Blue Ridge Water Improvement District Update
Following our July 20, 2019 second public update on the Blue Ridge Water Improvement District, the Steering Committee Leadership has worked hard to answer some of the many questions and concerns raised by the attendees. Working with third parties, we have been able to gather some professional opinions and assessments using their expertise, which is laid out below.
Valuation of Starlight Water Company
There have been numerous questions relative to the price / valuation of Starlight Water Company. This has been a difficult question to definitively address. A member of the Blue Ridge Community, with background in large corporate finance, took on the task to better assess what other Water Improvement District experiences have been.
He was able to track down those individuals that conducted three separate reviews and detailed assessments of Bullhead City Water Company, currently owned by Epcor. Bullhead City is trying to buy back the Water Company from Epcor, and attempting to valuate the price. See links below for more information on their process.
Bullhead City Article link
Bullhead City Water Company Valuation link
Bullhead City reviewed nine different recent water company sales in Arizona to use as comparisons. If we throw out the high valuation and low valuation assessments, and use the middle assessment the cost comes to approximately $3200 per connection. Starlight Water Company is asking for what amounts to $3800 per connection.
We did explore the idea of having an assessment conducted specifically for Blue Ridge Water Improvement District, and we were quoted a cost of $20,000 to conduct a basic assessment.
Review of Starlight Water Company Books
We had a third party expert, with experience in forensic financial reviews, sign a non-disclosure, travel to Phoenix, and sit down with the Starlight Water Company books to do a deep dive into their finances. His report is attached. Briefly, his finding revealed books in good order and nothing out of order. See link below.
Evaluation of Equipment
We asked an individual with experience in water systems to review the Starlight Water Company assets. The link to the report is below.
It was found that there is approximately $4M of hard assets (valves, pumps, storage system, etc.), and $4M of labor (manpower to install 34.5 miles of 6” mains – poly pipe and PVC). All reports show that all equipment appears to be in good condition and shall be replaced as needed on an ongoing basis. See link below.
Starlight Water Company Equipment Review link
BRWID Liability
While BRWID will have liability insurance, our lawyer has made it clear that any person can sue for any reason in today’s society. Hopefully, there will not be sufficient justification to warrant a lawsuit, nor any action of the Board or BRWID would necessitate any lawsuit. However, any person has the right to sue, for which the BRWID would have to defend itself against any lawsuit. Assuming there is no basis, the lawsuit should be thrown out by a judge for lack of basis.
The legal standard for liability regarding district board members is “gross negligence and willful misconduct.” As a practical matter, liability usually arises in situations where a board member either commits a crime or acts to financially benefit from the board position.
District Boundaries
As we move forward in this initiative, we will be hiring a mapmaker to draw the BRWID map. At this juncture, we have over 650 petitions for the Water Improvement District. Each person that sent in a Petition will automatically be included in the Water Improvement District. All those that did not return a petition, will be left out. If a person wants to be in the Water Improvement District following the Water Improvement District Map finalization and approval by the Coconino County Board of Supervisors, they will have to pay for the cost of revising the map and obtaining revised approval from the County. It is our hope to begin drawing the District Boundaries by the end of September. If you still want to be in the District you must get your signed petition to us by September 28. If you sent in a petition and DO NOT want to be in the BRWID, please advise us in writing by September 28.
BRWID Website, brwid.org
We have hired a webmaster to build a Blue Ridge Water Improvement District website. This site is now active and will be our conduit to get information out. Please SUBSCRIBE on the home page of the website if you are not already receiving updates via email.
Next Steps
We are still collecting petitions. If you want to get your petition in, please do so by September 28.
The district map will take approximately two months to finalize.
Once the BRWID District Map is developed, we will go before the Coconino County Board of Supervisors to have it approved. The County requires that we post a bond prior to the review.
Assuming the County approves Blue Ridge Water Improvement District as an entity, we conduct final negotiations with Starlight Water Company and secure financing to move forward. At the time the Blue Ridge Water Improvement District is created, the Board of Directors become in effect and will conduct regular public meetings, following open meeting laws.
The current operators, Lee and Leslie Thompson, will stay on to support the new water district and train a new operator. We will be hiring a new operator to take over their duties in the future. The Southwestern Utility Management Company will continue in their capacity for billing, water inspections, annual reports, and bookkeeping.
Thank you for your support in making this a better community.
Blue Ridge Water District Steering Committee
