State Legislative. Water Policy. Resolutions. Board of Directors. Arizona Municipal. Water Users. Association. of the. of the

Transcription

1 2006 State Legislative Water Policy Resolutions of the Board of Directors of the Arizona Municipal Water Users Association

2 TABLE OF CONTENTS STATE LEGISLATIVE WATER POLICY RESOLUTIONS Resolution 06.A Resolution 06.B Resolution 06.C The 1980 Groundwater Management Act and Safe-Yield The 1980 Groundwater Management Act and Rural Arizona Funding Rural Water Resources Development: Conditions Antecedent and Funding Principles ISSUE PAPERS Issue A Issue B Issue C The 1980 Groundwater Management Act: Safe-Yield and Ending Groundwater Mining The 1980 Groundwater Management Act and Rural Arizona Funding Rural Water Resources Development: Conditions Antecedent and Funding Principles

3 Resolution 06.A RESOLUTION A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ARIZONA MUNICIPAL WATER USERS ASSOCIATION REGARDING THE 1980 GROUNDWATER MANAGEMENT ACT AND SAFE-YIELD WHEREAS, the Arizona Municipal Water Users Association represents the Cities of Chandler, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Tempe, and the Town of Gilbert in the development of urban water policy for Maricopa County; and WHEREAS, the 1980 Groundwater Management Act established the goal of safe-yield---a long-term balance between the amount of groundwater withdrawn and the amount replenished---for the Phoenix, Tucson, and Prescott Active Management Areas; and WHEREAS, safe-yield will not be achieved so long as groundwater mining continues in the Phoenix, Tucson, and Prescott Active Management Areas. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Arizona Municipal Water Users Association that the Association urges the Arizona State Legislature to resist any efforts to repeal, directly or indirectly, the safe-yield management goal; and BE IT FURTHER RESOLVED that the Arizona State Legislature require that those who propose changes to the 1980 Groundwater Management Act must address the following: 1. What might the proposed change do in terms of groundwater mining? Will it be increased? Decreased? Or will the proposed change have little or no impact on the level of groundwater mining? 2. What might the proposed change mean for the achievement of safe-yield? Will it be more difficult? Easier? Or will the proposed change have little or no impact on the achievement of safe-yield? 3. If groundwater mining will be increased and the achievement of safe-yield made more difficult by the proposed change, why is that justified? 4. Will other persons or water users be affected by the proposed change, and if so, how? DATED THIS 12TH DAY OF JANUARY 2006 Mayor Boyd W. Dunn, President Arizona Municipal Water Users Association ATTEST: Steven L. Olson, Executive Director Arizona Municipal Water Users Association JRM:dsp h:\resl.06.a

4 Resolution 06.B RESOLUTION A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ARIZONA MUNICIPAL WATER USERS ASSOCIATION REGARDING THE 1980 GROUNDWATER MANAGEMENT ACT AND RURAL ARIZONA WHEREAS, the Arizona Municipal Water Users Association represents the Cities of Chandler, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Tempe, and the Town of Gilbert in the development of urban water policy for Maricopa County; and WHEREAS, the 1980 Groundwater Management Act (GMA) established Active Management Areas, including the Phoenix Active Management Area, within which the GMA places limits on rights to withdraw groundwater, regulates the drilling of new wells, requires the metering of wells, the reporting of water use, the conservation of water, and prohibits new subdivisions for which there is not a 100-year assured water supply; and WHEREAS, the 1980 Groundwater Management Act does not apply outside of Active Management Areas; meaning, that in rural Arizona there are no restrictions on the drilling of new wells, no limitations on new uses of groundwater, no requirements to meter wells or conserve water, and that lots in subdivisions may be sold even if there is not a 100-year adequate water supply; and WHEREAS, the decision to subject only urban Arizona to intensive water management was based in part on the assumptions that rural Arizona did not have any serious water supply problems and would not experience any significant growth pressures, which assumptions have proven invalid causing many to be concerned that if a long-term water supply is not developed to meet the needs of the existing population and provide for future growth in rural Arizona, the health and welfare of the entire state will be at risk; and WHEREAS, the impacts of the 1980 Groundwater Management Act s water management provisions have proven significant and beneficial for municipal providers within Active Management Areas, not the least of which is a drought insurance program; and WHEREAS, rural Arizona may benefit from some of the water management concepts in the 1980 Groundwater Management Act so long as such water management concepts are adopted in a manner that reflects the varied local conditions in rural Arizona. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Arizona Municipal Water Users Association that the Association urges the Arizona State Legislature to provide rural Arizona with the water management tools that can help rural Arizona to ensure its future prosperity by passing legislation requiring that: 1. Subdivided land, including dry-lot subdivisions, regardless of subdivided lot size, may not be sold or leased for new residential development without demonstrating an adequate water supply to the Arizona Department of Water Resources. An adequate water supply means: a. Sufficient groundwater, surface water, or effluent of adequate quality will be legally and continuously available to satisfy the water needs of the proposed, new residential use for at least 100 years; and b. The financial capability has been demonstrated to construct the water facilities necessary to make the supply of water available for the proposed, new residential use, including a delivery system and any storage facilities or treatment works. 2. A private well to serve a new residential use may not be drilled without demonstrating an adequate water supply to the Arizona Department of Water Resources.

