The FY 2017 budget has been reviewed by the mayor and town council and is awaiting their formal approval as a forthcoming Town Council meeting agenda item.
As expected, revenue is down, expenses are up, and the proposed budget fails to implement accountability and cost control procedures --- crucial components towards achieving the town’s long-term independence and financial stability.
To increase revenue town officials discussed raising the sales tax rate and selling town assets. However, the assets they discussed selling did not include vehicles or office copy machines. There was an audible silence by those in attendance when town officials discussed selling a portion of the town’s CAP water allotment for additional town revenue.
Without a doubt, every resident could enumerate reasons why selling a portion of the town’s CAP water allotment is poor financial management. But, for town officials to consider selling CAP water while at the same time being steadfast in their position that the town remain committed to the water and financial obligations in the Open Space Agreements is dumbfounding.
The four Open Space Agreements declare that the town’s allocation of CAP water will be short by approximately 1,000 acre feet to meet the needs of the 3,000± new residences required under the Agreements. Under 2014 estimates, the town can only provide water to 308 new residences, not 3,000±. Using the town’s estimate of $1,500 per acre foot of water, the cost of purchasing 1,000 acre feet will be $1.5 million dollars.
Now, more than ever, the residents of Cave Creek must pay attention to this issue as town officials do not need voter approval to sell any portion of our CAP water allotment.
The proposed budget also contains a $55,000 appropriation to hire a consultant to do a water-sewer rate study. This study is needed to justify the mayor and town council’s intended increase to the base rate residents pay for water and sewer services. The items to be included in the base rate are fixed costs such as the purchase of water, construction loan payments, billing/collection expenses, water testing, debt service, and capital improvement reserves.
According to federal government guidelines, the base rate for water and sewer should be between 2 and 2½% of the median household income, lower if just for water. In 2013 the median household income in Cave Creek was $75,600. At a 2% calculation, the base rate for water service, depending on the size of the water meter, could be increased from $50/month to $126/month. Water usage would be an additional cost.
The proposed budget also contains a $40,000 appropriation to hire a consultant with bond financing experience to examine the feasibility of debt restructuring/refinancing. However, during the budget workshop discussion on this topic it was disclosed that the State was not interested in restructuring/refinancing our WIFA (bond) loans.
What else would involve bond financing? Answer: The purchase of the 4,000± acres of open space land. Knowing that passage of a property tax for the purchase of 4,000± acres is akin to living in an alternative reality, town officials appear to be pursuing the purchase using bond financing that doesn’t require voter approval of a property tax.
Our $50 million in bond financing that resulted in our water infrastructure debt does not require debt repayment using a property tax, but it is still the town’s largest debt. Debt is debt regardless of how the debt repayment is structured, and the town’s debt to income ratio will increase commensurate with the purchase price of the 4,000± acres.
The town’s check register reveals an April 6, 2016 payment to the town’s bond attorney for legal services in the amount of $19,454.22. Based on available figures to date, town officials have spent approximately $95,000 in fees and costs in preparation for the town’s purchase of the 4,000± acres. ($35,000 to consultant Steve Betts thus far, $40,000 in consultant fees, and $19,454.22 to the town’s bond attorney.)
Why didn’t the $19,454.22 paid to the town’s bond attorney require payment approval at a Town Council meeting? Shortly after the recall election, on October 5, 2015, the mayor and town council amended Ordinance 2015-06. The amended ordinance removed provision D(2). Prior to the mayor and council’s amendment, provision D(2) required that all expenditures over $10,000 be placed on a Town Council meeting agenda for public comment and Council approval. There is no longer such a requirement under our ordinances.
In 2009, the town officials who committed the town to the four Open Space Agreements included: former Town Manager Usama Abujbarah; Mayor Vince Francia; Councilmembers Ernie Bunch; Dick Esser; and Tom McGuire. Steve LaMar joined in the choir, but was on the Planning Commission at the time. Ian Cordwell as Planning Director.
In 2016, the town officials who will likely be asking residents for bonding authority to purchase the 4,000± acres are: Mayor Vince Francia; Councilmembers Ernie Bunch; Dick Esser; Tom McGuire; Steve LaMar, now Vice-Mayor, and newest Council member Susan Clancy. Ian Cordwell as Planning Director.
Until the town’s debt is significantly reduced and/or paid off, Creekers will be subject to the mentality of those who wish to “develop” the town out of debt.
Creekers must decide which is more important to our lifestyle: keeping our CAP water allotment or increasing the town’s debt by purchasing 4,000± acres of undevelopable land.
