Cave Creek approves 10-bed behavioral health facility; grants 6-week negotiation window

Cave Creek Rejects Reconsideration Motion on Behavioral Health Facility; Residents Lose Battle but Win 6-Week Negotiation Window

On August 6, 2018, the Town of Cave Creek council convened for a contentious special meeting dominated by the Silverman's Estates controversy—a dispute over a 10-bed behavioral health residential facility on residential property that council had approved 4–3 on July 16. Multiple residents, their attorneys, and a former council member demanded a motion to reconsider and deny the permit. Town attorney Bill Simms blocked that path on procedural grounds, but both parties agreed to a six-week negotiation period to explore compromise. The council voted 7–0 to approve a $279,000 water treatment plant upgrade and unanimously adopted the FY 2019 budget, but the Silverman's Estates dispute overshadowed all other business and revealed fractures in how the council interprets its legal obligations.

Key Speeches

"I believe tonight that you have the right and the ability to do a motion for reconsideration because here's the other problem: the applicant will readily admit that they did not do a good job of meeting with the neighbors and explained it to the neighbors what they're doing… we can start all over again and the neighbors would have to listen to him and it would be a fair process." — Thomas Galvin, Rhodes Law Group, on behalf of residents

"Notwithstanding the Fair Housing Act and the relevant federal case law and the recent amendments to the Arizona statutes regarding sober living homes, our client has made a commitment to work with this town and its staff… that decision will prevail in a court of law." — Heather Dukes, Lazarus Sylvan and Bangs, representing Silverman's Estates applicant

"You have been fed a truckload of manure. You have been misadvised. It is not true that federal law requires you to approve a home of more than 6 residents. I defy anyone to give the case from the federal courts that so says." — David Cantwell, resident attorney and former Cave Creek council member

"I do not have a whole row of law books sitting behind me to turn around and pull out chapter and verse to see what the right way is. Based on the information we have got from our attorney, I believe that we have done, based on the information we've got, we're making the right decision." — Councilman Smith

Timeline

Silverman's Estates Special Use Permit (Case SU 18-01)

• Original approval (July 16, 2018): Town council voted 4–3 to approve a special use permit for a 10-bed behavioral health residential facility on a nearly 5-acre property at 3010 East Cloud Road.

• State law change (August 3, 2018): Arizona legislation became effective, potentially exempting state-licensed behavioral health residential facilities from local municipal regulation—a change that motivated expedited negotiation attempts.

• This meeting (August 6, 2018): Residents' attorney Thomas Galvin opened with a demand for motion for reconsideration. Town attorney Bill Simms reported that the applicant (Mitch Prager) had agreed to a six-week negotiation period and to abide by the 12 original conditions pending potential amendments. Galvin argued the motion was permissible under Robert's Rules; Simms disagreed, citing the absence of a reconsideration procedure in town code and the requirement that reconsideration occur on the same meeting date. Former council member Adam Trank, resident attorney David Cantwell, and other speakers demanded the council reconsider. Applicant's attorney Heather Dukes warned that any reconsideration would violate Arizona's open meetings law (insufficient notice) and Robert's Rules (motion must be made at the original meeting, July 16, not August 6). Resident attorney Craig Lehr countered that the applicant's agreement to negotiate in good faith was meaningless without a motion for reconsideration, which would suspend the SUP and give residents "leverage" in negotiations.

• Council deliberation: Councilwoman Clancy voiced support for reconsideration; Councilman Smith declined to make a motion, citing legal advice and the risk of litigation; Vice Mayor Silva expressed concern about the town's history of costly litigation but sided with the attorney's advice; Mayor Bunch and others cited uncertainty about state preemption and the recent law change.

• Outcome: No motion for reconsideration was formally made. Council accepted the applicant's agreement to extend negotiations through late August/early September and to abide by the 12 original conditions, with willingness to negotiate additional stipulations (e.g., bed count, firearms restrictions).

Public Comment: Approximately 12 speakers addressed the SUP.

• Mary Cafarelli (resident, 3651 North 24th Street): Expressed fear that approval opens "Pandora's Box" and will invite other commercial uses (Circle K, Starbucks, condos, urgent care) to Cloud Road, transforming it into "another Carefree Highway." Warned that increased medical traffic and patients will erode rural character and equestrian lifestyle.