5 3. The Arizona Department of Water Resources must be given the authority to enforce water conservation requirements for all water users. 4. All wells must be metered or use an Arizona Department of Water Resources-approved measuring device with the amount of water withdrawn annually reported to the Arizona Department of Water Resources. DATED THIS 12TH DAY OF JANUARY 2006 ATTEST: Mayor Boyd W. Dunn, President Arizona Municipal Water Users Association Steven L. Olson, Executive Director Arizona Municipal Water Users Association JRM:dsp h:\resl.06b.

6 Resolution 06.C RESOLUTION A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ARIZONA MUNICIPAL WATER USERS ASSOCIATION REGARDING FUNDING RURAL WATER RESOURCES DEVELOPMENT: CONDITIONS ANTECEDENT AND FUNDING PRINCIPLES WHEREAS, the Arizona Municipal Water Users Association represents the Cities of Chandler, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Tempe, and the Town of Gilbert in the development of urban water policy for Maricopa County; and WHEREAS, in rural Arizona the absence of the financial wherewithal to plan for and to acquire the water resources and construct the water and wastewater infrastructure (herein after referred to as water resource development) necessary to meet the needs of the current and future population presents, perhaps, the most significant obstacle to the future economic vitality of rural Arizona; and WHEREAS, when coupled with the lack of technical assistance, inadequate hydrogeologic data, and the dearth of information about the amount and patterns of water use, the problem is only compounded; and WHEREAS, there must be some conditions antecedent in place before the member cities and town of the Arizona Municipal Water Users Association will join with the rest of the Arizona water community to consider how to equitably fund the water resource development in rural Arizona that will be necessary. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Arizona Municipal Water Users Association that the Association urges the Arizona State Legislature to establish in statute the following conditions antecedent: 1. Subdivided land, including dry-lot subdivisions, regardless of subdivided lot size, may not be sold or leased for new residential development without demonstrating an adequate water supply to the Arizona Department of Water Resources. An adequate water supply means: a. Sufficient groundwater, surface water, or effluent of adequate quality will be legally and continuously available to satisfy the water needs of the proposed, new residential use for at least 100 years; and b. The financial capability has been demonstrated to construct the water facilities necessary to make the supply of water available for the proposed, new residential use, including a delivery system and any storage facilities or treatment works. 2. The Arizona Department of Water Resources is given the authority to enforce conservation requirements for all water users. 3. All wells must be metered or use an Arizona Department of Water Resources-approved measuring device with the amount of water withdrawn annually reported to the Arizona Department of Water Resources. BE IT FURTHER RESOLVED that assuming the conditions antecedent are met and that the Arizona State Legislature establishes a funding program for rural water resource development, the Board of Directors of the Arizona Municipal Water Users Association urges that the funding program incorporates the following funding principles: 1. The costs of funding rural water resource development should not be the responsibility of the state or water users or taxpayers that are residents of Maricopa, Pinal, and Pima Counties. 2. New growth should pay for itself.

7 3. The ability of local and county governments to levy impact fees for water resource development should not be pre-empted. DATED THIS 12TH DAY OF JANUARY 2006 Mayor Boyd W. Dunn, President Arizona Municipal Water Users Association ATTEST: Steven L. Olson, Executive Director Arizona Municipal Water Users Association JRM:dsp h:\resl.06.c

8 Resolution 06.1 RESOLUTION A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ARIZONA MUNICIPAL WATER USERS ASSOCIATION REGARDING USE OF EXCESS CAPACITY IN THE CENTRAL ARIZONA PROJECT CANAL WHEREAS, the Arizona Municipal Water Users Association (AMWUA) represents the Cities of Chandler, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Tempe, and the Town of Gilbert in the development of urban water policy for Maricopa County; and WHEREAS, the Central Arizona Water Conservation District (CAWCD) has performed in an exemplary manner in meeting its contractual obligations to its Central Arizona Project (CAP) M&I subcontractors; and WHEREAS, the CAWCD, operating as the Central Arizona Groundwater Replenishment District (CAGRD), is also obligated, by statute, to replenish aquifers in the Phoenix, Pinal and Tucson Active Management Areas for excess groundwater used by CAGRD members; and WHEREAS, any municipal water provider or developer, upon proving that sufficient groundwater exists beneath its lands to serve projected customer demands for 100 years, can apply for membership in CAGRD, and WHEREAS, membership in CAGRD cannot be statutorily denied by CAGRD; and WHEREAS, CAGRD plans to acquire water to meet its statutory replenishment obligation and use some of the excess capacity in the CAP canal to import this water; and WHEREAS, the members of AMWUA also intend to import additional water using excess capacity in the CAP canal to meet customer demands; and WHEREAS, the CAWCD is, for all practical purposes, the State entity that controls the allocation and use of the excess capacity in the CAP canal; and WHEREAS, the excess capacity in the CAP canal is limited; and WHEREAS, the CAWCD s statutory obligation to replenish excess groundwater used by CAGRD members combined with its control over the allocation and use of the limited excess capacity in the CAP canal provides the potential for CAGRD members to receive a disproportionate share of this valuable CAP asset at the expense of the members of AMWUA and other CAP M&I subcontractors designated as having an assured water supply pursuant to State law; and WHEREAS, this potential disproportionate benefit may create future conflict over the use of the limited excess capacity in the CAP canal; and WHEREAS, the needs of 1) AMWUA members, 2) other CAP M&I subcontractors designated as having an assured water supply pursuant to State law and 3) CAGRD members are better met through cooperation and coordination in the use of the limited excess capacity in the CAP canal.

