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Cave Creek council authorizes pursuit of $11.4 million financing to secure Harquahala water allocation; resolution passes 5‑2
Summary
After a multi‑hour debate about timing, costs and alternatives, Cave Creek council voted 5‑2 to authorize staff to pursue a Water Infrastructure Finance Authority (WIFA) augmentation loan and direct‑placement excise‑tax obligations to finance the town’s approved Harquahala water purchase. The package would total about $11.4 million including issuance costs.
CAVE CREEK, Ariz. — The Cave Creek Town Council on Tuesday authorized staff to pursue debt financing options to pay for a previously approved purchase of Harquahala water, voting 5‑2 to move forward with resolutions that allow application to the Water Infrastructure Finance Authority of Arizona (WIFA) and the potential sale of direct‑placement excise tax revenue obligations.
Town staff and outside advisers told the council the Harquahala purchase price is $11,250,000 and that, with estimated issuance costs, the financing need was roughly $11,400,000. Staff outlined two primary financing paths: a WIFA water‑augmentation loan (subject to a competitive, not‑yet finalized application process that officials said might total about $96.2 million available statewide in fiscal year 2026) and direct‑placement excise tax obligations, which generally move faster but may carry higher interest costs.
"We are setting ourselves up to be able to explore the options and choose which ones will be most beneficial for us," a staff presenter said, cautioning that authorizing the resolutions does not commit the town to a particular debt instrument.
Financial adviser Jim Strickland and Caitlin Dwire of Columbia Capital Management provided illustrative debt‑service estimates. Dwire said financing $11 million over 20 years at 6 percent would cost roughly $950,000 a year in debt service; at 4 percent, the annual cost would be about $800,000.
Several council members sought concrete numbers on how the town would pay annual debt service: options discussed included dedicating a portion of local sales tax receipts (staff estimated a quarter‑percent sales‑tax equivalent could be near one of the scenarios under consideration), postponing a separate water‑resource fee, and relying temporarily on general‑fund cash reimbursed after financing closes.
Opponents raised timing and policy concerns. Two council members voted no, citing worries about the town committing funds before completing related work such as an RFP process that could identify private‑sector options for water companies, and about the risk of spending sizable sums for a town of roughly 10,500 residents.
"Everything in public policy is timing," one dissenting council member said, urging caution because the town is simultaneously exploring potential privatization of its water companies and faces near‑term maintenance needs.
Supporters urged urgency, arguing the town faces a looming Colorado River cutback and has limited options. A council member said the resolutions were exploratory and part of due diligence to preserve options before contractual deadlines.
Roll call recorded the outcome: Council approved the resolutions 5‑2. (Council member roll‑call names were recorded in the meeting transcript.)
Next steps: staff will pursue application materials and, if recommended, return to council with a financing recommendation — including the chosen debt vehicle, interest and amortization assumptions, and a plan to cover debt service — before finalizing any sale or loan.
The council emphasized the decision did not yet obligate the town to borrow but cleared the procedural path to move rapidly if favorable terms are available.
