Another Option - Domestic Water Improvement Districts

The current mindset is that the only resolution to the ongoing water problems with the McLain-owned water systems seems to be the purchase of the systems by Algonquin Water. Everything seems to be leading in that direction whether it is the best solution for the frustrated customers or not. It appears to be the County's only game plan right now.

Algonquin may decide to walk away if the valuation isn't set as high as possible. Yes, they want to pay as close to $1,000,000 as they can even if the water companies are not really worth near that much. I know that sounds counter intuitive, but the reason is that the rates will be set by the ACC based upon the purchase price that Algonquin pays. The higher the purchase price, the higher the rates that Algonquin can charge. The rates never go down so Algonquin obviously wants to be able to start with the highest rates they can reasonably get.

The valuation decision by the ACC has been delayed until mid-January. The ACC is fighting to keep the valuation, and therefore the rates, low while Algonquin, McLain's creditors, and the County are fighting to keep the valuation high.

In the meantime, if the delays continue, the interim manager ASUA may quit and walk away leaving the water customers without anyone to run the "worst water systems in the state".

So, what is Plan B?

During the ACC Town Hall held in Sierra Vista in July, Tom Schelling, who is the County Director of Elections and Special Districts, approached me and put into my hands the Cochise County handbook on creating Special Districts. He suggested that frustrated customers may want to consider forming a Domestic Water Improvement District.

Since then, I learned about precedent already set in Cochise County in resolving a situation somewhat similar to the one facing the McLain-owned water companies. It involves Sulger Water #1.

The details are still a little sketchy, but here's what I've been able to gather by talking to some people who are very close to the situation. Paul Sulger owned Sulger Water #1 which is located in the Whetstone area. Sulger was not an educated man and was quite stubborn had several businesses and investments and achieved little success. He tried to develop an area near Whetstone which he called Sulger City and he purchased the old housing from Fort Huachuca and moved the buildings to his development. Asbestos was discovered in those old buildings and there was a legal tussle with the County which resulted in the buildings being demolished by the County but the bill sent to Sulger along with an order to clean up the contaminated properties. Long story short, Sulger sued the County and collected a large settlement. Sulger owned several other businesses to include a cab company, a bus line, a real estate company, and two water companies. He was not very business savvy, lacked any sort of professionalism, and frequently flouted laws and regulations either out of ignorance or sheer stubbornness.

In 1987, his water companies were a mess. They were as bad or worse than the McLain-owned water companies were then and now. The largest of the companies was Sulger Water #1 which serviced around 110 homes. Apparently, either because the system was so poorly designed or because angry water customers refused to pay their water bills, Sulger's method of dealing with nonpayment of water bills was to shut the whole system down. This did not set well with customers or the County. Sulger didn't care and left the customers without water for lengthy periods of time.

Cochise County stepped in and bought out Sulger Water #1 for approximately $160,000. They formed a Domestic Water Improvement District called Whetstone Water Improvement District and the original board of directors for that district was the County Board of Supervisors. The County made several improvements to the water systems to include the installation of a 6 inch water main in one area. They also purchased some capital equipment for the water district. A federal loan from the Farm and Home Administration (now part of the U.S. Department of Agriculture) was obtained in the amount of $260,000 for repairs, replacement, and construction. At some point in time, management of the system was done by Southwestern Utility Management (the company initially chosen by the ACC to act as interim manager of the McLain-owned systems).

The problems started to be resolved as repairs and replacement took place. The interconnections to Sulger Water #2 were cut off and the County put in additional lines and made further improvements. The Board of Supervisors approved the district's tax levy, but it was never imposed on the district. Too many people living within the district's boundaries were not on the water system or owned their own wells and objected to paying an additional tax. Despite that, the district succeeded in resolving the water problems, replacing or repairing the terrible water system, paying off the federal loan, and they even grew in size from 110 initial customers to 330 customers now.

In fact, the Whetstone district even considered and inquired about purchasing the two McLain-owned water systems in the Whetstone area. They were told, however, that the water companies could not be broken up and that all of them would have to be purchased together.

The current situations with the McLain-owned water systems and the Sulger-owned water system in 1987 do bear some resemblance. Only, in this case, beyond a couple dozen water tanker truckloads dumped into the system and some supportive words from the County Supervisors, the County has not similarly stepped in and attempted to solve the problems. Instead, they seem to have put all their eggs in the Algonquin purchase basket and are doing everything they can to grease the skids for the Algonquin purchase.

I think that the formation of Water Improvement Districts is an option that needs to be explored in depth. If the County can do this for 110 customers in Whetstone, they can do this for the 1,200 customers throughout the McLain-owned systems. Further, McLain already owes the County $600,000 in taxes while the system is likely to be given a valuation at or below that amount. Could the county simply seize the water companies to pay for the back taxes and then split them up and turn them over to Water Improvement Districts? I checked the Arizona Revised Statutes and even inquired of one of the Corporation Commissioners and there is no law that prevents the County from seizing a water utility for back taxes.

As for paying for the repairs and replacement of the water systems, if a water improvement district can get a federal loan for $260,000 in 1987 dollars for improving a water company servicing 110 customers, I'm sure that federal loans can be obtained for at least the $1,000,000 estimated by the ACC and Algonquin for repairing or replacing the current systems. In addition, a Water Improvement District only has to go to the County Board of Supervisors to raise or lower rates and any rate increases for repairs and replacement of the systems can be made very temporary by the Supervisors. Also, the district only need to get approval from the Supervisors to temporarily levy taxes on the district to help pay for fixing or replacing the systems. While rates may go up initially to pay for necessary fixes and replacement, they won't necessarily go up as high as Algonquin would have them raised and the increases could be made temporary.

This may be the best option, even better than the Algonquin purchase. But, right now, there may be no way to get out of the Algonquin purchase if water customers and the County did decide to pursue this option. Certainly, it could serve as the basis for a Plan B if the Algonquin purchase is held up or falls through entirely. What needs to happen is the Supervisors need to look at this option, fill in the details that may have been missed, and explain why this option may or may not be possible and what some of the issues may be. I am by no means an expert on any of this. I'm just a frustrated water customers looking for solutions and trying to get my elected officials to act upon the best solution.

Supervisor Pat Call's water rate increase predictions analyzed

Cochise County Supervisor Pat Call sent out a mass email yesterday with his take on Thursday's ACC hearing as well as his predictions, based upon information given by the ACC, of how our water rates will increase following the Algonquin purchase. His letter was posted here on this website and in it I embedded my own comments which contained some analysis of the numbers that Supervisor Call used. I've extracted that and created a separate post so that the water rate information and analysis is better highlighted.

Supervisor Call said: "During the hearing the county asked the ACC how much individual meter rates would be affected based on the sales price. The number given by ACC staff was that the average monthly bill would be changed by 40 cents per $50,000 dollars. In other words, if the final valuation was set at $50,000 customers would only see an increase of 40 cents per month over what they are currently paying. This amount is based on the current customer base. If the infrastructure is improved, the moratorium is lifted and as more customers are brought into the systems, the 40 cents per month figure would decrease."

"For the sake of discussion let’s say the ACC sets valuation at $800,000 next week, the bankruptcy judge accepts this amount at the hearing scheduled for the end of January and ownership of the systems are transferred to Algonquin by the end of February. At 40 cents per $50,000 that means rates would go up approximately $6.40 per month over the current bill. "

Adding $6.40 per month to the average $36.50 per month paid by customers on Horseshoe Ranch and Cochise systems would have them paying more than almost every other water customer in Cochise County and more than 85% of the water companies in the state of Arizona according to my analysis of the Arizona Water Infrastructure Finance Authority's 2005 Residential Water Rate Survey.

It would increase the average monthly bill for the water systems in the following manner based upon usage of 7,500 gallons per month:

Cochise Water: Current $36.50 Proposed $42.90 Increase 17%
Coronado Estates: Current $24.38 Proposed $30.78 Increase 26%
Crystal Water: Current $24.38 Proposed $30.78 Increase 26%
Horseshoe Ranch: Current $36.50 Proposed $42.90 Increase 17%
Miracle Valley: Current $15.50 Proposed $21.90 Increase 41%
Mustang Water: Current $31.25 Proposed $37.65 Increase 20%

I will say that an extra $6.40 per month is not too much extra to pay to have clean, quality, reliable water IF that can be guaranteed and IF it can be further guaranteed that we'll only see that much of an increase. I'm already paying more than that buying and hauling safe, clean bottled water for my family to drink. But, the fact is that even $6.40 is not an insignificant increase and would put some of the water companies into the highest rates in the County and the State of Arizona.

Supervisor Call said: "By the way, $800,000 is the highest valuation (worst case scenario) I’ve ever heard mentioned in this whole process."

"One final point about rates you should be aware of: if Algonquin purchases the systems they will spend money on improving the infrastructure – capital improvements. A figure of around a million dollars has been mentioned in order to bring the systems up to par. Algonquin will, within the first year or so, ask for a rate increase from the ACC to cover this capital investment. The ACC will grant the increase. At the .40 cent per $50,000 rate, that would mean an additional rate increase of $8.00 per month per meter."

"So sometime in the next two years given a worst case scenario of an $800,000 valuation equating to a $6.40 rate increase and infrastructure improvements of a million dollars resulting in an $8.00 increase, rates could increase by a total of $14 or $15 per month per meter."

