A foundational premise in the Council’s acquisition of the New River Utility Company was that the purchase of the NRUC would not result in an increase to City water rates for customers outside of the NRUC service area.  As such, in August of 2015, as part of the City’s acquisition of the New River Utility Company (NRUC), the city council approved a temporary continuation of the NRUC water rates pending a transition to City water rates in January 2017.  The City purchased the NRUC and assumed full operation of the system on November 6, 2015.  The NRUC water rates were expected to remain in place for approximately 15 months to avoid an immediate cost increase to customers and to establish a transition period to the city’s water rates.  During the transition period the water costs and tax-related assessment costs would remain nearly equivalent to those total costs experienced before the city’s acquisition of the NRUC.

 During the 12 months following the NRUC acquisition, the City has initiated and completed a number of system improvements funded through a loan with the Water Infrastructure Financing Authority (WIFA). These improvements included:

• Planning, designing and constructing two new system inter-connections connecting the previously-separate New River System to the City’s water system.  These connections allowed stable water operating pressures throughout the New River System, which previously had experienced significant water pressure issues.
• Converting one existing temporary emergency interconnection to a permanent interconnection.
• Modifying pressure set-points at well and pumping facilities to improve system operating pressure.  Evaluating, designing and implementing repairs and improvements to the system’s two primary operating wells and one storage tank to bring them up to City standards.
• Acquiring and completing the replacement of approximately 2,900 customer water meters.  The new water meters are consistent with the reading technology in use throughout the City system.  This change reduced the effort and cost of manually reading the New River system’s meters. The system is now fully incorporated into the City’s meter reading and billing processes.  
• Evaluating and designing a number of repairs and improvements to New River well sites, storage tanks and treatment systems to ensure they are fully operational and reliable.  This process will continue for a period of several years.
• Began negotiations with the Central Arizona Groundwater Replenishment District to acquire New River’s Central Arizona Project water allocation to ensure that the City is not required to seek additional surface water supplies at higher costs.

Recently, New River customers received property tax statements from Maricopa County that included varying assessments from the Central Arizona Groundwater Replenishment District for water usage in calendar year 2015. Staff anticipated that a typical residential customer would see tax assessments in the $230-240 range which, coupled with the city’s water rates, would approximate the total annual costs prior to the city acquiring the company.  Based on the actual property tax rolls,  approximately 84% of the customers experienced assessments totaling $16.50/yr, 10% experienced median assessments ranging from $75-$135, and  the remaining 6% experienced median assessments of approximately $300.  Staff are seeking the Council’s approval to apply bill credits to these customers to offset the additional tax amounts.  Council’s action on this recommendation will not impact or change the adopted water rates and fees for FY2017 currently in effect for existing Peoria customers.

Should the Council vote to transition the temporary rates to current City rates, the City will be providing a number of communications to New River water customers to inform them of the rates that will become effective on January 1, 2017. 

A public outreach meeting was conducted on May 28, 2014 with residents served by the New River Utility Company to determine the level of interest in a potential City acquisition.

A study session was conducted on October 21, 2014 to present findings of the public outreach/civic engagement process and customer survey regarding the potential acquisition of NRUC.

Executive Sessions were held on April 7, 2015; April 21, 2015; and May 19, 2015 to update Council on progress and status of efforts regarding the potential acquisition of the NRUC.

On July 7, 2015, at the regular Council Meeting, Council approved a draft Agreement, contingent upon the successful completion of further procedural items, to acquire the New River Utility Company for the amount equal to $10,000,000.  Council also adopted a Notice of Intention to establish water rates and established August 26, 2015 as the date of a public hearing to consider adoption of these rates.

On August 26, 2015 at a public hearing, the City Council voted to adopt rates specific to customers of the New River Utility Company that became effective October 1, 2015.

On October 6, 2015 at the regular Council Meeting, Council approved a Resolution approving the authorization of a loan with the Water Infrastructure Financing Authority (WIFA) in the amount of $14,000,000 to fund the acquisition of, and related system improvements to, the New River Utility Company.

A:  That the Mayor and Council adopt a Resolution transitioning the current New River Utility water rates to the existing City rates effective January 1, 2017 and authorizing the Finance Director to apply bill credits to offset CAGRD tax bills in an equitable manner.

B:  That the Mayor and Council elect to not transition the current New River Utility water rates to the existing City rates. 

With the transition of the water rates, in FY 2017 customers previously served by the New River system will pay six months under the temporary rates and six months under the current City rates.  Under this plan, revenue from these customers is anticipated to increase by approximately $1.0 million to $2.0 million in FY 2017.  The revenue will increase $0.4 million to $2.4 million when the customers are paying prevailing City rates for a full year in FY 2018.