Cave Creek approves $1.25 million Harkahala Valley groundwater deal amid Colorado River cuts

Thank you for attending um discussion on water resources uh strategies for the town. So I'm Sean Cruz Weisner, the utilities director. I've been with the town about seven years and I'm just going to want to acknowledge that we have several uh council members here. I don't want to uh call them all out right now because we do have a council meeting after this and this is why we sort of have the awkward setup. We don't want to um have to do too much rework after to get to the council meeting.

Our town manager is also here, Grady Miller. Um, and then our goal here is to give you an update on our overall water strategies for the town. Obviously on tonight's agenda is also the next uh rate increase. So, we're going to talk about that at the end. Just some logistics.

Um, if we can um if you have comments, if you want to write comments down, but after the presentation, we'll go through those comments and we'll leave an open forum, but we want to do want to leave a little bit of time before the council meeting just to to clear the room up a little bit before that meeting starts again. Um, on tonight's agenda is the the rate increase going tonight.

So I'll I'll give a bit of a briefing tonight, but actually during the the um session today tonight is actually the action item. So tonight, right, we're dealing right now is not the action item. So this is really a briefing. I'll just give an update on that at the end of the presentation.

So we have about half an hour to get through and I appreciate if you again hold your comments to the end because we're going through a lot of information and I think as we've previewed this presentation, people have asked questions. I said give me four slides and I'll present that to you. So let me let us get through that. Um and then uh we'll take any questions and go from there. And I want to um to my um left is Brad Hill. He's um our water resource consultant.

And we also have our water uh resource attorney, Michelle Vanquam, in the room also to answer questions. So with that, we will start. See here, let's get the logistics down. So again, we've already gone through our introductions. Um and we're going to this is uh our agenda for tonight. We're going to talk about the cap reductions uh central Arizona project. That's the Colorado River allocations.

So, that's one of the big things and we've been talking about this since pretty much since I've been with the town um um about what's happening. So, now it's coming through um we're getting to the point that it will be a reality sometime in 2027. So, we're talking about what we've been doing and working on for planning for the town's water resources and the water future. And we're talking about the some of the long range plans we're talking about.

Um, I know there's a few that are really important for the town right now, including our Bartlett Dam project and our participation in the Harkahala Valley project, which um, we actually have to make a decision. So, I'll give some information about that and then I'll I'll just stop off there and and just do the, uh, talk briefly about the utility rates and why we need those and then what is being proposed right now. So, with that, all right, good evening. As Sean mentioned, my name is Brad Hill.

Uh I'm just to give you a little background. I've been in the Arizona water business for 38 years uh uh as a hydraologist and as doing Sean's job. So very familiar and I'm a consultant to well not for Cave Creek but for other municipalities. Uh so thanks again for all of you attending. So what they asked me to do here is to give you a little bit of a brief uh statement of the problem if you will to this that impacts both the state of Arizona and then how it impacts you here in Cave Creek.

So there are two issues that are coming to at the end of this calendar year. One is the hydraology site on the Colorado River and the other is the agreements that all the seven basin states that you see on this map that make up the Colorado River basin and the federal government. All of those are kind of this year or what we're saying here uh is a January 2027.

Essentially, what's happening, and I'm sure you've heard, due to the hydraology, drought on the Colorado River, declining uh uh declining flows in the river have impacted the state's abilities to withdraw all of the water that they're legally entitled to. And so, because of this, uh it's um and the importance of that is Cave Creek gets the majority of its supply from the Colorado River via central Arizona project.

So, what this means today is there's going to be reductions, anticipated reductions come January 27, which in our business isn't that far away. So, we've been uh uh I've been solicited to help Sean and the town work on ideas and options and solutions. We don't want to identify the problem as I just done without any solutions. So, we're going to present some of that in a couple more slides. So, with that statement, I'll turn it back over to Sean. Thanks.

And one other acknowledgement I want to make. I realize we actually have some members of the town's utility advisory committee here tonight. So also, so that's the board that's been um uh the town council's actually asked public and they volunteered to actually help uh with water resource and water related issues for the town. So I see some members here. Um so Brad's framed the problem. So how is that actually uh what's that mean for uh Cave Creek?

So this is a summary of sort of our water resources. Um, and that's the legal available water that we have access to. The town has two subcontracts to get access to Colorado River water. There's called our cap, central Arizona project subcontracts. We have municipal and industrial water and we also have a non-Indian agricultural water. Why they're separated out? They're actually different priorities. So, um, we can't rely as much on the NIA water as we can the municipal and industrial supplies.

That's that's how that works. So um now we also have groundwater and desert hills. So the desert hills water system started in the 70s on groundwater wells. The cave creek system was actually also started in the 50s on groundwater wells but they converted to surface water supplies in 1990 when they got an allocation the municipal industrial water supply and then built the the pipeline up Cave Creek Road and built the water treatment plant in the town core.

So, as of right now, the cuts that are being proposed are um and just educate, we'll probably put post these slides on the on our website. So, if you don't if you want to do that, too. So, we'll make those available as a public presentation. So, we'll just post it on the website probably um through news uh outreach everybody. Um we're hearing uh I think before we've talked about it in their master planning process, we've talked about up to 20 even more percent cuts.

25% cut is what we were last time I we did this presentation. Right now, uh, we're being told 20% is most anticipated cut that will come to the Colorado River allocation to the state, which will then come back down to the town's um, subcontracts that we have for, uh, water. What does that mean to the town? A 20% cut in our municipal industrial water supplies. You'll notice on there, the NIA, the non-incial water is zero. Um, that is less reliable water.

As of this upcoming calendar year, the calendar year we're right in right now, they actually do orders by calendar year. we uh they said we could not order any of that water. While we've had excess water for the last several years, we've been recharging that. Uh so any portion of the M& allocation that's unused and the the NI NIA water that's been unused, we've been putting into recharge, but this this calendar year we were told we can't order any any NIA.

We anticipate that for the next refable number of years. So that's not as reliable supply. The real takeaway here is that with what's being proposed in the reductions to the Colorado River supplies, the town is very dependent on our Colorado River. Over 90% of our water resources are tied to that. Um that we're in a position where that's getting close to andor less than what we have in current c customer demands.

So this table I just actually updated and um um Ryan Hill from our staff actually just did the numbers for us. We just completed our 2025 number. So, how much water did we need to provide to customers last year? Just under 2,000 acre feet of central Arizona project was delivered to our customers. Um, that's delivered to Desert Hills, Cave Creek, and also some of the other uh water transfers to do.

And that's including getting beneficial use out of the um the waist stream from the from water treatment plant to help for irrigation use at Ranch Manana. That's down a little bit from our 24 numbers, which was just over 2100. Um, we looked at that and we're surprised to see that.

Part of that goes back to we were actually able to run the desert hills wells more last year uh to get more production capacity out of them and then there was actually a decrease in the amount of water used by rancha golf course. So um between those two factors that saved us a little bit of water so that helped out. How long we can anticipate those two factors to occur um is is a struggle for us especially the wellwater desert hills uh we don't think that's a good long-term reliable supply.

So that that's what makes us very nervous when we look out for water supplies. you know, we have to look out for longer term, not the next 5 years, 10 years. We're looking out actually when we if we approve a subdivision plat, it actually has to be a hundred year water supply we're signing off on for. And at the bottom of this table I'm showing, it's one thing we've talked about before is what's the future commitments to the town? What are other demands that are needed out there?

And this came actually out of our master planning efforts. So, we looked at existing subdivisions and those are, you know, lot splits that have more than I think it's five lots or four lots in the town um that require a final plat. Um we actually have a number of final platted areas in the town that were platted prior to 1980 the which is the groundwater management act in the state and they show that Cave Creek Water is their water supplier.

