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