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HomeMy WebLinkAbout01/28/1992 Special Council Meeting MinutesMINUTES OF SPECIAL COUNCIL MEETING~ MARANA TOWN COUNCIL, JANUARY 28, 199~ DATE January 28, 1992 PLACE Town Hall CALL TO ORDER Mayor Ora Ham called the meeting to order at 7:02 p.m. PLEDGE OF ALLEGIANCE Mayor Ham led in the Pledge of Allegiance. III. INVOCATION A moment of silent prayer was observed. IV. ROLL CALL Ora Ham Doug Mostyn Elwin clifton Eddie Honea Helen Key Jo Rex Bill Schisler Mayor Vice Mayor Council Member, Council Member Council Member Council Member Council Member excused Staff Kirk S. Cookson Roy Laos Jean Hooper Hugh Holub Town Attorney Town Manager Stenographer Special Attorney for water issues Public Four members of the public were present. APPROVAL OF AGENDA A motion was made by Jo Rex, seconded unanimously carried to approve the agenda. by Bill Schisler and VI. None PETITIONS AND COMMENTS VII. ANNOUNCEMENTS Bill Schisler announced that his wife, home from the hospital on January 29. Leilani, would be coming VIII. ORDER OF BUSINESS A. Water Requlatory Framework and Town of Marana Options Hugh Holub Hugh Holub, the Town's Water Attorney, presented a summary issues, past and present, relating to the Town's water future. of 1 MINUTES OF SPECIAL COUNCIL MEETING, MARANA TOWN COUNCIL, JANUARY ~8~1992 Mr. Holub said one of the key issues, under the water law side that the Council needs to consider, because it is in the water business, is the ability to develop on its own an assured water supply. He said there are more options today than there were two years ago because of recent legislation for gaining water supplies. Mr. Holub said that even though the Town has a General Plan, new development in the area will be not be allowed unless somebody can assure that there is proof of a 100-year assured supply of water. He said the Town must pay for the mining of groundwater through a withdrawal fee, by trading CAP water for pumping rights, or through delivery of imported water. He strongly recommended that the Town charge developers an impact fee to pay off these water expenses so that the existing water user doesn't have to pick up these costs. He said Tucson has a presumptive assured water supply because of a signed CAP water contract for 160,000 acre feet of water, so anybody that wants to eliminate water as an issue during a project, the first thing they will want to do is get a signed contract with the City of Tucson to get water service on their property. He said at that point all they would have to do is to write a check someday to pay for water rights. Mr. Holub said that is how Continental Ranch got into the City service area because the developer there years ago wanted to be assured of a water supply. He said Westinghouse also has a signed agreement with Tucson. He is not sure about Estes and Acacia Hills. Mr. Holub stated that Tucson has a boundary it works off of and that is basically the Pinal County line, the north-south line is on the west side of Avra Valley and runs down to southern end of Avra Valley and cuts across the San Xavier Indian reservation and goes out about five miles past vail and comes back to the north to the Pinal County line. Mr. Holub said Tucson will make an agreement with anyone who wants service and is not under a private water service agreement, and never contact anybody in Marana to see if it is all right with them. He said that sets off lots of concerns with other jurisdictions on who gets to make decisions as to the growth of a town. He said that one of the issues that prompted getting at this was that an entity could not let another entity outguess it where it comes to control or destiny of a Town's land use plan. He said going back several years, Tucson has been very hostile and unwilling to cooperate with anybody on the matter of water allocation. Mr. Holub said when Tucson got the CAP water for the boundaries he mentioned, they included CAP water for the growth of Marana. He 2 MINUTES OF SPECIAL COUNCIL MEETING, MARANA TOWN COUNCILL JANUARY 28, 1992 recommended that he and representatives from the Town Council meet with the Tucson Mayor to discuss how much of this allocation was actually for Marana. Mr. Holub said the Flowing Wells Irrigation District and Estes have CAP allocations, and they have indicated a desire to transfer it to Marana rather than to Tucson. He will investigate the steps to take in making this reassignment. He urged the Council to get a firm commitment in writing on this matter. Mr. Holub requested direction on going forward with negotiations with Cortaro Marana Irrigation District. He feels that with a little more negotiation, a contract could come about. He said Cortaro received 47 acre feet per year of CAP allocation, which is enough for 94 houses. He said this gives them an assured water supply through the year 2000. Mr. Holub said the theory of Cortaro is that the Town could get water delivery to its customer through the wholesale