After 1980, they were required to get what's called a certificate of assured water supply. cause is is what we and you'll hear and I'll try not to use as vernacular here, but I'll slip into it if I do. Brad can hit me or you guys can put your hand up and I'll explain it. Um so we have subdivisions that have water um dedicated to them. They actually have a certificate that was issued by the state that says yes, you will gives up some of your water resources to that development.

Some of them are not um fully developed and some are. uh in the master planning we came up with a number of 827 acre feet of new demands over and above what we have customer demands on right now. If we actually take into the all those pots the uh existing subdivisions with and without certificates and also there's a westside whip area domestic water improvement district area that's a prop some properties along 32nd 36th street on the west side that were promised water by the town years ago.

So we included that in that. We also looked uh with master plan a little further. We looked at um vacant lots that were within 500 ft of the existing distribution system to say, okay, well, what happened if property owners start to see things like a decline in their well, their private wells, what would that number be? And that came up to 504 acre feet of demand additional.

And then we went next step further and say, okay, how about if all the vacant lots, undeveloped, either undeveloped or not connected to the water system lots, um existing prepper owners who have wells, uh that want to connect to water system, what would that be? And if we go beyond the 500 foot buffer, then we're adding another 377 acre feet.

So again, if we want to provide water services to every potential uh customer in the town, every potential citizen, that's another over 870 acre feet of water in addition to what we currently have uh banked on. Um so that's that's where we're trying to frame the argu you know, the discussion argument of what what do we need? So with that, uh through the master planning effort, we were able to come up with some good ideas. I want to sort of walk through.

We've been working on this for a number of years. The master planning really helped us tie it all down which we completed in November of uh 24 is when we got that adopted, but we've been working on this for a number of years. And I'll let Brad explain sort of the graphics that to help help explain what's going on or help visualize what we're dealing with. So, I have a a few of these gra uh slides and I I did it in two ways.

one that are visual people, that's the bar charts on top, and then one that are numbers people. So, we also give you the numbers down below, and I'll currently I have the numbers uh blanked out. So, what these and all of the graphs look identical to this. So, once I lay out of what you're looking at, you can you'll be able to track. So, from left to right on the bar charts is from 2025 looking into the future.

The analysis of this is looking at what's the available supplies that Cave Creek has to the demands that the customers use water today and into the future. And as you'll see these bar charts, if you look at the left, uh, excuse me, I need two more lines. So, there's a white a yellow horizontal line, which is the water use today that Sean just talked about. there is a green line that is water use projected into the future meaning future customers.

So if the uh if the bars are above the green line and and yellow line that means good you have sufficient supplies and that's one of the takeaways I want you to to leave with is the town has sufficient supplies if it wasn't for the issues that are going on on the Colorado River and and and this bar chart helps to show that. But what you'll see quickly as you go to the right is the red above the the existing customers today. And those I'm going to use the term shortage or or reduce supplies.

And but you'll hear me use the term um shortage. At the bottom for the numbers people, the top is going to be the numbers of how much we're projecting to be short both existing customers and future. And then what are those different supplies that we've identified that the town can look at uh as and as a future uh development. Um and then we have a list of the existing supplies that that are already being used and then uh the demand projections which are the the green and the yellow line.

So with that I'm just going to step through a couple of these. So when we first look at a 20% so the current negotiations between the upper and lower basin meaning that map of the seven basin states is 20% uh and that's in 2027.

So you'll notice instantly we we go into what we're term as shortage that's the first dashed uh on the left circle uh not with existing customers at the moment uh under this analysis but the data is so close on existing projected supplies and demands that uh I wouldn't quite say it's zero for the remaining years but that's what the numbers show and then you'll you'll see farther out is where the numbers in 2031 show an actual where we think existing customers. If you want to show the next.

So this is what we really think's going to happen. If it's not 2027, then it's going to be 2028 because if you've heard anything in the news, you know the hydraology on the Colorado River isn't looking too good. Meaning what's going on in Colorado, Wyoming, and Utah, the the uh the headwaters to the Colorado River. So we planning for deeper shortages on the Colorado. Therefore, the impacts are deeper to people that use central Arizona project like Cave Creek.

Well, what you want to draw your attention to is that circle and that is the town immediately comes into a shortage on existing customers. So, we have been working diligently under the new water supply. As I said, we never want to identify and take to city council here's the problem and we don't have a solution. In fact, we have several solutions, but they all each have issues associated with to make them actually perfected, meaning available come January of 27.

So, here is just a quick uh uh example of if we put some of these supplies together, what does it do for us? So, here are supplies. Uh, and Sean's going to talk more about these in detail, but at the highest level, you'll see Cape Creek groundwater, and there's those little blue bars, horizontal bars, uh, long-term storage credit recovery, and and that's via exchange. And we're working with some valley cities that have been very West Valley cities, and then, uh, water bank.

And we're going to kind of talk a little bit about each of those. So if we can get the legal agreements in place to satisfy, we can begin to push these the impacts of the shortages farther out.

And that's really the takeaway message uh that I want I want you all to to understand that there may be shortages to uh existing customers come next year uh for sure in future customers and we have some solutions uh of what we are diligently working on and we'll be bringing those to council when they're ready. Just add that we've actually brought some of them to council based on our capital programming that we've already done.

So, um, yeah, we've been talking about this and a lot of this came out of the master plan. So, we do have projects. It's not they're not new projects, stuff we've been working on. So, I'm going to run through a few of them. So, um, you know, just right now what what's really ongoing is we want to work with the existing customers on outreach and education.

I think we've been doing good, but we could do better as far as, you know, uh, understanding what the issue is and then asking for people to participate to actually help lower their water usage. If everybody contributes a little bit, that helps the community, helps out. Uh we've talked about restarting the wells, so we're trying to get down to physical infrastructure improvements on that. You know, the Cave Creek water system was started in the 50s on groundwater wells.

Uh the the aquifer that we draw off of the Cave Creek Carefree aquifer has some issues with it. Um and we actually happen to be at a shallow portion of it, but we do believe we can get some wells functionally operational to help us bridge the gap. What we we're concerned about is the long-term viability of those wells, but I still think it's worth the worth the investment. Um the viability being the water production may decrease and the water quality may become an issue.

So we have to deal with both issues. Um we talk about water banking and the uh uh water resource world that means we putting water into the ground. We've saved water that we had and we put it somewhere. In our case we actually have two recharge facilities that we work with with central Arizona project and and uh for a number of years we've been actually putting unused portions of our allocation into the ground into those ch two recharge facilities.

So now we're trying to get the agreements in place to allow us to get physical access to that water and how we can get that water delivered to the town. Um and then we also want to work with our largest water users um in the town. There's actually several between uh the both the town and Desert Hills um that we have some very large water users like in Desert Hills. We actually have a school district that's tied to our system. Um so how do we work with them to reduce their overall water demands?

Um, and we are continually working to update the supplies and what we've got available to us to this is not a static chart and even these charts that Brad's presenting, they're always in flux as we move through different options. Those are just ongoing projects and we've got other projects that we started or we're considering right now. Um, again, the water exchanges is a key one for us. We've come to that conclusion. If if we've put water effectively, think of a checking account.

We've been putting water into our checking account. Now we need to do withdrawals to actually help us bridge. So how do we get legal access to that water? The recharge facilities that we actually been placing them in are actually uh one's called the hieroglyphics facility 163rd Avenue by Grand Avenue. The other is called the hour Fria facility which is Happy Valley Road 107th. They're they're outside the town's municipal limits. So how do we get access to that water?

So, we're working with the municipalities that surround those facilities on exchange agreements where we would uh they would get um we'd pay them for withdrawing using their wells to actually pull water out of the ground which would be recovering our water and then leaving some of their cap water on that would allow it to come down the canal to us. So, uh you know um those are really key agreements to us.

