Cave Creek reviews Colorado River cuts strategy, defers rate decisions

Welcome to this uh special town council work session um April 28th, 2025. We've already had the uh roll call and meeting now called to order. Um have the pledge of allegiance and Carol, would you lead us? I aliance to the flags for the stands indivisible andice for all. Thank you. Okay, tonight has only one agenda item. Uh there will be no action tonight and uh you're going to hear uh a lot about water. Um we just we just concluded a an executive session on some of the contract issues.

Uh the agenda item is a staff recommend that council provide comments and direction on the strategic water resource planning that has occurred since the adoption of the integrated utility master plan in November of 2024. With that, I'll turn it over to staff. Thank you, Mayor, mayor, and council. Um, so we have a presentation that we're going to be um putting it on the screen. Um, we can have that come up. Um, we have uh a number of people here that are augmenting staff.

We have um uh our water policy advisor um water attorney Michelle Van Balkam Botham and also our another outside um water uh policy um strategist uh Brad Hill um who has quite a bit of municipal background and then of course Sean our utilities uh director and I'll turn it over to our utilities director Mr. Cruz Weisner. Thank you, Grady. Uh, good evening, Mayor and Council, and um, also members of the public. Um, what you're seeing handed around, I'll just explain to people.

Um, in some of the slides, you'll see some graphics. So, we actually made hard copies. So, there's some on the table on the side there. Uh, some of the graphics if you like. I think there's 20 copies of them. And then there's also a double-sided um, sort of summary sheet of of, uh, what we were working on as far as water policies and pros and cons. Just hang on for a second while people grab those. Yeah. So, we gave council the full 11 by7s just because it's a little easier to look at that way.

Again, you'll see these in the presentation uh except for this summary table, which is basically the the gist of the presentation we're going to give tonight. Uh Sean, do do you plan to give an overview of what's behind all this with Cal River cap? Yes. Okay, good. For those those in the room that don't live and breathe this every day. Yeah. Obviously, water resources is a big uh issue and topic for the town to consider.

Um so our goal tonight is just to explain since you know during the master planning process we actually held a workshop in 2023 where we discussed the water resources some of this is repetitive from that presentation and then again we repeated it in November when we actually um adopted the master plan. So since that we've been working on strategies. We identified a problem which was the town's water resources are at a point that we're limited as we move forward to.

We referred to it as post 2026 or 2027 is when we expect uh cuts to happen in the Colorado River. The town's water resources are very tied to our Colorado River water allocation. So that that we are directly impacted by that. So we're going to walk you through uh a bit of a history and then what we've been doing to hopefully address that. And there's multiple layers to this. So it's not just one solution. So with that again just a quick background. We did adopt the master plan last November.

We did a workshop in 23 to explain the water resource component of that uh master plan. And we really looked at tonight we're going to talk about the water resources portfolio that the town has. Um looking at growth projections because one of the things when you look at your water portfolio, you want to look at what you're going to need in the future.

It's not just uh you know in our case it's actually we're looking at the potential cuts or potential shortages on the existing customer base let alone for future growth and the town really needs to be looking at uh uh developing redundant water supplies. What do I mean by that? That means that we are so much tied to the Colorado River water supplies right now. It puts us at risk because we have one large supply.

So that's what we're going to go through tonight and uh stop us and ask any questions you have. Brad, you want to start with this one? Yeah, welcome Brad. Yeah, I'll pass it off to Brad Hill. Brad Hill is a water resource consultant and actually ex former director from Flagstaff. So, he has a lot of knowledge about water resources in the state and uh just it's great to have him on the board as part of our team here. So, thank you Sean. Mayor Council, it's a pleasure again to speak before you.

Um so, what we thought as the mayor asked was a little bit of a background. So, I'm going to go through the next handful of slides here. Uh the first one is a picture on the left of the upper and lower basin known that is the Colorado River basin. Um as you've all been hearing in the news, uh the supplies have uh have been uh overly overallocated and I'll describe what what I mean by that.

Um there's been a drought ongoing as we've all heard for the last several decades and the agreements between the seven states which is there's seven states that make up the upper and lower and then there's the agreements between the lower basin and I won't go into those but they're important in the in the in the conversation. Is it all seven states or is it the three lower basin states? I'll I'll I'll refer to both of those. Um and then in 27 so those agreements all expire in a year.

So in in our business a year is not far away for candidly a year is like tomorrow for us.