Here's where it gets truly expensive and we're seeing water rates virtually double on one of the McLain-owned systems. I'll do the math based upon a $15.00 increase and an average use of 7,500 gallons per month:

Cochise Water: Current $36.50 Proposed $51.50 Increase 41%
Coronado Estates: Current $24.38 Proposed $39.38 Increase 61%
Crystal Water: Current $24.38 Proposed $39.38 Increase 61%
Horseshoe Ranch: Current $36.50 Proposed $51.50 Increase 41%
Miracle Valley: Current $15.50 Proposed $30.50 Increase 96%
Mustang Water: Current $31.25 Proposed $37.65 Increase 48%

If the rates increase by this much, then these water companies will have some of the most expensive rates in the County and in the entire State. Horseshoe Ranch and Cochise Water customers will have the second highest rates in Cochise County. This is an average increase of 48% for all the McLain-owned water companies.

I'm pleased that the Arizona Corporation Commission is stopping to take a breath to make sure that the path this situation is going down isn't going to hurt the already frustrated and abused water customers. I applaud their effort.

Water outages and problems are #5 top news story for 2005 in Sierra Vista Herald

10 stories to remember from 2005


Friday, December 30, 2005 10:45 PM MST



Herald/Review staff


5: Hereford-Whetstone water outages: As late as this week, this issue was still being discussed and a solution was being sought by the Arizona Corporation Commission and Cochise County. For periods of several days, Hereford and Whetstone residents using one of seven area water companies owned by John McLain Sr. and managed by the commission-appointed Arizona Small Utilities Association experienced water outages. While water was trucked in, the discussion in 2005 shifted from making Band-Aid approach repairs to finding a buyer for the companies who could make necessary upgrades to improve the service. After two hearings in Sierra Vista, the commission continued to research the best solution for the issue. An administrative judge offered a recommendation to sell the companies at more than $700,000, but that could mean a rate increase when the new owner takes the reins. For now, the issue remains unresolved.


Read the entire article at the Sierra Vista Herald website.

County Supervisor Pat Call provides information about yesterday's ACC meeting and potential rate increases

I thought that you might be interested in my thoughts regarding the ACC hearing on the McClain water systems that took place yesterday. I apologize in advance if it is a bit lengthy; however, I’ve tried to condense it as much as possible.....

The ACC commissioners would like to know how much the county will compromise on back tax reduction before they will set a valuation for the McClain systems – and the sale of the McClain systems can’t go forward to the bankruptcy court until a valuation is set.

On the other hand, the county can’t say how much they will compromise the taxes until a valuation is set. State law says that the county can’t abate taxes less than the value of the real property.

We seem to be in the classic conundrum of which came first: the chicken? or the egg? The ACC won’t set valuation until the county tells them how much in back taxes will be forgiven and the county can’t say how much in back taxes will be forgiven until a valuation is set.

However, going out on a limb, I testified that the county would be very, very flexible in compromising the taxes owed. In fact, during the proceedings yesterday one of the ACC commissioners said that he personally felt the value of the systems was zero. I testified that if the ACC would vote to set a valuation of zero on the McClain systems I would not disagree and I would advocate to my colleagues on the Board of Supervisors (BoS) to forgive all the back taxes based on that valuation. I indicated that I did not care about how much back tax was collected but, again, until a valuation was set the BoS could not definitively say how much could be forgiven.

Frustratingly, unfortunately, the meeting ended without a value for the systems being established.

The ACC commissioners are very concerned about increased rates to the customers. They reason, and I agree completely, that the lower the selling price, the lower the rate increase will be.

As I said, I will support whatever valuation the ACC establishes regardless of how much or how little back taxes are recouped; I don’t care. However, there is a catch. The wild card in all of this is the bankruptcy proceedings. No one knows what valuation the bankruptcy judge will accept.

If the ACC sets the valuation too low, the bankruptcy judge will stall the process, go back to square one and probably call for a re-bidding - and possibly order an independent valuation study. All of this will take time. As you know, it has already taken over a year just to get this far. The higher the valuation (within reason), the more likely the judge is to accept the amount because all the creditors will be made whole; that’s her job. Another wrinkle is that there are private creditors who are expecting a return of 99 cents on the dollar based on the original bankruptcy plan. If the valuation accepted by the bankruptcy court is too low, the private creditors will most likely contest the amount – and stall the proceedings.

Bottom line: in setting the valuation the ACC has to be careful not to set it too low or the whole process goes back to square one, infrastructure upgrades will be further delayed and the very people they are trying to protect ( the customers/rate payers) end up being hurt the most. If they set the rates too high, rate payers will be unfairly burdened.

By the way, ASUA is strongly indicating – unofficially – that if a decision is not made very soon, they will give notice and quit. It will be very difficult, if not impossible, for the ACC to find another interim operator given the issues with the McClain systems.

All in all, it’s a tough position for the ACC commissioners.

Let’s talk briefly about rates. The ACC commissioners are very concerned about rate increases to the customers – and rightfully so.

As you know, McClain, in 20 years, did not ask for a rate increase from the ACC. Consequently, the average monthly water bill for most users on McClain systems is low compared to other rural water companies.

[Not according to the rate analysis I posted yesterday. -te]

During the hearing the county asked the ACC how much individual meter rates would be affected based on the sales price. The number given by ACC staff was that the average monthly bill would be changed by 40 cents per $50,000 dollars. In other words, if the final valuation was set at $50,000 customers would only see an increase of 40 cents per month over what they are currently paying. This amount is based on the current customer base. If the infrastructure is improved, the moratorium is lifted and as more customers are brought into the systems, the 40 cents per month figure would decrease.

For the sake of discussion let’s say the ACC sets valuation at $800,000 next week, the bankruptcy judge accepts this amount at the hearing scheduled for the end of January and ownership of the systems are transferred to Algonquin by the end of February. At 40 cents per $50,000 that means rates would go up approximately $6.40 per month over the current bill.

[Adding $6.40 per month to the $36.50 per month paid by customers on Horseshoe Ranch and Cochise systems would have them paying more than almost every other water company in Cochise County and more than 85% of the water companies in the state of Arizona.

It would increase the average monthly bill for the water systems in the following manner (based upon usage of 7,500 gallons per month):

Cochise Water: Current $36.50 Proposed $42.90 Increase 17%
Coronado Estates: Current $24.38 Proposed $30.78 Increase 26%
Crystal Water: Current $24.38 Proposed $30.78 Increase 26%
Horseshoe Ranch: Current $36.50 Proposed $42.90 Increase 17%
Miracle Valley: Current $15.50 Proposed $21.90 Increase 41%
Mustang Water: Current $31.25 Proposed $37.65 Increase 20%

I will say that an extra $6.40 per month is not too much extra to pay to have clean, quality, reliable water IF that can be guaranteed and IF it can be further guaranteed that we'll only see that much of an increase. I'm already paying more than that buying and hauling safe, clean bottled water for my family to drink. But, the fact is that even $6.40 is not an insignificant increase and would put some of the water companies into the highest rates in the County and the State of Arizona. -te]

By the way, $800,000 is the highest valuation (worst case scenario) I’ve ever heard mentioned in this whole process.

One final point about rates you should be aware of: if Algonquin purchases the systems they will spend money on improving the infrastructure – capital improvements. A figure of around a million dollars has been mentioned in order to bring the systems up to par. Algonquin will, within the first year or so, ask for a rate increase from the ACC to cover this capital investment. The ACC will grant the increase. At the .40 cent per $50,000 rate, that would mean an additional rate increase of $8.00 per month per meter.

So sometime in the next two years given a worst case scenario of an $800,000 valuation equating to a $6.40 rate increase and infrastructure improvements of a million dollars resulting in an $8.00 increase, rates could increase by a total of $14 or $15 per month per meter.

Here's where it gets truly expensive and we're seeing water rates almost double on some systems. I'll do the math based upon a $15.00 increase and an average use of 7,500 gallons per month:

Cochise Water: Current $36.50 Proposed $51.50 Increase 41%
Coronado Estates: Current $24.38 Proposed $39.38 Increase 61%
Crystal Water: Current $24.38 Proposed $39.38 Increase 61%
Horseshoe Ranch: Current $36.50 Proposed $51.50 Increase 41%
Miracle Valley: Current $15.50 Proposed $30.50 Increase 96%
Mustang Water: Current $31.25 Proposed $37.65 Increase 48%

If the rates increase by this much, then these water companies will have some of the most expensive rates in the County and in the entire State. Horseshoe Ranch and Cochise will have the second highest rates in Cochise County. This is an average increase of 48% for all the McLain-owned water companies. I'm pleased that the Arizona Corporation Commission is stopping to take a breath to make sure that the path this situation is going down isn't going to hurt the already frustrated and abused water customers. I applaud their effort. -te]

One final piece of information ... the bankruptcy hearing is scheduled for January 24th . If a decision is not reached by next week on the valuation, it is my understanding that it will be another month delay – at least – to get on the court’s docket.

I have significant concerns that if the valuation is too low it will unnecessarily delay the bankruptcy proceedings resulting in continued hardships for the users of McClain’s systems. However, I am on record with the ACC Commission that I will support any valuation they set regardless of its impact on the collection of back taxes.

The commission knows my position. You should contact the ACC commissioners on this matter and let them know your position – soon. They are working hard to reach resolution and might benefit from your thoughts.

Thanks.

ACC Defends Frustrated Customers from "Rate Rape", County Heatedly Argues Urgency

ACC eyes a ‘better deal’ on sale of McLain's water companies

BY DANA COLE
Thursday, December 29, 2005 10:04 PM MST



HERALD/REVIEW

PHOENIX — When the Arizona Corporation Commission announced its decision to delay voting on a valuation for seven water companies owned by John McLain Sr. at a Thursday open meeting, the decision did not sit well with some county officials.

Because of frequent disruptions in service and long outages, County Deputy Attorney Charles Irwin and Board of Supervisors Chairman Pat Call, who both attended the meeting, wanted to see a valuation in place so the companies could be sold to a reputable buyer.