9 NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of AMWUA urges the CAWCD to provide equal access to the limited excess capacity in the CAP canal for 1) AMWUA members, 2) other CAP M&I subcontractors designated as having an assured water supply pursuant to State law and 3) CAGRD. DATED THIS 22 ND DAY OF JUNE 2006 ATTEST: Mayor Boyd W. Dunn, President Arizona Municipal Water Users Association Steven L. Olson, Executive Director Arizona Municipal Water Users Association JRM:dsp h:\cagrdresolution-final.2

10 2006 LEGISLATIVE ISSUES AMWUA ISSUE PAPERS (1-1-06) ISSUE A THE 1980 GROUNDWATER MANAGEMENT ACT: SAFE-YIELD AND ENDING GROUNDWATER MINING The 1980 Groundwater Management Act Responding to the hazards associated with groundwater overdraft or mining, i.e., withdrawing more groundwater than is recharged or replenished, and to federal policy linking continued funding of the Central Arizona Project (CAP) to effective and comprehensive groundwater regulation, the Arizona State Legislature enacted the 1980 Groundwater Management Act (GMA). The GMA's declaration of policy states that, "The Legislature finds that...withdrawal of groundwater is greatly in excess of the safe annual yield and that this...is threatening to do substantial injury to the general economy and welfare of this state and its citizens...it is, therefore, declared to be the public policy of this state that...it is necessary to provide a framework for the comprehensive management and regulation of...groundwater in this state." ( ) The framework for the comprehensive management and regulation of groundwater is found in a set of five groundwater management plans. "The plans shall include a continuing mandatory conservation program...designed to achieve reductions in withdrawals of groundwater." ( ) These sections of the GMA encompass the basic objectives of AMWUA's municipal groundwater management philosophy---the achievement of safe-yield and an end to groundwater mining in the Phoenix Active Management Area (AMA). Safe-Yield Safe-yield is a management goal which aims to achieve, by 2025, a long-term balance between the amount of groundwater mined and the amount of water artificially, naturally and incidentally recharged or replenished. Under safe-yield conditions, groundwater users in the Phoenix AMA can normally depend upon withdrawing only that amount of groundwater which has been or will be replenished. Groundwater in excess of that which has been replenished can be mined only when the renewable portion of the total water supply is inadequate to meet the then existing level of demand. To employ a banking metaphor, safe-yield means that Phoenix AMA's capital (groundwater) is saved for emergencies (drought) and only the interest earned (amount of groundwater replenished) may be routinely spent. The achievement of safe-yield means that future growth and development in the Phoenix AMA cannot rely on groundwater mined in the Phoenix AMA. Groundwater can be used, but only to the extent it is or will be replenished. 1

11 Ending Groundwater Mining Groundwater mining must be ended to achieve safe-yield and halt the overdraft. The physical and economic impacts of groundwater mining are serious: the ground can sink or subside; large cracks or fissures can form in the land surface; quality problems can arise; and as groundwater levels decline, pumping costs increase. And, finally, since mined groundwater is for all practicable purposes a non-renewable resource, the more it is mined today the less there is for emergencies tomorrow. Groundwater mining in the Phoenix AMA can be ended in a number of ways: implementing conservation programs, substituting other kinds of water such as effluent for mined groundwater, replenishing the groundwater aquifer through artificial recharge, augmentation programs, developing renewable supplies like CAP water, and purchasing existing groundwater mining rights and retiring them from use, not transferring them to another use. It is incumbent that Phoenix AMA water resource management efforts move forward in all of these areas so that groundwater mining will be halted and safe-yield achieved. Nevertheless, the GMA is not sacrosanct; it is not a perfect instrument of law. Those who propose changes to the GMA, however, must, at minimum, be prepared to address the following: 1. What might the proposed change do in terms of groundwater mining? Will it increase? Decrease? Or will it have little or no impact? 2. What might the proposed change mean for the achievement of safe-yield? Will it be more difficult? Easier? Or will it have little or no impact? 3. If groundwater mining will be increased and the achievement of safe-yield made more difficult by the proposed change, why is that justified? 4. Will other persons or water users be affected by the proposed change? If so, how? JRM:dsp h:\bob\leg-isue.06a 2

