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Cave Creek council OKs 6% utility rate path, lowers top tier to 40,000 gallons; seasonal rates tabled
Summary
Council voted unanimously to proceed with statutory posting and a public hearing for proposed utility rate increases under a 6% annual scenario and agreed to lower the highest consumption tier from >50,000 to >40,000 gallons; council declined to adopt seasonal rates and deferred a separate water‑resource fee.
CAVE CREEK, Ariz. — The Cave Creek Town Council voted unanimously to proceed with statutory posting requirements and schedule a public hearing on proposed utility rate increases based on a scenario that uses 6% annual revenue increases for both the Cave Creek and Desert Hills systems.
Staff presented two scenarios for Desert Hills (6% and 10%) and explained proposed structural changes, including lowering the top usage tier threshold from greater than 50,000 gallons to greater than 40,000 gallons. The council declined to adopt seasonal (summer/winter) rates after discussion about administrative burden and modest estimated behavioral impacts.
Utility staff explained the financial plan and customer impacts. Using conservative modeling, advisers showed that financing $11 million over 20 years at a 6% yield would imply roughly $800,000–$950,000 annually in debt service depending on interest; those figures informed conversation about how to allocate costs among rate tiers and whether to use a sales‑tax dedication or a future water‑resource fee.
The presentation included sampled customer impacts: a low‑use residential customer (about 2,400 gallons/month) would see a projected increase from about $75 to $78 per month (≈3%), while very high‑use residential customers (nearly 200,000 gallons/month in the sample) could see increases in the 19–24% range under the proposed structure. Staff said 675 customers are in the 0–4,000 gallon lifeline tier, 592 in 4,000–10,000, and 56 Cave Creek customers use more than 40,000 gallons per month.
Council and the Utilities Advisory Committee urged targeting the highest users with additional tiers or conservation measures; committee chair William Sullivan said the committee supports the 6% option and recommended adding targeted higher tiers above 40,000 gallons.
Council’s formal motion directed staff to prepare the statutory posting materials and schedule a public hearing under the 6% scenario, with the intent of having the increases effective Feb. 9 if approved on schedule. The motion to proceed with posting and to set the hearing passed 7‑0.
Staff said they will finalize draft rate study documents and public communications and return to council with a public‑facing report and the required legal notices.
Next steps: staff will post the draft rate study, schedule a public hearing, conduct outreach, and bring back a final ordinance for council consideration.