And the other thing is that actually gives us access to the Arizona Water Banking Authority. That's and I think I have a more detailed slide later. I'll talk about that. But that that's an agency that was set up by the state to actually recharge and actually has a bank of water that hopefully we can access. Also, uh we're um looking at the Bartlet Dam project and I'll talk more about details of that and Harkah Valley and I've got more details on that too. And then can continue.

We're going to look at other exchange agreements local, state, federal. There's other agreements being discussed. There's a lot being discussed in the world. It's been discussed for a lot number of years, but it's it's really accelerating right now. So, we're going to keep our eyes open for anything that the town has uh can jump on on, including looking for future purchases of additional cap supplies or Colorado River rights.

You know, the Central Arizona project only has rights to about I think about half the state's uh portion of the Colorado River. There's actually the other half goes to there's Indian tribes, there's other other agencies that have access to that. So, can we just do an exchange agreement and buy water from somebody else and then work with the CAP to get it transmitted to us? So there's there's a number of ways to we can solve this problem.

Uh again I want to highlight a little bit on the public outreach and what we're trying to do. Um I like this again we're introducing Cactus Charlie. You know we uh one of the things came out of utility advisory committee was you know a a mascot. You know a Cave Creek specific mascot. So we came up with a really nice one. One of our members actually uh his is one of his family members actually came up with that.

So we're looking at uh we're we're trying to work with customers to get outreach materials out there. We're going to do some education, some additional work to try and get to at least a voluntary 5% reduction because the cuts may be deeper than we're anticipating. We might have to get into or go into higher reductions and those might be both voluntary and required. And required, I mean by the the town actually had put in place in 2022 our drought management uh plan.

So, if cuts go deep enough, there's a list of things that are in town code that allows us the authority and council to authorize us to go after and to do to require people to make that. We're hopeful we can do it voluntarily with people. We don't want to go into mandatory, but we've been actually working on things to put things in place for town code to help us. You know, if we get into a real shortage, we need everybody to participate and and jump in and help us out.

We want to again focus on the highest water users. You know, the ones that's where the uh 80 almost 90% of the customer base in Cape Creek for water system is residential demand. There are some high uh residential customers, but there's also some high commercials and non-commercials like the school I mentioned out in Desert Hills. So, uh though we think our biggest bang for the dollar is to go after them and work with them, not go after them, but work with them.

Uh we have some funds right now in the in the current operating budget to go do uh develop that outreach program. We're probably going to help uh because of staff resources go out and do a solicitation, help uh bring in firms that can help us do education outreach and then also help us work on the numbers uh behind the scenes and help us do that focus work. Part of the focus is going out to residential customers, helping them do education. We know a lot of the water use um is outdoor water use.

Um so how can we work and educate with our customers to to lower their outdoor water use that helps save the water demands. And then for commercial customers, what can they do to actually help their their water use? um is it looking into doing an audit of their fixtures and seeing if they can be more efficient and providing those those um tools to them to be more efficient and then we'll continue to work with our uh advisory board to actually develop this as we go forward.

One of the big things and for water conservation is our metering upgrade project. And I think I've talked to Nea about this but I think it's it's such a value to the town. So we were able to get a federal grant that helped us uh fund half the project cost of upgrading the Cape Creek water meters. A lot of them had functionally failed and were under reporting. When a meter fails, it 99.9% of the time we'll under report.

That meant that we didn't have full accounting of customers water usage and um and and we needed to correct that. Uh but in addition to that, we did a leap in technology. We had what was called the driveby system. So instead of manual reading the meters, they were set up with little radio antennas, but we had to be within a certain proximity with a with a vehicle to actually pick that up. We've now done the next leap to an AMI, automatic metering infrastructure.

Um, that's effectively we've got collector sites up that are actually listening for the re the the meters are putting out a radio signal. They can listen to it. In some cases, we actually had to put cellular antennas on some of our meters. Um, so they're sending signals up and the collectors and or cellular aren't sending that up to the web and we're actually seeing up to hourly usage out of a lot of our customers.

So as of this point uh over 60% of our customer base and it's mostly Cave Creek is is that 60% is we're seeing hourly data out of that now it's the re real great results. You'll see on that map that some of the Desert Hills customers were getting picked up by the collector sites that we were able to put in place. Um we actually have monies in this year capital program to continue that exercise to pick up the Desert Hills customers.

We didn't try to forget about Desert Hills um but we just you know there we have to put some collector sites uh to to pick up their antennas. We focused on Cave Creek with the funds that we had. Um, and we also set up a portal, the my 360 portal. And if you're not on there, uh, please get signed up for that. That gives you access to that data set. Um, and then, um, uh, uh, benefits of the my 360 is that gives you as a as a user access to see your usage on an hourly basis.

You can go in and set the system up. So, it sets you alerts. It can be daily, it can be hourly. suggest not doing hourly because you'll you'll drive yourself crazy and the alarms will come at you. But you set daily limits, weekly limits, other thresholds or if you're you're going to be out of town, you can set a threshold. It's looking for a usage. So you can identify leaks earlier and sooner so we can work with you to address it or you can address it yourself.

So the current system was when we drive by your meter, we're reading your usage for that month and it takes us two to three weeks to process and get the bills out. So you could have a leak that started at the beginning of our building cycle and it could be six to seven weeks before we notify you via the building system that you've got a leak. With the new AMI system, we're actually seeing that usage. We have staff that are looking at it.

Ryan Hill in our office uh spends time at looking at that and looks for anomalies in the system, but we want to really empower the customers. We, you know, we have 4,500 customers. We can't have time to we don't have time to look at all that. So we really need to have people looking at it. There's 294 people as of yesterday that were signed up for the system. Our hope is to get everybody signed up on it. And it's not just the people who have the AMI meters that could benefit from this.

Even the people with our driveby and in fact as soon as we do the driveby, that information is getting uploaded to the cloud. Um, so while we takes us two to three weeks to process the bills, effectively as a driveby user, you'd see the data two to three weeks before we could actually send you a bill and see it. So it still will benefit you. And as we upgrade the meters, you'll actually get the hourly data.

So, I'd encourage anybody who's got an account with Cave Creek uh water, either be in our desert hills or Cave Creek system, sign up for the my 360 system. Um when we talk about water bridges, how do we bridge this gap that that uh uh we talked about earlier? Now, we see the problem coming um and and we've come up with solutions and we do think getting access to the town storage credits, the water that we've put underground is key to helping us uh get by this.

So that's the checking account that we we've been working on for a few years. At the end of this year, we think we'll have about 3,200 acre feet in the ground. So again, I mentioned the beginning of the slide, our full water usage was just under cruise around 2,000 acre feet for cap water supply. So we have about a year and a half of water stored in the ground. The next thing is we need to get access to that water.

And on top of the water that we've uh put in the ground, the Arizona Water Banking Authority has been doing that on behalf of the state since 198 1996. So that was an agency that was created.

The town uh the state overall has actually been a good steward of water resources which ironically is something that's getting used against the state in the discussions in the seven basian state discussions because they're saying hey you guys have been saving water and storing water and they said yeah we knew there was going to be a problem so we've been so they've been using that against uh the state of Arizona which is ironic but the water banking authority has been putting excess water into the ground.

So uh the last number I saw is about 3.8 8 million acre feet that they have stored on behalf of municipal and industrial subcontractors. I think there's 54 55 M&I subcontractors and that was their mandate to put that water in the ground. The problem we're seeing is that they're also not mandated then to withdraw that and give it to those customers. Then they they basically they're talking about how they distribute those credits and then leaving it up to us uh to get access to it.

