BULLHEAD CITY — Proposition 415, the November ballot initiative seeking approval from voters for the city to acquire EPCOR Water Arizona’s local delivery system, already has firm supporters and opponents.
The Daily News asked the City of Bullhead City and EPCOR for reasons why voters should take a particular side regarding this matter.
The city provided information on Proposition 415 that has been presented to council members, which voted last week to approve putting the proposition on an all-mail ballot due Nov. 5. City staff and the consulting firm hired to assign a value to the system, Raftelis Financial Consultants, Inc., are the sources of information in supporting the referendum.
Bullhead City Manager Toby Cotter sent the city’s responses to the newspaper.
Taxpayers Against City Takeover, through its No on Prop. 415 campaign, presented arguments against the referendum for EPCOR. TACT was started by EPCOR last year.
Chip Scutari, from Scutari & Cieslak Public Relations, based in Phoenix, sent TACT’s answers.
Raftelis is doing more research that will be presented to the council within coming weeks. That information could affect these and future responses by proponents and opponents.
There has been some editing for length. We asked each side for clarifications that resulted in them providing some rewrites from original responses.
Why? Or why not?
FOR: City residents and businesses have been complaining about EPCOR’s water rate increases and consolidation efforts. The city has tried repeatedly to work with EPCOR to convince them to lower rates and not consolidate the water system. EPCOR proposed a 59% rate increase in 2017, after substantially raising rates just two years earlier, and this year city residents saw more than a 25% interim rate hike. The rate increases residents and businesses have endured are out of line with what neighboring communities are paying. EPCOR’s business model is based on consolidation of services to increase profits. This means EPCOR is working toward merging service with communities like Paradise Valley and Scottsdale. The consolidation was not approved, but EPCOR has been ordered to submit another case with consolidation options by May.
AGAINST: First, read exactly what you are being asked to vote on. The city wants approval for up to $130 million at 8% over 30 years to seize a private business, pay legal fees and anything else it deems necessary. Do the math: that’s $400 million. Bottom line: Prop. 415 wants voters to approve a multi-million seizure of a water system. Voters need to focus on the actual ballot language — not vague promises made by city officials. Eminent domain is an extreme measure where the government seizes private property, a serious threat to our free-market system. And the city is trying to downplay what is clearly government overreach — the city’s own language states that this opens the door to take other private water utilities.
Setting city’s purchase price
CITY: If approved, the bonds — loans to acquire the system — would be paid off as part of the water rate. There will not be any new property taxes. There also will not be any special assessments. The city believes the purchase price will be around $55 million. Since EPCOR is not willing to sell, a Mohave County jury will determine the final purchase price. However, if approved by the voters, the city hopes the City of Edmonton and the EPCOR Board of Directors will come to the table to negotiate a final purchase price much lower than their continued stated value of $130 million.
TACT: Eminent domain is an extreme measure where the government seizes private property. The city has low-balled the value of EPCOR to make you believe it can take over the water system and lower costs. The people at EPCOR are water experts, and they know that the system is worth at least $130 million. If Prop. 415 is approved, a jury will decide what the system is worth, and taxpayers would be on the hook for millions of dollars in legal fees. You, the taxpayer, will be on the hook for those costs.
Running the utility
CITY: Publicly owned utilities serve 88% of the U.S. population. If Bullhead City owned the water system, decisions about rates and water treatment would be made locally by the city council and not by a foreign-owned company with a single shareholder being the City of Edmonton, (Alberta, Canada). Publicly owned water utilities are not structured to make a profit for shareholders. Money that residents pay on their water bill is reinvested to maintain and upgrade the water system and to benefit the customers by maintaining affordable rates. Bullhead City would not make a profit, pay corporate allocations and would have many efficiencies, such as staffing, billing and oversight.
TACT: EPCOR has 300 people employed in Arizona — experts committed to delivering safe, clean and affordable water to communities every day. They can do it cheaper and better than the city because that’s what they’ve done for more than a century. Private companies have strong incentives to operate as efficiently as possible. EPCOR has continually made sound, strategic infrastructure investments — pipes, water mains, etc. — to provide better and more reliable service for the people of Bullhead City. Every year, EPCOR produces clean, safe water that meets or exceed all state and federal drinking water standards. Your city government does not have the expertise. EPCOR is committed to keeping rates as low as possible for all customers.
CITY: If the city owns the water system, the city council sets the rates. Just like wastewater today, which are the lowest rates in the region, the city council would set rates. Rate-making would be made by locally elected council members who report directly to the voters. Currently, rates are proposed by EPCOR, which is based in Edmonton and Phoenix, with the final decision makers being the Arizona Corporation Commission in Phoenix. The city council has nothing to do with the two recent rate hikes as approved by the Arizona Corporation Commission.
TACT: Prop. 415 is an expensive gamble for taxpayers. With about 19,000 EPCOR customers in Bullhead City, the average customer would pay about $50 a month just to pay for a debt of up to $130 million. That does not include millions in annual operating costs and pension benefits for city employees to run the system. Right now, the average water customer in Bullhead pays $37 a month. Prop. 415 could more than double the average customer bill. Bullhead City residents have much bigger needs. This would be a lot of money spent for no good reason. The city acknowledges that it has no idea what interest rates will be in the future.
Acquisition of other utilities
FOR: EPCOR is the main reason (for Prop. 415) because of the massive rate hikes and the pending rate hike and consolidation coming in May. There are also serious concerns about the Bermuda/Utilities Inc., system in the Arroyo Vista neighborhood. You’ll find at least three places in the streets that have been recently exposed due to leaks. Many residents there are asking the city to help. In the future, the city could discuss purchase options with Bermuda/Utilities Inc., for the Arroyo Vista neighborhood system.
AGAINST: Under Proposition 415, the Bullhead City government can seize EPCOR’s assets, but it also can seize other water companies in and around Bullhead City, including Fort Mohave. In fact, the Bullhead City Council and city manager — without any public input — now state unequivocally that they want to pursue other opportunities to seize other water companies in the area. This comes with absolutely no guarantee that they can provide better service at a lower cost.