Cottonwood and Clarkdale councils approved memorandums of agreement with each other Tuesday night.
The agreements outline their goal of working together in the acquisition of four local water companies.
The two entities announced last week their progress in securing tentative purchase agreements with the Verde Santa Fe, Clemenceau and Cordes Lakes water companies. No agreement has been reached yet with Cottonwood Water Works, but negotiations are continuing.
Since the three secured water companies have no customers within the Clarkdale town boundaries, Cottonwood will be taking the lead by issuing a $13 million bond for the purchases.
If negotiations with Cottonwood Water Works are successful, Clarkdale will come on board financially by issuing bonds for their portion.
The town's proportionate ownership in the three systems, in addition to Cottonwood Water Works, will then be determined and paid for.
Since Cottonwood is the only municipality currently issuing a bond, the city's council also passed a resolution providing a notice of intent to establish water rates, fees and charges for the city's water utility.
City Manager Brian Mickelsen said there will be a public hearing held June 29 on those rates.
Clarkdale Mayor Michael Bluff updated attendees of Tuesday night's council meeting on the progress. He said they are hopeful an agreement with Cottonwood Water Works will be reached.
"We've been working an awful long time," Bluff said.