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Cave Creek issues IFB for Desert Hills system as committee weighs divestiture, revenue and rate impacts
Summary
Town staff said an Invitation for Bidders for the Desert Hills water system was released to test market interest in buying the system without town water resources; proposals are due Jan. 16 and staff are conducting an appraisal and impact analysis while members raised concerns about revenue loss and customer fairness.
Sean told the advisory committee the town issued an Invitation for Bidders (IFB) seeking interest in purchasing the Desert Hills water system separate from the town’s water resources, with a pre‑bid meeting and site tours scheduled and proposals due January 16.
"We actually have an invitation for bids out on the street... we want that water resources back," Sean said, explaining staff hope a sale could return the roughly 560 acre‑feet now supplied to Desert Hills back to the town portfolio. He said the town has started an appraisal required by state law and is conducting a financial and impact assessment to evaluate consequences for Cave Creek customers.
Why it matters: Sean told members Desert Hills customers represent a large share of the town’s revenue stream (staff estimated roughly 40% of revenue), and divesting the system would affect enterprise fund cash flow and capital program planning. He also warned that sales over certain valuation thresholds could require voter approval and that a private sale would fall under Arizona Corporation Commission oversight for rates.
Resident David Phelps, who identified himself during public comment, argued the town’s public outreach had framed Harquahala as a done deal and suggested residents should carefully consider privatization trade‑offs. “If Cave Creek voters knew they could have the same potable water served by a private water company with stable rates that were 40% lower… I think they take a second look at privatization,” Phelps said.
Committee discussion focused on timing and fairness: several members objected to asking existing customers to shoulder a larger share of future water costs and urged staff to pursue clearer cost allocations and impact‑fee revisions. Sean said impact‑fee updates and a rate study are forthcoming and that statutory notice requirements (90 days for rate changes) constrain timing.
Next steps: staff will complete the appraisal and impact analysis, host the pre‑bid meeting, collect proposals by January 16, and return with a council briefing that may include executive‑session review of NDA‑protected materials. No sale decision was made at the advisory meeting.