• David Cantwell (resident attorney, 3351 East Glory Road): Built the house now proposed for the facility. Claimed federal law does not require approval of more than 6 residents and that the council has been "misadvised." Stated the facility is a "commercial business with movie theater and hotel amenities" in a residential neighborhood and demanded a motion to reconsider and deny. Cited his 38 years of litigation experience and his representation of districts across Arizona.

• Katja Kinsel (resident, 4120 North Echo Canyon): Stated she has fought commercial uses in her neighborhood for 8 years and that commercial is not allowed in residential zoning.

• Adam Trank (resident, 6914 Highland Road, former council member): Defended the town's obligation to protect health, safety, and welfare and preserve rural zoning character. Stated federal law does not create a "speculative property right" and urged the council to reconsider, noting that negotiation without a motion for reconsideration leaves residents with "a gun to their head." Warned that approval sets a dangerous precedent and erodes the "wild west frontier" character that attracts residents. Repeated his earlier concerns about Schoolhouse Road repaving being slick and dangerous for horses.

• Craig Lehr (attorney representing residents): Demanded a motion for reconsideration as the only mechanism to ensure good-faith negotiation. Argued the applicant's threat of litigation and the insistence on 10 beds demonstrates bad faith. Stated that without reconsideration, residents lose all leverage and the applicant can walk away from negotiation.

• Sandy Walker (resident, 2663 North 42nd Way): Objected to any motion for reconsideration on procedural grounds, noting it was not listed on the meeting agenda and citing rules of law.

Opposition

Number of speakers against: Approximately 7 substantive speakers opposed approval or demanded reconsideration.

Main concerns:

1. Non-compliance with group home definition: The facility is a commercial medical/psychiatric treatment center, not a traditional group home. It will have more employees than residents/patients, generate traffic, and provide services beyond basic residential care.
2. Incompatibility with residential zoning: Cloud Road is rural residential. Approval sets a precedent for commercial medical facilities in residential neighborhoods and will invite other commercial uses (urgent care, dentists, pharmacies, etc.).
3. Traffic and infrastructure burden: Unclear how many staff, patients, and visitors will arrive daily. Will burden small-town roads, emergency services, and law enforcement.
4. Loss of leverage without reconsideration: Residents' negotiation position is weakened if the SUP stands as approved. The applicant has no enforceable incentive to reduce from 10 beds to 6.
5. Federal law misinterpretation: Multiple speakers (Cantwell, Trank, Lehr) claimed the town attorney and applicant's attorney misread the Fair Housing Act and federal case law. Federal law does not require approval of 10 beds when the town's own ordinance allows 6 unrelated adults in a group home.
6. Procedural error: The July 16 vote may have violated the six special use criteria. Lack of pre-application neighbor meetings and community input (applicant did not meet neighbors before hearing) suggests cart-before-horse approval.
7. Broader precedent: Approval will "open Pandora's Box" and accelerate commercialization and suburban sprawl, eroding Cave Creek's rural character and property values.

Most compelling arguments:

• David Cantwell's assertion that federal law does not mandate approval of 10 beds when the town code permits only 6 unrelated adults in a facility.
• Adam Trank's framing of the council's duty to protect the "health, safety, and welfare" of existing residents, including equestrian and rural lifestyle interests.
• Craig Lehr's procedural point that a motion for reconsideration is the only enforceable mechanism to compel good-faith negotiation.

Organized groups: Rhodes Law Group (Thomas Galvin) represented neighbors; informal coalition of residents and former council members coordinated messaging around federal law misinterpretation and rural character preservation.

Support

Number of speakers for: Approximately 1–2 (no substantive pro-approval public comment recorded).

Applicant's position (Heather Dukes, Lazarus Sylvan and Bangs):

• Federal Fair Housing Act protects the right to open a group home for disabled residents.
• Planning Commission unanimously recommended approval.
• Staff recommended approval.
• The facility meets all six special use criteria and preserves rural character through adequate screening, open space, and integration with existing equestrian facilities.
• No threat to public health, welfare, or safety; opposition has provided no evidence to the contrary.
• Recent Arizona statutory changes (August 3) may exempt behavioral health facilities from local regulation, strengthening the applicant's legal position.
• Applicant has substantially relied on the July 16 approval through contractual commitments and expenses; reversing the decision invites equitable estoppel and litigation claims.
• The applicant has agreed to meet with neighbors and negotiate additional conditions despite having no legal obligation to do so.