And that's what we we've been working on. We know the two facilities that we have water in. We know that uh the water banking authority has water in those facilities. So, we're working with two other adjacent agencies to come up with exchange agreements where they would utilize their infrastructure to withdraw our stored credits and then allow us to do an exchange with their cap water. So, effectively, we don't have all the cap water. They would leave some of their cap water and come down to us.

We still have to pay them to do that, but it it keeps the town wet. It keeps Now, I always go back to the analogy of of wet water. Brad taught me that early in my career. Um is you know we have paper water legal rights to it and I'm on the infrastructure wet water. I got to make sure you guys can turn your top taps on. So we always have to think of both both lenses of that.

Um so that's a huge one for the town and we actually are working on hopefully in the next couple of months uh being able to bring those forward so they're in place before 27 hits that we actually have those in place uh for tools. Um, and ironically, the town is leading the charge on this in a lot of ways because a lot of for the the the reductions in the Colorado River that most other agencies are are addressing are more longer term. They're not seeing the impacts right away.

And best analogy I can have is we had a meeting with a lot of municipal industrial users that was hosted by the Arizona Department of Water Resources and uh they the uh I was sitting next to the the um Scottsdale uh water resource person said yeah 80% of our supplies are tied with the Colorado River and I said well I don't want to win the competition but we're 90% and I didn't want to be on that so we're directly impacted by this.

So, the town sadly is is dealing with this issue first in the in the state, but I think we've got good things in place to allow us to to get through this. That's what we want you to leave with tonight. And then we go into our long-term water resources, you know. Um, and again, I I sort of alluded this, but we we've got multiple things. We have to increase the town's water resources, our paper water, our ability to have access to legally legally available to to water.

And what are those water supplies? We're not sure, but that's one of the legs of the stool. I looked I like the analogy of the three-legged stool. Uh physical access, you know, my engineering training is how do I physically get that water to customers? But I need to be legally able and Brad's taught me out over the years, you have to have legal rights to that. You just can't uh pull water out and do that somewhere. And the other thing the town needs to be looking at is diversifying our supplies.

you know, the the water company and then when the townbot system was did good by actually converting to surface water from from wells because the wells weren't able to keep up with the groundwater supplies. But now we have a new new problem facing us because that surface water supply is not as reliable as we once thought. So now we're into this next phase. That's why I think the three the three legs of the stool for our water resources.

So, the two big projects we're considering for longer term after we get past the bridge would be the modified Bartlett Dam and the Harkahala uh Valley groundwater projects. So, here's a graphic of Harkahala uh or sorry, not Hark um sorry, Bartlett Dam. Um and it shows where relative uh uh Bartlett Dam is. You know, it's basically due east of the of the town's municipal limits is actually the Bartlett Dam on the Verie River.

So the issue with Bartlett Dam is that um um there's two reservoirs on the Verie River, the Bartlett and the Horseshoe Reservoir. The Horseshoe reservoir actually has been filled in with sedimentation. The reservoirs were originally constructed for storm water uh control on the Verie River because flows can vary so much. Um so the sedimentation meant that it couldn't meet its its prime one of its prime functions which is for for uh um storage for storm water.

So they did a large project to figure out what they can do. They looked at how could they dredge that out um uh remove the material something else and they concluded the best solution would be to actually raise Bartlett Dam which you saw the graphic before by raising that and then if you're doing the project to construct a new dam why not go a little bit higher higher and then gain some extra capacity and then you can give other users that extra capacity.

So that's what we're that's what the gist of the project is is that it's trying to solve a drainage related issue, storm water drainage related issue, and they're building it higher so there's extra capacity for users. Uh the town became a non- voting member in September of 2024. Uh we requested 1,000 acre feet of storage capacity. And why I call that out differently is because that's maximum storage.

They want they gave us a volume of they needed to hold back, but the average supply is only uh it's it's a factor of 3.5. So it's only 286 acre feet annually that we can and even that is uh I'd say rely on but it's the average. So there could be uh dry years on the Verie River where that even that 286 we don't get. So there's variability on that project. So that's a big unknown for that project. Um and the cost has gone up.

Um if people remember when we did the presentation we had SRP actually staff did a really good presentation on the project. Initially this was discussed as like a 1.1.2 billion project. The most recent cost estimate that we were shared with is $3.7 billion for that project. That's uh 11.5 million for the thousand acre feet of storage that the town has requested. So it's it's the cost has gone up on that project and as we participate and continue with it, that'll be our cost moving forward.

Uh the project is doing its feasibility report and environmental impact statement. There was a meeting uh not too many months ago was held over in Carefree in their hotel uh where they were doing the environmental impact statement where we had to do public outreach and they're pulling that together. Their goal is to put the package get through all the federal regulations that they need to get through to put a package to to submit it to Congress for funding.

Uh so it's end of 27 beginning of 28 is when they're hopeful that they can bring that forward because this project can't be done just on the the users. the $3.7 million is the project's really actually been participing back and are um hoping to get half of that funded by the federal government. Federal government is actually going to get half the water by the project, too. They've actually made notice to us.

So, while we only requested 1,000 acre feet, um the other 22 of the 24 partners, um a lot of them are actually getting their their allocations reduced, the amount that they requested because the federal government has come now and finally, it only happened a couple months ago and said, "Yes, you know, we want half the water is coming through the Bureau of Reclamation." So, we're still at 1,000 acre feet, but the costs have gone up on that project.

Um we still so construction would start after the federal funding comes in place and the way the contract is structured our agreement with them is that we have to actually participate by having our funding to match them. So when they go to construction they don't want us paying the invoices they want us to frontload their construction costs.

So the town has is faced with that if we stay in the project we'll have to make a decision by probably uh uh 2028 to actually have all that funding available for them. So that's something we're facing. Uh the other project we're really considering is a Harkah Hala Valley groundwater project. You the town signed a contract in October, I believe it was.

We had been discussions with the group out there for um uh several months before that and they finally gave us a contract that we could execute and that was our goal was to uh see if that has a value to the town. Um u they have a it's a groundwater basin. It's called an irrigation non-expansion area NIA. um that's actually a legally defined basin um by the state of Arizona. So in the 1990s they actually set aside 1980 the groundwater management act went in place.

In the 1990s the state actually also set aside basins outside of the active management areas and Phoenix happens to be an active management area. They're outside of it and they're set aside as groundwater and I hate to say the term but they're they were set aside to be mined to basically take the ground water from those basins to bring into the active management areas to support uh future shortages.

So, it's legally all been put in place and that's why the the town knowing about this project out there thought it might be something worth us pursuing. So, we had to uh actually execute the contract uh in order to get the information so we can make a proper decision. Um the so the groundwater can be physically uh legally imported into the Phoenix active management area. Cave Creek is part of the AMA. So, that gives us physical access to that. Here's a graphic of where Harkah is.

Again, I think I did a map quest from from the town to get out to the property is about a 2-hour drive, so it's out there. Uh I think uh the project that we're looking at is actually around 250th Avenue. Um it's past Palaverde, so it's a ways out there, but this is one of the basins that was set aside by the by the state. You can see the black line is the Phoenix Active Management Area. You can see the town there.

The real thing that intrigued us is the Central Arizona project runs through Harkahala Valley. So now you've got a groundwater supply, you've got the CAP canal, which we actually have capacity on, but CAP can't meet their obligation to the town. They can't give us our uh non-union agriculture NA water, and they can't guarantee how much M&I water. So now we have excess capacity. Could we put ground water in to make up that shortage and that's really the gist of the project.

And then we could utilize our existing infrastructure, our existing cap pipeline that brings it up to the town um through our treatment plant andor our agreement with the city of Phoenix to have them divert, treat, and deliver our cap water to us um through the new city of Phoenix's interconnect, which will go active this summer. So, it's utilizing the existing infrastructure that the town has to basically augment the the reductions of of Colorado River water.

