11/15/2012 8:04:00 AM Big Chino/Prop. 401 argument intensifies
PRESCOTT - A former City Council candidate faced off against a current member this week over a long-debated issue: Whether the Big Chino Water Ranch should be subject to Proposition 401's requirement for a public vote.
Michael Allen Peters, a candidate in the 2009 City Council election, and Councilman Steve Blair, who won a third term on the council that year, argued Tuesday about whether Proposition 401's requirement for a public vote for projects that exceed $40 million should apply to the multi-million-dollar Big Chino Ranch project.
The argument preceded the council's approval of a resolution that obligates the city to about $1.4 million more in costs for the project.
Proposition 401, which voters approved overwhelmingly in 2009, requires the city to put any project that exceeds a cost of $40 million to a vote of the public.
Although the initiative did not specifically name the Big Chino Water Ranch, its proponents said at the time that the water pipeline project was a major focus of the measure.
Peters has long contended that the city's continued expenditures for the water ranch project are illegal until the voters weigh in.
"Before you expend a single, solitary penny, you need to have voter approval," Peters told the council on Tuesday.
But that elicited a strong response from Blair, who said he was "tired of hearing about it."
"Listen up," Blair added, maintaining that the 2009 proposition came about five years after the city entered a contract with Prescott Valley for the development of the Paulden-area water ranch.
"It was passed after a contract was issued," Blair said of the proposition. "What comes first - the chicken or the egg?"
Peters responded that he is "tired of coming down here and saying it." But, he said, the voters approved the proposition with the understanding that the measure would require a vote on the project. The wording of the initiative specifically includes "all monies expended," he said.
"Do any of you believe the Big Chino Water Ranch will cost less than $40 million?" Peters asked the council.
He added that most estimates have the cost of the entire project at $180 million to $200 million, which would put Prescott's 54.1-percent share (compared to Prescott Valley's 45.9-percent share) well over the $40-million mark.
In conclusion, Peters asked: "Do any of you council members have the opinion that Proposition 401 needs to be followed or not?"
Prescott City Manager Craig McConnell led off the discussion by referring to this week's decision as "a formality."
The council earlier approved a three-way agreement with the Town of Prescott Valley and the Salt River Project (SRP) on an expanded modeling and mitigation plan. McConnell said this week's decision would be "a confirmation to specific subsections of the agreement."
The Prescott-Prescott Valley-SRP agreement got unanimous approval in mid-September. It calls for the three entities to share the $4.32 million cost of a multi-year monitoring system and new groundwater model for the Big Chino Sub-basin.
Information from the city at the time indicated that the estimated "capital cost forward" for Prescott would be $1.43 million.
Local resident Howard Mechanic questioned McConnell this week about the source of the $1.43 million.
McConnell had earlier noted that the costs would come from water rates and fees - primarily the alternative water fee.
City officials clarified that this week, reporting that the bulk of the costs for the water ranch would come from impact fees that new homebuilders pay to the city.
After Tuesday's meeting, Budget and Finance Director Mark Woodfill explained that 80 percent of the money for the Big Chino Water Ranch comes from water-related impact fees, including the Water Resource Development Fee, and the Water Impact Fee. (The remaining 20 percent comes from the Alternative Water Fee that city water customers pay on their monthly bills).
Currently, the city charges the builders of a new average-size home $5,389 for the Water System Impact fee, and $4,944 for the Water Resources Development Fee - for a total water-related impact fee of $10,333 per new home.
Woodfill said the Water Resource Development Fee was imposed "to service the water resources," including the Big Chino Water Ranch.
City impact-fee records show, however, that the city regularly borrows from its water fund to pay for the Big Chino Water Ranch costs. The balance of both water-related impact fee accounts was zero at the start of the 2012-13 fiscal year.
A footnote in the city's 2012 Impact Fee Annual Report stated: "The water fund loans the Water Resources Fee and the Water System Fee funds monies when there is not enough cash in those funds to cover the improvements made during the year."
It added: "These loans are repaid to the water fund with any surplus generated by the respective impact fees. The balances of these loans on June 30, 2012 are $440,937 and $1,903,692 respectively."
As money comes into the water-related impact-fee funds, it goes to pay off the internal water-fund loans, Woodfill said.
He explained that the expenditures for the Big Chino Water Ranch include the pay-off of the bond (loan) for the 2004 purchase of the ranchland, as well as other water-ranch-related costs.
Thus far, the city estimates the total costs so far are about $36 million.
Peters has challenged the city on the Proposition 401/Big Chino question off and on over the past several years.
This fall, he intensified the scrutiny by filing a massive public records request to seek city records relating to the project - dating back to 2004.
Currently, Peters said he is reviewing documents on outside attorney fees for the Big Chino Water Ranch. Other requested records deal with invoices, contracts, agreements, and plans to build a well field and pipeline to transport Big Chino water to Prescott and Prescott Valley.
Peters expects to continue reviewing the documents next week.