Byers says ACC not being fair with Rhodes

KINGMAN - Rhodes Homes and the Arizona Corporation Commission are still at odds over proposed utility companies after oral arguments last week.

The ACC is still withholding approval for the Certificate of Convenience and Necessity for Rhodes to operate its proposed Perkins Mountain Water Company and Perkins Mountain Utility Company.

As the ACC continues to push Rhodes to offer more and more information before granting approval, District 1 Supervisor Pete Byers said he feels as if Mohave County is being singled out.

"The problem that we have is that there's too many people out there (that) have decided we don't have any water. There is a difference between not having any water and having some water to grow on, and we have lots of water to grow on. We don't have enough water forever, as far as a million houses or something, but we have a lot of water where we could build a long time without destroying our water table," Byers said.

However, despite Herb Guenther, director of the Arizona Department of Water Resources, telling him that they are finding more and more pockets of water within Mohave County, the ACC is singling out one developer in this area. Byers said he doubts that there has been another project anywhere in the state that has been under so much scrutiny.

He said he was concerned that Rhodes Homes was being asked to provide so much when they have received water adequacy from ADWR, their county items are in current order and all of their Arizona Department of Environmental Quality permits were in order. There is a lot of water in the Sacramento Aquifer, he said, and the ACC seems to be pushing the limits of their authority and their jurisdiction in Mohave County.

Rhodes Homes and the ACC staff gave oral arguments Aug. 30 regarding the researched answers to several issues related to the actions of Rhodes Homes and the Perkins Mountain companies, as ordered by the administrative law judge. These questions, according to the judge, were set to determine the tangle Rhodes Homes and the companies have in addition to current construction at the Rhodes Homes sites.

David Ronald, an attorney within the Legal Division of the ACC, said that several case examples and an eight-element test prove that Rhodes Homes is acting as a public service corporation by constructing water infrastructure within the Golden Valley South boundaries. If this conclusion is relied upon by the ACC, Ronald said Rhodes Homes would also be found in violation of Arizona Revised Statutes.

A public service corporation is defined within the Arizona Constitution, Ronald said, as "all corporations other than municipal engaged in … furnishing water for irrigation, fire protection or other public purposes … for profit … shall be deemed public service companies." Following the eight-element test created by the Arizona Supreme Court, Ronald determined that Rhodes would fall into this category.

He said Rhodes is currently constructing water infrastructure to serve at least 350 lot reservations in the master-planned community. In addition, water is being hauled from Rhodes' wells to supply water to two sets of design homes.

"When the Serv Yu factors are applied to the facts and circumstances present here, it becomes clear that Rhodes Homes is acting as a public service corporation. Rhodes Homes is building a golf course and has built several wells. Also, Rhodes Homes has built and is serving design homes. Rhodes has built storage tanks and a five-mile transmission line. Clearly, Rhodes Homes is presently furnishing water for public purposes with the infrastructure it has constructed.

"The public certainly has an interest in receiving water service in and around the Golden Valley South Development. In addition, Rhodes Homes is charging a $2,000 lot reservation fee for future water customers," Ronald said.

Given these facts, Ronald said that Rhodes is in violation of Arizona Revised Statutes, a matter that has been handled by the Commission in the past by fining the company at the time the CC&N is issued.

Rhodes' attorney, Jeffrey Crockett of Snell and Wilmer, however, disagrees with the staff's conclusion.

"Rhodes Homes Arizona does not meet the constitutional definition of a public service corporation because it is not 'furnishing water for irrigation, fire protection or other public purposes,' within the meaning of the Arizona Constitution (emphasis added)," he said.

Water currently being used at the property was being pumped from Rhodes' own wells into its own trucks for use in dust suppression and grading activities within the development, he said. Turf watering and landscape watering are also being done within the development; however, these items are not open to the public. Currently, these uses are entirely private, he said.

"If supplying water to one's self met the constitutional definition of 'furnishing water for irrigation, fire protection or other public purposes,' then countless Arizona water users would become public service corporations including farmers, dairies, feedlots, private homeowners, golf course, sand and gravel operators, mines, cemeteries, private airports, developers, prisons and others, to name a few," Crockett said.

Despite the differing views given at the oral arguments, Commissioner Kris Mayes has requested that Rhodes voluntarily stop building utility infrastructure within the CC&N area.

Mayes said it would be her preference for Rhodes to take a deep breath and allow the ACC to conduct their hearings. She said she feels they are trying to rush through the process.

Mayes also said that staff would be traveling to Mohave County to investigate what is being installed within the CC&N area. The independent investigation would be conducted prior to the next hearing regarding Rhodes' request.

A date for the next hearing has not been set.