A little more details on the project itself. So, the basing is fairly large. Um the project boundary you can see is highlighted on there on the graphic. It's sort of at the south uh east corner of the property.

Um is is the project they've assembled lands and what they've done is they've they've made that the Harkahala Valley uh uh land owners and they're they're you know they've they've said well we want to we know that this this water can be withdrawn and exported and used in in the Phoenix metro area. How can we make this work? And they they've gone through the exercise. has been working on for a number of years to get all the documentation put into place to actually allow them to do that.

And so they've actually gone to Arizona Department of Water Resources. They've done all the modeling. The the modeling is actually basinwide, but specifically under their project, ADWR, Arizona Department of Water Resources has signed off saying that yeah, they they they agree that that um land out there has 80,000 acre feet per year available for 100 years.

So they it was actually 80 80 million uh uh gallons or acre feet of water available but they uh to make it a sustainable supply they have to do that lens of 100 years. So that's all been modeled. They've agreed it's actually that was what was sort of I wouldn't say delaying the project but a lot of the effort with them is actually get the state to buy off on that modeling. Um so there's more water out there than the basin.

This is what's actually available to that property of the Arala Valley uh land users group. Um they're talking about planning it for three infrastructure phases because 88,000 acre feet is a lot of water and what they're trying to do is sell off this and the town again our contract with them allows us access to um some of that. We've actually only requested 500 acre feet in the project overall. We thought that was our first buyin.

Um but they're looking at they've already done the mapping out of the infrastructure of how they can get access to it. It makes sense to actually do it in three phases. Um they have to actually cross the I 10. They actually have to do a new structure that would get that water into the cap canal. that's all being mapped out. Um, there is a non-disclosure agreement, so I can explain some of it, but I can't get into a lot of details on that.

Um, but the the just sice to say that they've done a lot of engineering and they've updated a lot of that engineering, so they know how to make it physically work. And it's really the goal for the or the benefit of the goal of this project is it it helps us utilize the wheeling capacity in the col in the central Arizona project that we have by our uh unmet uh NIA and our un uh portion of our municipal industrial supply that central Arizona project can't supply with Colorado River water.

So we actually have capacity that we can wheel it through. And we've talked to central Arizona project and they agree that that that's we can do. They're not we're not trying to add extra water to the canal and some of the participants have had that discussion with them. we're trying to utilize and just firm up. As Brad indicated, if we didn't have this shortage coming, the town's water supplies would look good. The shortage was what's driving us into this. And we're not going it alone.

Um there are actually other jurisdictions already in the project. Last year, uh the city of Buckeye purchased just under 6,000 acre feet, made their purchase, and Queen Creek purchased 5,000 acre feet, and Queen Creek is actually set to make two more purchases this year. one um uh next month and then one in I think September or August for in total they'll have another 12,000 acre feet. So they'll be all in at about 17,000 acre feet. So you know we're not going it alone here.

Uh and you know the work that Buckeye and Queen Creek did on the project actually helped get it to the point where Arizona Department of Water Resources signed off on the availability. So again what what's the town looking to do? Uh purchasing 500 acre feet. We picked that number because you go back to my planning slide, we'd need more than that to meet our raw resources.

But, you know, the town, if we had, you know, we had a boatload of money, we'd go out and buy it all and secure it and sit on it, but we don't. So, we have to be realistic. But 500 acre feet pushes us out. We got the bridge to get us out for the next uh number of years, which depending if we get access to Arizona Water Banking Authority, that bridge could actually last us potentially for the next decade. So, um um uh so that's something to put in place.

So, do we need this right now or do we want to have it secured and available to the town? The 500 acre feet of groundwater and that's 100ear supply. So, it's 100 500 acre feet per year for 100 years. Unlike the Bartlett dam, which is variable in flow, we're not sure. Again, the average was 286, but we could get wet years in good wet years on the Verie River, we'll have more than that water. We can, you know, figure out a way to store that.

So, we'll get some banking, but in dry years, we'll have less than that. So, the variability, this is a secure water supply for the town. 500 acre feet per year for 100 years. the contractual value is $1.25 million. So, it's a big thing the town is considering and that's that's the discussions next week is we need to uh come uh to a conclusion, do we want to be in this project?

The due diligence phase ends next next Friday the 15th and then after the due diligence then we just have to secure the financing to allow us to uh complete the purchase by February 15th. So, we've put our $50,000 in earnest money down. uh if if the town elects not to move forward with the project after next week, then we get that money back, the $50,000.

If we don't, that $50,000 uh stays with the project, but then effectively we're in breach of contract because so that's why we're driving this and we have to make a decision by next week. Um we've already made an application to Arizona Department of Water Resources to authorize us to import this water. So that process is ongoing. There's been ongoing discussions. Michelle's really led the charge on that one.

So we're again we're following the footsteps of others uh with Queen Kar Buckeye already doing this and um and and the next question you know I'd ask and hopefully you're thinking about is how do we get access to this water? Um so there is a common infrastructure project being discussed out there that would utilize some of the existing wells. They're talking about drilling some new wells uh and then they're going to pipe them together. All that engineering's been done.

So they have the the higher level preliminary. It's actually more than preliminary engineering. They've mapped out they've got easements mapped out. They know the size of the pipelines to get all the way through production capacity to get 80,000 acre feet of groundwater for this large basin into the cap canal. So they've mapped that all out. The best estimate that we have right now is it'd be 3 to 5 years to construct all that infrastructure.

So we wouldn't see that until that that common infrastructure. You know that the town can't do this lift ourselves. And ironically a lot of the wells out there that's public information on some of the wells within the project boundary. A lot of their wells out there are actually producing 2,000 acre feet a year. So, if I got access to one of those wells, I could actually meet the town's obligations for groundwater uh for water resources into the future, but we need to get access to that.

We need to get that water into the cap canal to get benefit to the town itself. But there's a lot of things that we have to consider. You know, that we're not going in this with, you know, our eyes uh you know, blinded saying, "Oh, that's our one solution." There's a lot of things and we're trying to pull together all that information, allow uh uh the council and with the public's input to decide that. um access to the physical infrastructure to physically accessing this water.

We don't know that cost. When we signed on to the project back in October, um there was anticipation that by before the end of the last calendar year in December, we were going to get a briefing by the a group that's actually looking to do the common infrastructure. They have now deferred that meeting. I'll be attending that meeting on Thursday. So, I'll get a briefing on Thursday to know what that ongoing operational cost of getting access to this water.

If you look at the cost of the water at $11.2 million um because that's for 100 years and effectively per acre foot per year that's only $225 per acre foot. It's actually relatively inexpensive. The problem for the town is we have to come up with all the money up front. How do we do that within our budgets? Um how does this fit within our other planning efforts? We've talked about the bridges that we've worked on that we think will help us get out a number of years.

So do we need to do this right now? Can we wait? you know, we've we've we've learned a lot about the project, but is this the right project at the right time for us? How are we going to make this fund uh you know, fund it? You know, the everybody's probably aware that town's enterp uh utility funds are not true enterprise funds and enterprise funds means that they're fully self-supporting.

The town is has helped support the utilities since making the purchase of the utilities and that was a decision made. We're trying to wean ourselves away from that, but when you have things like this, we don't have a reserve set aside to make that.

So, it's either the general fund having to do a loan to the utility and or we go out and get a new private bank loan and and uh uh figure that out what that would be that again the debt service ratio cost on doing that is that in the interest of the town and then who's going to pay for the purchase that's been a discussion point is it you know right now it's the existing customers making that purchase for future uh to both secure with 20% we're good so it's really the future customers that are going to benefit from this but if we're at a 25% cut and the in and the Colorado River.