12 2006 LEGISLATIVE ISSUES AMWUA ISSUE PAPERS (1-1-06) ISSUE B THE 1980 GROUNDWATER MANAGEMENT ACT AND RURAL ARIZONA Introduction June 12, 2005, marked the 25 th anniversary of the enactment of Arizona s 1980 Groundwater Management Act (GMA), legislation at that time nationally acclaimed as the most comprehensive law to manage and regulate groundwater use in the country. The GMA quantified and regulated rights to withdraw groundwater in hydro-geographic areas of the state where the overdraft, or mining, of groundwater was most severe and/or where competition for rights to groundwater was so intense that litigation was the norm. These hydro-geographic areas are called Active Management Areas (AMAs). Within AMAs, the GMA identifies and places limits on rights to withdraw groundwater, regulates the drilling of new wells, and requires the metering of wells and reporting of water use to the Arizona Department of Water Resources (DWR). Significantly, the GMA also requires water users to conserve water pursuant to management plans adopted by DWR and prohibits new subdivisions for which there is not a 100-year assured water supply (AWS). With the establishment of AMAs that include most of Arizona s population and subjecting those areas to intensive water management requirements, the GMA effectively divided the state into AMA Arizona (or for lack of a better term urban Arizona) in which a precondition to further growth and development is the demonstration of the physical and legal availability of water and non-ama Arizona (or again for lack of a better term rural Arizona) in which there is no such precondition to growth and development. Outside of AMAs, the GMA requires little regulation of groundwater use. With the exception of Irrigation Non-Expansion Areas (areas in which only acres of farmland that were historically irrigated may continue to be irrigated), outside of an AMA any person may withdraw groundwater for a reasonable and beneficial use. There are no restrictions on the drilling of new wells, no limitations on new uses of groundwater, and no enforceable requirements to meter wells or conserve water. Although the developer of a proposed subdivision is required to submit evidence to DWR showing the adequacy of the water supply for the subdivision, the developer may sell lots in the subdivision even if DWR has determined that the water supply was inadequate. Moreover, it is unclear whether city and county governments have the authority to deny a subdivision solely on the basis of an inadequate water supply. 1 1 Partly as a result of recommendations from the Governor's Drought Task Force, legislation (HB 2277) was introduced and passed in 2005 which dealt for the first time with municipal water planning in rural Arizona. The legislation requires community water systems to prepare system water plans which include plans for water supply, drought preparedness and water conservation. Importantly, each system is required to maintain records and submit annual water use reports to DWR. Even though the legislation does not require metering and its enforcement provisions are without teeth, HB 2277 is a positive step forward for water resources management in rural Arizona. On the other hand, legislation (HB 2173) which would have given cities and towns the specific authority, if they so chose, to deny subdivisions on the basis of an inadequate water supply was a dismal failure. 1

13 Apart from the almost universal opposition to state water management in rural Arizona in 1980, the decision to subject only urban Arizona to intensive water management was based in part on the assumption that rural Arizona did not have any serious water supply problems and the companion assumption that it would not experience any significant growth pressures. These assumptions are now invalid. In the past decade, many rural areas have become popular places to establish residences (including second homes), businesses, and communities. Indeed, the growth rates in some of Arizona s rural counties have been among the highest in the nation. However, the development of water supplies to support current and projected growth has lagged behind. In many rural areas, shallow aquifers are being drained, wells are going dry, and water is being hauled. Indeed, some homeowners could be left sucking sand. This is not simply just a question of drought. It is one of inadequate water supplies, period. Many in the state, rural as well as urban interests, are concerned that if a long-term water supply is not developed to meet the needs of the existing population and provide for future growth in rural Arizona, the health and welfare of the entire state will be at risk. The impacts of the GMA on urban AMA have been profound. Insofar as the issue is what rural Arizona can learn from the GMA s 25-year impact on urban Arizona, let us briefly focus on its conservation requirements and, in more depth, the significant impacts of the AWS program in one of the AMAs with a management goal of safe-yield---the Phoenix AMA. By highlighting what the GMA and DWR have directly and indirectly required Phoenix AMA s municipal water providers to undertake may serve to indicate how rural Arizona s economic potential could be realized. Conservation in the Phoenix AMA The GMA requires DWR to adopt a series of management plans for each AMA that includes a continuing mandatory conservation program for all persons withdrawing groundwater in the AMA. Are these conservation requirements working in the Phoenix AMA? The evidence seems to so indicate. Agricultural use is declining, but that may be more a recognition of the rapid urbanization of farmland. Industrial users are required to use the latest commercially available conservation technology consistent with reasonable economic return and are doing so. Municipal use is, understandably, increasing absolutely as the population grows but, comparatively speaking, progress is measurable. For example, in the City of Phoenix alone, although population has increased 33% in the past 15 years, water use per person has actually dropped 17% during that period and 27% since peak use in The conservation message has an audience. Can more be achieved? Of course. But the trend lines are in the right direction. We are all---agricultural, industrial, municipal---becoming more efficient. A culture of conservation has developed. In the Phoenix AMA since 1980, in excess of $35 million has been expended by municipal water providers on their water conservation programs. With some notable exceptions like the Town of Payson and the City of Flagstaff, in most of rural Arizona water conservation has not been on the front burner. However, perhaps more by necessity than choice due to the drought, the issue of water conservation is reaching increasingly receptive ears across the entire state. Not only is conservation the most important way to stretch the life of existing water supplies, it should not 2

