Developer George Johnson is no stranger to legal controversy. Late last year, Arizona Attorney General Terry Goddard hit Johnson with a $7 million fine for environmental violations in his unsuccessful bid to turn desert in southern Pinal County into a huge master-planned housing development named La Osa Ranch.

Johnson Utilities has 10 days to present argument

Tribune files motion for access to utility study

Records on possible water deal blocked

Now, a multimillion-dollar failed deal between Florence and a water company he owns will land Johnson’s utility and Florence in Pinal County Superior Court over potentially damaging information about the company. And Florence officials are expressing concerns about the town’s dealings with Johnson — both in negotiations to buy the company and withholding information about the company.

Johnson wants to protect what he calls “proprietary information” from being released to the public by seeking a restraining order of a $300,000 taxpayer-funded study of Johnson Utilities.

Florence officials, including the Town Council, agreed to a confidentiality agreement before entering into negotiations with Johnson for the privately owned utility in January 2007.

Councilman Tom Smith said that at the conclusion of a study he was uncomfortable in closing a deal with Johnson.

“He’s got a lot of business connections in different areas and with different companies,” Smith said. “I don’t know why anyone on the up and up who would want that agreement.”

The Tribune became a third party in the case in which Johnson seeks to protect information about the utility. The Tribune seeks release of the records, and a judge last week gave Johnson Utilities 10 days to come up with a good reason for Florence to withhold the records.

Some of the information in the study was provided to Florence by Johnson. Other information, like an engineer’s study of the system, was contracted directly by the city.

The information provided by the company included the company’s profit-loss margin, the long-term viability of the company based on the current slowdown in the housing market and the structure of the business, Florence spokesman Jess Knudson said.

A recent comparison of Johnson Utilities water rates shows the utility is more expensive than surrounding utilities and the state average.

Florence’s public stance is that all the documents should be public.

However, Mayor Tom Rankin said the town knew the issue would likely end up in court, given the fact the council and the town agreed to the confidentiality agreement.

The report’s findings could have ultimately killed the deal, Rankin said.

“There must have been something in there at the time the deal stopped that George didn’t want out there,” he said. “What it is, I couldn’t tell you.”

The purchase of the utility could have allowed Florence to extend its reach to 20,000 of Johnson’s customers — and perhaps future incorporation of places such as Johnson Ranch.

Brian Tompsett, executive vice president of Johnson Utilities, said the deal didn’t break down because details of the utility would have become public if a government entity purchased the water system.

However, town officials have reported the two parties were only $2 million dollars apart on an approximately $190 million deal.

“The negotiations are confidential and should remain that way,” Tompsett said. “That was our stance all along.”

In March, Johnson paid the town $219,000 of the study’s costs after negotiations had ceased.

That payment doesn’t entitle Johnson to any rights over the study, Knudson said. He said the appearance of a conflict was not an issue.

“If he paid just one dollar ... it would not affect the town’s ability to release those documents,” Knudson said.

Dan Barr, an attorney representing the Tribune, said that confidentiality agreements seeking to supercede state open records law have not held up in Arizona courts.

“All of it is public information,” Barr said. “Anything created or maintained by the town is a public record.”