PRC approves transfer of Harvest Gold water system
Move clears way for construction of connection to Bloomfield infrastructure
- The transfer agreement allows AV Water to back out if the PRC enforces fines levied against the company and its owner.
- AV Co. owner Mark Iuppenlatz will pay $30,000 to Apple Orchard, but most of the money will be used to pay for bottled water deliveries that have already occurred.
- PRC chairman Sandy Jones called the agreement a bad deal.
- AV Water's owner said taking management of the water system was the worst decision he ever made.
FARMINGTON — Residents of the Harvest Gold subdivision are one step closer to getting clean water following a New Mexico Public Regulations Commission decision today.
The PRC approved an agreement that AV Water Co. will transfer its Harvest Gold water system to the newly formed Apple Orchard Mutual Domestic Water Consumers Association.
The PRC voted 3-2 today in Santa Fe in favor of the transfer. The meeting was streamed live online.
Apple Orchard is a community-owned water utility formed earlier this year as a way to access public funding. The public funding will be used to build a connection between the Harvest Gold subdivision and the city of Bloomfield's water infrastructure. That connection may allow the New Mexico Environment Department to lift the boil-water advisory for Harvest Gold customers that has been in place for more than a year.
The PRC initially voted 4-1 in favor of the transfer agreement. Commissioner Cynthia Hall changed her vote at the last minute due to a clause in the agreement that would allow AV Water to back out of the transfer if the PRC does not waive the fines and penalties it has issued against both the company and its owner.
Over the past year, the PRC has issued more than $2 million in fines against AV Water and owner Mark Iuppenlatz.
More than $180,000 of state money awarded to the city of Bloomfield for the connection was at stake if the transfer was not approved. If the system was not transferred out of private ownership by the end of this month, Bloomfield and Apple Orchard would have been forced to reapply for the funding.
In addition, the connection will take several months to build, Apple Orchard lawyer Ryland Hutchins said.
"Every day that we delay further is another day that the people down there can't brush their teeth with clean water," he said.
Commissioner Valerie Espinoza opposed the transfer agreement. This morning, she provided a list of conditions that she required before she would support the agreement. Those conditions included AV Water paying the membership fees for all Harvest Gold residents.
AV Water attorney Germaine Chappelle said Iuppenlatz does not have enough money to pay the approximately 130 membership fees. The price tag for those membership fees ranges from nearly $82,000 to $130,000.
Iuppenlatz testified during a PRC meeting on Wednesday that he was considering filing bankruptcy due to the large amount of fines levied against him.
When asked why he believes the fines should be waived, Iuppenlatz said he took over management of the water system in September when his business partners backed out. He said he was warned not to take over management, but he wanted to do the right thing.
"It's been the worst decision I ever made," Iuppenlatz said.
In its approval of the transfer, the PRC stipulated that Iuppenlatz pay $30,000. The bulk of that money will be used to pay for bottled water deliveries to Harvest Gold customers that have taken place. The remaining money can be used for operating costs for the new system.
The PRC and AV Water also will ask a court-appointed receiver who oversees AV Water Co.'s Morningstar water system to provide Apple Orchard with approximately $40,000 because AV Water used insurance proceeds that were intended for improvements to the Harvest Gold system to benefit the Morningstar system.
PRC Chairman Sandy Jones described the agreement as a terrible deal, despite voting in favor of the transfer. But Jones said if he had to choose between $3 million in fines for the company and clean water for residents, he would choose the water every time.
"I don't think there's time to negotiate," Jones said.
Harvest Gold resident Dawn Schumacher told the PRC on Wednesday that she did not like the idea of the fines being waived.
"I'm really torn on this because I want clean water more than anything, but I also want justice to be served," she said.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652.