14 be forgotten that because each new water supply will probably cost more than the previous one, conservation can be the cheapest source of new water. Water conservation must be a key element in any water management effort, and central to any water conservation program is universal metering. Universal metering produces the critical data necessary for real planning and provides a basis for an efficient water conservation plan that recognizes the importance of rate structure. Since 1980, municipal water providers in the Phoenix AMA have required metering of all connections and have adopted water rate structures designed to encourage water conservation. The number of un-metered connections served by municipal water providers in rural Arizona is unknown as is the number of municipal providers without a rate structure that encourages conservation. Assured Water Supply Requirements in the Safe-Yield Phoenix AMA Simply put, an AWS means that sufficient water of adequate quality must be continuously and legally available to satisfy the proposed subdivision s water use for 100 years. Significantly, the proposed water use must also be consistent with the achievement of the AMA s management goal. The safe-yield management goal, in an operational context, means that it is state water management policy within such AMAs to, over time, halt municipal groundwater mining, i.e., withdrawing and using groundwater in excess of the amount the safe-yield AMA s groundwater aquifers are being recharged or replenished. The AWS requirement means that cities and subdivisions can t grow on mined groundwater, i.e., houses can t grow on mined groundwater. Originally included as a consumer protection measure to prevent unscrupulous developers from selling land without water to innocent homebuyers, the AWS requirements have become one of the GMA s most effective, if not the most effective, water management tools. Indeed, the consequences of the AWS requirements in safe-yield AMAs for municipal water providers have been legion. Some of the most significant are: Drought Insurance Since mined groundwater withdrawn in a safe-yield AMA can t be used to demonstrate an AWS, growth can t occur on mined groundwater. So then, what good is groundwater? Two words: drought insurance. Sooner or later, the renewable water supplies of AMAs will face some degree of shortage. In fact, they already have. Groundwater not depleted today will be there for use tomorrow. The AWS program is a drought insurance program. In fact, it can be argued that the GMA provides a basic drought plan for safeyield AMAs. Expanded Planning Horizons The water resources planning horizon for the vast majority of municipal water providers in AMAs changed almost immediately from a short term horizon of five to ten years to a long term horizon of 50 to 100 years to take recognition of the AWS requirements. The development of comprehensive municipal water resources plans are now the rule rather than the exception in urban Arizona. 3

15 Renewable Water Supply Utilization and Investments There is little argument that the AWS requirements have measurably increased the utilization of renewable water supplies and decreased dependence on groundwater. Municipal water providers soon recognized that mined groundwater could not provide a water supply for the growing and expanding municipal sector in safe-yield AMAs. So be it. Municipal water providers in safe-yield AMAs planned and acted accordingly; they sought alternative, renewable water supplies. Since 1980 in the Phoenix AMA, municipal water providers capital expenditures for surface water treatment and delivery systems, renewable supply acquisitions, water reclamation systems, and recharge activities are in the neighborhood of at least $1.5 billion. Unfortunately, the use of Arizona's renewable water supplies may have reached sustainability limits. The purchase and transfer of surface water rights and Colorado River contracts is an avenue worth exploring. Increased Effluent Reuse The AWS requirement is also a partial reason why approximately 50% of the effluent currently produced by municipal water providers in the Phoenix AMA today is either exchanged for potable water or reused somewhere in the Phoenix AMA. By the end of the decade, effluent reuse in the Phoenix AMA may approach 75%. Rural Arizona is well aware that reclaimed effluent will be an important component of its water resource portfolio. Importation of Groundwater: Water Farms Recognizing that one can t grow on groundwater mined in a safe-yield AMA, a number of municipal water providers in the Phoenix AMA purchased water farms in rural Arizona and in the Pinal AMA, a non-safe-yield AMA. We all know the result: for all practical purposes and except for the traditional grandfathering, groundwater is generally, now, no longer transportable between groundwater basins. Rural Arizona and many safeyield AMA residents for that matter, feel that groundwater is properly reserved only for use in the basin in which it is withdrawn. Rural Arizona may have to revisit this issue, sooner rather than later. Water Resources Related Fees Complying with the GMA, the AWS requirements and growth related costs is expensive. Since the passage of the GMA in 1980, customers of the largest municipal water providers in the Phoenix AMA have faced the imposition of, or large increases in, impact fees for water and wastewater development as well as, in some cases, special fees for water resource acquisitions. Water-related impact and/or acquisition fees levied in non- AMA Arizona are beginning to approach, and in some cases exceed, those levied in the AMAs. The water impact/acquisition fees levied by the Town of Payson and the Cities of Flagstaff and Williams come to mind. However, most of the remainder of non- Arizona lags behind. This may soon have to change. 4

