Avondale landowner exploited loophole in SRP's election rules to influence board races, group says

A watchdog group has accused a Valley landowner of exploiting a loophole in Salt River Project’s rules to use a large property to influence the outcome of the utility’s 2024 board races, before flipping the land to a data center developer for hundreds of millions of dollars.

The allegations center on 200 acres of land in Avondale sold by Vanderwey, a long time West Valley agricultural family, to QTS Data Centers for $247 million in July 2024.

The Energy & Policy Institute, an anti-fossil fuel watchdog group, compiled public documents showing that, in the months before the sale, the Vanderweys transferred ownership of the property through a maze of businesses and trusts operated by the family.

The watchdog alleged the transfers — at least three over seven months — were done to use the property to elect the family’s preferred candidate to SRP’s governing bodies before selling off the land.

Election rules

Every two years, eligible voters pick the members of boards and councils that make big decisions and recommendations for SRP’s Association and District, which provide water and power services to more than 2 million people in Arizona.

Only a fraction of those customers can actually vote in the elections, though, because eligibility is reserved for land owners within the Association and District boundaries.

Votes are awarded on a proportional basis, with one acre equaling one vote. Smaller land owners who own less than one acre receive a fraction of a vote equal to their property size.

That system dates back to the Association’s founding in 1903, said Michael O’Connor, SRP’s associate general manager and chief legal executive.

Until recently, only individuals could vote in SRP’s elections — not other entities like trusts and businesses that owned land within the boundary.

“You have to remember in 1903 when the Association was started, that was before obviously the state of Arizona was even incorporated, and so we didn't have corporation laws and there really weren't trusts back in 1903,” O’Connor said.

But around 2010, changes to state law and SRP policy allowed landowners that placed their properties into trusts to retain the right to vote.

“And really up until the time of 2010, most individuals held their property on an individual basis as opposed to other forms such as trusts,” O’Connor said. “They started to change in terms of trust voting because of some tax laws in the 1990s, etc, early 2000s.”

That change did not apply to business entities, like limited liability companies, also called LLCs.

One hundred days before each election, SRP officials compile voter rolls by creating a list of eligible individuals and trusts that own property within its boundaries.

The workaround 

According to public land sale and ownership documents compiled by Energy & Policy Institute researcher Stephanie Chase, the Vanderweys transferred around 200 acres of the Avondale property into a trust shortly before that deadline in December 2023.

According to deeds on file with the Maricopa County recorder, Hermosa North LCC, which is owned by the family, sold the land to Hermosa North Trust on Dec. 18, 2023.

SRP’s early voting records show Nicholas Vanderwey voted on behalf of the Hermosa North Trust in 2024. The trust’s 217.76 votes in the SRP district election, allocated based on the property’s acres, accounted for 76% of votes in the SRP District 3 board election.

Board member Mario Herrera won that race with 263.88 votes, according to SRP.

According to a property deed on file with the recorder, by June 2024 the Avondale site was again owned by an LLC — TGV Investments, the Vanderwey-owned entity that sold the land to QTS Data Centers a month later, according to Phoenix Business Journal.

The scheme does not appear to break SRP’s election rules.

Speaking generally on the organization’s elections, John Felty, SRP’s corporate secretary, said that as long as a property is owned by an individual or trust by the 100 day deadline before an election, the owners can vote.

“And so that 100 day cutoff means that all properties that are going to be included in that voter property roll will have been designated and recorded in the Maricopa County Recorder's Office, and we will then take that information and develop the voter roll for that year's election,” Felty said.

But Chase argued it raises real transparency concerns for SRP customers, especially those who cannot vote in the elections. That’s because unlike most other large utilities, SRP is generally not subject to oversight by the Arizona Corporation Commission, the state’s utility regulator.

“Unlike the Arizona Corporation Commission, which of course is elected statewide, SRP customers just don't have that amount of say in the governance of the board,” Chase said. “And when you have existing council members who are running for the board, moving large chunks of land to kind of benefit whatever they see as the best policy, it raises a lot of concerns.”

In addition to owning a lot of SRP land, the Vanderweys also have a history of serving on the Association and District boards and councils. Currently, Nicholas Vanderwey represents District 6 on the Association Council and Division 6 on the District Council.

Nicholas and Michael Vanderway are also on the ballot in SRP’s upcoming elections.

Chase argued that raises conflict of interest issues because the family, and their allies on SRP’s governing bodies, are in a position to influence future SRP contracts with the businesses buying their land, such as QTS Data Centers.

“I certainly don't have evidence of what is happening in those contracts, but because it is such a fraught process and we're talking about large amounts of power that data center customers typically require, when we don't have insight to sort of what's happening in those contracts, we don't know how those contracts may favor or not a data center and the individuals who sold that land initially,” Chase said.

Nicholas Vanderwey did not respond to requests for comment.

SRP’s next election is on April 7. Early voting begins on March 11.