On October 26, Cave Creek Road near the Phoenix Interconnect site went down to one lane in each direction. The Town said the restriction would last about two weeks while its contractor, MGC, modified the 16-inch waterline in front of the site. In the Town's October 23 notice, this was "one of the final steps" to finish the project, and the Town said it expected treated water from Phoenix in early November.
The interconnect was planned as insurance for a town that depends on a single pipeline. Over 2026 it has also become one of the options in a much larger review. The Town is considering whether to keep owning and running its water and wastewater systems, sell them, or have the City of Phoenix treat all of its water. The lane closure, January's rate increase and the bid process the Town ran this summer all belong to that one decision.
A Second Line Into a Town That Had One
Cave Creek's water system draws raw water through one 16-inch pipeline. It runs 12 miles from the Central Arizona Project canal to a treatment plant that can handle 3 million gallons a day. The Town's Invitation for Bids lists 2,574 metered water accounts on that system.
The interconnect adds a second way in. The Foothills Focus reported that the project costs nearly $20 million. The site sits next to Lowe's, off Cave Creek Road just north of Carefree Highway. The lane changes south of Carefree Highway before this year's work were the City of Phoenix laying its part of the connection. In that article, Mayor Robert Morris explained what the project was originally for:
"What are you going to do if water is out for two weeks? This project was originally put in to address that issue."
The same Foothills Focus story repeated what Morris told the paper in 2024: "We regularly have near misses. Our dedicated employees will sleep much better when the new facility is operational." Morris also said the project began as a backup for when a pump goes out and has since "become part of the solution to the town's water woes."
The Town's November 3 FAQ puts the interconnect's backup capacity at 1.4 million gallons per day. That is just under half the 3-million-gallon daily capacity of the Town's own treatment plant.
How the Backup Became One of the Options
The FAQ explains how the backup line got pulled into the larger question. The Town issued an Invitation for Bid to see whether anyone wanted to buy its utility systems. It also hired consultants to look at other options, including "expanding the newly constructed Phoenix Interconnect system to have the City of Phoenix supply 100% of the town's water treatment needs."
The sale idea started smaller. In March, the Cave Creek/Carefree Independent reported that the Town first looked at selling only the Desert Hills system and was weighing whether to add Cave Creek's water and wastewater systems. The paper also reported that Raftelis was expected to help run the sale process for about $114,000.
By summer, all three systems were included. The bid document lists them:
| Date | What happened |
|---|---|
| January 6, 2026 | Town Council adopts Resolution 2026-01, resetting water and wastewater rates |
| July 10, 2026 | Invitation for Bids issued for the Desert Hills water system, Cave Creek water system and Cave Creek wastewater system |
| August 3, 2026 | Optional pre-bid meeting |
| September 10, 2026 | Bids due |
| October 26, 2026 | Cave Creek Road narrows for the final interconnect waterline work |
| November 3, 2026 | Town posts its FAQ on the utility bid |
| Early 2027 | Public information sessions planned |
Bidders had to bid on all three systems and give a separate price for each. The document describes a possible sale to a single qualified operator. It also says that issuing the invitation does not obligate the Town to sell.
As of the November 3 FAQ, the Council had held two executive sessions on the bid results and was still doing what it calls due diligence before presenting details to the public.
What the January Rate Vote Was For
For most households, the first sign of all this was the monthly bill, months before anyone was talking about a sale. On January 6, the Council approved 6% increases for each of the next three years for Cave Creek water, Desert Hills water and Cave Creek wastewater customers. The Cave Creek/Carefree Independent reported that the vote happened "to little fanfare."
According to that report, Finance Director Cherie White said the increases were meant to reduce and then end general fund subsidies and cash loans to the utility funds. They were also meant to keep debt service coverage strong enough for the Town to borrow for future capital projects. In other words, the utility had not been fully paying for itself, and the Town wants it in shape to finance its next round of infrastructure.
The tiers changed as well. A new tier now covers 0 to 4,000 gallons a month, and the top tier now starts at 40,000 gallons instead of 50,000. The Independent reported these monthly effects:
- Low-use Cave Creek Water customers would pay roughly $4 to $7 more per month.
- Very high-use customers would pay roughly $120 to more than $600 more per month.
- About 1,250 customers fall in the first two tiers. About 120 fall in the top two tiers, which start at 30,000 gallons a month.
So the cost of the new tiers falls mostly on a small group of very heavy users. During the presentation, Councilmember Dusty Rhoades asked, "We have customers that actually are using 4 acre-feet of water a year?"
Three Systems, Each Bought From Someone Else
Any sale would involve three systems the Town itself bought from private companies over about 14 years. The bid document gives the history.
- Cave Creek wastewater. The Town bought Cave Creek Sewer Company in 1993. The system serves 947 accounts.
- Desert Hills water. This system began in 1970, mostly as a hauled-water service, and added a distribution network later. The Town bought it from the private Desert Hills Water Company in September 2006. It has about 1,840 accounts. Since 2007, more than half of its supply has come from the Cave Creek system through an interconnect built in 1995.
- Cave Creek water. The Town bought Cave Creek Water Company in March 2007. That is the 2,574-account system on the 12-mile CAP pipeline.
Some residents are not on any of these systems, which explains why private-well owners appear in the FAQ. The bid document says the 10th Street standpipe in Desert Hills lost its Petro Vend system in 2022. Instead of replacing it, the Town kept the standpipe running by appointment: users call 24 hours ahead and meet staff at the site. The document lists three standpipe accounts, and two of them use the service. Cave Creek's own standpipe, installed in 2017, serves only property owners in a defined West Cave Creek Water LLC area.
The FAQ says the Council is considering "rate impacts and concerns from private well-owners and other residents who are not yet hooked up to the Town's water system."
The Supply Behind the Pipes
All of this comes back to where the water comes from. The FAQ says Cave Creek gets nearly 95% of its water from the Colorado River through CAP. The Town had expected a 20% cut in supplies in 2027. CAP and the Arizona Water Banking Authority have "firmed up" supplies so the Town is whole for that year. The FAQ says reductions are likely in 2028, depending on conditions at Lake Mead and Lake Powell. The Town reports enough water banked underground for three to five years.
The FAQ also addresses the fall rains. It cites Sarah Porter, director of Arizona State University's Kyl Center for Water Policy: Lake Powell rose 12 feet in two weeks after the storms but was still only about 25% full, and Lake Mead was at about 23% of capacity.
The FAQ also describes two limits the Arizona Corporation Commission would place on any private buyer. The ACC would not let a private water company sell Cave Creek's water resources to another service territory. It also would not approve a sale to a private company that cannot show it has enough water to serve the community.
What Happens Next
According to the FAQ, the Council and its consultants will keep gathering data. Once the Council reaches consensus, it will put the item on a public Council meeting agenda and take questions and comments. Public information sessions are planned for early 2027. The FAQ also leaves room for no change at all. If keeping the current Cave Creek and Desert Hills water and wastewater services turns out to be the most reliable and cost-effective choice, the Town says it will "continue to pursue opportunities to secure new water supplies in earnest."
The Town also launched a centralized community calendar this fall. Communications Director Bo Larsen described it as a way to make local events easier to find. It is one place to watch for the information-session dates once they are posted.
This post is general information, not legal, tax or financial advice. Anyone whose property depends on a well, a standpipe or a particular utility account should check their own situation with the Town and the right professionals.
Questions about what water service means for a specific Cave Creek or Desert Hills property often come up in a sale or purchase. At Shields Regal Realty, we can help you find out which system serves a property, gather the right documents, and point you to the people who can answer the technical questions. If that would help, please reach out and Contact Us.