16 Direct Recharge Programs (Underground Storage Facilities) Municipal water providers in the Phoenix AMA initiated and were the strongest supporters behind the mid-1980 legislative efforts to introduce and implement a direct recharge program using Colorado River or CAP water that would otherwise have remained in the river. In direct recharge, water is physically added to an aquifer, typically through spreading basins or injection wells. Through 2004 nearly one million acre-feet of primarily CAP water and effluent have been directly stored underground in the Phoenix AMA. Water stored underground can be used to firm up surface water supplies during droughts or to demonstrate an AWS. Rural municipal water providers appear well aware of the centrality of the direct recharge of effluent to their future. In Lieu Recharge Programs (Groundwater Savings Facilities) Use of in lieu recharge programs or groundwater savings facilities is another water resource management tool employed in AMA Arizona. In these kinds of recharge projects, a person (a municipal water provider or the Arizona Water Bank) with access to an excess supply of renewable water (typically excess CAP water) makes this water economically available to a person (an irrigation district or farmer) who otherwise would have pumped groundwater. The person with the renewable water then earns credits which can be recovered at a later date. Through 2005, it is estimated that close to 2 million acre-feet of such credits will have been registered in the Phoenix AMA. These credits also can be used to firm up surface water supplies during droughts or to demonstrate an AWS. It is problematic whether the concept of in lieu recharge holds any meaningful promise for most of the rest of Arizona. One first needs access to an excess supply of renewable water. Both access and excess are in short supply in most of rural Arizona. What the State Legislature Should Do In this coming legislative session it is imperative that the Legislature address the water management situation, or lack thereof, in rural Arizona. This is not a call for the statewide application of the GMA, or for the establishment of safe-yield AMAs in rural Arizona. That level of hands-on, intensive state regulation is probably neither necessary nor achievable. Management goals and plans should reflect local conditions. Just as it is obvious that one size does not fit all, so too is it evident that one need not go barefoot. Accordingly, it is time the Arizona State Legislature provides rural Arizona with the water management tools that can help it to ensure its future prosperity. At minimum, the Legislature is urged to recognize that the water management situation in rural Arizona requires the following: 1. Subdivided land, including dry-lot subdivisions, regardless of subdivided lot size, may not be sold or leased for new residential development without demonstrating an adequate water supply to DWR. 2 2 According to a recent Rocky Mountain Poll (News Release 2004-IV-02), Six of ten Arizonans favor laws to prevent developers from building subdivisions in rural areas where there is no proven water supply to support such developments. Support transcends political party lines and regions of the state, and is unabated even if such laws were to have the effect of slowing down growth in those rural areas. 5

17 An adequate water supply means: a. Sufficient groundwater, surface water, or effluent of adequate quality will be legally and continuously available to satisfy the water needs of the proposed, new residential use for at least 100 years; and b. The financial capability has been demonstrated to construct the water facilities necessary to make the supply of water available for the proposed, new residential use, including a delivery system and any storage facilities or treatment works. 2. A private well to serve a new residential use may not be drilled without demonstrating an adequate water supply to DWR. 3. DWR must be given the authority to enforce water conservation requirements for all water users. 4. All wells must be metered or use a DWR-approved measuring device with the amount of water withdrawn annually reported to DWR. JRM:dsp h:\bob\leg-isue.06b 6

18 2006 LEGISLATIVE ISSUES AMWUA ISSUE PAPERS (1-1-06) ISSUE C FUNDING RURAL WATER RESOURCE DEVELOPMENT: CONDITIONS ANTECEDENT AND FUNDING PRINCIPLES The primary recommendation from this Town Hall is that dedicated and secure funding sources be created to finance Arizona s critical water management, planning and infrastructure needs. 1 Introduction There is little argument that in rural Arizona the absence of the financial wherewithal to plan for and to acquire the water resources and construct the water and wastewater infrastructure (herein after referred to as water resource development) necessary to meet the needs of the current and future population presents, perhaps, the most significant obstacle to the future economic vitality of rural Arizona. When coupled with the lack of technical assistance, inadequate hydrogeologic data and the dearth of information about the amount and patterns of water use, the problem is only compounded. The dilemma is, and has always been, money. Where will the funds come from to do what is needed in rural Arizona? Funding options have been identified. Some of them include: - Federal assistance - State appropriations - Private gifts, grants or donations - Bonding - Real estate transfer taxes - Building permit fees - Impact fees - Property taxes - Surcharges on water use What institutional or governmental structure will be necessary to administer the funds? Do existing ones like the Arizona Department or Water Resources (DWR) or the Water Infrastructure Financing Authority or the Natural Resource Conservation Districts provide a workable foundation? Or might a multi-jurisdictional water facilities district or a new institutional structure based on watersheds, for example, prove more productive? 1 Report of the Eighty-fifth Arizona Town Hall, Arizona s Water Future: Challenges and Opportunities. Grand Canyon, Arizona, October 31 - November 3, Page 17. 1