arrangement cheaper than the Town could produce it itself. He said what has to be figured out now is if that assumption is still valid, will it still work and to get some numbers together to see if Cortaro can wholesale water to the Town cheaper than the town can do it itself. Mr. Holub said there is also the Lyn Lee Water Company to consider. He feels the Town is in a pretty good shape to go forward with bringing everything together for its water future, and expressed the opinion that now is the time to act, and a first step is to decide how much water the town will need for the area it expects to serve. In reply to Jo Rex's concern that there may not be water available from CAP, Mr. Holub explained that if in any year there is not enough water for an entity to receive its allocation from CAP that the farmers would be in a subordinate position to receive this water. He said that the City of Tucson is working on a facility at the end of Avra Valley for storage of any surplus water for use when there may not be enough water. Mr. Holub said the Town Council has the power to condemn a water utility system, but he said that because of recent court cases as much as $3,000 per customer was awarded to the condemned water system. Mayor Harn said the Town Council has applied for membership in the Augmentation Authority. Mr. Holub explained that the legislature set up a seven member temporary Augmentation Authority, and within three months there is to be a permanent board. Mr. Holub said that this board will come up with a permanent rate structure for entities to be able to purchase CAP water to recharge their 3 MINUTES OF SPECIAL COUNCIL ~EETING, MARANA TOWN COUNCIL~ JANUARY 28, 199~ groundwater. He said this is happening so Tucson can't do something to the detriment of everybody else and vice versa. The Town Manager said that Marana is not a full-fledged member of the temporary beard, but what they have asked the Council to do is to put in their application for membership on the advisory committee, and also to identify three separate sub-committees that have formed that will deal with the substance in putting that whole thing together. The Town Manager expressed the opinion that the Council needs to get on the advisory committee now so that when the permanent board is in place, Marana, because it does have a water utility and is expected to grow, can become a full-fledged member. A motion was made by Bill Schisler, and seconded by Vice Mayor Mostyn that the Council authorize the Mayor to sign letters to Flowing Wells Irrigation District and to Estes stating the Council is willing to negotiate for their CAP allocations, and have Mr. Holub, the Town Manager and staff to start putting together for the Town Council some information on these water issues. Under discussion of the motion, Mr. Holub explained to Jo Rex that the last six months is the first time the City of Tucson officials have admitted that a portion of their CAP allocation was for Marana and other service areas. He said that the City of Tucson had recently sent out a memo to another entity acknowledging they did get allocations for other areas and that they had a draft formula as to how it was to be divided among other service areas, The Town Manager reminded the Council that there is a price to pay for CAP allocations that Flowing wells and Estes have. He said purchase of this allocation may prohibit the Council from purchasing other private water utilities like Cortaro and Lyn Lee. RECESS: The Town Council recessed at 8:10 p.m. ROLL CALL: The meeting was called back to order at 8:16 p.m. Mayor Ora Harn, Vice Mayor Doug Mostyn, Council Members Eddie Honea, Jo Rex and Bill Schisler were present. Council Members Elwin clifton and Helen Key were excused. Cortaro Marana Irrigation DistrictL Residential Water ~stem Takeover ~y the Town of Marana General Discussion Mr. Holub said when the Town floated a bond to buy Honea Water Company, the plan was to refinance that bond at a later date. He recommended the Council meet with PHS&G and do a bond rate study. He said the Council may be able to reduce the actual cost of the Honea system because of the current interest rate differential, and not just on th~ Honea issue but on a larger bond issue that could 4 MINUTES OF SPECIAL COUNCIL MEETING, MARANA TOWN COUNCIL_=_ JANUARY 28, 1992 include taking over the domestic water system of the Cortaro Marana Water Irrigation District (C.M.I.D.) He suggested the Council get a handle on what kind of improvements it really wants and what they will need to tie in the pipelines between the C.M.I.D. and Honea systems, and to get some preliminary previews of the C.M.I.D. system before a final decision is made. Robert Condit, Manager of C.M.I.D., said they have 550 retail customers of potable water and three customers for non-potable water. They have 50 wells for irrigation and five wells for domestic use. Mayor Harn expressed the opinion that C.M.I.D. has been hesitant in negotiating