Cave Creek, AZ
Why settle for the status quo? This is what local leaders in the small southwest town of Cave Creek, AZ, must have asked themselves when they decided that their privately owned and operated water utility was not doing the job.
Cave Creek’s water system had always been privately owned and operated. Unsatisfied with the private company’s service and confident that local ownership and management could do better, Cave Creek set the goal of taking on ownership and management.
In 2005, after the town lost to Global Water Management in a bid to purchase the water system, local leaders didn’t give up. Instead, they decided to use condemnation proceedings to buy the system.
Why did the town decide to publicly own and operate its water services? Local control was a major factor. “One concern was having control of our growth in town,” said Cave Creek utilities director Jessica Marlow. “And with private ownership the town had no say in those transactions. We’re a small town and people want that small town environment.”
The utility‚ which was operated by Arizona American Water‚ was also performing badly and needed improvements. “It was in very poor maintenance,” Marlow said. “Facilities are falling apart. There wasn’t a lot of revenue going back into the system.” The state of the system was so poor that Cave Creek experienced three system-wide water outages during the summer of 2007.
In March 2008, Cave Creek purchased the water utility. For financial assistance, Cave Creek turned to the Water Infrastructure Financing Authority (WIFA), the state agency responsible for distributing federal SRF loans. WIFA awarded the city low-interest loans to help pay for necessary improvements. The town retained private operator Arizona American Water as it prepared to take over operations and increase the staff.
Later that year, Cave Creek took over the operations, deciding against renewing a management contract with American Water. During a presentation to the town council in November 2007, the town’s utilities manager explained that the benefits of public operation included local management, enhanced financial sustainability and improved customer service. Mike Rigney, the assistant utilities manager, then added a telling example of how local management can improve service.
“One of the major issues with Arizona American has been the call to an 800 number. Somebody in some remote state would answer the phone and wouldn’t know what was going on in Cave Creek,” Rigney said. “By handling the system locally and by having it in real time and by having constant communication with the field people, we will know exactly when the problems occur, what the status of that repair is, and be able to communicate more effectively with customers to be able to resolve problems.”
At end of the town’s presentation, one councilmember remarked that the town’s findings were the exact opposite of what the industry presented at the National Congress of Cities earlier that month. The town planner responded that cost-effectiveness was the primary reason for the town’s takeover because that private operation involved extra costs, including profits and overhead. In its 2009 annual report, the town reported that public employees ran the water “eliminating an operating contract with a private company and improving operations while reducing operating costs.”