19 This issue paper, however, will not recommend any particular funding source or set of sources for water resource development in rural Arizona, nor will it suggest an appropriate administrative structure. Instead, this issue paper will identify some conditions antecedent that must be in place before the member cities and town of the Arizona Municipal Water Users Association will join with the rest of the Arizona water community to consider how to equitably fund the water resource development in rural Arizona that will be necessary to meet the needs of its current and future population. First things first; the cart must not be put before the horse. In addition, and assuming the conditions antecedent are met, some basic funding principles will also be set forth. Conditions Antecedent 1. Subdivided land, including dry-lot subdivisions, regardless of subdivided lot size, may not be sold or leased for new residential development without demonstrating an adequate water supply to DWR. An adequate water supply means: a. Sufficient groundwater, surface water or effluent of adequate quality will be legally and continuously available to satisfy the water needs of the proposed, new residential use for at least 100 years; and, b. The financial capability has been demonstrated to construct the water facilities necessary to make the supply of water available for the proposed, new residential use, including a delivery system and any storage facilities or treatment works. Financing growth without an adequate water supply is tantamount to financing a train wreck. 2. DWR must be given the authority to enforce conservation requirements for all water users. Conservation is a foundation of a water management plan and is one thing that can be accomplished without any hydrogeologic data. 3. All wells must be metered or use a DWR-approved measuring device with the amount of water withdrawn annually reported to DWR. Efficient and prudent water management and water resources planning is impossible if one does not know how much water is being used and by whom. 2

20 Funding Principles 1. The costs of funding rural water resource development should not be the responsibility of the state or water users or taxpayers that are residents of Maricopa, Pinal, and Pima Counties. At this point in time, it is simply unrealistic for rural Arizona to expect the state and urban water users and taxpayers to fund its water resource development needs, even though many rural residents think it is the state s fiduciary obligation to do so. Some in rural Arizona believe the state and rural water users and taxpayers actually financed the CAP for the benefit of urban Arizona. They contend that it is now rural Arizona s turn to receive the same benefit. Apparently, some in rural Arizona do not understand that the CAP is being paid for by its water users and the taxpayers in Maricopa, Pinal, and Pima Counties. State funding and rural tax monies are not involved. 2. New growth should pay for itself. The financial burden of water resource development should be placed on the growth that creates the need for that development. Such can help ensure that existing rural and urban residents water rates are cushioned from the financial impact of new water resource development costs. 3. The ability of local and county governments to levy impact fees for water resource development must not be impaired. Assuming for a moment that there may eventually be a state program to assist rural water resource development, one must be aware that one size will not fit all. Therefore, the ability to recognize and react to local conditions must not be pre-empted. JRM:dsp h:\bob\leg-isue.06c 3

21 2006 AMWUA ISSUE PAPER (5-4-06) ISSUE 1 CENTRAL ARIZONA GROUNDWATER REPLENISHMENT DISTRICT: USE OF EXCESS CAPACITY IN THE CENTRAL ARIZONA PROJECT CANAL Issue Currently, the Central Arizona Water Conservation District's (CAWCD) Board of Directors is undergoing a strategic planning process to determine future directions for the Central Arizona Project (CAP). Because the CAWCD Board of Directors is also the Board of Directors of the Central Arizona Groundwater Replenishment District (CAGRD), the strategic planning process will address issues related to the CAGRD. One of these issues is the use of the remaining, limited excess capacity in the CAP canal to wheel non-project water (water other than CAP water) for the CAGRD and other CAP users. Since the CAWCD is the State entity that controls the allocation and use of the excess capacity in the CAP canal, the likelihood of increased competition between CAGRD and other CAP users over the remaining, limited excess capacity in the CAP canal places the CAWCD Board in an untenable, cross-pressured position. There is concern that CAWCD's open-ended and ever-growing statutory replenishment obligation for CAGRD when combined with CAWCD's control over the allocation and use of the excess capacity in the CAP canal creates the potential for the CAGRD to receive a disproportionate share of what remains of this valuable CAP asset. Recommendation It is recommended that the Board of Directors of the Arizona Municipal Water Users Association (AMWUA) approve the attached resolution, which urges the CAWCD to provide equal access to the limited excess capacity in the CAP canal to meet customer demands and obligations. The resolution recognizes that the needs of AMWUA members, other CAP M&I subcontractors designated as having an assured water supply and CAGRD members regarding the use of the limited excess capacity in the CAP canal are all better met through cooperation and coordination. Background The CAGRD was established in 1993 to alleviate the pressures of the 1980 Groundwater Management Act s assured water supply (AWS) requirements which mandated that new subdivision growth occur, not on mined groundwater (groundwater that is not replaced or replenished), but on renewable water supplies that could be proven to be physically and legally available for 100 years. Faced with being forced to acquire such renewable supplies and build the enormously expensive infrastructure needed to make use of those supplies, the development community and others, including some municipal water providers, lobbied for the creation of the CAGRD. Formed by an Arizona legislature leery of new special districts, CAGRD is a "department" within the CAWCD, the entity in charge of operating the CAP. The CAGRD is the same entity as the CAWCD. Thus, the Board of Directors of the CAWCD is also the Board of Directors of the CAGRD. 1