Town attorney Bill Simms' position:

• Motion for reconsideration cannot be made tonight under Robert's Rules of Order (11th edition), which permits reconsideration only at the same meeting the original vote occurred.
• The town has no current code provision for reconsideration; absent one, Robert's Rules apply, and that window has closed.
• However, the applicant and neighbors have agreed to communicate and negotiate additional stipulations over a six-week period.
• If parties reach agreement, amended conditions can be submitted for Planning & Zoning review and returned to council, preserving due process.
• This approach avoids the legal entanglement of state preemption (new August 3 law) and the risk that reconsideration would extinguish the SUP, exposing the town to federal Fair Housing Act liability.

Project Details

• Case number: SU 18-01
• Applicant / developer: Mitch Prager, Silverman's Estates LLC
• Attorney: Heather Dukes, Lazarus Sylvan and Bangs, 420 Roosevelt Street
• Residents' attorney: Thomas Galvin, Rhodes Law Group
• Location / address: 3010 East Cloud Road, Cave Creek, Arizona
• APN: Not stated in transcript
• Current zoning: Residential (low-density, single-family)
• Proposed zoning: Same (special use permit for group home/behavioral health facility)
• Density / units / square footage: 10-bed residential behavioral health facility on nearly 5-acre property
• Changes from previous version: Original approval on July 16 included 12 conditions (not detailed in transcript). Residents requested reduction to 6 beds and additional restrictions on firearms use and commercial operations.

Vote Breakdown

Final (no reconsideration motion): No formal vote on reconsideration; SUP approved 4–3 on July 16 stands; no council member formally motioned for reconsideration on August 6.

Individual votes on whether to reconsider (not formally recorded): Council declined to make the motion; Councilwoman Clancy expressed support; Councilman Smith opposed on legal grounds; Vice Mayor Silva expressed ambivalence; Mayor Bunch cited legal advice and uncertainty.

Outcome & Next Steps

The town council declined to entertain a motion for reconsideration. The special use permit approved 4–3 on July 16 remains in effect and is immediately enforceable. However, the applicant (Mitch Prager) voluntarily agreed to:

1. Suspend opening operations until September 3, 2018 (approximately six weeks).
2. Abide by the 12 original conditions of approval regardless of the recent Arizona statutory changes.
3. Meet with neighbors and their representatives to negotiate additional stipulations (e.g., bed count reduction, firearms restrictions).
4. If agreement is reached, submit amended conditions for Planning & Zoning review and return to council for formal amendment of the SUP (ensuring due process).

Continuation: No formal continuance date set. Negotiation to occur over six weeks; council will revisit only if parties reach agreement requiring amended conditions.

Controversies & Context

Procedural dispute: The central controversy is whether the town council has the power to reconsider an action taken at a prior meeting. Town attorney Simms and applicant's counsel assert Robert's Rules of Order (11th edition) require reconsideration only at the meeting the original vote occurred—July 16. Once that meeting adjourned, the motion is barred. Residents' attorney Thomas Galvin and former council member Adam Trank counter that Simms' interpretation is overly restrictive and that governing bodies routinely reconsider at subsequent meetings, especially when proper procedure was absent from town code. Councilman Smith and Vice Mayor Silva ultimately sided with the attorney's reading of Robert's Rules, fearing litigation risk if the town adopted a non-standard reconsideration process.

Federal law and state preemption: A secondary dispute concerns whether federal Fair Housing Act case law mandates approval of a 10-bed facility. Residents' attorneys (Cantwell, Galvin, Lehr) claim the FHA does not require approval of more than 6 unrelated adults, the town's ordinance limit. Applicant's counsel (Dukes) cites Sharp Divisions case and HUD guidance stating that if a town allows a family of 6 as of right, it cannot restrict a disabled group home to 6. Town attorney Simms acknowledged that Arizona legislation effective August 3, 2018, may exempt behavioral health facilities from local regulation, complicating the town's power to impose conditions. This legal uncertainty motivated the negotiation-based compromise: if the applicant voluntarily agrees to conditions, the town can amend the SUP through planning review without immediately triggering state preemption arguments.

Precedent and commercial sprawl: Residents fear the approval will trigger a cascade of medical and commercial uses along Cloud Road, transforming a rural equestrian neighborhood into a mixed-use corridor. This "Pandora's Box" concern reflects broader anxiety about growth pressures from Phoenix and Scottsdale and the erosion of Cave Creek's distinctive rural character. Adam Trank and Jim Pierce both raised the general plan and the 4,000-acre state trust land on the town's western border as long-term threats to the low-density rural character the community was founded to preserve.