Instead of voting on a rate base value for the systems, commissioners wanted more time to investigate the feasibility of abating or compromising a portion of the tax debts owed to Cochise County and Arizona Department of Revenue.

Algonquin Water Resources Inc., a company interested in purchasing McLain’s systems, needs the commission’s valuation decision before the purchase can happen.

“We’re trying to bring the sale price down because it will affect the rate computation, or what customers on those systems will be paying,” said Jeff Hatch-Miller, the commission’s chairman. “We want to do everything we can to get the rate payers a better deal.”


The companies are tied up in a bankruptcy court proceeding, and creditors will be paid off with money from the impending sale.

As negotiations for McLain’s 20-year-long back-tax debt continue, the commission is urging the two primary creditors, the Arizona Department of Revenue and Cochise County, to consider abating a portion of the amount owed them.

“I think the two- or three-week wait is well worth it,” Hatch-Miller said of the postponed vote. “We (ACC) are the only group out of four or five entities involved in this that are prescribing a better price for the rate payers.”

Those entities include Department of Revenue, Cochise County, bankruptcy court and Algonquin.

In a heated exchange between Irwin and the commissioners, the county deputy attorney answered questions and expressed an urgency for moving through the sale and bankruptcy court as quickly as possible. He told commissioners that the county is concerned about customers on the systems and that county officials are doing everything in their power to move the deal through.

Irwin maintained that if the value for the companies is set too low, it could complicate proceedings in bankruptcy court, especially if creditors object to the proceeding.

Complicating the back tax issue, Irwin said there are investors who have purchased tax liens on six of the systems. Those investors expect a return on their investment.

He applauded a rate base value recommendation made by Administrative Law Judge Jane Rodda, who arrived at $748,893 as a possible value for the McLain water systems, a significantly higher amount than the $540,000 presented by commission staff at a status hearing last month.

While the higher value comes as good news for creditors that are owed money by McLain, the commission needs to look at Rodda’s recommendation, discuss the issue and vote on an amount. It’s this stage of the process that has been temporarily delayed by the commission.

Before moving forward with purchasing McLain’s water companies, Algonquin requested that the commission come up with the rate base value, which provides a starting point for rates charged to customers once the purchase has been completed, Irwin said.

“We (county officials) were pleased to hear Judge Rodda’s decision,” Irwin told the commissioners.

Irwin added that Algonquin has placed $200,000 in escrow toward the purchase of the McLain systems, and the county is anxious to get on with the sale.

While the commissioners understand the urgency in finalizing the sale of the troubled systems, they are firm in their belief that a lower selling price will benefit the rate payers.

“What I’m proposing is that we take a deep breath and look at this,” said Commissioner Marc Spitzer.

The commission recently heard a willingness from the state to compromise on the tax issue, Spitzer said, one of the reasons for holding off on the vote.

“If the DOR is willing to abate taxes owed, then it benefits the rate payers,” Spitzer argued.

Like Irwin, Call expressed his concern for McLain’s customers, who have endured years of poor service and extensive water outages. He asked what the commission needed from the county to come to a successful conclusion to the issue.

“My constituents are trusting us to get this settled,” Call said.

The commissioners continued to push for an abatement of the back taxes the McLain estate owes the county.

The issue has come up before.

In Aug. 23 letter to Commissioner Kris Mayes, Cochise County Administrator Jody Klein wrote that “the board (of supervisors) did not have the authority to compromise the taxes based on the facts as currently known.”

During Thursday’s session Call said he would be willing to take the commission’s abatement requests to the board.

The meeting went into executive session so that commissioners could seek legal counsel regarding some of the questions they had.

In an interview following the meeting, Spitzer said, “We (commissioners) are acting on behalf of the rate payer. Whatever the utility is, we represent the rate payer. I want the systems fixed, while doing the best I can for the customers. We’re stewards of the rate payers’ money, so I was not willing to vote on this without investigating it further.”

While commissioners want Algonquin to get a fair deal, Spitzer said it’s important that adequate attention is paid to the rate payers. It’s the reason for the delayed vote.

“The rate payers have already paid these taxes once, and someone needs to stand up for them,” Spitzer said. “It’s not fair that they pay these taxes again. That’s where all of us stand on this issue.”

HERALD/REVIEW reporter Dana Cole can be reached at 515-4618 or by e-mail at dana.cole@svherald.com.

Water Rates Analyzed

There has been some discussion of water rates on the McLain-owned water companies and how they will be effected after the Algonquin purchase.. Some discussion has been of how allegedly low the rates have been on the McLain-owned water systems because McLain was never able to successfully get a rate increase approved by the Arizona Corporation Commission. For some water companies McLain has had the same rates for 20 years.

Here's the rate information from the Corporation Commission:

Cochise Water Company – Rates the same since August 1985 (20 years)

Coronado Estates Water Company and – Rates the same since August 1985 (20 years)

Crystal Water Company – Rates the same since August 1985 (20 years)

Horseshoe Ranch Water Company – Rates the same since August 1987 (18 years)

Miracle Valley Water Company – Rates the same since April 1989 (16 years)

Mustang Water Company – Rates the same since August 1985 (20 years)

Sierra Sunset Water Company – McLain never filed for a Certificate of Convenience & Necessity (CC&N is required to provide service in a particular area). The Commission has never approved rates for this system.

Statements from the Corporation Commission, Cochise County Supervisors, Algonquin Power (the company considering the purchase of the McLain-owned water systems), news media reports, and others are that the purchaser will have to raise the water rates significantly in order to recover purchase and new construction costs to replace the water systems. Mr. Ed Pamatat of Algonquin Power has asserted in a conversation with a frustrated water customer that higher rates and even the double payment of taxes (McLain never paid the taxes originally and the purchaser will have to retire the tax debt and will, therefore, recollect the taxes from customers through higher rates) is justified because of the "low" rates water customers have paid for decades.

Pamatat stated that based upon his analysis and review of the water companies he felt like he could put forth a convincing argument that we as customers have NOT, in fact, paid those taxes in the first place because it is his opinion that the rates in effect at the time were insufficent to pay the operating costs, pay the taxes, and allow McLain a profit on the operation. Pamatat's position is, in effect, "you got exactly what you paid for" and "while we benefitted from the low rates for all of those years, the outcome (todays situation) was for all intents and purposes a given."

I think that it is instructive to this topic to review the water rates for the McLain-owned systems and to also compare them with the water rates for companies in Cochise County and similar water companies elsewhere in Arizona.

The Water Infrastructure Finance Authority of Arizona (WIFA) has released their 2005 survey of Water Residential Rates in Arizona. It can be found at http://www.azwifa.gov/QuickLinks/2005WIFARateSurvey.pdf and a link is also now provided in the Information section of the sidebar of this site.

Extracting the relevant water companies and their rates you get the following data:

.	Base	5K Gals	7.5K Gals	10K Gals
Cochise Water	$20.00	$29.00	$36.50	$44.00
Coronado Estates Water	$12.00	$18.75	$24.38	$30.00
Crystal Water	$12.00	$18.75	$24.38	$30.00
Horseshoe Ranch Water	$17.00	$29.00	$36.50	$44.00
Miracle Valley Water	$10.00	$13.00	$15.50	$18.00
Mustang Water	$15.00	$25.00	$31.25	$37.50
Sierra Sunset Water (No Listing for this Water Company)

The monthly charges for 7,500 gallons of water in Arizona
are:

.	Average	Median	Highest	Lowest
Arizona Total	$30.36	$27.75	$102.90	$5.22

This shows that the water rates for Horseshoe Ranch and Cochise Water Companies are well above the state average and the median and that the rest of the McLain-owned water companies are below the average. Mr. Pamatat's assertion may be credible when referring to Coronado Estates, Crystal, Miracle Valley, and Sierra Sunset but it is not when referring to Cochise and Horseshoe Ranch. Customers on those two systems are already paying well above what is reasonable and acceptable.

More instructive and relevant is comparing the water rates against other companies in Cochise County.

The monthly charges for 7,500 gallons of water in Cochise County are:

.	Average	Median	Highest	Lowest
Cochise County	$28.22	$24.71	$66.05	$5.88

Here are all of the water companies in Cochise County and their monthly rate for 7,500 gallons:


AZ Water Company - Sierra Vista $22.80
AZ Water Company - Bisbee $35.78
Bachmann Springs Utility Company $38.75
Bella Vista Water Company $24.58
Benson $15.88
Bowie DWID $35.00
C-D Oasis Water Company $32.40
Clear Springs Utility Co., Inc. $23.38
Div. $14.88
Cochise Water Company $36.50
Coronado Estates Water Company $24.38
Crystal Water Company $24.38
Douglas $16.50
Dragoon Water Company $66.05
East Slope Water Company $18.41
Elfrida Domestic Water Users Assn. $18.25
F&F Water Company $ 5.88
Holiday Water Company $29.10
Horseshoe Ranch Water Company $36.50
Huachuca City $21.00
Indiada Water Company, Inc. $37.75
J.N.J. Enterprises L.L.C. $50.38
La Costa Water Users Assn. $30.00
Lucky Hills Water Co, Inc. $36.38
McNeal Water Company $43.35
Mescal Lakes Water Systems, Inc. $42.75
Miracle Valley Water Company, Inc. $15.50
Monte Vista Water Co., L.L.C. $11.50
Mustang Water Company $31.25
Naco Water Company $37.66
Parker Lakeview Estates HOA, Inc. $46.50
Pomerene DWID $23.53
Pueblo Del Sol Water Company $28.40
Southland Utilities Water Company $19.98
St. David DWID $21.80
Sue Juan Water Company $12.08
Sulger Water Company #2 $18.20
Tombstone $26.38
Whetstone DWID $42.88
Willcox $20.53
Willow Lakes Property Owners Assn. $41.88
Winchester Water Company L.L.C. $16.23


Horseshoe Ranch and Cochise Water Companies already pay rates higher than 31 water companies in Cochise County. The average monthly rate for 7,500 gallons of water paid by customers on the McLain-owned water companies in Cochise County is $28.08. That is only 14 cents below the monthly average of all water companies in Cochise County.