22 The CAWCD, operating as CAGRD, is required by law to replenish mined groundwater that is withdrawn to serve development on lands and within municipal service areas that are members of the CAGRD. To become a member land or a member water service area, the landowner or the municipal water provider must first demonstrate to the Arizona Department of Water Resources (DWR) that 100 years worth of groundwater is physically and legally available to meet the projected water demands of the existing and/or projected growth on the lands or in the service area. Membership in the CAGRD allows the municipal water provider serving the land to pump groundwater to meet its water demands. Currently, the CAGRD relies on CAP M&I subcontracts totaling 7,746 acre-feet and excess CAP water to fulfill its existing replenishment obligation. The CAGRD levies a replenishment assessment against member land and member service areas to pay the costs of replenishment. The CAGRD is required to submit a plan every ten years to DWR describing the activities CAGRD proposes to undertake during the 20 years following submittal of the plan (Plan of Operation). On October 31, 2005, the Director of DWR issued a Decision and Order determining that the CAGRD's most recent Plan of Operation is consistent with achieving the management goals of the Phoenix, Pinal and Tucson Active Management Areas (AMAs). The Plan of Operation projects the CAGRD's "replenishment obligations to reach about 225,000 acrefeet per year for current members and future members that are expected to enroll through 2015" 1. The Plan of Operation also identifies the sources of water anticipated to be used for replenishment purposes and describes the CAGRD's transportation and replenishment facilities requirements. The CAGRD plans to use some of the excess capacity in the CAP canal to import the identified sources of water. The CAGRD has no independent authority to deny membership in the CAGRD as long as the lands or service areas meet the statutory requirements for membership. However, if the CAGRD does not meet its replenishment obligation or if the Director s determination that the Plan of Operation is consistent with achieving the management goal expires, a member service area will lose its designation of assured water supply and no additional land or service areas may join the CAGRD. Unfortunately, however, because the CAGRD submits a Plan of Operation to DWR only every ten years, it is entirely possible that enrollment of lands and service areas may exceed the CAGRD s replenishment ability. 2 In December 2002, the CAWCD adopted a "Policy for Use of Excess Canal Capacity" that establishes a framework for the future use of excess CAP canal capacity by the CAWCD and its customers, including the CAGRD (Policy) 3. The CAP canal is the only currently available facility to transport imported water. The Policy assumes that up to 300,000 acre-feet of excess canal capacity is available for delivery of non-project water. Of this 300,000 acre-feet of excess canal capacity, the CAWCD approved "interim set asides" totaling 53,000 acre-feet per year for the Cities of Phoenix and Scottsdale for delivery of non-project water from water ranches 1 CAGRD Plan of Operation, Submitted Draft, November 8, 2004, p DWR may require the CAGRD to submit a revised Plan of Operation if DWR determines that there has been an unexpected increase in the CAGRD s replenishment obligations or an unexpected reduction in water supplies available to meet the replenishment obligations. However, DWR may require CAGRD to submit a revised Plan of Operation only between the second anniversary and the sixth anniversary of the determination of consistency with the management goal, and the CAGRD has two years to submit the revised plan. Consequently, a great deal of time can elapse within which membership in the CAGRD can continue to grow beyond expectations. 3 Referenced in Ibid, pp

23 purchased prior to The Policy also sets aside up to 3,460 acre-feet per year of excess canal capacity for the CAGRD to wheel Scottsdale's Harquahala groundwater and additional excess canal capacity for use by the CAGRD to meet a portion of its current and committed replenishment obligation. The Plan of Operation identifies a need for up to 105,000 acre-feet per year of canal capacity to wheel non-project supplies for CAGRD purposes. Thus, it appears that 161,460 acre-feet per year of excess CAP canal capacity has already been spoken for, leaving only 138,540 acre-feet available for future use. Already, some CAP M&I subcontractors have indicated an intent to import additional non-project water using the remaining available excess capacity in the CAP canal to meet future customer demands. Clearly, the remaining available excess capacity in the CAP canal is limited and may be insufficient to satisfy all the demands that may be placed upon it. CAWCD/CAGRD Issues on the Horizon There are a number of CAWCD/CAGRD related issues on the horizon that require additional study and that may become the subject of future discussions by the AMWUA Board of Directors. They include but are not limited to: 1. Growth: Open Enrollment/Capping the Replenishment Obligation The CAGRD does not have the legal ability to refuse membership to any land or municipal provider that applies for membership absent some sort of determination by DWR that CAGRD is or may be unable to fulfill its replenishment obligations. The CAGRD cannot grow forever. Assuming the CAWCD wishes to be a leader in the Arizona water community, it (or others in Arizona's water community) may be obliged to explore the political and economic feasibility of limiting the CAGRD s membership or capping the CAGRD's replenishment obligation and the attendant repercussions. At the very least, it may be necessary to develop criteria that would allow the CAWCD to accomplish either objective absent the DWR determination noted above. 2. The Institutional Relationship Between the CAGRD and the CAWCD As indicated above, the CAGRD is the same entity as the CAWCD. Thus the CAGRD Board is the CAWCD Board. The possibility of competition between the CAGRD and the CAWCD s municipal subcontractors over water supplies and on other issues may place the CAWCD Board in an untenable position. The CAGRD s legal replenishment obligation could force the CAWCD to favor the needs of the CAGRD at the expense of the CAWCD s CAP municipal subcontractors. Discussion of ways to avoid such an outcome may be imperative. 3. Competition for CAP Water In addition to continued use of excess CAP water, the Plan indicates that the CAGRD will work to obtain rights to use other CAP water supplies held under long-term contracts or subcontracts. 4 These other CAP water supplies include transfers of CAP M&I subcontracts, including a portion of the subcontract held by the Arizona State Land 4 Ibid, pp