Cave Creek Council Rejects Fire Hydrant Waiver for Continental Mountain Stakes Subdivision, Votes 4-2

Cave Creek Council Deadlocks on Fire Hydrant Waiver for Continental Mountain Stakes, Denies Developer Agreement 4-2

On April 28, 2016, the Cave Creek Town Council rejected a development agreement that would have allowed developer LS and SS Properties Inc. (represented by Mr. Spelts) to build three single-family homes in the Continental Mountain Stakes subdivision without complying with the town's mandatory fire hydrant ordinance. The 4-2 vote split council along fairness versus safety lines, with supporters of the waiver arguing proportionality and equity, and opponents citing fire protection precedent and liability exposure.

The developer has waited since 2004 for approval and claims to have invested $450,000 in offsite improvements, including street paving and water-line upgrades on property beyond the subdivision boundary. The rejection leaves uncertain whether the project will be redesigned as individual non-subdivision lots—which would exempt the developer from fire-hydrant requirements entirely—or attempt further negotiation.

Key Speeches

"I've already spent $450,000 on offsite improvements improving 72nd Street, resurfacing 72, and putting in new water lines, new pump to run the fire sprinklers for the homes and pavement on Mountain Stage drive not coming into the subdivision and replacing that water 4-inch line with an 8-inch line. I think the state law is pretty clear that exactions by cities and towns have to be proportional to the subdivision development and they do make exceptions for topography and a lot of things." — Mr. Spelts, LS and SS Properties Inc., applicant/developer

"When given the opportunity to have working fire hydrants placed in service before the stick is still in the air, that we always support that endeavor. Any extra structure in the community of that size are going to put a strain on what we do and how we operate." — Chief KZ, Fire Chief

"The waiver of section 4.6.B3 of chapter 4 of the subdivision ordinance would say that trees say is each [plat] parcel should be supplied with portable water and sufficient volume pressure for domestic use and fire protection purposes. You're waiving that. If you sign this, no domestic requirement, no fire protection requirement. The 8-inch line provides a little less than twice as much water as a 6-inch line. The standard for Cave Creek for gallons per minute for fire protection has been 2,000 gallons as the chief stated—this is 282 GPM." — David Smith, Cave Creek resident/citizen legal analyst

"Whether this Council has authority to give the applicant a period of 10 years to perform under this development agreement—which provision in the town subdivision ordinance gives any developer 10 years to perform? Amendments such as this fall under the same guidelines as original applications and that performance timeline is three years." — Jan Smith, Cave Creek resident/legal expert

"I think it's important that there be some semblance of equity and fairness associated with people who want to build homes in Cave Creek as compared to other people who have built homes in Cave Creek and not been so encumbered. I would propose to amend the agreement before us removing any requirements that the town pay for and install that upgrade from 6-inch to 8-inch, and let the town do that as time and money indicates in our Capital Improvement plan." — Councilman Montemino (moving amendment to remove town cost)

"It's a safety issue and a council in 2004 said from now on we're going to have sprinkles. We do have subdivision ordinances in place, and I'm very reluctant to suspend regulations that have to do with safety of construction and the residents who go there." — Councilman McGuire, opposing the waiver

"The present motion that's on the table requires the town to spend nothing so your issues with money are moot, and there will still be a requirement that the homes constructed in there have residential sprinklers, so the remarks that there's no fire protection are not valid." — Mayor Francia, clarification to council

Timeline

• Applicant presentation: Mr. Spelts presented the development-agreement request, describing 12 years of delay and $450,000 in prior improvements. He argued state law requires proportionality consideration and that the 8-inch water line with 1,000 GPM pump would provide adequate fire flow (282 GPM stated versus town's historic 2,000 GPM standard).

• Staff recommendation: Town Manager/Finance presented the original agreement requiring town to fund $96,000 upgrade of 6-inch line to 8-inch line from water tank to Panorama Circle. Town Attorney Mr. Baxley confirmed council has authority to waive subdivision ordinance Section 4.6.B3 but warned the broad immunity language and 10-year timeline exceeded typical development-agreement scope (normal three-year performance window) and could invite precedent problems.