Given what this data shows - at least my analysis of this data - I have to disagree with the assertions made by Mr. Pamatat at least as Horseshoe Ranch and Cochise Water Companies are concerned. Customers on those two water systems are already paying appropriate rates when compared to other companies in Cochise County and across the state. Mustang Water Company too comes close as customers there also pay above the Cochise County average.

One other thing to note is that Horseshoe Ranch, Cochise, and Mustang water customers already pay more for water than customers on Algonquin-owned Bella Vista Water Company. Those on Horseshoe Ranch and Cochise, in fact, pay over $10 more than Bella Vista Water customers.

I hope that the Arizona Corporation Commission takes this into account as they consider the Rate Case that Algonquin will bring to them. The Commission should prevent Algonquin from committing "rate rape" against the already frustrated and abused water customers.

UPDATE: All of the Corporation Commission's stunning videos of the McLain-owned Water Systems NOW ONLINE!

After some difficulty getting the videos to be hosted on Google's video service, and further difficulty getting more than 4 of them hosted on the alternative service by PutFile.com, I've finally got all of the videos up on Google.

You can view the videos by clicking on its link in the Media section of the Sidebar to the right of this post.

You can also view the videos by clicking one of the links below:

• New! ACC Video: Cochise Water Company


• New! ACC Video: Coronado Estates Water Company


• New! ACC Video: Crystal Water Company


• New! ACC Video: Horseshoe Ranch Water Company


• New! ACC Video: Miracle Valley Water Company


• New! ACC Video: Mustang Water Company


• New! ACC Video: Sierra Sunset Water Company

ACC Decision Postponed; Supervisor Call Disagrees with Tax Abatement; Algonquin Desires to Pay Top Dollar for High Rate Case

McLain water system nearing sale

BY DANA COLE
Tuesday, December 27, 2005 11:06 PM MST



HERALD/REVIEW

COCHISE COUNTY — Barring unforeseen delays, seven local water companies now owned by John McLain Sr. — collectively called the McLain Water Systems — could be sold in the near future.

While undoubtedly good news for the systems’ customers, the deal’s timeline is still unclear, hinging on back tax negotiations, an Arizona Corporation Commission rate base value vote, a bankruptcy court decision and a mountain of paperwork that must be submitted by the potential buyer.

McLain could not be reached for comment.

Algonquin Water Resources Inc., the Canadian-based organization that also owns Bella Vista Water Co., has placed $200,000 in escrow toward the seven systems. Algonquin is now waiting for a rate base value to be determined by the ACC, a process that gives Algonquin a guaranteed rate of return on its investment.

While the ACC vote was initially expected to happen at an open meeting on Thursday, there has been a change in plans. Commissioners will discuss the matter, but will hold off on a final vote because of ongoing issues over the amount of back-taxes owed by McLain.


“Factors that will be addressed include the rate base determination, McLain’s back taxes and the ultimate outcome of McLain’s bankruptcy case,” said Heather Murphy, public information officer for the ACC. “All of these pieces may influence the rate amounts that customers will pay in the future.”

Commissioner Kris Mayes, who has been pushing for the abatement of back taxes that McLain owes the state and county, believes that a tax abatement will save rate payers money.

“We believe there is a much greater chance that DOR and or the county may agree to abate some of the taxes,” Mayes said. “The ACC has been talking to both the state and county to consider this.”

The state department of revenue is looking at this issue, Mayes said, and has requested more time.

“There is a serious chance that we can save the rate payers a considerable amount of money, so I thought it was appropriate to take a two or three week pause and vote on this once the negotiations are finished,” Mayes said.

However, Pat Call, chairman of the county board of supervisors, was not happy about the ACC’s decision to postpone the vote.

“Cochise County has never had a conversation with the ACC about abating taxes,” Call said. “And not once has Algonquin requested that the taxes be abated. Apparently, the only people who want to see the taxes reduced are some of the commissioners on the ACC.”

If the valuation of McLain’s water systems comes in too low, Call argues, then Algonquin could opt to bow out of the deal.

“We want the bankruptcy proceedings to go through without any hiccups,” he added. “Of the total back taxes owed to the county by McLain, only 25 percent are actually owed to the county government. The bulk of those taxes go to special districts, such as school, fire, lighting and college.”

If the taxes are abated or forgiven, those special districts have the right to go into bankruptcy court and contest the hearings, Call warned. That could to lead to more delays.

“Personally, I can live without the 25 percent that goes to county government,” Call said. “We’ve lived without that money all this time. My main concern is to move the systems to a new and reputable owner as quickly as possible and get this through the bankruptcy proceedings as quickly as possible and get these people a reliable source of water.”

But despite what happens with tax abatements, Algonquin is going to be guaranteed a rate of return on the systems.

“Since that rate of return is determined by a percentage of the company’s value, the sale is more likely to move forward quickly if the rate base is higher,” Call argued.

Administrative Law Judge Jane Rodda is recommending $748,893 as the rate base value for McLain’s seven systems, significantly higher than the $540,000 set by ACC staff at a status hearing last month. While the higher value comes as good news for creditors that are owed money by McLain, the commission still needs to look at Rodda’s recommendation, discuss the issue and vote on an amount. It’s this stage of the process that has been temporarily delayed. Before moving forward with purchasing McLain’s water companies, Algonquin requested that the ACC come up with the rate base value, which provides a dollar amount that establishes a starting point for rates charged to customers once the purchase is completed.

“I’m really disappointed that the ACC has decided to stall and not make a decision. This delay could create more problems for the whole sale.”

But Mayes maintains that the delay will be brief.

“The ACC hopes to have a decision by the end of January,” Mayes said. “All of the commissioners want to expedite this sale. I was the one that asked for the vote to be pushed through more quickly to begin with, and I’m the one who agreed with DOR’s request for a delay.”

The McLain Water Systems serve approximately 1,205 residences scattered about the Sierra Vista, Hereford, Palominas and Whetstone areas. All seven systems are plagued with numerous deficiencies that have been identified by ADEQ. Many of the deficiencies are responsible for the extended water outages, poor pressure and substandard service endured by the systems’ customers.

While the problems have been going on for more than 20 years, the situation has been further complicated by McLain’s failure to pay state and county taxes during those two decades. By filing bankruptcy eight different times through the years, McLain effectively insulated his assets from creditors and legal action. However, in May, 2004, the ACC requested a limited relief from the bankruptcy court’s automatic stay. The stay relief was granted, a move that allowed the ACC to appoint an interim manager to operate McLain’s companies until the systems could be purchased by a new owner.

In May of 2004, ACC staff entered into an agreement with Arizona Small Utilities Association to act as the new interim manager. Out of concern for McLain’s customers, it was step that was deemed necessary by the ACC, ADEQ and bankruptcy court.

Concern for McLain’s customers also is noted in fact 39 of a docket that Rodda submitted to the commission and bankruptcy court: “The assets of the McLain Water Systems are in great disrepair and in their current state threaten the health and safety of the customers of the McLain Water Systems.”

In that same docket, Rodda states: “It is in the public interest to find a buyer for the McLain Water Systems who is able to repair the systems and provide adequate service to the residents as soon as possible.”

Murphy echoed Rodda’s sentiment.

“We’re all interested in the same result,” Murphy said. “The commission wants to hand these companies off to a new buyer promptly and cleanly, without having to undo things in the future, when it’s infinitely more costly and complex.”

Herald/Review reporter Dana Cole can be reached at 515-4618 or by e-mail at dana.cole@svherald.com.

Read the original article at the Sierra Vista Herald website.

Sierra Vista Herald Editorial Recommends High Purchase Price for McLain's Criminally-mismanaged, Third World, "Worst Water Systems in the State"

Time to seize the moment


Tuesday, December 27, 2005 11:07 PM MST



On Thursday, the Arizona Corporation Commission will again meet to discuss seven area water companies owned by John McLain Sr.

This time, they’ll review a recommendation from Administrative Judge Jane Rodda that valued the companies at $758,893, which is about $200,000 more than the commission’s staff recommendation on the properties.

This value is important because it will determine if McLain, who has filed for bankruptcy, can repay his creditors. It also will determine a price for a potential buyer, which is at this point the Canadian-based Algonquin Water Resources Inc., owner of Sierra Vista-based Bella Vista Water Co.

We urge the commission to accept Rodda’s recommendation.

First, we think this amount will help McLain settle his debts. He should be able to do that.

Second, we believe that this amount will lead to a new owner of the companies, which in turn means that much-needed improvements will be made to the systems.


In Rodda’s recommendation report, she lists what the commission’s staff has found problematic with the systems. She mentions that some wells were once domestic wells, not wells to serve many households. She mentions the problems of welds and equipment used in the system.

We don’t think the commissioners’ acceptance of Rodda’s recommended value is a quick fix. This water service problems have gone on for far too long in the Whetstone and Hereford areas, and they will continue as the interim manager of the systems, Arizona Small Utilities Association, battles to keep up with repairs and needs on the systems, investing money without having ownership or the proper finances and manpower to do so.