It's actually some of the existing customers need to help pay for this because that's their water. So, but who's making that? So, we have to make those decisions. Uh is it a combination of that? Uh right now, and I go and talk about the rates. We've done some modeling with what we think some numbers might be. Um and then, uh we've we've looked at, you know, right now the town charges new connections, new water connections a capacity fee. The uh cost of the water resources is not built into that.

So, we'd probably want to update those capacity fees and or develop a uh its own water resource capacity fee. We can't do that legally under state statutes until we have a cost to attribute to that. So, we're in this gray area until we pick a project and go with that. Then we can develop the water resource capacity fee to allow us then the new connections as people connect onto the system to pay for that.

So, we know that's got something we have to do, but we actually have to get the solid information to allow us to do that capacity fee study. So, we do have issues. Haha. I'll leave it. You know, there's questions and it's not a done deal. Um, and council has a hard decision to make and hopefully staff staff we can give them as much information so they can make an educated decision. But one of the reasons for having this meeting tonight was to explain what we're dealing with.

And I'll I'll stop off by talking about utility rates. So on tonight's agenda is the conclusion of the uh the update to the utility rates study. So why do we even need to look at our rates? Well, you know, the cost of operating the water system is always in flux. We have operation, maintenance, and capital costs that we need to pay for. Operational costs, chemical costs, electrical costs always increase. Our staffing costs go up.

Just general maintenance on the system, you know, just running our pumps, they wear out, we need to to replace them. And the capital, that's the investment the town's making to improve the system beyond what we bought. You know, when we bought the systems, again, it was 2000,00 end of 2006, we bought Desert Hills and followed very quickly by I think it was March of 27 that we bought Cave Creek Water. There were reports done.

It showed that, yeah, there needed to be some capital investments in the system to improve that. And with our new master plan, that really helped us solidify what those projects are and helped us look at the system and what we need to to improve. That's pipelines, that's new booster pumps, it's other improvements, uh improving the water treatment plant, let alone just general maintenance. So, all those costs go up.

So we have to continue to to balance those balls and and get rates sufficient to allow us to to pay for that. The 2020 just shortly after I started and I don't want you to attribute my starting with the town being the increase utility rate increases started but its coincide um uh we did the first increases over a decade. Um it's hard to the town we were running the system without significant increases to customers paying for that operation of the system for over a decade.

Um that's a long time to go. A lot of municipalities and a lot of utilities went through that. Private utilities actually they a little more on this but a lot of public utilities made that decision. Uh my prior employer city of Aenddale and they went over a decade too between their rate increases and we got behind on theirs. So because it's people are very sensitive to that um of the rate increases but you you can only run the operation so far.

Um so we had to go through the uh get get a reset and then we also had to do um at the time we did a single year rate increase. We had a number of things we were trying to develop with that and we got that put in place. So in 21 we got that that funding put in place and then in 22 we actually had to revisit that again uh largely because uh and going into 2020 and into 21 we didn't know what was going to happen with 550 of our customers. Those are the Carefree customers.

Uh at the end of 21 we knew what was going to happen. Carefree had uh moved forward with um um the u moving those customers onto their system which now as of about a month and a half ago they finally did the last disconnect. Um that was almost a million dollars in revenue that we're losing. So while they took the they got the water resources uh which was to supply them by by contract. We reduced our operating cost a little bit um but we had so much sunk cost already.

We still it didn't really lower our operations cost but we were losing a million dollars in revenue a year. So we had to account for that. We had to look at how Desert Hills was being functionally handled because actually in 2020 for the first time we actually charged differential rates for Cave Creek and Desert Hills.

In 22 we reinforced that a little further saying hey the Desert Hills customers they they reliant on the town's surface water supplies because when we bought Desert Hills didn't have a water uh surface water supply. They didn't have an M&I subcontracted cap subcontract. They were well water.

So it's not fair that Cave Creek, they use some of our water resources not pay for that and also help pay for the the operation and improvements in the Cave Creek system to make sure that we can continue to send that water to them. So that was the wheeling rate. We we address that in 22 and then we actually asked at the time for six years of rates to give us some stability looking forward of what the rates may be and how we could get revenues.

Uh so we weren't doing one year and having to keep coming back at it and and council authorized that. The problem with the uh the outy years, we didn't know what projects we needed. So in case of Desert Hills Water and Cave Creek Water, we didn't the the outyear increases which were coming true now is that they were very low if if negligible. So that's where we're at right now in 26. Uh we're trying to look at obviously and even when we did 22, we talked about the master plan is being done.

We'll probably come with a whole new list of projects because I'll be honest, the CIP capital program that I put together before that was based on my understanding of the system. We needed to go through the evaluation to prove what we needed to do. That's what the 24 master plan helped identify. Um we wanted to work on a council goal which is to create a true enterprise fund where the utilities are self-sufficient and they weren't relying on general fund.

We can't get there day one, but how do you work towards that? It's incremental steps. Um and we wanted to strengthen the conservation efforts. That's what's ongoing right now. and you'll hear more tonight uh with Sherry's presentation is you know we looked at again we can't continually to ratchet up the rates that's what we heard back from feedback from the general public and utility advisory board.

So the town looked at the customer base and since so much of our residential customers are actually low water users we set a new rate tier used to be 10,000 and below 0 to 10,000 was one rate. Uh we looked at the customer base and said there's actually a lot of customers who are very are very good water stewards that are using less than 4,000 gallons a month. So, let's let's not punalize them.

So, they're actually I think there's a little bit of a decrease for those customers and then it it starts going up from there. At the top end, we did look at um um the upper rate tier and it used to be uh customers over 50,000 gallons got the highest water rate. That's now been ratcheted down to customers the highest rate tier we're going to have is now 40,000.

And Brad laughed at me when I told him that because his experience with the city of Flagstaff, I think their top rate was 18,000 or is it 11,000? That was an upper tier. So something we can look at in the future and that's something we do want to continue um to look at, but we've we've pulled that down again helping those people who are good stewards of the water and then putting the more of the burden on those uh higher water users.

So tonight will be uh tonight's council meeting is the final hearing in that with the rates going into effect in February. And what we're trying to do with this uh uh rate increase is we're trying to generate an additional 6% of revenue on the the water system specifically for the next two years. So in fact we were resetting the 22 study the last couple years that 22 study.

I'll leave you with the fact that you know I have to say it that this won't be the last rate study we go through because we factored in some water resources cost into this rate study but we still have so many unknowns. we don't know what it's going to be and what the the cost is going to truly be. So, we we picked one project and try to model it around that. But, as we get more clarity on what the town's water resource solution will be, we can add that back in.

And and most other jurisdictions either have completed recent rate studies or working on rate studies and everywhere I go to meetings, they're always talking about that as they hone in on on things like water resources.

again the all the participants in the Bartlett Dam project as those costs keeps going up they're trying to figure out can they stay in the project and how can they pay for that so every this is a common in the industry right now and specifically the Arizona and and really specifically to the Phoenix metro area um because of what's coming with the Colorado River it's and then just construction costs continue to escalate on behalf of our utilities everything it gets more expensive and wages go up etc so uh with the new rates.

We're updating the bulk water rates, the wheeling rate between the two companies. So, the calculations have been updated so that um again, the Cave Creek customers are helping, the Desert Hills customers are paying for a proportional share of the Cave Creek improvements that help make sure that we have secure water supplies and secure water infrastructure more so to keep them wet.

Uh we looked at the boosted rates and that's some people might not aware of that the way the town system set up is that our our um water treatment plant boosts into the town core. That's our pressure zone 7. Anybody who needs to get a boost above pressure zone 7 then gets charged a new rate uh to pay for the extra cost of boosting that water uh from the town core down to the Carefree Highway and out to Desert Hills.