• Public comment: Four speakers, approximately 20 minutes total. Terry Z (Cave Creek neighborhood president) questioned why infrastructure requirements identified in 2006 approval now required waiver. David Smith outlined technical and legal deficiencies (282 GPM vs. 2,000 GPM standard, lack of enforcement mechanism, town liability for 8-inch line with no guaranteed future connection). Jan Smith provided detailed legal analysis questioning council authority to grant 10-year waivers, criticizing broad liability waiver language, and noting lack of cost-benefit analysis. Third speaker (Jan Smith's associate) praised Spelts' fairness argument but called for middle-ground solution protecting fire safety and avoiding bad precedent.

• Council discussion: Councilman Montemino questioned timeline and infrastructure-cost allocation; pushed back on town funding obligation. Chief KZ and Fire Chief fielded technical questions on water flow, pump capability, and residential sprinkler sufficiency. Councilman Durkin raised equity concern (70% of Cave Creek homes lack sprinklers, many residents over 800 feet from hydrants). Councilman McGuire cited 2004 council decision mandating sprinklers and reluctance to waive safety rules. Councilman Spitzer expressed concern about precedent. Mayor Francia intervened mid-debate to clarify amended motion's scope.

• Amendment: Councilman Montemino moved to remove requirement that town pay $96,000 and install 8-inch line upgrade; town would perform upgrade only as time and budget permitted within Capital Improvement Plan. Motion seconded; amendment accepted without renewed public comment. This shifted full infrastructure cost to developer but preserved developer's right to build upon issuance of three building permits.

• Vote: Mayor Francia called the roll on amended Resolution R 2014-17:

  • Councilman Montemino: Yes
  • Councilman Durkin: Yes
  • Councilman McGuire: No
  • Councilman Spitzer: No
  • Councilman Bunch: (voted no, per roll call)
  • Mayor Francia: No
  • Final tally: 4-2, motion fails (insufficient majority).

(Note: Transcript indicates only five named votes before Mayor Francia's "no," suggesting one council member absent or voting silently; Kathryn Royer, Tom Augherton, Cynthia Driskell, Joe Freedman, or Dusty Rhoades identity not clarified in this portion.)

Opposition

• Number of speakers against: Two (David Smith, Jan Smith); one speaker (third party, name not clearly transcribed) expressed qualified opposition.

• Main concerns:

  1. Fire-flow standard violation: 8-inch line with 1,000 GPM pump provides only 282 GPM, far below town's historic 2,000 GPM fire-protection standard; inadequate if two homes on fire simultaneously.
  2. Waiver of mandatory ordinance: Section 4.6.B3 makes fire protection mandatory, not discretionary; waiver removes legal obligation for domestic and fire protection on affected lots.
  3. Enforcement gap: Agreement allows town to issue three building permits upon receipt (waiving fire-protection requirements immediately), yet town commitment to water-line upgrade is deferred with only "as soon as practical" language; no bond, no performance guarantee, no sunset date for developer obligation.
  4. Financial liability: Town funds $96,000 upgrade with no guaranteed benefit if developer's operation fails or is abandoned; 8-inch line may be undersized if other development occurs in area.
  5. Authority and precedent: Council has no explicit subdivision-ordinance authority to grant 10-year performance timeline (standard is three years); doing so for Spelts creates precedent for other subdivisions (e.g., K Springs) and signals safety requirements are negotiable.
  6. Lack of transparency and analysis: No cost-benefit analysis comparing town's $96,000 expenditure against loss of developer fees or revenue from alternative projects; staff did not flag liability or precedent risks until late in debate.
  7. Preferential treatment: Agreement grants Spelts immunity from ordinary ordinance enforcement and expedited approvals unavailable to other applicants.

• Most compelling arguments: Jan Smith's legal analysis questioning council authority and the agreement's unilateral immunity clause; David Smith's technical breakdown showing 282 GPM versus 2,000 GPM standard and lack of enforcement mechanism; Fire Chief's statement that hydrants are preferable to delayed infrastructure.

• Organized groups: None identified; neighborhood president Terry Z spoke on behalf of residents but no formal opposition coalition.

Support

• Number of speakers for: One substantive speaker supporting Spelts (third party citizen/neighbor who benefited from prior improvements).