Uh and so we are doing what we can uh uh to respond to uh uh to these upcoming rule changes and then what is known as in 2027 or we'll use the term post2026 uh water supplies get reduced or we're anticipating that those water supplies get reduced meaning central Arizona project water supplies which are withdrawn from the lake Havsu and through the central Arizona project canal are also referred to CAP P if I use too many acronyms and I apologize, let me know. I'll try not to.

I'll try to speak them all out, but sometimes we just kind of slip into that. You want to go to the next slide? So, here's kind of what's happening. Sean and I met with Central Arizona project staff on several different occasions, but most recently the last couple weeks, um CA, as we have, as I mentioned before, is is anticipating shortage cuts and and that's due to the uh lower basin has put together an alternative proposal to the seven states on what to do post 2026.

Those conversations are held up much higher uh at the highest levels of the water folks in the state, meaning within central Arizona project, the department of water resources, the governor's office, etc. So there's a little there's not a lot of information out there of how those conversations are going.

Another impact is with the change in the federal administration, the Bureau of Reclamation, that is the master of the seven states of the Colorado River, they don't have a what's known as a commissioner. that's a person that runs the uh the bureau and is the uh the uh how the operations and things work within the bureau and the Colorado River.

So those are kind of some of the things that are ongoing right now that why when we we we're slightly abusive or slightly uh uh we're not quite sure how things are going to land in terms of the conversations that's the reason why.

So the first bullet here is there central Arizona project in our conversations with them are talking about a 1.5 million acre feet reduction uh within the lower three states and Mexico that is what's known as the structural deficit in terms of if you hear or read about what that means this so central Arizona project said that's what we should be uh uh uh planning for and if that were to occur and and Arizona would get the majority majority of that cut based on priority.

Central Arizona project within the state of Arizona has a low priority water supply of which that's the water we're talking about here. What's the town gets um additionally if the hydraology continues to uh uh kind of the last 20 years is like what the next 20 years will be. So the last 20 years two decades worth of grow worth of drought. If there's going to be continuing drought in the future, uh then probably additional shortages will occur beyond what we're just discussing here.

Uh with that 1.5 million acre feet reduction, the state of Arizona is going to take a $760,000 uh60,000 acre feet, sorry about that, uh reduction over the norm, which means it's about a 20% M&I reduction to the town's M&I supply. So, what you're going to see in the following slides from this one is I uh with John and I and talking with Central Arizona Project, we elected to use 25%. We thought that was a little more conservative for you.

So, while the state is looking right now in the near term at 20%, uh we're going to use 25% for this conversation here tonight. And and the lastly, it's very very important uh that we note and I've said it earlier, but there if there are shortages greater than the 1.5 million that's already been agreed upon in the lower states, meaning the seven states, no one has agreed to anything. Just make it candidly clear. Above the 1.5, what it looks like at the seven state level, no one's approved.

No one's agreed to anything. And that's kind of the challenge of us having this conversation and then planning for you on on how to mitigate those impacts. So what that means to you is you have current supplies are roughly 2,800 acre feet. Uh here's the breakdown of the different types of supplies. Couple of them are central Arizona project M&I which is municipal industrial. It's a priority type of supply.

And then you have uh some groundwater mostly at Desert Hills, but we'll talk about uh the Cave Creek groundwater uh in the presentation a little later. So, as I mentioned before, there's anticipating in the year January of 2027 that the federal government's going to declare a shortage. Uh we think it's going to be or Central Arizona Project thinks it's going to be 20%, we're proposing 25% to plan for.

And what that does is that reduces your water supply for of the cap portion of your water supply. And what that means is that could be come in two years, you'll have a water supply of less than 2,000 acre feet a year. What is what does that mean to you? That those numbers might not mean anything to you. So you currently deliver roughly 2,300 acre feet of water supply. So you're instantly in a shortage.

you and the type and the and the water that you deliver to your customers will be instantly and you won't have enough Sean won't have enough water for you to deliver all of the water needs of your community. That's what those numbers mean. And I'll get I'll describe a little more because what we also don't want to do is provide you a problem without a solution or two. So yeah, spo is what came out of the master plan. This is what we've been thinking about diligently for the last couple of years.

So, we have a big problem. Uh, we don't know the scope of that problem because, as Brad's indicated, the uh the the cuts have not been determined. Uh, we anticipate there will be cuts. You know, it'd be very short-sighted for us not to think there's going to be cuts. It's just uh again, all our conversations have shown that 20% is a good number.