Most of those customers uh to the customers immediately along cloud road are actually fed by pressure reducing valves. So we actually burn energy to get that water down to them. But there are some customers in Desert Hills that we have to put that water either into another reservoir to get then get boosted out again. So, we came up with new rates. Um, it actually went down for most of Desert's customers because logistically that's how the systems work out there.

There's only a handful of booster stations, actually two major booster stations out there that feed most of the customers and the cost of operating those a lot less than the small booster stations that I have on the side of Black Mountain to boost the water up there. So, that was a reset. Um, the change that happened is debt funding of the capital program. prior to this and there were some changes done.

Um some of the town's general fund revenue was being set aside to actually help pay for the capital program. So that's been a reset. You know, that's the the general fund subsidies have really been minimized and I um try to get us to that. And we've also set internal service fees.

Um before you know the town actually as a utility we we paid for a couple of the um um finance staff to help do the billing and all that but we weren't in reality paying for our fair share of the use of you know me going in and bugging Grady every day on a water resource issue was not being charged back to the utility or my you know my work on with the attorneys was but everything else. So there those internal service fees are to set at an equity level.

the town, the utility should be paying for for a fair share of our uses of our other town um infrastructure, our staff. Um again, I wish I could say this is the last one, but we need to continually look at this and we will continue to look at it as we look at our operational maintenance costs and as we learn more about the town's water resources future. We'll continue to look at that. Um so, summary, wrap it all up. I've been talking for a long time and you guys are probably sick of hearing me.

So, we do want to get to questions and answer this because this is a forum. You know, we've been working for several years to just address the shortages. We know it's coming. Uh, you know, it's it's and and we we're not going into the the tunnel and watching the train come barreling down at us. We've been thinking about this and we want we we think we have good solutions to the town's uh uh water shortages. We've done things like going into our town code in 2021.

People might not remember the the water resource policy. The town's actually been looking uh the first policy was put in place in 2017. We updated it in 21. That's the policy that actually put a volumetric limit on new customers uh half an acre foot for uh most uh single family customers um and also uh commercial customers and also stopped new meters out in Desert Hills unless there was a contractual or statutory obligation. Big change for the town at that point.

We also did updates to our waters in 22. We actually changed town code to add the water shortage and drought management. Um so now there's the tools are in town code that if we get into a shortage situation, we already have the list of things that we can go and go and do to help um u require people to save more water.

Um uh we completed the 24 master plan which again help bring all these planning efforts together and and the master plans are great because they look at the infrastructure but they look at the water resources and integrated master plan looks at all the systems together including our wastewater system and helps clarify what that needs to be helps identify what needed water resources help us to identify what capital improvements we need to do and we've been working for a number of years on number of solutions and I'll leave you with that that you know there's there's not one solution for this simple water solution for the town I wish there was that we just go write one check and we're done.

You know, and one of the things again the town really needs to start looking at diversifying our water portfolio to help get our water security. What's happening in the Colorado River right now and discussions of the shortage, the next conversation that always comes up in even these same meetings is this is the first cut. What's the next one's going to be? So, we don't know. Um, and the cuts may not be just because of the cuts to allocation subcontracts.

The the the basin itself has physically changed. the amount of water on the river changes year to year based on snowpack. So there's could be years where there's, you know, we're 27 or 29 years into a drought on the river. Could that continue or could there be even lower values to the point that they can't get the deliveries to us physically even though there's an allocation?

So, you know, that's something for the federal government to interject on and say, you know, what can they do to to keep the the contracts whole, but they say there might not be the water on the river this year and you'll have to take an additional cut this one year. So by getting diversity in our water portfolio, we help bridge those in the future. So so we don't get into such a severe situation. So again, I've I've talked long enough and then we want to take some questions.

So we do have some written questions and we already and we do have um we can go around um want to take some we'll take some of those and we'll I'll stop and go through the written ones that we received. Thank you. Is this someone? Thank you very much for your cogent Sean and Brad presentation. Pretty excellent.

Uh I agree with that last summary statement which is there is no simple solution and I hope I hope that the town uh council takes into consideration that well my big concern is not so much Bartlett is the alternative project. Um, I'm very concerned that we don't know the costs. We truly don't. Massive potential costs. Quality of water, treatment, right?

Transportation, drilling, infrastructure, maintenance, massive amounts of dollars, not including over 11 million dollars that apparently, and by the way, this is not I'm not really criticizing. I'm at I'm saying let us be cautious please. $11 million $250,000 nonrefundable dollars prior to having any of those costs which you put on one of your slides. I'm not sure that's the best deal making situation that anyone, any company, any entity or municipality would want to do.

So, the pressure of making this deal with a date certain, my understanding is February 15th. I think the money has to go to the owners non-refundable. And if we decide it's not really going to work or we find out there's issues, we're kind of screwed. And I just wanted to say that one last thing. Sorry guys, I'm going on and on, but I'm cautioning the council here. Um, also my understanding is the owners of the land are the Wolfs Winkle family.

I do believe that they were convicted in federal court a number of years ago uh or crimes of land swindling not reconstituted. They have not been habituated or what what is the word rehabilitated? I don't think they've been rehabilitated. And so the question again is caution, caution, caution. Everybody that went into business with them ended up in a legal situation. Thank you. We need water. Let's do it the right way no matter what. Thank you very much.

We have uh forms over here if you want to also fill out your question. They will be answered and I'll post them online. Yeah. Once we're done. Yeah.

I want to point out you know the um us making the purchase and getting access to that groundwater the the town's not just left we'd have paper we'd have a water resource so there's a thought of you know if we hold that is that an asset that we can use and we can sell that off to someone else in the future so yeah I understand that we might be able to do that so that would be you know it's a it's a resource that we would have so we'd be buying that while it's paper water and my understanding is the Arala Valley land owners you brought some of the the ownership group but they're not the ones involved in the common infrastructure So, they're basically selling off.

They the work's been done um uh to have the state sign off on how much water is there, but they're not moving ahead with the project. They've helped assemble the land. They've put the easements in place. They're not the ones building the infrastructure. So, we we're going in with our eyes open on that. So, I just want to make sure people are aware of that. the project documents as they exist now.

It's a very restricted source because it's it's um subject to the state's order that a particular party has the authorization and there's not an easy way to unwind it. So, no, you can't just freely sell it like an asset, like if it was a a real estate lot. There's always a possibility it could be unwound and redirected to another party, but that would involve all sorts of government approvals and potentially private party approvals.

And so, there's no way to say to you today, "Yeah, it's doable." Because we would have to go through and see if we would have a problem doing it. So, Early in your presentation, you said that Cave Creek was we we won the lottery, that we are most serly severely affected, and we see demonstration from that. Phoenix and the new city that they're building next to us.

Originally the the town did it creek did operate on wellwater and we were thoroughly induced to get off groundwater and onto surface water and to participate with cap and that happened at great expense or the town owned the system but nevertheless we bought the system so we did pay for that. So it seems to me that different municipalities are affected to different levels here.

Can we go to CAP and say, "Hey, remember that deal we cut?" Because if we are more severely affected than Phoenix, where Phoenix can't even feel it, is there any equity at CAP to somehow maybe not get us cut as much as a Phoenix? So that's my question, but I have a statement, too. Reef brief. I promise. Every time we talk about water, I like to talk about rainwater collection. I now have over two and a half years experience doing that. Personally, I collected over 15,000 gallons with two tanks.

That is a better than 10% reduction for most customers. And you can start doing that tomorrow. It's available and once you put in the infrastructure, it's free. So, thank you. Yeah. Good point. Someone interested like first thing that's something that through water conservation we could do some outreach on um to to help that.