• Main arguments:

  1. Fairness and proportionality: Spelts has invested $450,000 over 12 years; state law (referenced by Spelts) allows municipal modification based on topography, cost, and proportionality; denying relief after such investment is inequitable.
  2. Precedent in inaction: Existing Cave Creek residents (70% of homes) lack sprinkler systems; many residents live 800+ feet from fire hydrants; imposing standards on Spelts that are not applied to existing developed areas is selective enforcement.
  3. Practical cash-flow necessity: Three-permit threshold ensures developer has cash flow before further development; prevents unlimited homes without infrastructure (only three permitted initially).
  4. Residential sprinkler requirement: Agreement still mandates in-home sprinkler systems, providing life-safety (egress time) even if not full fire-suppression protection.
  5. Comparison to simple-lot alternative: Spelts could have subdivided into three individual lots (avoiding subdivision ordinance entirely) but instead sought formal subdivision approval; council should reward that transparency.

• Council support: Councilmen Montemino and Durkin voted yes after amendment removed town's $96,000 cost obligation; Montemino cited fairness and equity; Durkin emphasized inconsistency of enforcing sprinkler/hydrant rules on new subdivisions when existing residents lack equivalent protection.

Project Details

• Case number / Resolution: Resolution R 2014-17 (development agreement).

• Applicant / Developer: LS and SS Properties Inc., represented by Mr. Spelts.

• Attorney: Town Attorney Mr. Baxley (town side); applicant's counsel not named in transcript.

• Location / Address: Continental Mountain Stakes subdivision, Cave Creek, Arizona; water infrastructure runs from Rockway Hills water tank north through Panorama Circle to the subject property. Offsite improvements included 72nd Street paving and Mountain Stage Drive pavement and water-line work.

• APN / Parcel ID: Not stated in transcript.

• Current zoning / Proposed zoning: Zoning not specified; subdivision ordinance Section 4.6.B3 applies (mandatory fire-protection and potable-water requirement).

• Density / Units / Square footage: Three single-family homes proposed (first phase); total of 13 lots envisioned in subdivision; homes in 5,000–7,000 square-foot range.

• Changes from previous version: Original agreement required town to fund $96,000 water-line upgrade (6-inch to 8-inch from tank to Panorama Circle). Amendment (Councilman Montemino) removed town funding; developer now fully responsible for own water-line improvements; town retains discretion to upgrade 6-inch line via Capital Improvement Plan on its own timeline.

• Fire protection alternative: Without hydrant waiver, developer would need to install onsite water-storage tank and pump system capable of delivering 2,000 GPM for two hours—approximately 2 million gallons storage (not feasible per applicant and staff).

• Water-line infrastructure: Existing 6-inch line from Rockway Hills tank to Panorama Circle is 52 years old and in poor condition (described as "on borrowed time"). Replacement with 8-inch line estimated at $96,000. Developer committed to installing 1,000 GPM pump and connecting 8-inch line from Panorama Circle to subject property. Agreement language stated town would perform 6-to-8-inch upgrade "as soon as practical" (later clarified as no specific timeline, subject to Capital Improvement Plan priorities).

Vote Breakdown

• Final tally: 4-2 (motion failed; insufficient for passage).
• Yes: Councilman Montemino, Councilman Durkin.
• No: Councilman McGuire, Councilman Spitzer, Councilman Bunch, Mayor Francia.
• Absent or not voting: Vice Mayor Kathryn Royer, Councilmember Tom Augherton, Councilmember Cynthia Driskell, Councilmember Joe Freedman, Councilmember Thomas McGuire, Councilmember Dusty Rhoades (council roster shows seven members; transcript shows five named votes plus Mayor Francia, suggesting two members absent or non-voting during roll call).

Note: Transcript names "Councilman Bunch" but canonical roster lists no councilmember by that name. Phonetic match unclear; transcribed as heard.

Outcome & Next Steps

The development agreement was denied. The 4-2 vote, with amendment removing town's $96,000 infrastructure cost, left the project in limbo.

Mr. Spelts retains three options: (1) renegotiate the agreement addressing council concerns about specificity, precedent, and enforcement mechanisms; (2) pursue building permits as simple lot (non-subdivision) development, which would exempt him from fire-hydrant ordinance Section 4.6.B3 but limit to one home per lot and eliminate subdivision entitlements; or (3) escalate via appeal or legal challenge, though no such proceeding was mentioned in transcript.

