Carefree Truth
Issue #673, July 24, 2018
After the presentations were concluded, questions from the audience were taken.
Q: What is the time frame to bring in the 526 homes, assuming Carefree goes forward?
A: Tony Geiger-It should take less than 2 years, and should be completed by 2020. It's not that big a deal from an engineering project standpoint. Coe Van Loo will have their study wrapped up and it will go out for bid. The deal with Cave Creek goes to arbitration. It is lined out to happen.
Les Peterson-There's a time schedule for the arbitration. It's not long.
Q: Is there redundancy?
A: Tony Geiger-Carefree has redundancy. There are 3 CAP connections and 6 wells.
Q: But is there redundancy for Cave Creek?
A: Tony Geiger-No, Cave Creek is in trouble. There is no way they can get redundancy. Their request for hook-ups have already been turned down by neighboring cities.
Q: Can they hook into the Carefree system?
A: Tony Geiger-They already are hooked in (to supply temporary emergency water for Carefree citizens on CCW). Carefree could never generate enough water to supply Cave Creek.
Les Peterson-We are not here to penalize Cave Creek but we are not here to compensate for them either.
Q: Does the condemnation happen in January of 2019, or 2 years later when we are ready to go online?
A: Tony Geiger-There should be multiple simultaneous tracks going forward. The Town should be working with the engineers, with the finance people to figure out the bid documents and rates, with the bond people to plug in the final number, and with the legal people on the condemnation.
Q: Can Cave Creek say, "Good luck, guys", then we go for 2 years?
A: Tony Geiger-That's not how Cave Creek works. Cave Creek has no tools to help us. No As-Builts, no records. Really good employees on the ground, but it's in their brains. There is nothing they can do for or against us.
Q: If there is a water problem at a Carefree house in the next 2 years, can Cave Creek walk away from it?
A: Tony Geiger-If the CAP line or the tank go down, there is no way to isolate or punish the Carefree customers because the whole system suffers. It is down for everyone. There is a chance they could be punitive (if part of the infrastructure in Carefree is affected) but that is no reason not to do this.
Les Peterson: Once Carefree takes over, it could be uncomfortable for a while. If the fire hydrants and water lines have not been flushed, Carefree will flush them, and the sediment will end up in your lines and in your house.
Q: Can you guess at the cost, the bond issues, etc?
A: Gary Neiss-That will be determined by the engineering study, which will provide a value of the system predicated on what's in the ground. If nothing is on record in Cave Creek, then the study must determine the maintenance schedule and age of the infrastructure, and assign a figure based on their understanding.
Q: You know it's not a billion dollars, right? And not $5.
A: Tony Geiger-We can't give a number right now, but Cave Creek paid $20 million plus for the system. The 526 homes represent about 20% of the customer base. That's $4 million. But that's not right because the $20 million includes the 12 mile pipeline with a series of pumps, and a water treatment plant to make canal water into potable water. We're not buying any of that. Carefree's buying pipelines, fire hydrants and meter boxes within the Carefree subdivisions. It's going to be a lot less. Cave Creek's revenue from the Carefree customers is approximately $600,000. Their cost for the water, power, chemicals and people is approximately $300,000. The Cave Creek Water rate payers will have to make up for that difference in income. Carefree will pick up $600,000 in revenue, but not $600,000 in costs. The delta between the two can be used to offset the cost of the bonds. Carefree is not using the reserve fund to buy this. The bonds are tied to the water bills. Mr. Geiger has worked around high fixed cost operations like factories and foundries. If you make 100 widgets, you have a fixed cost. If you make 110 widgets, the last 10 widgets are "raining money". It's the same with water companies. This is going to be a good deal, making CFW that much financially stronger going forward, and the reverse for Cave Creek, unfortunately.
https://vimeo.com/279763921
Parts 5B & C of the Q&A will be coming, then the report on the July 9th water info meeting will be complete.