with the Town, and she asked if they are now ready to negotiate an agreement. Mr. Condit said his instructions were that until Marana made a counter-proposal to their last proposal they would sit tight and see what happens. In reply to Jo Rex, Mr. Condit said the price of $500,000 plus attorney's cost is the conditions in their last proposal. He said Cortaro has suggested they retain ownership of the wells, the motors and the controls to the motors. Mayor Harn said the Council had expressed interest in starting out with ownership of the system and not the wells, and if farming went out they would negotiate further as seemed appropriate at that time. Mr. Condit said they are willing to discuss that issue. He said it's just trying to define when the proper comfort level is reached for the farms and when enough of the farms have disappeared and it is basically a domestic rate controlled climate. Mr. Condit said one of the reason they want to keep some element of control is they sit on the better water areas in the town, adding that there are some poor water areas in the town, and they don't want to see the benefit that have accumulated for their landowners over the last 70 years get diversified and they end up sharing. In ~eply to Eddie Honea, Mr. Condit said it is his understanding that the name on the contract for CAP water could be changed from Cortaro to the Town of Marana, and the Town would have no problems until the year 2001. He said the Town of Marana is just like the City of Tucson, they are assumed to have an assured water supply until that time, and after that year there will be no more assumption for anybody. In reply to Eddie Honea, Mr. Condit explained that the Honea Wa{er System and perhaps a portion of Lyn Lee is within their association boundaries, and he felt that C.M.I.D. would not be opposed to shutting down smaller systems and using their wells to provide MINUTES OF SPECIAL COUNCIL MEETING_~ MARANA TOWN COUNCIL, JANUARY ~SL 1992 water to the Town. Mr. Holub explained the legal method C.M.I.D. would have to take in order to do this. Mr. Condit said one of the difficult things to understand is that even though Marana is a good water area, increasingly the State controls whether that water can be used or not. He said the state says you have a shrinking water supply, and probably by the year 2001 they will say we have no water out here unless we bring in water from somewhere else. Mr. Holub said the State has created a water shortage through legislation. He said somewhere around the year 2001, if the State hasn't said Marana has surface water or renewable water, the Town will pay twice, once for pumping water out of the ground and then for the cost of putting the equivalent back into the ground. Mro Holub said there will always be a payback cost for pumping water out of the ground unless by some lucky circumstance that surface water claim of C.M.I.D. actually becomes renewable water, and then under safe yield,if it is renewable, the Town will not have to pay it back. Mr. Condit said what concerns C.M.I.D. landowners is that shrinking water supply they do have is eventually going to get to nothing. He said as long as it lasts they would like to reserve it for the landowners who invested in their system in their area. He said the next big development in the Town of Marana may not necessarily be in their area, it may be in Acacia Hills or up in the Tortolita area and without some kind of control, that little bit of wa%er could suddenly be drained outside their area, and they would like to at least apportion it out for whatever remains to their landowners. Mr. Holub said C.M.I.D. wants to sit on the groundwater, which is renewable right now, so they can continue to farm, but by the time they want to urbanize, that water will not count for an assured water supply. He said they are selling the Town the obligation cf providing their land an assured water supply so that the landowners can sell their land to developers for a lot of money, and that is what its al! about. Mr. Holub said an impact fee is the only way this can work for the ratepayers. He said the Town will end up having to go out and get water on top of what is already there, so they can build houses on their land, they are saying they don't want you to tax their !and as farmers to pay for it, but you don't want your existing revenues to pay for them to develop their land and the only way to reconcile that is you have got %o have a fee on every new house that is built on that property over there that pays for all this and you have to have a real strong will to do this and put that in place the same MINUTES OF SPECIAL COUNCIL MEETING, MARANA TOWN COUNCIL JANUARY 28, 1992 day you approve the purchase of that system so you don't end up finding out the accumulated cost of buying water rights for all these honses, and your people pay for it. He said the Council absolutely cannot do that and have to make it real clear to these would be developers if they are going to get water from Marana, they are going to have to pay for it. He said that is the bottom ]ine,that there is no other way to do it. Mr. Holub recommended setting a water rate as a first step in deciding which route to go for acquiring this water system. He recommended keeping the water rate within some kind of reasonable range and if it doesn't work within that reasonable range then go to another plan. ~r. Ho!ub said the value of Cortaro Marana Water System is ..... e~e.