the numerous presentations made by the Water Committee.  These can all be found on the THIA web page at www.tontohills.org.

 

FIRST – The letter states that the Domestic Water Improvement District (DWID) will buy Tonto Hills Utility Company (THUC).  This statement is inaccurate; the DWID, if formed, will purchase only the operating assets of the utility.  Thus, the DWID members would not be exposed to any potential liabilities that THUC might incur.

 

SECOND – The letter states that no DWID formation cost data was provided.  This statement is inaccurate; the June 2008 Town Hall meeting provided extensive cost data.  The presentation discussed the price to be paid for the THUC operating assets, the dollar amounts THUC and the DWID would put back into infrastructure improvements, the amount of a proposed new WIFA loan, the break-down of loan money disbursement, and the cost to each association member.

THIRD – The letter’s references to the Preliminary Engineering Report (PER) break no new ground.  The letter just repeats findings that were presented for evaluation to the members.  The PER was prepared by a licensed and certified engineer.  The company is a recognized engineering company accredited by Water Infrastructure Finance Authority (WIFA), which is advised by the Arizona Department of Environmental Quality (ADEQ).  The PER was reviewed by WIFA and ADEQ, and was approved.  It provides an independent expert opinion on the utility infrastructure, its flaws, cost for repair, and ability to meet the needs of the community.  The June 2008 Town Hall meeting presentation discussed how the flaws in the systems can be addressed.

 

FOURTH – The letter states the costs could increase.  This statement is correct; this possibility does exist as it does for any owner of a water system.  The projections and key assumptions in the June 2008 Town Hall presentation included assumed operating cost increases.  The largest ongoing operating cost to the DWID concerns the Scottsdale contract.  Future increases in that contract could impact costs regardless of who provides water to residents.

 

It really comes down to this.  THUC operating assets are for sale.  Either the DWID is formed and purchases the THUC operating assets, or THUC is purchased by an outside third party, or THUC is not immediately sold and the current THUC owners retain ownership.  The residents and property owners of Tonto Hills ultimately will pay the costs of operation and maintenance.  Who is going to maintain, on a cost effective basis, the systems better:  a not-for-profit, community-owned DWID or a private for-profit owner?

 

The THIA Board, at the November business meeting, will review the Water Committee’s draft response and issue a detailed response.

 

Respectfully,

 

 

Rick Nelson

THIA Board President