Lyn Hitchon
Prepared by Carefree Truth
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.
Q: What is the time frame to bring in the 526 homes, assuming Carefree goes forward?
A: Tony Geiger-It should take less than 2 years, and should be completed by 2020. It's not that big a deal from an engineering project standpoint. Coe Van Loo will have their study wrapped up and it will go out for bid. The deal with Cave Creek goes to arbitration. It is lined out to happen.
Les Peterson-There's a time schedule for the arbitration. It's not long.
Q: Is there redundancy?
A: Tony Geiger-Carefree has redundancy. There are 3 CAP connections and 6 wells.
Q: But is there redundancy for Cave Creek?
A: Tony Geiger-No, Cave Creek is in trouble. There is no way they can get redundancy. Their request for hook-ups have already been turned down by neighboring cities.
Q: Can they hook into the Carefree system?
A: Tony Geiger-They already are hooked in (to supply temporary emergency water for Carefree citizens on CCW). Carefree could never generate enough water to supply Cave Creek.
Les Peterson-We are not here to penalize Cave Creek but we are not here to compensate for them either.
Q: Does the condemnation happen in January of 2019, or 2 years later when we are ready to go online?
A: Tony Geiger-There should be multiple simultaneous tracks going forward. The Town should be working with the engineers, with the finance people to figure out the bid documents and rates, with the bond people to plug in the final number, and with the legal people on the condemnation.
Q: Can Cave Creek say, "Good luck, guys", then we go for 2 years?
A: Tony Geiger-That's not how Cave Creek works. Cave Creek has no tools to help us. No As-Builts, no records. Really good employees on the ground, but it's in their brains. There is nothing they can do for or against us.
Q: If there is a water problem at a Carefree house in the next 2 years, can Cave Creek walk away from it?
A: Tony Geiger-If the CAP line or the tank go down, there is no way to isolate or punish the Carefree customers because the whole system suffers. It is down for everyone. There is a chance they could be punitive (if part of the infrastructure in Carefree is affected) but that is no reason not to do this.
Les Peterson: Once Carefree takes over, it could be uncomfortable for a while. If the fire hydrants and water lines have not been flushed, Carefree will flush them, and the sediment will end up in your lines and in your house.
Q: Can you guess at the cost, the bond issues, etc?
A: Gary Neiss-That will be determined by the engineering study, which will provide a value of the system predicated on what's in the ground. If nothing is on record in Cave Creek, then the study must determine the maintenance schedule and age of the infrastructure, and assign a figure based on their understanding.
Q: You know it's not a billion dollars, right? And not $5.
A: Tony Geiger-We can't give a number right now, but Cave Creek paid $20 million plus for the system. The 526 homes represent about 20% of the customer base. That's $4 million. But that's not right because the $20 million includes the 12 mile pipeline with a series of pumps, and a water treatment plant to make canal water into potable water. We're not buying any of that. Carefree's buying pipelines, fire hydrants and meter boxes within the Carefree subdivisions. It's going to be a lot less. Cave Creek's revenue from the Carefree customers is approximately $600,000. Their cost for the water, power, chemicals and people is approximately $300,000. The Cave Creek Water rate payers will have to make up for that difference in income. Carefree will pick up $600,000 in revenue, but not $600,000 in costs. The delta between the two can be used to offset the cost of the bonds. Carefree is not using the reserve fund to buy this. The bonds are tied to the water bills. Mr. Geiger has worked around high fixed cost operations like factories and foundries. If you make 100 widgets, you have a fixed cost. If you make 110 widgets, the last 10 widgets are "raining money". It's the same with water companies. This is going to be a good deal, making CFW that much financially stronger going forward, and the reverse for Cave Creek, unfortunately.
https://vimeo.com/279763921
Parts 5B & C of the Q&A will be coming, then the report on the July 9th water info meeting will be complete.
Lyn Hitchon
Prepared by Carefree Truth
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.