Carefree board approves preliminary FY 2025–26 budgets, orders public hearing on rates and fees

The Carefree Water Company Board of Directors approved a resolution on May 6 adopting proposed fiscal year 2025–26 preliminary budgets for both the Utilities Community Facilities District and the Carefree Water Company and ordered a public hearing on the proposals, after staff presented the budgets and answered board questions.

The presentations by staff explained that the UCFD budget primarily covers debt service and two capital projects — the Peaceful Place booster pump station improvement (under construction) and the Silver Saddle Pipeline Improvement Project, which received an $800,000 EPA community grant. Board members voted to approve the resolution calling for a public hearing; the board recorded no public comments during the hearing that followed.

Greg Crossman, the staff presenter, walked the board through an organizational chart showing a legal separation between the town of Carefree and the water enterprise, and said the UCFD holds long‑term debt while the Carefree Water Company raises operating revenue. "We hold the water rights for the benefit of the town," Crossman said, and explained the company imports Colorado River water via the CAP Canal, uses a treat‑and‑transport agreement with Scottsdale and supplements supply with pumped groundwater.

Crossman said the UCFD budget will authorize routine debt service payments (about $1,400,000 this year) and fund two capital projects. He reported the Silver Saddle project was awarded an EPA community grant on March 28 for $800,000 and that the board is also holding a $2,000,000 town capital advance from fiscal year 2023–24; those two sources together would fund the two capital projects to a combined total of $2,800,000.

On rates and the water company budget, Crossman said the utility is following a five‑year rate plan and is proposing the final year’s 4.4% increase. He said the average residential bill would rise by about $5.69 per month based on 12,000 gallons of monthly use. Projected system revenues are roughly $5,000,000 in the current year and $5,200,000 in the coming fiscal year. Crossman noted the system’s customer count has grown from about 2,000 three years ago to roughly 2,600 today, a nearly 30% increase.

Crossman outlined major cost drivers: overall water costs up roughly 6% (to about $1,800,000), Scottsdale treatment and transport costs up about 5%, anticipated APS power cost increases around 6%, general and administrative costs up about 9% (driven in part by regulatory requirements), and replacement/maintenance costs rising about 4%. He said the company has budgeted for regulatory work including a lead service line field program and updates to the emergency response plan and the risk and resilience assessment.

On lead service lines, Crossman said the company’s inventory identified no confirmed lead service lines and that 1,400 of 2,600 service lines have been certified as non‑lead by construction date; 1,200 remain unknown. "To date, we have not identified any lead service lines within Carefree," he said. The budget includes $75,000 to investigate 600 of those unknowns this year and a similar amount next year to address the remainder.

Crossman said the company budgeted $50,000 to update the emergency response plan and the required five‑year risk and resilience plan, and budgeted a 4.5% cost‑of‑living payroll adjustment. He described a reserve policy that targets $1,400,000 in the rainy‑day reserve (current balance roughly $1,040,000) and a plan to deposit $40,000 a year until the target is reached.

The capital improvement program in the proposed budget totals just over $315,000 and includes replacing three fire hydrants, meter replacements, and pipeline work (about $186,000). Crossman also listed a final $16,000 payment for the utility’s NIA (Non‑Indian Agricultural) CAP water and an annual $43,000 contribution for continued participation in the Bartlett project study.

Staff proposed changes to some customer charges: a 40% increase for the standpipe fill station commodity rate, raising the standpipe minimum charge from $5 to $20, and a 44% increase in the water supply fee charged to new development (about $5,400 per acre‑foot; Crossman said that would translate to about $2,700 for a single‑family residential connection and about $13.50 for a multifamily residential unit under the utility’s formula).

During board discussion members asked about the standpipe user mix, hydrant replacements and the Bartlett study. Crossman said most standpipe use comes from water haulers and contractors who often haul water outside Carefree, and that the company maintains a policy of no new standpipe accounts and usage limits tied to prior usage. He said one hydrant is currently out of service and that staff have purchased a replacement and plan to install it at Cave Creek and Tree Line Trail when crews are ready. On Bartlett, Crossman said 21 entities remain in the study and Carefree’s preliminary allocation is up to 1,155 acre‑feet; he noted capital costs for any Bartlett project would be "very significant" and would require further decisions.

The board approved the resolution (Resolution 2025‑01) to adopt the proposed or preliminary budgets and to order the public hearing. The roll call recorded the motion, a second and unanimous "aye" votes; no names were provided in the transcript for the motion maker or second. The public hearing was opened, no members of the public spoke, the hearing was closed, and the board will consider final adoption at its June 3 meeting.

The meeting also opened with approval of minutes from the board’s Nov. 12, 2024 joint meeting after a correction was requested to names listed in the past minutes. The board adjourned after the budget items and public hearing.

Sources: Carefree Water Company Board of Directors meeting transcript, May 6, 2025; staff presentation by Greg Crossman.