By Greg Friestad – EDITORS NOTE
The following Water rate story is another example of why we need a FULL FORENSIC AUDIT IN PAYSON. It was originally published by the Payson News in January of 2020. It is a very detailed story using Freedom Of Information data to show that the SEPARATE LEGAL ENTITY (SLE ) WAS PAID $700,000 to build a raw water line on Tyler Parkway to provide irrigation water to Chaparral Pines and The Rim country clubs, but In reality, the SLE did not build this water line, the Town of Payson did.
The Town was supposedly reimbursed for the cost by the SLE, but numerous FOIA requests to determine the amount of reimbursement have failed to provide a full accounting of the money.
The same story also detailed that during the same time the citizens of Payson had their water rates raised 42% while the country clubs saved over a million dollars in water fees by paying irrigation water rates for potable water.
This rate was locked into a 50 year contract that Mayor Tom Morrissey said he would eliminate. HE HAS NOT EVEN ATTEMPTED TO ELIMINATE THIS 50 YEAR CONTRACT.
This 50 year renewable rate contract is still in place and nothing is being done to give rate relief to the citizens of Payson. Please read all the details to understand why questions have been raised about the accounting for this project.
The review of past capital projects has been ridiculed as a “BOONDOGGLE” by some in the local established media. [5] I think you may have a different opinion about that when you know the facts about the implementation of Resolution 2724 [1] and 2725 [2]. These agreements were the blueprint for SAVING THE COUNTRY CLUBS $1.13M in water cost since 2014, while the water rates for all other
Payson customers rose 42.22% for the same time period (69.26% from 2011 to date).
Freedom of information requests resulted in the acquisition of detailed cost and water usage charts for the country clubs (JFM) as well as detailed rate information for all other Payson water customers. We are grateful for the cooperation of the management and staff of the Water Department for providing this very detailed data. The charts and links to resolution 2724 & 2725 are included in this article. Please review the details they contain to fully understand why we are concerned with the results of this project. Is it possible to recover a portion of the $1.13M for the town?
The following excerpts from our December 20th, 2019 article and the FOIA information will show the true results of the JFM water project.
From our December 20, 2019 article:
In 2013 the Rim Golf Club and Chaparral Pines were in desperate need of water for their golf courses. Reclaimed effluent from the sanitary district and well water from Star Valley were not meeting demand.
Working with the Town, a solution to the problem was crafted in the form of Resolution 2724 [1] & 2725 [2].
Resolution 2724 was an agreement between Joint Facilities Management, LLC (JFM) [3] which is comprised of investment groups from the two country clubs, (The Rim Investments, LLC and Chaparral Pines Investments, LLC), the RCEA-SLE, and the Town of Payson to construct a waterline from the treatment plant at Mesa Del Caballo to the Chaparral Pines Golf Course on Tyler Parkway. This agreement required JFM to pay the RCEA-SLE $700k to coordinate, design, and build this waterline. When completed, it would be given to the Town along with a payment of $100K.
In reality, the RCEA-SLE did not coordinate, design, and pay for construction of the waterline as required by Resolution 2724 [1]. The Town of Payson actually did all the work and paid all the bills. The amount of reimbursement received by the town to recover those costs is unclear, but consider the following quote from a Payson Roundup article dated December 5, 2019 entitled “Is it Better to Pay for or Sell C C Cragin Water?” [4] Michele Nelson quoted an official, apparently from the RCEA-SLE, saying they, “used the remaining money (roughly $100,000) to pay for archaeological studies necessary to buy the land and engineering studies of needed infrastructure”. We suggest that our readers review that December 5th Roundup article and seriously analyze all the comments it contains.
Why was the RCEA-SLE part of this contract when the Town could have contracted directly with JFM [1] Remember, the town actually paid for and did all the work to complete this project, contrary to what was stated in Resolution 2724. [1]
Since untreated C.C. Cragin water was not available in 2013, Resolution 2724 [1] & 2725 [2]. crafted a pricing structure to provide JFM potable water at untreated water rates, until the untreated water was available. Did the Town and JFM know it would be years before the C C Cragin project could provide untreated water? In reality, the untreated water was not available until late 2019.
From the FOIA provided data we now know that since 2014 JFM used 210,184,300 gallons of potable water to irrigate the golf courses (645 acre ft.) at a total cost to them of $716,830. If they had been paying the same price for that water as anyone else in town their total cost would have been $1,848,267. Their net savings from 2014 to July of this year was $1,131,438. These are exact figures provided by the Payson Water department.
This cost savings was more than enough to pay for the original $700,000 JFM paid the RCEA (SLE) . In reality then, the Town of Payson, not JFM, actually paid for the construction of the untreated waterline to Chaparral Pines by the water cost savings granted to JFM. A substantial portion of the original $700K (at least $100K, see quote above) also accrued to the RCEA (SLE) . A forensic audit of Town of Payson and RCEA(SLE) financial records is needed to determine the actual figures. To date the RCEA(SLE) has not provided the necessary records and an audit of town financial records has not yet scheduled.
From 2014 to July 2019 Payson water customers endured rate increases totaling 42.22% (SEE THE ATTACHED RATE CHARTS HERE and HERE) while the Country Clubs enjoyed a fixed low rate ($2.06/1000 gallons) for the same potable water. This situation is further exacerbated by the fact that Resolution 2724 [1] locks in the low $2.06/1000 gallon rate to JFM for 50 YEARS (subject to complicated minimal CPI adjustments after 11 years). Regular water customers are enduring higher rates that might have been lower if JFM had been paying their fair share. We need to start reducing water rates as soon as possible and stop subsidizing the country clubs.
Mayor Morrissey WAS committed to reducing water rates 2 yrs. ago but that goal was never accomplished. Reviewing completed capital projects is business as usual for most large companies and government bodies. There are some who think this type of review is a waste of time (a boondoggle). Why wouldn’t the Town want to learn from past mistakes to determine what is needed to improve contracting and procurement procedures? It is obvious from reviewing this project that improvements are definitely necessary. Locking in water rates for 50 years as resolution 2724 does is outrages and raises questions about what the original $700,000 actually paid for. We encourage our readers to diligently study resolution 2724 [1] and 2725 [2]. and the FOIA data we have provided so you can form your own opinion.
We encourage the people of Payson to attend the Capital Improvements Committee public meetings [5] and show your support for the committee members because, they are facing serious ridicule and intimidation from other local media outlets and political figures for their efforts. ★ ★ ★ ★
