Johnson Utilities loses in land dispute ruling

A Pinal County judge has ruled that a homeowners association will now control property on which Johnson Utilities recently spilled raw sewage.The Pecan Creek Community Association Inc., representing residents of the Pecan Creek development, legally terminated a lease with Johnson Utilities on more than 100 acres that the company plans to use as a large underground leach field, according to a court ruling by Judge Robert Carter Olson of Pinal County Superior Court.

The utility has already built one of four planned leach fields on the property. The fields would provide an area for Johnson Utilities to dispose of treated wastewater from a nearby sewage plant into the fields. The underground plumbing allows treated sewage to properly filter into the groundwater table hundreds of feet below the property, located in the San Tan area.

John Lohr Jr., the attorney for the homeowners association, said the lease to Johnson Utilities was a sweetheart deal and the private utility failed to keep up its end of the bargain.

“We claim they failed to maintain the property, they failed to landscape the property and they violated laws when they leaked raw sewage,” he said.

Johnson Utilities most recently came under fire for a spill of more than 10,000 gallons of raw sewage on the property in May, where it pooled in Queen Creek Wash. Other spills have occurred on the property, Lohr said.

Meanwhile, lawyers for Johnson Utilities said the court recently issued a ruling that allows them to continue to use the property — while an appeal is pending. The process could take up to a year, estimated Chris Berry, a Phoenix lawyer.

Johnson Utilities is also proceeding with a separate condemnation case on the property, which, if successful, would get the company out from underneath the uncertainties of a lease agreement.

“I think what it is going to come down to ... ultimately is the price for the property,” Berry said.

The homeowners association hasn’t received what it was promised in the wash, which is known better for a pool of raw sewage than a place for a family to have a picnic.

The developer of the property, Pentad Investments, had talked about a recreation area there, landscaped with trees, biking and walking trails and barbecue grills, residents say. Aside from some of the landscaping, that plan was never executed, Lohr said.

The lease of the property to Johnson Utilities in the spring of 2006 came days before the homeowners association was handed over to the residents living in the neighborhood, Lohr said. The board was previously controlled by its developers.

The lease was set for $6,000 a year and required Johnson Utilities to maintain the landscaping on the property, Lohr said. The property is well below market value and Johnson has allowed the area to deteriorate, he said.

“They admitted that in court. They didn’t landscape it and they didn’t do any monthly maintenance on the property,” Lohr said.

Berry said that the property is in a flood plain — greatly reducing its value — and that Johnson Utilities only agreed to maintain areas that it used as part of the lease.

“To say that $6,000 a year is a sweetheart deal is not accurate,” he said.

Early this year, the homeowners association issued a 90-day warning to Johnson Utilities to maintain the property. On June 27, a 30-day notice to terminate the lease was issued. Much of the legal battle centered on whether the area could indeed be considered for recreation use, Lohr said.

He said the homeowners association would be willing to work with Johnson Utilities for a new lease agreement. More money could be used by the association to build some of the expected improvements on top of a leach field.

However, he said an earlier settlement conference before the court proceeding produced nothing.

“I think my client is willing to work with them and is willing to resolve this,” he said. “It would take agreeing to a new lease and a new lease amount.

”Meanwhile, Berry said, the homeowners association should have terminated the lease earlier if they thought the agreement was a bad one. The utility now has hundreds of thousands of dollars in construction work invested in the property.

“We argued at the hearing that if they had a problem with the lease they should have done something when the homeowners association was created,” Berry said.