Cave Creek council unanimously terminates Harquahala Valley groundwater purchase amid cost, delivery and permitting concerns

Cave Creek's town council voted unanimously on Jan. 13 to terminate a purchase agreement for a 1-acre parcel tied to Harquahala Valley groundwater rights after staff advised the council that key financial and regulatory questions remained unanswered.

Utilities Director Sean, who presented the staff report, said the town was facing pending cuts to Colorado River deliveries through the Central Arizona Project and had been evaluating options to diversify supplies. "After fully considering all the potential issues, and going through the due diligence, staff is recommending that council not proceed at this time with the purchase," Sean told council, citing uncertainties about the full capital cost to access the resource, long-term operational and treatment costs, and a firm water-delivery schedule for the project.

The contract under consideration would have given the town what staff described as 500 acre-feet per year for 100 years as part of a larger project that staff said has modeled reserves of roughly 80,000 acre-feet. Under the purchase agreement described in the staff briefing, the town's price for the parcel and associated paper water rights was $11,250,000. Staff also noted contractual dates for due diligence (Jan. 15) and a later closing (Feb. 15) and said the town had placed earnest money under the agreement.

During the public-comment period, residents voiced a mix of concerns and support. "I think we should pause," resident Cathina Bate said, citing the size of the investment and questions about long-term construction and treatment costs. Abraham Abeybe urged the council to avoid taking on more municipal debt. Several speakers, including Eric Morris, supported the concept of augmenting supplies but asked how the town would protect and monitor its share of the resource, including metering and annual reporting.

Council members who spoke said the October purchase agreement had served its purpose by putting Cave Creek "in the game" on possible supply options, but they agreed the town lacked enough clarity to assume the capital and operational burden now. One councilmember noted that the town expects to begin paying down significant utility loan obligations in coming years, which would improve the town's fiscal capacity.

The motion to have the town manager promptly notify the seller that Cave Creek was terminating the agreement (agreement dated 10/23/2025) passed on a 7–0 voice vote. After the vote council removed a scheduled agenda item, offered thanks to staff and outside financial and bond counsel, and adjourned the special meeting.

What it means: Cave Creek remains vulnerable to reduced CAP deliveries — staff projected a potential 500 acre-foot annual shortfall by the early 2030s under a sustained 20% CAP cut — but the council chose to delay a large capital commitment until the town can better quantify construction costs, treatment requirements, delivery timing and partner participation. Staff said the town will continue to monitor the Harquahala Valley project and other options, including recovery of banked water and negotiated water-exchange agreements.