City OKs $100M EPCOR settlement (January 19, 2022)

BULLHEAD CITY — The Bullhead City Council voted 6-0 Tuesday night to accept a $100 million settlement offer in the ongoing eminent domain litigation for the water system acquired from EPCOR on Sept. 1, 2021.

Mayor Tom Mayor called it one of the most historic votes the council has made.

If the EPCOR board also approves the settlement, the city would need to pay an additional $20 million to the company — in addition to the $80 million bond Bullhead City used to assume the system.

The EPCOR board will make its decision no later than 4 p.m. today.

If both parties agree to the settlement, the city can more forward with ownership without a jury trial to determine the purchase price, which was scheduled to begin Jan. 24.

Acquiring the water system has been a multi-year process, starting when EPCOR proposed rate increases and plans to consolidate water rates statewide.

“I remember five years ago, the attorney we had representing us at the Arizona Corporation Commission hearings (said) ‘If you have to pay $130 million for this system, it might sound like a lot,’” Brady said, “He said, ‘The water wars in the Southwest might be such that the voters might not approve what you do today, but they will approve of it in years to come.’”

In 2019, voters approved having the city acquire the water system at a maximum cost of $130 million at 8% interest, either through purpose or condemnation.

A hearing in April determined the city should pay $80 million to assume operation of the system while awaiting the outcome of the jury trial that would set the actual purchase price.

The city secured an $80 million bond with a 1.87% interest rate and took possession of the system on Sept. 1.

Two major reasons were given for accepting the agreement rather than proceeding to trial:

  • Accepting the settlement guarantees a level of certainty. According to City Manager Toby Cotter, the trial process could take months because of potential appeals and COVID-19 concerns.

  • Interests rates could increase in the time it takes to render a final judgment, increasing the cost.

Cotter said the city already has spent $2 million on the process, and a trial could cost another $1.3 million.

After the settlement was approved, the council illustrated one of the benefits of the acquisition in a vote to amend the municipal code to provide relief to customers with unexpected high water bills

“If this was under EPCOR, their policy is there’s no relief. As a city we have the option of changing the policy,” Brady said.


Source: Fred Mayson, Mohave Valley Daily News