What we see is an opportunity for the commission to help area residents move forward with an owner that has shown that it can run a water company in the Sierra Vista area. It has shown it is dependable and part of the community.

Area residents, however, must brace for changes, including possible rate hikes in an effort to improve the systems since the buyer will likely have to infuse more than $1 million to make the upgrades.

If the commissioners send this value back for more research or reject the value, there is the possibility that area residents will have to continue to wait for better service.

All the while, the frustrations will continue and local residents will have water service that can vanish for days at a time.

It’s time these companies are place in more stable hands.

Read the original article at the Sierra Vista Herald website.

Merry Christmas: Shocking ACC Videos Made Available Online

Yes, I know it is two days after Christmas. I've been a bit busy with the holiday but I've found the time to rip, convert, and publish online the shocking Arizona Corporation Commission videos of the McLain-owned water systems. I was able to obtain a copy of the DVD from one of the commissioners. The video was presented by Utilities Division Engineer John Chelus at the ACC valuation hearing on November 16th (see the Sierra Vista Herald Article) and it was reported to have stunned those who viewed it.

I've edited the original video and divided it up by each water system, giving each water system its own video and adding appropriate titles. I've uploaded some of the videos to the Internet and the remainder will be up shortly. I've added links to the videos in the sidebar to the right of this story in the "Media" section. All videos are in Windows Media format and require Windows Media Player to view. A high-speed or broadband Internet connections is also highly recommended.

You can view the videos at the links below:


Click here to watch McLain Water Systems - Cochise Water Company ACC Video
Click here to watch McLain Water Systems - Coronado Estates Water Company ACC Video
Click here to watch McLain Water Systems - Crystal Water Company ACC Video
Click here to watch McLain Water Systems - Horseshoe Ranch Water Company ACC Video

These videos make it abundantly clear that the McLain-owned water systems are worthless except for the CC&Ns and rights that comes with them. The infrastructure is beyond recovery. It is also amply demonstrated that the water systems are a threat to the health and safety of customers who are on the systems. Equally clear is the fact that ASUA has made little or no improvement on the safety and environmental quality compliance of the systems. These videos were taken over a year after the ACC brought in ASUA as the interim manager. It is appalling to anyone who views the video that an organization like ASUA would continue to allow the water systems to operate in such a deplorable manner. The ACC found that there was an imminent threat to water customers and charged ASUA with providing safe and reasonable water to the customers. In fact, the systems have become WORSE under ASUA's management, the water outages more common and far more lengthy, compliance with EPA regulations has still not been met. These videos expose how criminally bad McLain maintained the water systems, how terrible ASUA has continued to manage them, and just how unsafe and worthless the water systems are.

Pat Call Responds to Tax Abatement Suggestion

The back taxes are a complicated issue.

There is disagreement between attorneys ( county and ACC) as to the authority the county has to forgive back taxes and to what extent/amount they can be forgiven.
Algonquin doesn’t want the back taxes forgiven and has not asked. The county has spoken to Algonquin representatives and they have indicated the amount of back taxes is not an issue – at all.
Of the total amount of back taxes owed less than 25% of the amount is owed to county government. The bulk of the back taxes are owed to the various school districts, lighting districts, college district, fire districts and so on.

After the ACC meeting next week (the 29th), a valuation will be set for the McClain systems by the ACC. Rates will be set by the ACC based on the valuation. Algonquin is very interested in the rates as that will determine their profit. The higher the valuation, the higher the rate base will be. This is one of the reasons why Algonquin doesn’t really want the back taxes reduces.

We all want Algonquin to take over the systems and start investing in infrastructure as soon as possible. Before that happens, the bankruptcy hearing has to happen (scheduled for mid-January). If no one contests the bankruptcy proceedings, then ownership of the systems will be transferred to Algonquin. This could happen by the first week of February – if there are no ‘hiccups’ in the proceedings.

However, if the back taxes are forgiven one of the districts may object and hold up the bankruptcy proceedings. If the valuation of the company is too low, one of the private creditors owed money by McClain might object and hold up the bankruptcy proceedings. And, if the valuation is too low, Algonquin might pull out because they may feel they can’t make enough profit. These are all ‘hiccups’, if you will and we want to avoid them. We want the bankruptcy hearing to proceed as quickly and as smoothly as possible.

The corporation commission knows all of this. Why they keep shifting the blame to the county is something I don’t know. I talk with them – a lot. In fact, I just spoke with one of the commissioners an hour ago.

Bottom line, though, is the buyer (Algonquin) is not interested in having the back taxes reduced; only the ACC commissioners want the back taxes reduced and I don’t understand why, particularly when reducing the taxes could slow up the proceedings.

I hope this helps. Frankly, it took me a while to understand because it sounds counter-intuitive.

Merry Christmas.

Pat.

Is it in the best interests of the customers for Algonquin to pay the highest price possible for the water companies so that they can make a rate case to stick the frustrated customers with the highest rates possible? Is the County acting in the best interests of the customers to care so little about this?

Why hasn't the County considered the same option they took with Sulger Water Company #1 a decade or so ago? The County either seized or bought out the company, operated it for some time through a contractor, helped the residents form a Water Improvement District, and has assisted in the management of the district. I would like Pat Call to offer more details about what the County did in that situation and how it may apply to solving the current situation.

I'm really starting to think that the only acceptable solution is for the county to buy out or seize the water systems just like they did to Sulger Water #1 and then to help us pass a bond issue and form a water improvement district. If McLain owes them $600,000 and his water companies are only worth $540,000, then they should be able to seize them to pay for the back taxes. If, by law, they can't, then we can work with state legislators to change that law. The Water Improvement District would want barely any of the existing infrastructure as it is garbage that needs to be replaced. But then again, instead of much higher rates we'll see somewhat higher rates and higher taxes until the bond is repaid. But that is a temporary situation until the water systems can be replaced. While under Algonquin the rate increases are permanent and will only go higher as time goes on and as they can use their big corporation strategies to convince the ACC that they need more.

I'm not happy with what I hear about Algonquin nor their attitude and plans for the new water system. Their water restrictions and roving water cops they employed this last summer on a water system right next to mine will NOT go over well at all with me and the already frustrated and angry customers. I'm also certain that I won't like their rates especially since they're doing all they can to see that the third-world, "worst water system" in Arizona is given as high a value as possible. Looking at the ACC videos (that are becoming available one by one on this website) it is easy to see that the water systems are worthless.

We don't need a foreign company coming in an grabbing up the water rights in our County and then charging the highest rates possible in perpetuity. We need reliable water at reasonable rates owned and professionally operated by local people who have a stake in our community.

ACC Judge Says McLain's Water Systems Worth More Than ACC Staff's Valuation

BY DANA COLE
Friday, December 23, 2005 11:50 PM MST



HERALD/REVIEW

SIERRA VISTA — After carefully weighing the evidence, Administrative Law Judge Jane Rodda came up with a rate base value recommendation for John McLain’s seven water companies.

Rodda’s recommendation of $758,893 is up from the $540,000 value presented by Arizona Corporation Commission staff during a status hearing in Tucson last month.

“I was relieved to see Judge Rodda’s recommendation,” said Charles Irwin, chief civil deputy for the county Attorney’s Office.

At that hearing, Irwin urged Rodda to consider a higher value for McLain’s properties. He expressed concerns about the $540,000 value, arguing that McLain’s creditors would be receiving far less than what they’re entitled to in the bankruptcy proceeding.

Steven Wene, who represented McLain during the hearing, also felt the $540,000 value was too low.


Irwin also expressed a concern that a low value could delay the bankruptcy proceeding, if the judge determined the value to be too low.

“The bankruptcy judge is required by law to get as much money as possible out of the company, in order to satisfy the debtors and creditors,” Irwin said. “If the amount is set too low, the judge could decide to remarket the company. Then we’re back to square one.”

If all goes without a hitch, McLain’s seven systems could be sold in the near future. Many regard the potential buyout as the only hope for reconstructing the systems, something that is needed, but would require a buyer with the resources to do the job.

Algonquin Water Resources Inc., a Canadian-based organization that owns Bella Vista Water Co., has $200,000 in escrow toward the purchase of McLain’s systems.

Algonquin is waiting for the rate base value determination from the commission, a process that gives the company a guaranteed rate of return on their investment, Irwin said. “The best solution for everyone is to get this sale closed and done,” he said. “But depending on how things move along, it’s a process that could take months.”

The corporation commission will hold an open meeting on Thursday to review Rodda’s recommendation, discuss options and vote on an amount.

“Algonquin has bound themselves to purchse the companies for a million dollars,” Irwin said. “But they’re insisiting on a rate of return for their investment. If the ACC rate determination comes in less than a million, then the bankruptcy court has the authority to say no to the deal.”

If that happens, and McLain’s systems are remarketed, it could take up to a year to go through the process again.

In her rate base value recommendation to the commission, Rodda writes, “Currently, the assets of the McLain water systems are in great disrepair and in their current state threaten the health and safety of the customers on the McLain water systems.”

Rodda goes on to say, “It is in the public interest to find a buyer for the McLain water systems who is able to repair the systems and provide adequate service to the residents as soon as possible.”

In determining the rate base amount, Rodda considered the fair currrent value of the real property as a reasonable estimate of the value of McLain’s water systems. Rodda used that value in determining the rate bases of McLain’s systems.

A significant amount of money will need to be invested into the systems to bring them into compliance with state standards. According to Rodda’s report, Algonquin estimates that it will need to infuse at least $500,000, and perhaps as much as $1.25 million to bring them into compliance. Customers will need to expect a rate increase when McLain’s systems are purchased by Algonquin, along with a second rate bump once the infrastructure upgrades are completed, Irwin warned.