Um again other valley cities have have handed out rain barrels to help facilitate that depending on you know last year was a a dry summer so sometimes we get a lot of water sometimes you don't and then it's it's good augmentation for outdoor water use but that is that is something that's that helps could help reduce uh people's demands. getting back to your first uh question.

Yeah, we are because the town's uh you know because of how reliant we are because we hadn't you know the even the water company stopped using a lot of its wells after 1990 after they made the investment in the CAT pipeline the treatment plant and and started to do that and part of that was based on the fact that how the aquifer works up here even before that there was discussions at at the state level of of how viable is the Cave Creek Carefree aquifer ironically we're at the shallow end of it um and it actually gets deeper as you go towards Carefree Scottdale border and that's the deepest part of of the aquafer.

So, there's been discussions with Cave Creek, the Cave Creek Water Company, uh with Carefree, Carefree Creek Water Company, and Scottsdale to help preserve that area. The state can't regulate the exempt wells that go into the aquifer, with the private wells that people can drill. It's called an exempt wells, but they actually have been working for decades with the municipal, the three municipal providers up here to try and preserve the aquifer up here. Could we bring them online? I think we can.

How long will they work? And what water quality are we going to get out of? We've tested three of the wells. um we think that'll help us with our bridge solution. But looking back historically, I I was able to put together about a 20-year um usage on those wells and there's a lot of variability and a lot of drop in the well production and we know that water quality arsenic specifically is one of the constituents they had to deal with that the old water company was running into dealing with.

So they were actually blending it. So, there's a lot of things to consider with that. And yeah, we don't want we are there have been conversations all the way up to the governor's office. Our our our mayor uh um on behalf of the council has we presented letters. We've actually met with the governor's office. We've met with Arizona Department of Water Resources, Tom Pashetsky, the director, um one-on-one. Um we've actually met with Arizona Water Banking Authority.

We've we've met with the the CAP staff on this. The very issue you're relating is, you know, this is a real wet water issue for Cave Creek. Can you treat us differently? Legally, they always say, you know, we're trying to treat everybody the same, but I'll I'll say that our name is coming up in conversation statewide. They've heard our story. They know this is a wet water issue for Cave Creek and and the fact that we're um getting these other cities to partner with us in this exchange agreement.

It's because they heard that and they're willing to do exchange agreements with us to allow us access to our water storage credits. And even the the state again there we were at the meeting with the Arizona Department of Water Resources and and um I know Tom didn't know I was there because I was sitting on the side and he mentioned Cave Creek you know when he said this is a real wet water solution Cave Creek as an example and I happened to lean forward said thanks for doing that.

So they've heard it. They know that they're so we're trying to figure out the legal mechanisms how that will work out because they have to look at statewide they have to look at all again the municipal industrial sum contracts for the sensor product. I think there's 54 of them. out, you know, how do you treat everybody differently and how does that work out? And I use the analogy, you know, it's funny, you know, we're a small company.

It's very important to you guys that I can provide water to you, but I'm we're almost a decimal place rounding error to a lot of these water companies when you talk about talk about city of Phoenix. So, but there we go into conversations with people that um I'm surprised they're opening the door to us because they heard our story. So, yeah, this is our last question. Otherwise, please fill out a card and we'll make sure we get the announcements.

If the town's been banking water for the future, then what would prevent the town from easily accessing what you've been banking? I I I don't understand the process of accessing bank water. Great question and Brad will provide more of that. So, in effect, there's we've actually been banking with centralizer project. Central Project has physical areas that they're recharging the aquifer. They've done studies. They've picked locations that they're actually putting in and they use spreading basins.

So, they use large basins and they're putting that water in. It's percolating into the ground and recharging that. The facilities that they're uh they they run and you know the town geographically it's not good for us to recharge up here. We don't have a good location to recharge in the town core area. It's just not viable.

the groundwater table actually is surprising hard because perched water on the base down south we could do some recharge but it's actually going to go south the carefree highways the next day um so how do we recover that is the next portion of that so when you look at groundwater recharge you have to look at you know get can it get absorbed into the aquifer um there's rules on what you can do where you can place those and then can you withdraw it so it's the physical access to that stored water the water we've banked again the two locations that we have access to right now are I have stored water are the hieroglyphics facility 163rd Avenue in in Surprise north of Grand Avenue and the other one is in uh Poria at Happy Valley Road 107th.

So, and that's why the exchange agreements, those municipalities actually have wells within the zone of influence that they can recover that water. And that's the exchange agreements is that they will run the groundwater wells, pull our credits out of the ground. They'll account for it and there we'll do a transfer with them of our credits to them for that year and they'll leave water on the central arm project that they won't take off water and come down to us.

So, it's it's moving the water around um based on the fact that when you recharge is not where you have physical access and we're trying to get that next connection, the physical access to that water resource for the town. Yeah, I'm sure you want to elaborate more, Brad. When you ask for it, they can't say no. Well, so there's two pieces that one is the agreements that you have to come up with agreements between city to city or you know, town to city and then the other is the infrastructure.

And so since those other cities have infrastructure um so they can say no. So because each goes to their coun the the agreement a legal piece of that goes to individual councils and we're working through and it also goes with the department of water resources. So, we're working with all of those to uh the two cities as well as the department to get allow us to get access to their infrastructure so we can get access to that city's uh cap water to get delivered to us.

So, it's not as simple as you would think.

uh it's actually very complicated both from an infrastructure and agreement perspective but that's exactly if you looked at the slides or if you download them later those are the when uh those are the the exchange agreements that what one of the things that Sean had asked me to do and and kind of I was on their master plan was to how do we bridge this we know we need something long-term can you give us some space so we have time council has time to uh legitimize it and figure out what what it is you need to do what solution that Sean mentioned.

And so that's when I started working with my uh contacts in these other cities and how hey we can do this. Are you willing to help this town? Yes. Which was wonderful. Now we're just working through those terms and and to finalize those. And actually Sean and I just met this morning with one of the other cities because we want to do this twice at the two different recharge projects.

And we're on the cutting edge of doing this as Sean mentioned before because of the reasons that we're talking about with the impacts to the shortage and this community. We need to uh bring this to a close unless you have a final statement. Um well, we can we can post those online. Yeah, I'll post it online. I've got three here that are tying back to water rate increases. So, those will be discussed more tonight. So, again, um again, I gave a preview of that.

And one question that got written down was had to do with the new hotel project in town. Um so there is a project moving forward uh for a hotel near the post office. They actually have what we call a cons a contractual right. They that property actually does have a certificate of assured water supply. So when I brought that forward talk about fewer obligations that's a contractual obligation that we had signed off for that property if you're not aware of it is tied to the Gallery Ridge project.

It was actually one project at one time. So Galloway Ridge the 70 lot uh residential subdivision is actually phase one. Phase two was always going to be the hotel. So that the amount of water set aside for that project is uh that's a a contractual obligation.

That's why when I brought that first table up of what do we have as obligations, you know, there are some subdivisions that have vacant lots in them that actually helped pay for the system that got to the point that they that we now actually have. So we're we're honoring that contract with them. So well, thank you very much everyone. Uh we appreciate your time for being here and I hope uh this information was useful. Um the video will be online tonight.

Um and I'll post it on the website as well. And then um all the questions that we can answer, I'll keep updating the website as more and more of those come in. Uh so please check um the website. The homepage will have a link to it. And um hopefully we answer all your questions. If there's still questions afterwards, I'll make sure that you have an email link you can send to communications at cavecreekaz.gov and I'll make sure that the guys get it so they can uh answer it.

So, it's on YouTube and it will also be on our website. Yes, it's it's uh town hall something, but it there'll be a link to it off our website. So, uh but again, we have a council meeting if you want to stick around for that fun show. It starts at 5. And uh I thank you. Thank you again for being here.