We decide to go to 25% and that's assuming we lose all of the non-Indian agricultural water, which is water that we did secure for Desert Hills a few years ago, and that's going to go to zero. We'd only ever get that back on a good wet uh winter year that we'd get some of that coming back at as occasionally. But with that, we're going to walk through some graphics.

So, the large 11 by7s you have in front of us, the charts we'll actually have on the slides and those who pick them up, that's where we're going to walk through, which helps explain this graphically of what we think uh for the next 20 years, what this impact could be, and then we'll go into what we believe are solutions. And actually, the graphics will show those solutions and we'll verbally uh repeat that again at the end.

to the question and council would ask questions as we go along here, but the question is we also have some water that we're contracted for. We have obligations for does this I'm just in this page here. I know it's probably on some of the graphs, but uh does the uh um 2,000 acre feet we're we're delivering 2,300 now, but some of that's going into storage. Um so that's an additional amount that is that we're short. We can't those those contracted amounts.

No, the 2300 is actually um our cap and our Desert Hills water deliveries to customers on top of that's to meet existing customer demand. So there is growth. We've mentioned it before that uh the town has some some neighborhoods that have certificates of secured water supplies. Um so that's an add-on on top of this and we've actually looked at existing neighborhoods in the town. When we did the master plan, we did a very detailed study of this.

Uh there's several existing neighborhoods that were platted prior to 1980 when the groundwater management act then required certificates. So we sort of accounted for those. We have them broken out separately in the master plan. But we're talking about 2,300 acre feet is the current deliveries to customers. Does that include Kava Springs and Ranch Minatan? Uh no not Kava Kava Springs because they're not existing customer certificated water and we've been using it for a while. Yeah.

So again, if there is a certificate that has not been obligated or not currently getting demands, we sort of are not counting for that. So there is part of the discussion is the growth in the system and then what priority is that growth level? Is it a certificate? Is it old? How many additional acre feet would Kahava Springs require that we're obligated to um I think it's actually 127 I believe or something like that.

And then there's is that on top of the 2821 or is it on top of the of the 2228? Uh no 2821 is the water supply the water portfolio. So that's on top of the 2300 deliveries that we're doing right now because Kohava has not gotten any deliveries from us. So roughly 2500 acre feet is where we need to be well with Kahava. And then if you look at the other certificates because I think there's a total of five certificated subdivisions that could be developed.

Um again I don't have those numbers in front of us. We had that in the master plan. So and that shows up in some of the churches. So what what's the total that we if all these things were built and what what is the total we need to provide? So I think that number is we'd be short assuming a 25% cut in the town's cap municipal industrial supplies and a zero availability of the NIA water. I think it's 800 acre feet short for deliveries at at I think and we can provide council that number.

It's in the uh the black of each master plan that was presented to you back in the fall. Uh those exact numbers. Uh we just don't remember them off the top of our head. Well, the reason I'm asking is because that'll make a difference into how much how much water we have to procure. I mean, it'll make quite a bit of difference. Mayor, council member Rhodess. Yes. And the next slides will illustrate that for you and for everybody. Good discussion. Thank you.

Hopefully the next slides do help build upon that. But yeah, the master plan we outlined that um the certificated areas, the neighborhoods that uh don't have certificates, but we sort of assumed had a had a higher right and then there's existing infill development. So we sort of mathed all that out. Now let me ask another question. and the 2821 um and the does that include um the areas south of Carefree Highway or are they on Phoenix water and it's their problem? Yeah, south of Carefree Highway.

American Council will be converted by the end of this calendar year is our understanding will be converted to city. What does that lower our number to? Um the right now because it's only really the uh Walmart, Burger King, and the little strip center actually on our water supplies. Um everything um uh west of Cave Creek Road is actually already have a city Phoenix domestic meter. They're getting fire protection from us.

I think it's about 18 acre feet that um that um Walmart and North other areas are using. So we get about 18 acre feet back at the end of the year when Phoenix completes their improvements. Okay. Thank you. Yes. So, if I could if I could spend just a little bit of time on this slide and then the other ones we'll just step through because they all look identical with uh uh with information popping up. So, let me just spend a few minutes here.

So, what you have on this slide is a bar chart on the upper right with colors of vertical bars. Those vertical bars represent the types of water supply that the town has. The blue in general is central Arizona project water um etc. You could see the the different types that we just discussed on the prior slide. That bar chart also has two colored lines, a green one at the top and a yellow one.