How to listen to the hearing

The water systems will be on the agenda of the Arizona Corporation Commission’s open meeting on Thursday. The meeting begins at 10 a.m.

To hear the meeting, you can:



Attend by going to the commission’s building at 1200 W. Washington in Phoenix


Listen by either calling the commission’s listen line at (602) 542-0222, or going online to www.cc.state.az.us and clicking on the “listen line” link.

Herald/Review reporter Dana Cole can be reached at 515-4618 or by e-mail at dana.cole@svherald.com.

Read the original article at the Sierra Vista Herald website.

Steve Cockrum Makes More Proposals and Comments on the McLain Bankruptcy

Having further read Judge Rodda’s Opinion and Order dated November 16, 2005, I would like to make the following comments.
1.) In Findings of Fact Point #4 Judge Rodda states, in part, “…indicating that on July 30, 2003, McLain had filed for relief under Title 11 of the United States Code, initiating a Chapter 13 proceeding.” Title 11, Chapter 13 of the Bankruptcy Code is described generally as “Adjustments of debts of an individual with regular income.” Judge Rodda further states in Point 26 that “The County feared that if the Bankruptcy Court did not approve the sale, the bankruptcy would be converted to a Chapter 7 proceeding and ultimately the trustee would abandon the McLain Water Systems assets because they would add no value to the estate as the secured debt would be greater than the value.”
2.) For the purpose of discussion and clarification, it is my understanding that a Chapter 13 proceeding is a reorganizational type bankruptcy and a Chapter 7 is a liquidation type bankruptcy. Further, a Chapter 13 is filed on behalf of an individual(s) rather than a Chapter 11 type that is normally filed by corporations who wish to reorganize and restructure their debt. As McLain filed under Chapter 13 rather than Chapter 11, we must conclude that because he included the Water Systems Companies in the filing, they must have been operating as a Sole Proprietorship, rather than a separate corporate entity. As the McLain proceeding appears to continue to be a Chapter 13 type bankruptcy, I would assume that some of the outstanding debt will be discharged, some of the debt will be satisfied, and potentially some of the debt will remain to be paid at some time in the future under the adjustment and reorganization tenets of the proceeding.
3.) I believe that it would be fair to stipulate that Mr. McLain failed to pay his obligations and has accumulated all of the list Pre-Petition debt of his own free will and was not acting under duress.
4.) I will further stipulate that that portion of the debt listed as “back taxes” to either the State or the County of Cochise have been collected from the customers of the systems once, and to collect those taxes a second time from the customers of the systems, especially if the calculated amount of penalty and interest is added, is patently unfair. Mr. McLain was solely responsible for not paying those taxes, it seems a miscarriage of justice that he should not be SOLELY RESPONSIBLE for paying them.
5.) I would suggest that if the amounts that are calculated by the State, County, and/or private creditors and listed as either penalty and/or interest is deducted from the gross amounts shown, the net amount of the principal debt is very close to the Staff valuation of the systems at approximately $541,000.00.
6.) If it is the plan of the Court to satisfy the McLain debt by selling the systems, so be it. I would, however, suggest that the net principal amount of the debt be discharged by the sale of the systems; any amount of principle debt above the $541,000.00 to be written off by the Court OR that amount plus the remaining unpaid penalty and/or interest be a part of the overall adjustment and reorganization and have Mr. McLain pay those amounts over some fixed period of time.
7.) If the Trustee has determined that the Systems add no value to the estate in a Chapter 7 proceeding, be default the Trustee has placed a very low dollar value on the Systems, certainly well below the proposed $541,000.00. The creditors are placing themselves at significant risk by failing to accept and agree to the repayment of the net principal amount of the debt at or near 100 cents on the dollar; as they are aware if the proceeding evolves to a Chapter 7 they will receive little if anything.
8.) I am hopeful that the above will lend support for the Commission to support only the Staff valuation and that the State, County, and private parties will agree.


Steve Cockrum

Former President of Horseshoe Ranch Association Proposes Solution

This is a proposal to resolve our water companies difficulties. To accomplish this solution will require a couple of fairly significant political moves and I am sure require a majority of the people that are affected to agree and support vigoriously. With that having been said, I offer the following:

1.) At their meeting scheduled for December 29, 2005, the Commissioners, with no disrespect intended, reject the Opinion and Order of Administrative Law Judge Jane Rodda, and citing the fact that the consumers of the McLain Water Systems have suffered long enough and that they above all else deserve relief, accept the Staff recommendation and place the value of the assets of the Mclain Systems at $540,142.00.

In addition to adopting this valuation for the Systems, the Commissioners request that the United States Bankruptcy Court, in the matter of Johnny A. Mclain, et al., Case No. 4-03-bk-04125-TUC-EWH, the Honorable Eileen W. Hollowell, Presiding and Christopher Pattock, Trustee accept the Commission recommended valuation and discharge the outstanding debt using the following formula. That any and all penality and/or interest shown in regards to taxes or general debt be eliminated and that the remaining debt be satified by applying equally to all of the outstanding debt at whatever figure less than 100 cents on the dollar is appropriate. The County, State, and general Creditors will be required to accept that solution.

2.) As Algonquin Water Resources, Inc. will therefore purchase the assets of the Systems for $540,142.00 and invest an additional $2,000,000.00 for the necessary acquisition costs and infrastructure upgrades and repairs. This total cost of $2,540.142.00 will be repaid over a 20 year period at an interest rate of 5.25% ( Prime Rate + 1%), this cost to be equally divided amongst the "approximately 1,205 customers in and around Huachuca City and Sierra Vista." (Reference Rodda Findings of Fact, Point 2). This cost would be $14.21 per customer per month, in addition to their regular water charges. As a result of this investment, the Moratorium currently in place on all of the Systems will be lifted allowing additional new hookups that will potentially further dilute the monthly charge to repay these expendatures.

3.) Algonquin Water Resources, Inc. will develop realistic and credible budgets for all of the affected systems, and will present their proposals for future water rates to and for Commission approval at a reasonable rate of return.

If you agree, generally, with the above I would encourage you to immediately contact the ACC Commissioners requesting that they adopt this at their meeting scheduled for December 29, as time is of the essence. I would further encourage you to contact the Bankruptcy Judge and Trustee requesting that they view this plan favourably. Finally, I would ask that you contact our County Supervisors and the Arizona Department of Revenue requesting that they do not object to this proposed settlement to the debt. And finally, I would encourage you to write letters to the editor and perhaps encourage, as best we can, positive press coverage to this plan. A note to our Governor asking for her support might prove helpful.

Steve Cockrum

Water service returns for Hereford and Whetstone residents for now

BY DANA COLE
Thursday, December 15, 2005 11:18 PM MST



HERALD/REVIEW

SIERRA VISTA — Water service was back for Hereford and Whetstone residents on Thursday.

Flavio Gonzalez, operations manager for the Arizona Small Utilities Association, which is the interim manager for the water companies affected by the outage, said at 8 p.m. that service had returned.

Service in Hereford was restored in the afternoon, and Whetstone residents had water running again about 8 p.m.

The problem in Hereford started Dec. 8 with a water line restriction on Horseshoe Water Co.’s system. That outage left customers in Horseshoe Ranch Estates, Circle S Ranch and the surrounding area without water for seven days.

“Because of the restriction, there’s not enough water flowing through the system to keep it running,” Gonzalez said earlier on Thursday. “We’ve ordered water to be hauled to the tanks on Sunnyvale. Bottled water also is available at the Sunnyvale site.”


Whetstone residents connected to Crystal Water Co. continued to endure an outage Thursday, one that started after a county work crew hit a line on Monday.

ASUA subcontracted Whetstone resident Chris Gaxiola to work on that problem, while an ASUA crew turned its attention to the restriction in Hereford.

During the day, residents continued to be frustrated by outages, which at times were sporadic in their location.

“Today is day seven,” said Kristi Daynes, a Hereford resident who lives on the outer edge of the Circle S area. “I go back and forth from my house to my parents’ home with my baby and laundry. You have to live this to believe it. It’s beyond ridiculous.”

Hereford resident Cindy DeSoto said water was restored briefly Thursday morning, but went out again.

On Wednesday, the Hereford outage seemed more widespread.

“Some of us in the Circle S area have water, but Horseshoe Ranch Estates is still down,” said area resident Todd Evans. “I guess it depends on where the restriction is.”

Whetstone resident Judy Fitzsimmons said some of the Crystal Water Co. customers were still without water on Thursday, but that outage seems to be sporadic, hitting customers on Ivey and Sunset Roads.

Weary of all the problems with the system, Whetstone residents Bert and Femie Shill, have decided to dig a well.

“This has been very upsetting for us,” Femie Shill said. “We’ve already applied for a well permit and will be digging sometime next month. We have goats and it’s just too much to constantly be worried about how we’re going to get water to them.”

As with the Hereford outage, bottled water is available at the Crystal well site in Whetstone for people who need it.

“We have Chris (Gaxiola) working on Ivey Road, in the vicinity where the leak first occurred,” Gonzalez said Thursday afternoon. “He’s going to be repairing a broken valve on that system.”

To make matters worse, one of ASUA’s key employees, Edward Alvarez, left the company.

“He was a good employee, so it’s a big loss for us,” said Gonzalez, who drove from Phoenix to assist with the situation.

HERALD/REVIEW reporter Dana Cole can be reached at 515-4618 or by e-mail at dana.cole@svherald.com.

Read the original article at the Sierra Vista Herald website.

Important Updates from the Corporation Commission

This afternoon, an engineer from DEQ arrived in Hereford to assist ASUA with troubleshooting. An engineer from the Corporation Commission will arrive on Monday to help troubleshoot over the next few weeks as we attempt to stabilize the water system.