Town Council's Capital Improvement Plan does not currently schedule replacement of the 6-inch water line (estimated cost $96,000), and the Finance/Town Manager indicated the upgrade is not a high priority within the next five years. No continuance date was set; the matter appears closed unless Spelts resubmits a modified agreement.

The denial preserves the mandatory fire-hydrant requirement in the subdivision ordinance but leaves unresolved the equity question raised by Councilmen Montemino and Durkin: whether imposing standards on new subdivisions that are not universally applied to existing developed areas is fair or enforceable long-term.

Controversies & Context

Fire Safety vs. Fairness: The core tension pitted public safety against developer equity. Spelts argued that state law (referenced but not cited in transcript) requires Arizona municipalities to consider topography, cost, and proportionality when imposing exactions. He framed the 12-year delay and $450,000 investment as grounds for relief. Councilmen Montemino and Durkin agreed fairness demanded consideration, especially given that ~70% of existing Cave Creek residents lack sprinkler systems and many live 800+ feet from the nearest fire hydrant.

Councilmen McGuire and Spitzer, and Mayor Francia, countered that a 2004 council decision mandated sprinkler systems going forward, that suspending safety rules sets dangerous precedent, and that the agreement's broad immunity language created unacceptable liability. Fire Chief stated preference for hydrants; Town Attorney warned the agreement exceeded typical scope and failed to articulate the "specific circumstances" justifying the waiver.

Legal Ambiguities: Citizen Jan Smith identified several legal questions: (1) Whether council had authority to grant a 10-year performance timeline (subdivision ordinance allows three years); (2) Whether the broad "failure to perform shall not prevent permits" language constituted a waiver beyond the stated fire-hydrant waiver; (3) Whether the agreement served any purpose given zoning was already in place and subdivision ordinance already addressed infrastructure; (4) What financial benefit the town received (lost development fees offset any tax revenue).

Town Attorney Mr. Baxley acknowledged that setting "specific circumstances" in the agreement would reduce precedent risk but did not dispute the legal questions' substance. The amendment removing town's funding obligation made the agreement slightly less generous but did not address the immunity or timeline issues.

Precedent Concern: Councilman Spitzer and others worried that approving the waiver would obligate council to consider similar waivers for other subdivisions (e.g., K Springs, mentioned by a citizen). Without clear criteria for the waiver's applicability, council exposed itself to inconsistent or litigious demands. No council member stated how many prior fire-protection waivers had been granted or under what circumstances.

Twelve-Year Delay and Infrastructure Reality: Spelts noted the subdivision was approved in 2004 (per neighborhood president Terry Z). The town initially did not own the water-line infrastructure; confusion over system condition and responsibility delayed the project. The existing 6-inch line is 52 years old and in poor condition. Spelts' investment in 72nd Street improvements and water upgrades outside the subdivision may reflect attempts to satisfy ad-hoc town requirements over the permitting period, but the record is unclear whether staff communicated fire-hydrant standards upfront or added them later.

Single-Lot Alternative: Spelts noted he could have subdivided the property into three separate lots, each exempt from the subdivision ordinance's fire-hydrant requirement. This option went unaddressed in debate but highlights the ordinance's vulnerability to circumvention.

Duration

• This agenda item (Continental Mountain Stakes development agreement): Approximately 70–80 minutes (applicant presentation, staff explanation, town attorney clarification, extensive public comment, council discussion, amendment, and roll-call vote).

• Total meeting: Approximately 120–140 minutes (including three other agenda items: Resolution R 2014-16 water-service fee conversion [passed 6-0], Fiscal Year 2013-14 budget amendment [passed 6-0], and voting logistics reminder).

Other Notable Items

Resolution R 2014-16 (Water Service Rates): Housekeeping motion converting water-service connection fees from ordinance to resolution format, enabling future fee modifications with 60-day public notice rather than full ordinance process. No change to fee amounts; includes credit-card processing fee recovery mechanism. Passed 6-0 without substantive debate.

Fiscal Year 2013-14 Budget Amendment: Town Manager Robert presented cleanup of prior-year expenditures, including overages in Town Manager Department (~$450,000), Attorney Department, and Finance (credit-card fees). Final FY14 figures finalized for audit; council voted 6-0 to approve transfers. Councilman Montemino requested brief presentation on FY14 results at future meeting, to be coordinated with annual financial report. No deadline specified.