💰GILBERT'S BILLION DOLLAR SHELL GAME💰

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Gilbert’s infrastructure plan has been a continual topic of discussion for the better part of the last decade. In 2020, the Long Range Infrastructure Plan addressed the needs and expected timeframes for major capital investments. There was a strong push for investment in public safety, including the Public Safety Training Facility, transportation and roads, and water treatment, including the North Water Treatment Plant, with an estimated cost of $273 million for a complete rebuild of the plant.

However, COVID occurred, and the Town had to prioritize critical projects and evaluate bonding options. At the time, the North Water Treatment Plant was still tentatively scheduled to proceed on time. The decision was made to delay sending the $515 million transportation general obligation bond to voters until 2021 due to uncertainty in the economic forecast.

This is one of the "Smoking Guns" that has contributed greatly to our water rate issues. 

I simply do not have any other words to describe what happened other than to say that TOWN STAFF MISLED THE COUNCIL AND THE PUBLIC.  This was a major misrepresentation of the details of this bond, and the subsequent actions could only have been carried out with the full knowledge and direction of the Town Manager’s office.

At the time and under the circumstances, this particular bond, as it was presented to Council, was not entirely bad and was even an appropriate and responsible action to provide critical funding for the NWTP. However, years later, this particular bond ended up being one of the major reasons for our current financial situation.

I wrote a page that discusses GO and MPC Bonds and how they are used. MPC Bonds are very common; however, they are also controversial. MPC Bonds are often seen as a "backdoor" or "workaround" to get large amounts of money without ever getting permission from the taxpayers.

These two resolutions were unanimously approved on 9/9/2025 by the CURRENT Town Council. I believe this to be one of the most irresponsible Town Council votes in recent history. 

These Resolutions allowed for up to $750 Million Dollars to be reimbursed  from FUTURE BONDS! Think of it as a formal "IOU" for hundreds of millions of dollars that doesn't get reported to anyone and is never approved by voters.

The $515M Transportation (GO) Bond was sent to voters in 2021 and narrowly passed. A Bond Election Challenge lawsuit ensued and despite arguments made to the contrary, the lawsuit influenced the Town's approach to issuing General Obligation Bonds. This bond and the lawsuit were discussed in detail during the Gilbert Financial Retreat - March 3, 2022.

While this bond had no direct effect on water funds, water rates, or NWTP funding, All General Obligation (GO) bonds affect the Town’s ability to borrow money. This bond plays a role in the overall problem.

Hakon Johanson, Director of Finance & Management Services, presented Resolution No. 4287 to the Town Council. This bond resolution was for a very rarely used an highly unusual WRMPC "Revenue" bond for up to $500 Million dollars without requiring voter approval. 

This is a very large bond and processing it as an MPC "Revenue" bond was going to significantly impact Gilbert Water users for decades. It's one the largest MPC "Revenue" bonds ever approved by a municipality. None of the specific details of this highly unusual bond were presented to the council, nor were any details described to the public. Watch the video to see the entire presentation of this bond. The utter lack of dialog, blank spaces to be filled out later, and the urgency to receive 6 votes to activate an emergency clause that bypasses legal tripwires, was deliberate and fraudulent. 

This particular council was experienced and highly knowledgeable. I do not believe that a single member would have approved this bond as easily as they did had they known the full details of the bond and the specific intentions of staff regarding the issuing of the bond funds. I stand by my assertion that this council was grossly misled and deliberately deceived. 

VIDEO HIGHLIGHTS: At NO TIME did ANYONE even say the word "revenue" The lack of desail, the "blank sections to be filled in later," and the urgency to secure six votes to invoke an emergency clause—bypassing legal safeguards—appear to be deliberate. While you're watching, remember that this is a half-billion dollars being tossed around like it's nothing and Gilbert's water users will be stuck paying the bill for decades.

I solidly place blame on the Town Manager's office for this bad financial decision and for using deceptive tactics to get this bond approved. The Town Manager had the duty and obligation to fully discloser the details of this bond, his intentions for issuance, and the long term impact on Gilbert's Water users.

The council had no indication of what was going to unfold in the weeks and years that followed.

Some background - While MPC Bonds are used frequently, an MPC "Revenue" bond is considered a high-risk bond and is VERY unusual, especially for the amount requested. An MPC "Revenue" bond must be paid SOLELY from pledged revenue (ARS § 48-720) from net water revenue. The bank is the senior lien holder, meaning that they get paid first. There are a number of additional requirements associated with this bond. As luck would have it, I was able to obtain records related to this bond with discussions from the bond credit agencies. This article is the first time that I have publicly disclosed that I have this information in my possession. Please read my page about Bonds for more information.

• The Town Council was never informed that this was a "Revenue" bond with very stringent requirements and conditions.
• The ENTIRE AMOUNT of the Bond, $473 Million Dollars, was issued in a lump sum on 6/14/2022. This means that interest for the full amount started to accrue immediately. This is highly unusual! Bonds are first approved by council and then issued as needed to fund projects. The town will normally issue only what is needed to avoid accruing interest.
• There was no obvious discussion EVER with anyone regarding the terms of this bond. Some of the specific terms include maintaining net revenue at a minimum margin of 1.2x the required debt obligation payment. Basically, the town needs to increase water revenue by an extra 20% to satisfy the terms of this bond versus a standard MPC Bond.
• It is not clear in official public records that the WRMPC fully knew or understood the specific terms and intended plan for issuance of this bond when they recommended approval to the Town Council. Side note - The President of the WRMPC left the board in December 2025 after serving 18 consecutive terms.
• Since this bond must be paid SOLELY from water revenue, there is essentially no chance of paying this bond off early. The Principle and Interest payments are in the tens of millions annually!
• The bank is the senior lien holder meaning that they will always get their payments first. This is a HUGE Bond with large payments from water revenue. I believe that the debt obligation associated with this specific bond is the reason for the excessive and disproportionate water base rate.
• Email records have been obtained that discuss the intention of the town to delete all WRMPC emails and just maintain the meeting minutes for the WRMPC. Why was there a push to delete the emails related to THIS particular bond?