Cave Creek Runs Two Water Systems, and Both Are Under Review for Sale

Take two homes in the Cave Creek area. Each has a standard 5/8- to 1-inch residential meter, and each uses 3,000 gallons in a month. One is served by Cave Creek Water and the other by Desert Hills Water. Under the Town's 2026 rate schedule, the first bill comes to about $73.44 and the second to about $93.96. The Town of Cave Creek owns both utilities. It also has an open process to find out whether a buyer wants to take them over.

Both facts belong in a buyer's notes. Which utility serves a property sets what it costs to run. Who owns that utility a few years from now is an open question at Town Hall, and the Town has told residents it will hold public information sessions in early 2027.

Same meter, two price lists

On January 6, 2026, the Cave Creek Town Council approved an average 6% increase for Cave Creek Water, Desert Hills Water and Cave Creek Wastewater, effective February 5, 2026. Heavy users saw larger increases than the average. The rate study behind it, conducted by Willdan and covering 2025 through 2034, added a low-use tier below 4,000 gallons a month and put the highest rates on use above 40,000 gallons, according to the Town's announcement of the rate increase.

The adopted schedules in the January 6, 2026 Council packet show how far apart the two water systems sit:

The 3,000-gallon figures are simple arithmetic from the published base charge and first-tier rate. They do not include wastewater or other line items. Even so, they show the starting gap. A Desert Hills customer pays more before the first gallon comes out of the tap, and more for every gallon after that.

Why the two systems cost different amounts

The difference comes from where the water starts. The Foothills Focus reports that the Cave Creek system runs on Central Arizona Project water treated at the Town's Basin Road plant. The Desert Hills system draws groundwater from three wells, and Cave Creek supplements it with treated CAP water.

These systems also cover more than the town itself. The Town's utilities serve customers outside the municipal boundary, and the Council's rate resolution applies across the Cave Creek Water, Desert Hills Water and Cave Creek Wastewater service areas. The Town's Desert Hills Water System Invitation for Bid states that it owns a public drinking water system outside its municipal limits. So a Cave Creek Town Council vote can set the water bill for a home that doesn't sit inside Cave Creek town limits. Many homes aren't connected to either system at all. The Town's own FAQ names private well owners and "other residents who are not yet hooked up to the Town's water system" as groups whose concerns the Council is weighing.

For a buyer, the first question about any property here is which of these arrangements serves it. A property tour won't answer that.

The top tier is where large lots feel it

The tiered rates matter most for properties with large lots. In the Cave Creek system, a gallon used above 40,000 a month costs a little more than seven times as much as a gallon in the first tier. In Desert Hills it costs about six and a half times as much. Rate studies set tiers this way on purpose, and Cave Creek's 2026 schedule charges the steepest rates for the heaviest use.

So when buyers compare homes, a property that needs a lot of water for landscaping or animals has a different monthly cost depending on which side of the system line it sits on. The asking price doesn't show that. The rate schedule does.

The rate structure isn't settled either. A September 30, 2026 agenda for the Town's Utility Advisory Committee lists general rate design, capacity fees and possible future water-resource fees as discussion items.

Why the Town put its own utilities out to bid

Supply is the reason for the rate pressure, and for the sale review. In its November 3, 2026 FAQ, the Town says nearly 95% of Cave Creek's water supply comes from the Colorado River via CAP. The Bureau of Reclamation is reducing Arizona's allocation by 20% in 2027, and Cave Creek had been anticipating a 20% cut of its own. The Central Arizona Project and the Arizona Water Banking Authority have "firmed up" Cave Creek's supply to make it whole for that year. The FAQ says reductions are likely starting in 2028, depending on conditions at Lake Mead and Lake Powell, and that the Town has 3 to 5 years of water banked underground.

Staff were already working on that gap a year earlier. At a September 23, 2025 presentation, they projected that the Town would need almost 500 acre-feet a year of new water resources by 2030. The options they listed included restarting Cave Creek wells, water exchanges, Harquahala groundwater and storage at Bartlett Dam.