Post your comments but please remember: be nice .. be polite .. or be deleted.
Janelle Smith-Haff
As expected, revenue is down, expenses are up, and the proposed budget fails to implement accountability and cost control procedures --- crucial components towards achieving the town’s long-term independence and financial stability.
To increase revenue town officials discussed raising the sales tax rate and selling town assets. However, the assets they discussed selling did not include vehicles or office copy machines. There was an audible silence by those in attendance when town officials discussed selling a portion of the town’s CAP water allotment for additional town revenue.
Without a doubt, every resident could enumerate reasons why selling a portion of the town’s CAP water allotment is poor financial management. But, for town officials to consider selling CAP water while at the same time being steadfast in their position that the town remain committed to the water and financial obligations in the Open Space Agreements is dumbfounding.
The four Open Space Agreements declare that the town’s allocation of CAP water will be short by approximately 1,000 acre feet to meet the needs of the 3,000± new residences required under the Agreements. Under 2014 estimates, the town can only provide water to 308 new residences, not 3,000±. Using the town’s estimate of $1,500 per acre foot of water, the cost of purchasing 1,000 acre feet will be $1.5 million dollars.
Now, more than ever, the residents of Cave Creek must pay attention to this issue as town officials do not need voter approval to sell any portion of our CAP water allotment.
The proposed budget also contains a $55,000 appropriation to hire a consultant to do a water-sewer rate study. This study is needed to justify the mayor and town council’s intended increase to the base rate residents pay for water and sewer services. The items to be included in the base rate are fixed costs such as the purchase of water, construction loan payments, billing/collection expenses, water testing, debt service, and capital improvement reserves.
According to federal government guidelines, the base rate for water and sewer should be between 2 and 2½% of the median household income, lower if just for water. In 2013 the median household income in Cave Creek was $75,600. At a 2% calculation, the base rate for water service, depending on the size of the water meter, could be increased from $50/month to $126/month. Water usage would be an additional cost.
The proposed budget also contains a $40,000 appropriation to hire a consultant with bond financing experience to examine the feasibility of debt restructuring/refinancing. However, during the budget workshop discussion on this topic it was disclosed that the State was not interested in restructuring/refinancing our WIFA (bond) loans.
What else would involve bond financing? Answer: The purchase of the 4,000± acres of open space land. Knowing that passage of a property tax for the purchase of 4,000± acres is akin to living in an alternative reality, town officials appear to be pursuing the purchase using bond financing that doesn’t require voter approval of a property tax.
Our $50 million in bond financing that resulted in our water infrastructure debt does not require debt repayment using a property tax, but it is still the town’s largest debt. Debt is debt regardless of how the debt repayment is structured, and the town’s debt to income ratio will increase commensurate with the purchase price of the 4,000± acres.
The town’s check register reveals an April 6, 2016 payment to the town’s bond attorney for legal services in the amount of $19,454.22. Based on available figures to date, town officials have spent approximately $95,000 in fees and costs in preparation for the town’s purchase of the 4,000± acres. ($35,000 to consultant Steve Betts thus far, $40,000 in consultant fees, and $19,454.22 to the town’s bond attorney.)
Why didn’t the $19,454.22 paid to the town’s bond attorney require payment approval at a Town Council meeting? Shortly after the recall election, on October 5, 2015, the mayor and town council amended Ordinance 2015-06. The amended ordinance removed provision D(2). Prior to the mayor and council’s amendment, provision D(2) required that all expenditures over $10,000 be placed on a Town Council meeting agenda for public comment and Council approval. There is no longer such a requirement under our ordinances.
In 2009, the town officials who committed the town to the four Open Space Agreements included: former Town Manager Usama Abujbarah; Mayor Vince Francia; Councilmembers Ernie Bunch; Dick Esser; and Tom McGuire. Steve LaMar joined in the choir, but was on the Planning Commission at the time. Ian Cordwell as Planning Director.
In 2016, the town officials who will likely be asking residents for bonding authority to purchase the 4,000± acres are: Mayor Vince Francia; Councilmembers Ernie Bunch; Dick Esser; Tom McGuire; Steve LaMar, now Vice-Mayor, and newest Council member Susan Clancy. Ian Cordwell as Planning Director.
Until the town’s debt is significantly reduced and/or paid off, Creekers will be subject to the mentality of those who wish to “develop” the town out of debt.
Creekers must decide which is more important to our lifestyle: keeping our CAP water allotment or increasing the town’s debt by purchasing 4,000± acres of undevelopable land.
Post your comments but please remember: be nice .. be polite .. or be deleted.
Janelle Smith-Haff
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