The significance of those is what council member Rhodess was just asking and that is the yellow horizontal one is what if we just had what if the town had no growth from today forward. So only existing customers would the town still experience a shortage or not. So that's the purpose of the yellow bar and that the yellow underneath um shows in this example that you would have a shortage. That's the uh if you notice that I put a uh an arrow to it.

The red above is the growth portion and in this example is the shortage what would occur and that growth is what um is what Sean was just meaning we we anticipated it to be the the certificates etc. And then to answer your question council member Rhodess the bottom right of the oh I'm sorry it's going to be the next graph there is a number there that's going to answer your question. That's the total volume at least in the the year 20 240. So horizontally, let me let me figure out the horizontal.

So the top one above the blue line, it says water supply shortages. That's where your eyes are going to draw to. I put some red uh uh graphics around it to draw your eyes. I would recommend I'll get that in just a minute. The next slide is the new types of water supplies. As I mentioned, we don't want to come to you with a problem without some solution. And so that's what these are going to illustrate is what some options that council can consider as we move forward.

And then the next bar, excuse me, the next horizontal line is your existing supplies. And then the very bottom is what are those demands and their projections. And the growth shows that yeah, sorry I couldn't read that far. 3% growth is what that green line illustrates. So, with that, as long as there's no questions, I'll step to the one because there's going to be a lot of numbers. And my recommendation is to not specifically drill down to a single number and say it's 101.

If I had my brothers, I could have figured out with uh uh uh with Excel on how to round, but Excel doesn't let you round easily. So, it's got all the detailed numbers, but uh just be aware of these. So, if you Oh, can you step? Yeah. And just pause for real quick. So the 3% growth rate was actually what we adopted in the master plan.

So we're continuing this to match the master plan and that was actually done in 20 uh we started master plan at the end of 22 but it's really 23 that we looked at was the basically the horizon at the time of what we thought was going to come in and we sort of geographically placed it in the system and it was really properties within that we'd be tying on to the existing distribution systems where that number came from. But that's going back to our master planning document.

So we thought it would be best to tie that back to the master plan. That's something as we move forward we could refine better to figure out what that growth could potentially be. So why does the shortage at the no growth decrease over time because of various supplies on the existing supplies and the way they get moved. So let me let me step through these and I'll help it'll it'll help. Um so what this illustrates is our conversation with central Arizona project.

What were to happen if it's 25% reduction come 2027? As I mentioned before, your town would have uh a challenge providing water supply to existing columu uh customers. That is illustrated by the 199. That's these are in acre feet per year numbers. Uh and then the one above it is the shortage in a growth for the uh growth that were to occur.

the estimated growth as Sean just mentioned um the sum of those two is the total is the total but it's important for you to see at least existing customers and then at the very bottom what that illustrates is we work through the various types of water supplies and we have highlighted in purple your non-ading agricultural water supplies projected to go to zero actually next calendar year and then the M&I supplies your municipal industrial supplies are projected expected to be dropped 20 to 25% whatever that exact number is.

In this case, it's 25% starting in 2027. And then you could just do the math on how on how that works. Um so the the shortages of existing customers uh it it has to do with how the town is project how how Sean is projected to utilize the different uh water supplies that we have and how efficient Rancho Mñana can be and how efficient our treatment plant can be. So some of these have some of that baked into the numbers already efficiency.

So that's to answer your question why there's some some changes to the existing customer shortage uh and not a flatline. So, with that in mind, I'm going to step through these, but it's important to note if you were to experience what this shows, if you were to experience a 25% short in in MI, you're going to see a shortage all the way out as we just took it out to 2040. Uh, as an FYI.

So, now we're going to step through some options of what the council can consider, what I've been working with Sean and Michelle and and and his staff on what we can do moving forward. So water conservation is always at everyone's top of their mind. Um if you'll notice I didn't put any numbers and I I know or I think there's a desire to have some kind of percent number but I wanted to illustrate I didn't put that in here.

We can add that as we go forward but I wanted the conversation to occur first. So that's first and foremost is manage the water supplies you have today more efficiently water conservation and then that would reduce some of the shortage numbers that you see. The next one is what we're calling Phoenix aquifer storage and recovery wells.