• This afternoon, an engineer from DEQ arrived in Hereford to assist ASUA with troubleshooting. An engineer from the Corporation Commission will arrive on Monday to help troubleshoot over the next few weeks as we attempt to stabilize the water system.


• The judge in the RCN case (setting the valuation for the company so that it can be sold) issued her recommended order, which will be placed tomorrow on the Commission's website for review and comment by anyone. (www.azcc.gov). The judge recommended valuing the company at $758,893, which is up significantly from ACC Staff's recommended number. The judge's number could be amended by the Commissioners when we vote on the Order at our Open Meeting scheduled for Dec. 29.



• The Commission has asked that ASUA remain vigilant about providing both bottled water and ordering tanker truck deliveries whenever necessary. This occurred today to help fill up tanks at Sunnyvale. As of 4 p.m. Thursday, a total of 8 loads of water at 3,500 gallons per load were delivered.



• We truly appreciate the assistance of the County in the early days of this latest outage in providing water deliveries. I also continue to hope that the County and State will meet us part way by abating at least some of the taxes that McLain owes them. State law allows counties to engage in such abatements and if ever there was a time when such a compromise was appropriate, it is now. It's important to remember that the purchase price, whatever it ends up being, will have to be paid for by the ratepayers of the water system in the form of higher rates. Even a partial abatement by the creditors would help us -- and the residents of the McLain systems -- tremendously.

We will continue to work toward a long-term solution and I want to again say thank you for the opportunity to speak to the residents last night. I also appreciate the suggestions made and will be following up on them over the next few days



Kris Mayes

UPDATE: 8th Water Tanker Truck Delivers Water to Horseshoe Water System

The first truck delivered a tankful of drinking water to the Sunnyvale pump site at approximately 11:00am today. At 5:15PM there were two tanker trucks next to the pump station. I asked how many truck loads of water had been brought in today and I was told that 8 full tanks had been delivered. This may be why water is finally flowing.

UPDATE: Some water may be flowing to parched residents on Horseshoe Ranch system

The report from Flavio of ASUA was that another restriction was found. Edward of ASUA quit in frustration. "Cowboy" of ASUA has been working the problem this afternoon. A resident contacted ASUA and "Cowboy" answered the phone. Imagine that, a human being answering the emergency phone line. "Cowboy" reported that water pressure should be returning now. A resident who has not had water for 8 days now reports that she now has some water but at a reduced pressure.

Is the County Board of Supervisors Hiding Under Their Desks?!

During the water outages in July and August, Pat Call was sending emails out every other day and making sure that the County was active in providing a little relief to affected water customers and in helping find a resolution to the ongoing problems with the third-world water systems. This time around, I've heard nothing from Pat Call. He hasn't been quoted in the newspaper. He hasn't shown up on local TV media broadcasts. He's not sent out any mass emails. He's not called me to try to get information from him out to affected customers. He's not shown up at the pump site to talk to frustrated and thirsty residents. Neither he, nor the other County Supervisors have been visibly doing anything about the current problem. They seem to be "hiding under their desks".

Yes, the County sent a tanker truck full of water to dump into the broken system. And ASUA refused the delivery. But what use is it to put water into a clogged system? The County has some sort of emergency plan in case of natural disaster. Just because this is a man-made disaster does not mean that the emergency plan should not be activated.

Additionally, and I want a direct answer to this, when is the County Board of Supervisors going to vote on excusing or abating the approximately $600,000 in back taxes that the companies owe? If and when the systems are purchased, the immediate cost of paying those back taxes, that the crook John McLain did not pay, will be passed on to the customers in the form of raised rates. Instead of spending the rate increase monies on making immediate improvements or replacements to the water systems, the purchaser is going to have to dump money on back taxes to the County. If the County cared at all, they wouldn't place this additional McLain-caused burden on the customers already facing frequent and long water outages, but would instead excuse the tax debt. The County must understand that all of McLain's water systems combined were just given the valuation of $500,000 by the ACC. If they owe $600,000 in County taxes alone, that makes the systems worth less than what is owed on them. This will never satisfy the creditors who are attempting to recover debt through the bankruptcy. The judge probably won't accept it. Instead of pointing the finger at the ACC and telling them that the valuation is too low (and if you looked at the ADEQ-produced video detailing the disgusting problems with the water systems you would understand why it is valued so low) the County should instead excuse the back taxes so that the valuation and sale can go forward.

I call upon Pat Call to address these things so that his answers and comments can be published for affected customers - and voters - to read.

UPDATE: Tanker Truck Delivers Water to Horseshoe Ranch Water System

At 11:00am a water tanker truck was seen delivering water to the Sunnyvale Rd. pump site. At 2:00pm the same water tanker truck was there. This means either a long pumping time or possibly two deliveries of water to the system.

Flavio of ASUA reports that the issue involves another restriction in the lines. I'm not sure how water in the storage tanks is going to help people who live behind the clog. If the pipes are clogged, there is no way that they'll get any water no matter if it comes from the well system or from delivered water.

In addition, a huge load of Sparklett's water has been delivered to the Sunnyvale pump site. First come, first served.

UPDATE: Edward Alvarez no longer works for ASUA

The new recorded message from ASUA is Edward Alvarez stating, "This is Edward. Fortunately, I don't work with ASUA no more. You can reach Flavio at 602-725-4056. Thank you and I hope you all get your water back."

No word on whether Edward quit in disgust or was fired for some reason.

Hereford residents protest ongoing water woes

BY DANA COLE
Wednesday, December 14, 2005 11:51 PM MST



HERALD/REVIEW

HEREFORD — Maria Marsh dreads going home at night.

“In our neighborhood, we never know if we’re going to have water,” Marsh said. “We don’t know if we’ll be able to flush our toilets, take showers or wash our dishes. It’s going into the seventh day of this, and we’re just sick of it.”

Marsh, a resident of Horseshoe Ranch Estates, is not alone in her frustrations.

About 50 area residents staged a protest Wednesday evening where they crushed plastic water bottles to call attention to an ongoing problem.

A water outage that started sometime Dec. 8 has left residents in the Hereford community without water for nearly a week. Because of a pressure problem in the system, along with a blockage somewhere on the water line, it’s not clear how much longer this particular outage will be continuing.


Residents received some reprieve Tuesday when Mike Evans, Cochise County emergency services coordinator, ordered two tankers of water for Horseshoe’s water storage site on Sunnyvale Road.

The Horseshoe Ranch Water Co., owned by John McLain Sr. and managed by Arizona Small Utilities Association, has experienced a number of outages over the past two years.

“I can’t take this any longer,” said Cindy DeSoto, who lives in the Circle S area on the Horseshoe system. “I have a heart condition, and this is a serious health issue for me. That two weeks in July when we went without water permanently affected my health.”

The stress of coming home to a hot house every day caused DeSoto’s heart condition to worsen. She ultimately lost her job because of poor health and has been forced to file for disability.

As she watched angry protesters crush water bottles, DeSoto said, “This was supposed to be a peaceful, pleasurable place for me to live. Instead, it has literally been my demise.”

Like DeSoto, Marissa Herrera lives in the Circle S area, and is on the Horseshoe water system. “Being frustrated and angry isn’t helping anymore. We need to communicate with each other and do everything we can to conserve and manage our water consumption until the system is fixed,” Herrera said. “We need to be organized, with a plan in place each time this happens.”

Archie Buchanan said he’s sick and tired of living like someone in a Third World country.

“Not ever having reliable water is inconvenient for all of us,” Buchanan said. “And I’m one of the more fortunate ones. I’m retired and don’t have children living at home. I feel for the people who have to go to work and who have children. I don’t know how they tolerate this.”

Many of the protesters questioned why it’s taking elected officials so long to find some kind of solution for a problem that they believe has dragged on way too long.

“My frustration lies with the ACC, ADEQ, county officials and how much time it’s taking to get this whole mess through bankruptcy court,” said Alice Moffitt, another Circle S resident.

“Why is it taking so long to come up with a selling price for McLain’s companies? Why was John McLain allowed to run these companies into the ground the way he did for so many years before the ACC and ADEQ stepped in and did something?”

Another Circle S resident, Todd Evans, had made arrangements with Commissioner Kris Mayes to speak by phone to those at the rally.

Using a telephone and bullhorn, Evans broadcast Mayes’ answers to questions.

Evans asked Mayes what the plan would be if a natural disaster caused the outage. He also wanted to know if a manmade disaster makes a difference in the response.

Mayes said she has been talking to the governor’s office about the possibility of setting up an emergency relief area with portable showers and bathrooms. It’s a unique situation because these are private water companies, the commissioner said.

Mayes also said she is pushing for the state and county to abate their portion of McLain’s tax debt in bankruptcy court to help make the sale of his companies more attractive to Algonquin.

While it’s true that McLain’s water companies were not in compliance with state standards for a number of years, they have fallen under close ADEQ and ACC scrutiny during the past three years.

As more frustrated customers complained about unreliable service, poor water pressure and frequent outages, the ADEQ conducted an investigation of all of McLain’s seven systems.

In a report submitted to the ACC, the ADEQ cited a list of noncompliance violations involving each of McLain’s water companies. When McLain failed to bring the companies up to state regulations, health and welfare concerns for his customers were in the forefront. After the ADEQ presented its investigation findings to the ACC, the commissioners voted to strip McLain’s control of the companies, and ASUA became the interim manager until the companies could be sold.

While Algonquin Water Resources Inc. has expressed an interest in purchasing McLain’s systems, a number of snags have held up the deal.