The sale review moved forward step by step:

1. December 2, 2025. The Town issued an Invitation for Bid for the Desert Hills Water System. The optional pre-bid meeting was set for December 16 and bids were due January 15, 2026.
2. January 6, 2026. Council adopted the revised rates.
3. March 24, 2026. At a special meeting, Council voted unanimously to expand the review to include Cave Creek Water and Cave Creek Wastewater, as reported by the Cave Creek-Carefree Independent.
4. Through November 3, 2026. Council held two executive sessions on the bid results and is reviewing proposals with consultants and the Town Attorney.
5. Early 2027. The Town plans public information sessions, followed by a public discussion at a Council meeting once Council reaches consensus.

Mayor Robert Morris made the motion to expand the review. He also made clear that he didn't consider a sale settled. "Municipalities do not sell water systems. It's usually the other way around. They usually buy them," he said, as quoted by the Cave Creek-Carefree Independent. "So anyone that has the idea that this is a done deal and just because we're out here doing these things, I personally am skeptical."

The pipeline from Phoenix is the other option on the table

A sale is one possible outcome. A pipeline the Town just built offers another. The Phoenix Interconnect is designed to send Cave Creek's CAP water to Phoenix for treatment and bring the treated water back. It is built to deliver up to 1.4 million gallons a day, which the Town puts at roughly half its peak-day demand, according to The Foothills Focus. The paper put the project's cost at nearly $20 million. The Town's responses to bidder questions list the funding: $1,012,500 in forgivable principal on a WIFA loan, a $2 million Congressionally Directed Spending grant and $1,949,776 in COVID relief funds.

Morris told The Foothills Focus that the project was first meant to cover outages. He asked what the Town would do if its water were out for two weeks. The paper described the existing setup as a single pipeline that had come close to failing.

Drivers on Cave Creek Road saw the last stage of construction. A Town notice posted October 23 cut the road to one lane in each direction near the interconnect site for about two weeks starting October 26. During that time, contractor MGC modified a 16-inch waterline, which the Town called one of the final steps. In the same notice, the Town said it anticipated receiving treated water from Phoenix in early November.

The interconnect also connects back to the sale question. The November FAQ says the Town hired consultants to evaluate other options, including expanding the interconnect so that the City of Phoenix handles 100% of the town's water treatment. Selling the utilities, expanding the Phoenix arrangement and keeping things as they are all remain options under review.

What the Town says a sale could and could not do

The FAQ answers two concerns directly. The Arizona Corporation Commission would not allow a private water company to sell Cave Creek's water resources to another service territory. The Commission also would not approve a sale to a private company that couldn't show it has adequate water resources to serve the community. The Council says it is also weighing rate impacts and the concerns of residents on private wells.

If keeping the status quo turns out to be the most reliable and cost-effective choice, the Town says it will "continue to pursue opportunities to secure new water supplies in earnest."

The rates and rules above come from Town documents and can change. This post is general information, not legal or financial advice, so confirm how they apply to a specific property with the utility and the right professional.

Quick answers

Does a Cave Creek mailing address mean Cave Creek Water service? Not necessarily. The Town runs both the Cave Creek and Desert Hills systems, which serve customers outside town limits, and some homes use private wells or aren't connected to Town water.

When will residents hear details about the bids? The Town has scheduled public information sessions for early 2027, with a public Council discussion after that.

Is Cave Creek's supply cut in 2027? The Town says CAP and the Arizona Water Banking Authority have firmed its 2027 supply, and that reductions are likely starting in 2028.

Where can I read the rate schedules myself? The full 2026 tables are in the January 6, 2026 Council packet.

If you're comparing homes in Cave Creek, Desert Hills or the surrounding foothills, Inspired Living Real Estate Collective can help you find out which water system serves each property you're considering and keep you updated on the Town's early-2027 sessions. If you already own here and want to know how your home's water setup affects its value, start with an Instant Home Valuation.