Town's litigation history: Councilman Smith and Vice Mayor Silva referenced Cave Creek's costly litigation history in the past, when the town was sued repeatedly and faced cancellation of insurance coverage. This context informed their caution about overriding legal advice, even when residents demanded action.

Missing pre-application process: Residents' attorney Thomas Galvin emphasized that the applicant did not conduct neighbor outreach before submitting the application. Galvin argued best practice in land-use law is to meet with neighbors, address concerns, and then bring a refined application to the planning commission and council. Here, the applicant approved first and then attempted to negotiate with skeptical residents—a sequence Galvin described as "putting the cart before the horse."

Duration

• Silverman's Estates discussion: Approximately 90 minutes (public comment, deliberation, multiple procedural disputes).
• Total meeting: Approximately 3–4 hours (included water treatment plant upgrade approval, FY 2019 budget adoption, general manager report, and other agenda items).

Other Notable Items

Water Treatment Plant Media Replacement Project (Item 4): The council unanimously approved a $279,179.41 expenditure to replace media filters and add anthracite to the town's water treatment plant. Jim Kaylor, Water/Wastewater Manager, presented the project, which includes rental of a mobile water treatment unit ($146,000), media replacement ($68,133), and contractor labor ($65,043). Expected to generate $121,000 in annual savings through reduced backwashing and electricity costs, with a 15–20-year filter lifespan. The project will proceed over six to seven weeks during the summer to maintain water supply redundancy. Vote: 7–0 approval. Robert Wigand, Finance Director, noted the project was expedited following a July 10 West Tech evaluation and praised Kaylor's team for comprehensive planning under a tight timeline.

FY 2019 Budget Adoption (Resolution R 2018-15): The council unanimously approved the final budget for fiscal year 2019 with total expenditure authority exceeding $15 million. Notable inclusions: $218,000 allocated to Spur Cross Ranch entity; water and wastewater infrastructure funding; contingency reserves for major issues; clarification of interfund loan structure for water/sewer entities. Vice Mayor Silva asked for clarification on outstanding interfund loans (loans from the general fund to water/sewer operations) and whether the council would annually determine write-offs or permanent capital contributions. Finance Director Wigand explained that the budget includes provisions for both approaches and that future councils would decide annually on a policy basis. Councilwoman Clancy noted that the council did not conduct sufficient due diligence and could have trimmed unnecessary expenditures. Vote: 7–0 approval. Wigand reported that the town closed FY 2018 with $20.3 million in cash reserves (after subtracting debt service and restricted funds, approximately $6.8 million unrestricted), the best financial position in the town's recent history.

Quarterly Financial Report (Item 3): Wigand presented preliminary FY 2018 results on a cash basis, showing revenues at 112% of budget and expenditures at 68% of budget. The variance reflects receipt of unexpected grants and conservative spending. Water and wastewater revenues were slightly under projections due to postponement of a rate study. The town's debt service schedule remains current, and cash projections for the upcoming year are stable.

General Plan and Growth Pressures (Public Comment): Adam Trank and Jim Pierce raised concerns about the proposed general plan and the 4,000 acres of state trust land on the town's western border. Pierce noted that the land was annexed into the town in 2008 but has received no development strategy, and he urged the council to adopt a clear policy (bond/acquisition, auction, grazing lease, conservation area, etc.) before a developer acquires it. Trank stated the 2005 general plan is stronger and warned that growth pressures from Phoenix and Scottsdale will "chew this town up and leave nothing but suburban waste" if the new plan is not robust. No vote or formal action was taken.

Water Policy Implementation Concerns (Public Comment): Katja Kinsel noted that the Cave Creek water policy adopted December 4, 2017, required quarterly staff reporting and an emergency interconnect plan with other municipalities, but neither has been implemented as of August 6. She expressed concern about staff accountability on critical water infrastructure issues. The concern was referred to staff; no formal action was taken.

Schoolhouse Road Safety (Public Comment): Adam Trank noted that the newly repaved Schoolhouse Road is slick and dangerous for horses, particularly where equestrian trails cross the road. He requested the town address traction and safety issues. The concern was referred to staff.