Carefree UCFD and Carefree Water Company adopt FY2026-27 budgets, approve 4.4% rate increase

The Utilities Community Facilities District (UCFD) board and the Carefree Water Company on June 2 adopted the FY2026-27 UCFD budget and the final FY2026-27 Carefree Water Company budget, including a 4.4% across-the-board rate increase.

Mr. Nick Larson, who presented the budget, said the UCFD budget "sits at approximately 2.7 million" for the coming fiscal year, with its focus on debt repayment and capital projects, and that the Carefree Water Company expects "revenues are approximately 5.3 million" under the proposed rates. Larson told the board the FY26-27 proposals are unchanged from the May 5 presentation and that the rate increase is an extension of a five-year plan adopted in 2021.

The board and staff emphasized that the budgets prioritize paying down existing debt and funding capital work, including the Silver Saddle project supported in part by an EPA grant. Larson said larger regional projects and uncertainty about water resources prompted retaining a 4.4% increase now rather than reverting to the 2.2% projection discussed in 2021, and staff said a rate study is planned for later in the year to refine longer-term forecasts.

During public comment residents questioned governance and accountability for large utility financings. One resident asked why electing council members was treated as a substitute for direct voter approval of a multi-million-dollar bond obligation, noting that the UCFD "is the sole shareholder of the Carefree Water Company" and asking why taxpayers had not been given a direct vote. Another commenter, John Mattis, urged alternative approaches and said, "You don't follow the Constitution," arguing residents should have had a say on large obligations. The board closed public comment and Mr. Stevenson, a staff member, responded that in his experience utility financings are typically not put to a public vote in the way general obligation bonds are and described past town loans and WIFIA financing used to support the system.

Board members and staff said they will continue pursuing grants and other funding sources to cover capital needs that rates alone will not fully fund. After discussion the board voted to adopt Resolution 2026-02 to approve the FY2026-27 UCFD budget and the final Carefree Water Company budget, including the proposed rates, fees, deposits and charges; the motion passed unanimously (individual vote names and tallies were not recorded in the transcript).

Next steps noted in the meeting: staff will pursue grant opportunities, complete a rate study in the fall/winter to guide future rate decisions, and continue planning for capital projects tied to federal and regional approvals.