~t f~o~ Honea because the Town would be getting nine years of growth, and this will give the Council time to figure out al! the pieces of its water issues. He said if the Town enters into an agreement for this water supply, he wants a mechanism in the agreement that as Cortaro retires their land, the Town will get the surface area right, because it may be as ail the dust settles and who gets what wa%er in this basin, that surface water might be the equivalent of a renewable supply for the purpose of an assured ~ater supply. E~u_e Honea said he feels the Town should require Cortaro Marana to provide potable water to the system because the testing has to be done at the line. The Town Manager said that water quality assurance would be the Town's responsibility. In reply to Eddie Honea, %he Town Manager said if the Town took over the system, the Management contract would allow C.M.I.D. employees to stay where they are and at some point when the Town wanted to completely operate the system within its utility, the arrangement would be that those folks doing the work for the district would come over to the utility. Mr. Condit explained that the Gila River adjudication deals with the surface water, i.e., lakes, streams, ponds, rivers, but because there is some relationship, particularly when you get near a stream or lake with groundwater, people who have wells were also encouraged to become a part of this adjudication. He said it is an attempt to settle the claims for surface water statewide, including Indian claims, which exceed what is generally conceived to be the ava~able water supply by four times, and to try and settle once and for all who has the real water rights. Mr Ho!ub said this =~ , · C:~a Rfve~ Adjudication is a real downside :n the issue of acquiring ~ ~ . ~.M.~.D. because it ~s approximate to the MINUTES OF SPECIAL COUNCIL MEETING, MARANA TOWN COUNCILL JANUARY 28, 1992 river and the Town could end up after purchasing the system with no water rights, adding the Town will be buying their share in that ~awsnit. Eddie Honea moved that the Council ~esea~ch establishing a ~ate and then withdrew the motion. The Town Manager expressed the opinion that a motion By the Council was premature at this time. He said on November 27, 1991, the Council affirmed their general desire to move forward with the takeover of the Cortaro System. Prior to that the Council re- employed Mr, Holub by contract to represent the Town's interest. The Council also agreed by motion to have some working sessions with Mr, Ho!ub, and the Town Manager said that is what this meeting is ail about. He said primarily because there are a number of new Council members who did not have enough knowledge it was important to have these sessions, and lastly the Council made a decision to have a working session with Cortaro staff and hoard in furtherance of discussing the Town taking over C.M.I.D. Jo Rex requested an alternate plan be discussed in case C.M.I.D. negotiations fails. Mr. Holub agreed this should be done. }{ayor Hath appointed Bill Schisler and Eddie Honea to work with the Town Manager on negotiation with C.M.I.D. She said that she and Mr. Ho]ub will meet with the City of Tucson officials before a joint workshop is set up to discuss these water issues further. Mr. Condit said the options are really one of the things C.M.I.D. is looking for. He requested that the Council really give fair consideration to the alt options and not just to Cortaro, because they don't necessarily think that is the Town's best option. He said that somewhere in the process, the Town can evaluate where it is in terms of Cortaro, Lyn Lee and Honea Heights and what each option does for the Town ten or fifteen years down the road. He asked the Council to give some comparison to a regional in- coope~atLon and what that wo~tld do for the Town also, He said if a regional solution were to be the best route, C.M.I.D. would like to somehow be in there, even if it turns out to be a Marana-Tucscn picture. C__. ~n Lee Water Company - General Town Council Discussion pf Takeover_Options The Town Manager .