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American Fork council debates revisions to pressurized irrigation shareholder discount and proposed half-base rate
Summary
City staff proposed codifying the longstanding 50/50 shareholder allocation and charging participating shareholders one-half of the standard pressurized irrigation base rate; shareholders and some council members questioned whether the change could leave long-term shareholders paying more than comparable non-shareholders.
City Administrator David Bunker presented proposed revisions to the city's pressurized irrigation shareholder discount agreement at the July 7 work session, explaining the amendments mostly "formalize the City's longstanding practice" and document a 50/50 conveyance arrangement.
"The arrangement has always operated as a 50/50 split between the city and the shareholder," Bunker said, describing the implementation as a conveyance credit in which one acre-foot (one-half of a 2-acre-foot irrigation share) is credited to the City for delivery and distribution. He said the revisions clarify how share assignments are tied to specific properties and how credits apply under a new metered structure required by state law.
Under the staff proposal, shareholders who participate in the discount agreement would pay a base rate equal to one-half of the standard base rate charged to non-shareholders. The base rate would be calculated by lot square footage, consistent with the City's rate-study approach, and usage charges would apply only if a customer's use exceeded the Tier 1 allocation established by the irrigation shares they own and assign to the property.
Finance Director Anna Montoya and Council Member Ernie John described how the proposed billing would be pro-rated: additional irrigation shares beyond the minimum can either increase a property's Tier 1 allocation or be applied to further reduce the remaining base-rate charge. Montoya said the City's current billing system reduces the fixed charge proportionally by owned shares and that staff would prepare about 15 customer scenarios to show how the new structure would affect different properties.
Local shareholder Royce Shelley spoke during public comment, saying his property (2.13 irrigation shares on a 0.49-acre lot) suggested a potential inequity under the proposed structure. Shelley estimated the water value and projected bills and urged the Council to avoid a policy that would require shareholders to pay more overall than comparable non-shareholders.
Council Member Ryan Hunter (participating remotely) expressed a central concern: shareholders who generally stay within their allocated water should not be required to pay a separate ongoing base rate in addition to contributing water to the City. Mayor Bradley Frost and other Council members said the 50% base-rate discount is intended as a compromise that recognizes shareholders' historic contributions while ensuring the system recovers rising operations, maintenance, and metering costs identified in the Bowen Collins & Associates rate study.
Staff noted state House Bill 242 requires metering by 2030 and that American Fork received grant funding to cover meter installation; the City will, however, assume ongoing maintenance and replacement costs for metering equipment. Council asked staff to prepare clearer bill examples and customer scenarios and to return the item for formal Council consideration on July 28; the irrigation board plans to consider the matter on August 5.
What happens next: the Council will discuss the proposed amendment on July 28; the irrigation board's vote is scheduled for August 5. Both bodies must approve any change to the shareholder agreement before it takes effect.
