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Additional details regarding the Circle City Water Election

As everyone is receiving their ballots for the May 15th Water Company election, I have begun to see an increase in questions regarding the acquisition. To clarify some confusion, here are some of the frequently asked questions that the Council and staff have been receiving. Should you have a question that is not addressed below, please contact our Water Resource Management Director, Terry Lowe, at (623) 222-6022 or by email at terry.lowe@surpriseaz.gov. You can also visit our Water Election webpage at www.surpriseaz.gov/waterelection.

Question: I do not receive water service from the City of Surprise. What is the benefit of me voting in favor of this purchase?

Answer: As a member of the greater Surprise community, by voting in favor of this purchase you would help strengthen Surprise’s water position overall, which in turn will strengthen the City’s ability to attract businesses and to grow, therefore raising the standard of living, (for example, home values) for all residents, regardless of who one’s water provider is.

Additionally, the ability to grow the City’s water allocations today is a more cost effective way of growing the portfolio. By acquiring Circle City Water Company, we would grow the City’s annual right to Colorado Water by over 38%. If the City were to seek out water rights when the water is actually needed, the cost of those rights would be much greater. The costs to acquire rights to additional water sources continue to rise.

Question: The informational pamphlet states that the City of Surprise will use its current water assets to fund the purchase of Circle City Water Company. What are these assets?

Answer: The assets being referred to are called long term water storage credits. These credits represent water that is stored in the ground for later use. They have monetary value and are bought and sold, similar to stocks. The City generates credits every year by storing water in the ground. If we are successful in purchasing Circle City Water Company (CCWC), the City will have access to more water in which to store, in turn growing our stored water “bank account” at a greater rate. We plan on selling some of these credits to pay the cost of CCWC.

Question: Have there been any other offers submitted to purchase Circle City Water Company?

Answer: We have a commitment from the seller that if the vote is successful they will sell to us, assuming we can reach a deal.

Question: None of the information provided states the dollar amount for the purchase of the company. What is the price?

Answer: The price cannot be finalized until after the City has been given the authorization to complete negotiations by the voters and Council has reviewed the deal. We anticipate the final price will be in the low eight figures.

Question: Will taxes or water rates go up for current City of Surprise water customers in order to fund this purchase?

Answer: It is the City’s intent to not place the costs of this acquisition on the tax payers or into the Surprise Water utility rates. The City plans to utilize water portfolio assets to fund the acquisition. Even if the vote is successful, the City may elect to not purchase Circle City Water Company (CCWC) if the cost does not line up with what we believe they should be or if it is not within our desired repayment structure. City Council has the final say on both.

Question: What exactly are we acquiring through this purchase?

Answer: The City of Surprise Water utility will be acquiring the entire Company, its customer base, its infrastructure, and its water rights.

Question: If we purchase the company, what are our on-going obligation to its existing customers?

Answer: Upon completion, the City would be obligated to provide water service to its customers; who will become Surprise Water customers.

Question: What happens if we do not reach a deal in the negotiations for the purchase? Do we lose our water credits?

Answer: The City is not giving up anything to acquire the CCWC; if we are not able to acquire them, we will not be selling credits. If we are able to acquire them, we will be using what we gain through the sale to pay for them.