~-~ prior to the recent rate~,~'~a~,~ ~ ~+,- !ad, been quite sometime that the Lyn Lee Water Company had requeste~i and received a rate increase, and he felt the increase was justified based on their net loses over the last couple of years. The Town Manager said they have 5/$ by 3/4-inch l'~eter sizes and MINUTES OF SPECIAL COUNCIL MEETING~ MARANA TOWN COUNCIL~ JANUARY 28~1992 they have 50 to 65 customers. He expressed the opinion they do not anticipate growing over the next few years, but added that might change. The Town Manager said the issue before the Council is the possible takeover of Lyn Lee Water Company by condemnation or through negotiation of purchase. He said condemnation is a risky business because the courts geneza!ty rule for a higher cost. Bill Schis!er questioned if the Lyn Lee Water Company is losing money why are they asking so much for the system. He expressed the opinion they should give the system to the Town. The Town Manager replied that a private going concern with going worth can establish any price they wish, adding that the Corporation Commi~io~ does not regulate the value of the system in terms of qbe transaction. He said the Council could go into negotiation and say the value and the purchase price they are asking is to high. Eddie Honea said a few years ago, water was a profit motivated business, but that is not the case now because of federal and state laws. He said these small water systems are having difficulty surviving, and expressed the opinions a much more reasonable price for this system could be negotiated because of this. Mr. Holub said the Town made an offer of $!00,000 and they had offered a counter-proposal of $200,000, which the Council told them was ridiculous. He said that was the last communication from them. He said the numbers show they are in difficulties now from a rate making point of view because they can't get a rate of return. He said judges and juries do not look at a balance sheet in a condemnation process, but rather that a small company is being driven out of business by a city. Eddie Honea said it appeared to him to be a waiting game more than anything else. Vice Mayor Mostyn commented that it will be the customers who suffer the most in a waiting game, adding it is the legal and moral responsibility of the Council to take care of the people. Mr. Holub said the reason the Council took over the Honea system was because the people wanted a better quality of water. He added that the Council would not be buying hard assets, but would he buying the right to take this water company out of business, Eddie Honea said if the Council were to pay what Lyn Lee Water Company was asking, the rates would have to be too high, and it wouldn't be fair to the people who live there to have to pay that rate. It was the consensus of the Council to a?low Bob McCrea, !.37~0 ~? MINUTES OF SPECIAL COUNCIL MEE~NCL MARANA TOWN COUNCIL= ~A~.,~A~.~ 28~ 1992 ~'~.~.~er, to speak. Mr. McCrea said in 1987, there was a vote on whether the Town had the legal ability to go into the utility business. He expressed the opinion that what he is hearing tonight is completely opposite ofw;~ those peop!~,~ were told in 1987. He said if it weren't for ~he people who live in the Lyn Lee Water Company's service area, the Town might not be in the position it is in today relating to operating a water utility. He said they w ~I1 watching and listening through him what the Council is doing ~onight. He ........ d~d the Council that they were all Marana ..... ens. .o~.on was made by Bill Schis]er, seconded by Vice Mayor Mostyn, ~r~d unanimously carried that the Council hold an executive session at a later date ~o discuss acquiring the Lyn Lee Water System. IX. Future Agenda Items ~'~ ~ ~ood control Report on ...... ankmen~ on =~ Adjournment A motion was made by Vice Mayor Honea, seconded by Eddie Hcnea, and unsniraously carried that the meeting be adjourned at 9:50 Certification ! hereby certify that the foregoing minutes are a true and correct copy of the minutes cf the special meeting of the Town Council of Marana held on .Ianuary 28, 1992. ! further certify that the meeting was duly called and held and that a quorum was present. Dated this 3rd day of February, 1992 I0 MINUTES OF SPECIAL COUNCIL ME-~NG, MARANA T_ OWN COUNCIL, JANUARY 28, 1992 Grief, to speak. Mr. McCrea said in 1987, there was a vote on whether the Town had the legal ability to go into the utility business. He expressed the opinion that what he is hearing tonight is completely opposite of what those people were told in 1987. He said if it weren t for ~.~ ~ ~ ..... p_~p~e who rye in Lyn ._~_ Water Company's service area, the Town might not be in the position it is in today relating te cper3ting a water utility. He said ~ were ~II w~tching and listening through him what the Counci tonight. He reminded the Council that they were al! Marana citizens. A motion was made by Bil~ Schisler, seconded by Vice Ma~o~ and unanimously carried that the Council hold an executive session at a later~a~e ~ ~' t~ ~.~ acquiring the Lyn Lee Water System. Ad ~ :Paz nment A motion was made by Vice Mayor ftonea, seconde,! ~-,y E,idi~- !{:zee. an! unanimously carried that the meeting be adjourned at 9:~? p.m. Certification ~ ~r~b ....... ~' ~" that ~ f .... go,, g ...... : ...... ~ .... ~-~ ~'n minutes are ~ tw,J,, enl lorrec~ Dated this 3rd~"~-" ,Df February, 1992 I0