McLain, who has incurred a significant back tax debt to Cochise County and Arizona Department of Revenue, has filed bankruptcy. On top of that, money is owed to ASUA as different repairs to the systems are made and equipment replaced.

Algonquin is waiting to hear how things play out in bankruptcy court.

Many believe that Algonquin’s interest in the companies is the only hope for restructuring the systems, which need to be completely rebuilt.

“It’s going to be a long haul before the situation is resolved,” said Mike Dolan, who lives next to the storage tanks on Sunnyvale Road. “In my opinion, the ACC and our elected officials have dropped the ball. They’re like roaches. As long as the light is shining on them, they scurry. As soon as the light is off, it’s back to the same routine. It’s out of sight, out of mind.”

herald/review reporter Dana Cole can be reached at 515-4618 or by e-mail at dana.cole@svherald.com.

Read the original article at the Sierra Vista Herald website.

Does John McLain even own Horseshoe Ranch and Cochise Water Companies

Does John McLain even own Horseshoe Ranch and Cochise Water Companies?

Check the Decision 66241 Order to Show Cause & Order for Interim Relief - September 16, 2003 on the Arizona Corporation Commission website at http://www.azcc.gov/utility/water/Dec-09-16-03.pdf.

Look at the Findings of Fact items 3 and 4 which address Cochise Water and Horseshoe Ranch Water companies. Both say that the CC&N was never transferred to John McLain on these companies and the Corporation Commission never approved the sale of the companies to him.

If he doesn't legally own the systems, what options does that give us? This is something I want to ask Commissioner Mayes. If he doesn't have the CC&N, could Algonquin or another water company just come in and establish there own water company and start servicing customers in the area? Could someone claim the water companies without even paying for them? Could John McLain be criminally liable for operating the water companies illegally? I'm not sure what it means, but this could be significant.

UPDATE: Water Outages in Horseshoe Ranch Continue into 8th Day!

Water outages still persist on the McLain-ruined Horseshoe Ranch water system. Residents are facing their 8th day without water. While some service was restored briefly some time in the middle of the night and some customers received water (and some took advantage of it and got their showers) by 5:00am the water had stopped flowing. Most residents were probably not even aware that the water was restored, although for some it can be obvious as all of their toilets and any appliance connected to water starts making horrible belching sounds to signify that water and a ton of air are coming through the system.

ASUA's recorded message hasn't been updated since 4:00pm yesterday when it stated that they were "troubleshooting" the problem and that they "apologize for the inconvenience". "Cowboy", an ASUA employee, told some at last night's protest at the Sunnyvale pumping station that the problem was a broken "check valve" at the Naranja well site.

Frustrated Residents Protest

Nearly fifty residents on the Horseshoe Ranch water system who are facing their 7th day of water outage gathered at the pump station on Sunnyvale Rd. Wednesday night. On hand were several reporters and a KGUN 9 satellite van. Residents brought empty water jugs and created a large pile next to a warming fire made of pinecones burning in a small barrel. Residents chanted "We want water!" as they crushed the jugs in protest of the ongoing water crisis and how it is being handled.

At 6:00pm, water customer Todd Evans spoke to the crowd using an electronic bullhorn. He made several announcements and asked the frustrated crowd to remain peaceful and obey the law. A handful of Cochise County Sheriff's Deputies were present to ensure that things did not get out of hand. Evans then lead the assembled crowd in chants such as, "What do we want? Water! When do we want it? Now!" and "Hey, A-S-U-A! What is your excuse today?" KGUN 9 broadcast the protest live on their 6:00 broadcast and their reported stated that additional coverage would be broadcast at 10:00.

Evans then reached Arizona Corporation Commissioner Kris Mayes by cell phone. She addressed the crowd through Evans' cell phone and bullhorn. Mayes updated the crowd on the current situation with the McLain-owned water companies, the anticipated purchase by Algonquin Water, and the problems experienced with ASUA. After her remarks several residents were able to ask Mayes questions and she provided answers.

UPDATES: Water Off on Horseshoe Ranch System; Commissioner Kris Mayes to Address Gathering Long Distance; KGUN9 Satellite Truck in Area

Residents facing their 7th day without water are gathering again in the area surrounding the Sunnyvale Rd. pump site. They report that ASUA personnel came into the pump site and turned off all of the water in order to let the tanks fill. This likely means that the customers who were the half that had their water restored today now join the other half without water.

KGUN9 has a satellite truck in the area and they are interviewing residents about the situation and will likely cover the story on tonight's broadcasts. The truck was at Judy & Dale Goodenough's home doing an interview.

The gathering tonight at the Sunnyvale pump station is still on although it will not include any bottle burning as originally advertised. Instead, it will be a peaceful, non-confrontation gathering where residents can join together to call for a solution to the ongoing water crisis.

Corporation Commissioner Kris Mayes has agreed to briefly address the situation with the gathered residents and to answer questions. She will not be there physically, but will speak by means of an amplified cell phone. Commissioner Mayes is the one person on the Arizona Corporation Commission who has seemed to take an interest in the plight of the residents on the McLain-ruined and criminally-operated water systems.

It is hoped that ASUA and Cochise County will also provide a representative to address the gathered residents to update them on the situation and discuss options for immediate and future relief.

UPDATE: For Some, Water Outage Continues into 7th Day

While some residents on the McClain-ruined Horseshoe Ranch water system report restored water at reduced pressure this morning as of 8:00am, other residents report that there is still no water flowing to their homes. It seems that residents in the Circle S area have some water with reduced pressure, residents in the Horseshoe Ranch neighborhood have no water at all.

The recorded message from Edward Alvarez of ASUA states that as of 8:00am they are still troubleshooting the problem but that they don't understand what is going on a and he doesn't know why water has not been restored to everyone.

Several residents were gathered at the Sunnyvale pump site this morning apparently to complain and comiserate. Frustration levels are running high among customers as this is the longest water outage that they've ever experienced. Government officials have provided no relief and some feel that the situation is mostly being ignored.

Water outage goes for fifth day

BY DANA COLE
Tuesday, December 13, 2005 10:22 PM MST



HERALD/REVIEW

HEREFORD — Despite promises of restored service, Horseshoe Ranch Water Co. customers continued to be without water into Tuesday evening.

It marked the fifth day of an outage that was expected to end Monday.

Arizona Small Utilities Association, the organization managing the Horseshoe system along with six other local water companies owned by John McLain Sr., is not offering a timeline as to when service will be restored.

The ongoing problem not only frustrates the system’s customers, but is creating headaches for ASUA.

“We’ve ordered two more pallets of bottled water for Horseshoe’s customers,” said Flavio Gonzalez, who is ASUA’s operations manager.


“What we’re finding here is there is one section of line that is continuing to pop on us, and we can’t find the obstruction,” he said. “Unfortunately, we don’t know the system as well as the McLains did, so troubleshooting it has been difficult for us.”

The situation for ASUA was further complicated Monday when another water outage occurred in Whetstone. A Cochise County survey crew hit a water line on the Crystal Water system, Gonzalez said. As with the Hereford outage, service was expected to be restored Monday, but late Tuesday afternoon, customers continued to be without water.

Sue Ann Vannoy of Whetstone questioned why it took ASUA so long to repair the ruptured line, leaving people without water for two days.

“These outages are getting ridiculous,” she said. “All this could have been handled yesterday. If ASUA doesn’t have the manpower to get these problems resolved, then why don’t they subcontract? You just can’t let people go on and on without water like they’re doing.”

Crews were working at the sites in Hereford and Whetstone, Gonzalez said.

While he was optimistic the Whetstone outage would be resolved on Tuesday, Gonzalez was uncertain about how long it would take to restore service in Hereford.

On Tuesday, the county ordered two tankers of water, totaling 13,000 gallons, to be hauled to the Sunnyvale storage site. It’s a temporary fix, but at least the customers will have a reprieve from the outage, Gonzalez said.

Judy Goodenough, a resident of Horseshoe Ranch Estates, is planning a protest 6 p.m. today at the Sunnyvale storage site. Initially, Goodenough said she would be burning plastic water jugs and cardboard containers, but now she’s decided to crush and recycle the jugs.

“I have named the protest Six Days in December 2005,” she said. “We plan to have a crushing and stomping of the plastic jugs to vent our anger and frustration.”

HERALD/REVIEW reporter Dana Cole can be reached at 515-4611.


Read the original article at the Sierra Vista Herald Website.

Church Offers Water to Residents Facing Water Outage

Hello:

Country Estates Southern Baptist Church (5700 S. Highway 92) is
extending an offer of water to anybody currently on water systems owned
by John McLain.

The most convenient spigot is on the south side of the original church
building by the handicapped parking spaces. Individuals need only to
bring their own water containers.

Dale Jones
Country Estates Southern Baptist Church

"For the Lamb at the center of the throne will be their shepherd;
he will lead them to springs of living water.
And God will wipe away every tear from their eyes." REV 7:17

Gathering at Sunnyvale Pump Site Scheduled for 6:00PM, Wednesday, 14 December

Judy Goodenough, one of the many Horseshoe Ranch water customers who is facing her 7th day without water, has called for affected customers to gather outside the pump facility on Sunnyvale and Rogers Road. Her initial plan was to burn empty water jugs and boxes in protest in order to gain wider attention to the water crisis. Plans have changed and it will be a peaceful, non-confrontational gathering so that people can discuss the issue, comiserate with each other, and possibly get some answers from government and ASUA authorities who are brave enough to face a frustrated crowd.

Dennis Hess, president of the Horseshoe Ranch Home Owners Association has called for a gathering at 7:00PM at the same location. He asks that people try to determine what this recent outage has cost each of them monetarily so that the extent of the damages can begin to be calculated.