Why settle for the status quo? This is what local leaders in the small southwest town of Cave Creek, AZ, must have asked themselves when they decided that their privately owned and operated water utility was not doing the job.

Cave Creek’s water system had always been privately owned and operated. Unsatisfied with the service they were getting, and confident that local ownership and management could do better, Cave Creek set the goal of taking on ownership and management.
 
In 2005, after the city lost to Global Water Management in a bid to purchase the water system, local leaders didn’t give up. Instead they decided to use condemnation proceedings to buy the system.
 
Why the decision to publicly own and operate its water services? Having local control was a big piece of the puzzle. “One concern was having control of our growth in town,” said Cave Creek utilities director Jessica Marlow. “And with private ownership the town had no say in those transactions. We’re a small town and people want that small town environment.”
 
The utility—which was operated by private contractor Arizona American Water—was also performing badly and needed improvements. “It was in very poor maintenance,” Marlow said. “Facilities are falling apart. There wasn’t a lot of system revenues going back into the system.” The state of the system was so poor, Cave Creek experienced three system-wide water outages in during summer of 2007.
 
To finance the purchase Cave Creek turned to the Water Infrastructure Financing Authority (WIFA), the state agency responsible for distributing federal SRF loans. WIFA awarded the city low-interest loans for the initial purchase as well as $15 million in improvement projects. The city arranged to repay the loans through a combination of sales tax and revenue from the water system.
 
In March 2008, Cave Creek finally purchased the water utility through condemnation. The city retained private operator Arizona American Water as they arranged to take over operations and increase the staff. In 2008 its contract with American Water will lapse and for the first time Cave Creek’s water system will be publicly owned and operated.