BULLHEAD CITY — A town hall held Wednesday by the H20 Committee of Bullhead City highlighted what members describe as “misinformation” used by EPCOR Water Arizona and its political action committee, Taxpayers Against City Takeover, to persuade voters not to approve Proposition 415.
Voters have been exposed to plenty of information about the matter from both PACs as well as volumes of online posts by anyone interested in the subject who owns an electronic communication device or sees printed campaign material.
The H20 Committee is a PAC that supports Proposition 415, a referendum to obtain voter consent for city government to acquire EPCOR’s water system and operate it.
And the first thing John Pynakker, president and CEO of the Bullhead Area Chamber of Commerce, did was to talk about himself and his role in steering residents to vote in favor of Proposition 415.
“I’m not employed by the city or a paid advocate-lobbyist” regarding Proposition 415, Pynakker said, repeating information he provided at a previous town hall.
He said his employer is the chamber’s 15-member board and the organization’s 600-plus business members.
Pynakker then began his presentation. Several summaries of areas targeted during this town hall are provided here:
SENIORS SUFFERING NOW
The assertion that Proposition 415 would hurt seniors: Supporters noted that the water rate increases local customers have had to pay since EPCOR took over the system in 2012 are what have hurt seniors, Pynakker said. Another cost increase could come from EPCOR’s next rate case, which is supposed to be filed with the Arizona Corporation Commission next May. City government wanting to acquire the local water system is meant to bring local control to it, its operations and ensuring rates are set with customers in mind, he said.
TAXES WON’T RISE
Proposition 415 won’t raise taxes: Proponents said the bond the city secures to pay for the local system would be paid off by water customers. The city won’t figure in what for-profit EPCOR does, such as a corporate allocation, depreciation and property taxes and no longer would have to pay for the water itself — because the city owns the rights to water EPCOR delivers to local customers. Estimates vary on how much the city might save annually over what EPCOR spends. That money would go to paying off the money Bullhead City borrows to pay EPCOR for the system. Raftelis Financial Consultants, Inc, the firm hired by the city to provide information about the
acquisition process, estimates the savings could be about $3.8 million annually. A hand-out distributed at Wednesday’s meeting using information provided by EPCOR to the Arizona Corporation Commission about costs incurred during 2016 stated that it could be more than $5 million.
Pynakker said the cost to the city for the system is unlikely to reach $130 million; Raftelis estimated the worth of EPCOR’s local system to be about $55 million. Documents EPCOR has filed with the Arizona Corporation Commission were used to determine that estimate. Raftelis took different approaches to determine types of worth and used those to reach that conclusion earlier this year. Pynakker said EPCOR hasn’t disclosed what it paid for the Mohave system specifically when it purchased it as part of its acquisition of Arizona American Water several years ago. But Pynakker noted that it paid a price that equals about $1,200 per customer for North Mohave Water System with the nearly $2.48 million purchase price. Using that same formula for each customer within the Mohave and North Mohave districts in EPCOR’s asking price of $130 million would put the worth of each customer at about $7,222.
The loan most likely won’t be secured at an 8% interest rate: With the city’s AA credit rating, the interest rate the city would be given for the financing would be 2.5% to 3% over 30 years. Raftelis used 3.5% and 5% as interest rates for calculations it created for the city to provide water customer rate projections into 2024. If the cost to the city for the EPCOR system reaches $71 million and the city ends up with financing with 5% interest, it would be able to hold customer rates to the current level for the next few years.
RUNNING THE SYSTEM
The city will be able to run the system, Pynakker said. he said the city intends to retain local EPCOR employees and pay them as they would be paid by EPCOR for doing the same water utility jobs.
CAN BACK OUT
If the cost to acquire EPCOR’s local system is too expensive, the city can opt not to take it over. If a mutually satisfactory agreement between the city and EPCOR can’t be reached, then the matter would be settled in court. A jury woud determine the price of the system. If the city decides that price is too steep, it can back out of the purchase. It would be responsible for legal costs, however, Pynakker said.
Among concerns expressed by people who attended the town hall included whether the city was prepared to handle maintaining an aging water infrastructure system that one speaker compared to “Swiss cheese,” that the city seemed to struggle with maintaining its wastewater operations, and that the city should have an original business operation plan for the system instead of using EPCOR’s.
The city is “assuming what EPCOR did is just fine,” said Larry Adams, who also had questions about the information handed out at the event. “I’m not willing to take that bet.”
Bullhead City also has information about Proposition 415 on its website, bullheadcity.com.
The website addresses yeson415.com and yesonprop415.com are being operated by opponents to Proposition 415 and contain the same information as the website noon415.com. There’s also a Facebook page under the title No on 415.