Sean and I have met with city Phoenix city staff and they have the ability uh to help out the town by recharging some of your cap and I water right adjacent to you and then the then the town has the ability or they have the ability to pull it back out and deliver you. So uh and I think Sean's going to go a little more over in detail but just that option alone begins to buy you time for at least two years of existing customers and depending on the go. So just that alone buys you from 27 to 29.

That's that's very very important. So step through the next one. Sean is looking at redoing some of the wells uh that have been mothballled over time in the town. Uh we are projecting that as a shortterm option. So that 160 acre feet represents about 100 gallons a minute. And Sean thinks he should be able to get that. I know you're you're going to present more about it now.

You're going to talk about the the how much water he thinks he can get out of it, but we only used it here as a 4-year option because we you'll get whatever you can whether it's that much water or not, but it's not something the town should should rely on long term. It's not a sustainable water supply just given the hydrogeeology of this area. So, the next one Oh, you skipped two. You go back one. Oh, and then Oh, okay. Came together. So then the next one we're on slide five.

Uh we are on should be six. Yeah, we jump one. We don't have it in the slide deck. We go from Wells to this one that we do because you took it out because you didn't want you didn't want to have that. Yeah. Oh. Okay. Yeah. United States. So, what this illustrates is um the first one of those two, and I apologize for that. Uh is the what's known as the Phoenix Reclaim Water Exchange. You were on slide six or I am on Yes. Yes. So, scenario four.

Sorry, we should have all the scenarios should be in here. Yeah, this thing slides. Yep. We're on scenario four. Okay. So, what this is, this is a long-term storage rec uh LTSC, which is known as long-term storage credit recovery and Arizona water bank. And they're lumped into two two one option, but it has two impacts. I keep them separate. One is the reclaim water.

So there's an option to work that we have been working with Phoenix staff on for you to send reclaimed water to them in exchange for them to give you back a blended source of cap and advanced water treatment. There's a uh there's some physical infrastructure that needs to happen and stuff and Sean will describe that. But that is one of the two lines that that illustrates. That's the 56.

That's our um every time I come to council and the cory meetings I talk about that's the overflow water of the ranch mñana lakes. So that's us getting a connection to the city of Phoenix to allow us when their lakes are full not to overflow their lakes but to send that water to Phoenix. That was our goal with that that um uh number. That's where that came from.

And then the the second one on there which uh is the Arizona water banking credits of the first of all the reclaimed exchange with Phoenix is an ongoing so that's a supply that's ongoing so that's a benefit uh and and it's a water conservation option too. Uh the other element is the water banking credit. So, the state of Arizona since the mid90s has been recharging what then was called excess Colorado River water at various recharge projects within Arizona.

They've been doing it for 20 plus years. And they created statutoily what is known as the Arizona Water Bank, which is essentially a subset of the Department of Water Resources, but it's it's excuse me controlled separately through a board. They have a lot of credits that they have been recharging on behalf of all municipal c well municipal and industrial and uh Indian customers tribal tribal partners.

So what we are pro projecting here another element to the confusing part of this conversation is the water bank hasn't decided how they're going to give away their credits. Just to be candid that's another element they have to do it. They have a way to do it through both through 2026, but that agreement also ends in 2026.

So, not only is the discussions within the seven basin states up in the air, the conversations within the state on how the water bank needs to distribute its credits is also up for discussion. I know you have sent a letter to the board on that and I know you've talked to others in this state uh high up on that issue.

Uh but what they have agreed to I've just put here what if they just continue to what they agreed to and that is to backfill 20% of your municipal and industrial water for a period of time. I'm picking five years that is significant to this community because Yeah. Thank you. Yeah.

uh because as you could see on this graph what it does is it buys you even more time probably five six years uh buys you out to 20 you know again I hate to give you exact dates but these are generalized dates I think that's important that's why I put this as draft and not final uh but it's going to buy you five six seven years of time which is huge I mean that's that that that's a big deal so understanding and and we are we're all paying attention to what the water bank is doing how they distribute those credits and then what staff and and myself collaborating with your staff are doing that should they do that what are the administrative things we have to have in place the agreements the permits etc so that's a big uh uh water supply for you Brad a question on that one please yes uh for the Arizona water bank credits is that already paid for do we do we pay a new price for for the opportunity to use those credits mayor council member Driscoll um we were just having that conversation.

So, the the state of Arizona taxed everybody in the three counties to pay for the putting the water in the ground. I'm not sure what the cost is going to be to pull the you'll have an infrastructure cost to pull the water out of the ground, whatever that looks like. We're not sure if the state is going to have another search charge onto those credits. I I do not know that answer and it's just not known enough yet.

