The Arizona Corporation Commission plans to closely monitor a lawsuit accusing the Pinal County Board of Supervisors of sitting idly while Scottsdale utility owner George Johnson denied contractually guaranteed water service to a Maricopa developer.
Commissioner Marc Spitzer said the commission has the responsibility to keep watch on the case and possibly launch an independent investigation to determine whether Lennar Communities Development Inc., the company suing Johnsonowned Sonoran Utility Services LLC and Pinal officials, was denied its constitutional rights to "just and reasonable" service.
"I’m very troubled by what I read," Spitzer said about Lennar’s legal complaint.
The lawsuit, filed in February, claims Johnson convinced Lennar executives to put his firm in charge of water and sewer services through the formation of a water improvement district, and that Johnson has failed to meet deadlines or fulfill promises.
It states that the Board of Supervisors — which also governs the district Johnson’s company was hired to serve — ignored pleas to oust the utility or force Johnson to abide by his contract.
Lennar’s accusations have much in common with those made by Queen Creek-area utility Diversified Water, which accused Pinal officials of illegally creating a water improvement district in 2001 and putting Johnson in charge of it.
Pinal officials settled the Diversified case in April, after which Chairwoman Sandie Smith, D-District 2 of Gold Canyon, vowed to keep the county out of the utilities business.
Spitzer said he is concerned about water improvement districts being formed for the wrong reasons, because they have the effect of replacing corporation commission oversight with county control.
"While many such districts serve valuable and beneficial public purposes, there are rare circumstances where the imprimatur of a county government is used to oust the commission of its constitutional authority to secure water and wastewater service for customers," Spitzer stated in a letter to the other commissioners.
Johnson attorney Jay Shapiro said he was not familiar with details of the Lennar complaint.
Johnson is facing another lawsuit, also filed in February, by Arizona Attorney General Terry Goddard on behalf of five state agencies, including the Department of Environmental Quality and the Game and Fish Commission.
It claims one of his development companies bulldozed about 720 acres of state land north of Tucson, damaged protected historical sites and illegally destroyed desert plants and animals in connection with an ill-fated project.