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Carefree Truth
Issue #892, February 14, 2021
Issue #892, February 14, 2021
Greg Crossman explained that in 2017/18, when acquiring the Carefree Service Area (CSA) was first being considered, the Town realized it needed consultant assistance for a project of that scope. In 2018, they hired the engineering firm of Coe & Van Loo (CVL) to evaluate the condition and value of the infrastructure within the CSA, the cost to disconnect the CSA from the Cave Creek water system, to reconnect it to the Carefree water system, and to investigate financing options and water rates.
The CSA has 3 very distinct geographic areas with different challenges. Neighborhoods B and C are fairly close to existing Carefree Water Company (CFWC) infrastructure, with no physical impediments. Neighborhood A is on the southwest side of Black Mountain, which poses a physical impediment. Neighborhood A has about 60% of the residential customers in the CSA, as well as an existing commercial area that includes the big box store Lowes. Lowes requires water fire flow of 3000 gallons per minute, more than that of any other place in Carefree. There is also a planned commercial development on the northeast corner of Carefree Highway and Cave Creek Road that will be an economic driver in the future.
The CSA has 3 very distinct geographic areas with different challenges. Neighborhoods B and C are fairly close to existing Carefree Water Company (CFWC) infrastructure, with no physical impediments. Neighborhood A is on the southwest side of Black Mountain, which poses a physical impediment. Neighborhood A has about 60% of the residential customers in the CSA, as well as an existing commercial area that includes the big box store Lowes. Lowes requires water fire flow of 3000 gallons per minute, more than that of any other place in Carefree. There is also a planned commercial development on the northeast corner of Carefree Highway and Cave Creek Road that will be an economic driver in the future.
A 300,000 gallon water storage tank needs to be added to service Neighborhood A. The water will flow south on Tom Darlington Drive, then west on Carefree Highway to a new interconnect at Terravita Way that will be constructed with Scottsdale, at which point it will go from a 12" to a 16" transmission line, and will continue west on Carefree Highway to Cave Creek Road. This will provide the water flow required by Lowes and will service the future commercial development on the northeast corner.
At Peaceful Place, the water line will be expanded to 6 inches, which will support fire hydrants. There will be a new 8" water line along Rising Sun which will open up that area for water service which has not previously been provided by the CFWC. Scopa Trail will get a 6" to 8" water line. These are some of the larger projects associated with the water consolidation project.
The traditional Design/Bid/Build method is not a good fit for this project. There are too many unknowns and too much need for coordination and sequencing between 2 water systems, with the transfer of the CSA from one to another. Carefree will be using a relatively new "delivery method" called the Construction Manager at Risk (CMAR) process. The contractor will be involved early on and made part of the design team, and so will be totally up to speed at the start of the construction. This is the recommended process.
There are multiple financial funding sources. The Town has already fronted a considerable amount of money to get the project to this point. Contributions from the developers of the commercial center at the northeast corner are anticipated. There will be offsets from the negotiated settlement agreement. The majority of the funding will come from water revenue bonds which will generate the upfront capital to construct the project. They will be repaid over time based on water revenues. This spreads the cost out not only to existing customers but to future customers. It will be multi-generational. This gives the rate structure flexibility. There will be some weighted burden on Neighborhoods A, B & C, which will be the ones benefiting.
The financial details are as follows:
Town upfront (legal & experts) $2.3 million
(Already paid Town contribution)
*Payment to Cave Creek 1.5 million
**Scottsdale interconnect 1.5 million
Disconnect/Reconnect 11.5 million
Construction "soft costs" 1.4 million
Improvements to existing CFWC system 3.5 million
Total 19.4 million
*Settlement Agreement Reductions <$---million>
** Developer Contributions <0.75 million>
In the last budget project, the 10 year anticipated CIP improvements for the CFWC pipeline projects was estimated at $4.8 million, so this will take a big bite out of that due to utilizing economy of scale. This can now be constructed with the consolidation project instead of costing more and taking 10 years.
$19.4 million will be the number focused on for bonds. The current bond market is very favorable, with historic lows, but it is volatile, so it is imperative to act within the next 3-6 months. The anticipated bond rating is A- or better. It will be a 30 year term. The anticipated interest rate is in the low 3%s.
https://vimeo.com/510828834
Lyn Hitchon
Prepared by Carefree Truth
Copyrighted
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