But you you clearly will have a a a a physical infrastructure cost associated with pulling those out. That's my take at this moment. And our best knowledge right now with the Arizona Water Banking Authority is that uh while they've been banking the water and generating the storage credits, um they're not from what we're seeing right now, we don't expect them to move forward with a withdrawal option.

So they're basically going to give it to the different members and ask them to deal with getting that water out of the ground and putting it wet water in the pipe. I can't put paper water in a pipe, but you know, but that's so that's the next challenge that we'll have to overcome. But it is physically available to us and legally available to or legally available to us. Just how do we get physical access to that into some of the challenges? So there's one more and that is a future water supply.

I know this council authorized the town to be involved in the Verie River um uh Bartlett Dam modified. So that could be a future water. I just kind of left it a little amorphice. Uh but if you were to get a future water supply and how you would layer that in and how that would impact andor push out the need for uh uh or or the impacts of a potential shortage of your CAP supplies. So with that, I've given you kind of some ideas and solutions.

I'm going to turn it back over to Sean and uh he'll talk more details. Sean, one other question before you start there. For um the existing water supplies where Desert Hills groundwater is is um um charted out consistently at 230 acre feet. Uh and that's through the the life of this through 2040. Is that realistic that that's going to be a consistent number? Mayor, council member, um that's a little conservative. Uh we did put some projects into the 10-year capital program.

Obviously, we funded the first five years of that to look at uh redrilling a couple of the casings out there to try and keep it up. So, that's that's a conservative estimate. We actually also put there might be a potential to drill some new wells to to keep that water supply level. Um I don't think it'll grow and that's what we sort of got out of the Clear Creek study that we did in 2020, which allowed us to do the 2021 water resource policy, which which limited new connections out there.

It's not a very sustainable aquifer. Um, but we we think uh through this timing period that we could probably keep this well running. So that's our hope right now. So again, it it it doesn't paint a very good picture, but there's, you know, as Brad said there, we're trying to layer solutions together. So I'm just going to go through the more the higher level solutions and sort of lumping together. We have we have broken them into short terms and midterms. Short-term is water conservation.

How can we work with our customers to extend our current water resources so people use less water? That's an opportunity for us. Can I just break in here for a second and and talk to we have a lot of people in in the room here. Uh we've met with the governor's office, Department of Water Resources, sent letters, pure reclamation, uh C, you name it, we've been to see them and sent letters. Um and at every level there is, there is no certainty.

There's no there we have all these things out there, but none of the agencies are ready. We don't know how much water we're going to lose, if any. We will lose lose some. Um, and it's what, a year and a half away. Uh, Department of Water Resources, uh, the water banking has no rules to take water out. Um, it is, uh, like driving 100 miles an hour towards a brick wall uh, at night and and and you can't see it.

So, so we we've um uh spent an incredible amount of time and resources uh making sure we understand everything, having options. We've hired, you know, gotten this uh this these things done here, but it's going to take clarity from our leaders. We have no commissioner of the Bureau of Reclamation, the very agency that controls the whole thing. Now, um when we had one, they didn't do they didn't do anything to help us. So it's we may as well have not had one frankly.

Um so uh there's going to be a lot of uncertainty in the future. Um but we are doing everything that we can with what we can do and planning on uh getting additional resources and that's what what this meeting is is really about. So, you're not going to come out of here with a lot of certainty, but one thing you should come out here with is we have a lot of really smart people working on this problem. And um we won't it won't be next week. It won't be next month.

It may not be next year 20 maybe. Well, it has to be next year sometime, I guess, next year. But uh uh so um that's why you're seeing all these graphs and scenarios and uh and meetings and uh of course this is all going to have the effect where it always does on the uh bills that our water customers pay. So uh I don't think there's any way we can say that there's not going to be substantial increases. Every city and town in the system is doing that same thing. So we're going to have that happen.

the water's going to increase and the water cost is going to increase. I'm a water customer myself. Um, so um there isn't a lot of good news in this and there is a ton of uncertainty still and I think you're going to see here in Sean's next presentation that some of the work that has been done that around the edges uh to take care of some of these problems.

But I think the community and that's why we're having this meeting is so the community also gets updated on what's going on even though we don't have any final answers at this point. Quick thing. Um I've asked Brian who's sitting in the back, our IT guy, to pull up our water master plan so we can answer Oh, sorry. Uh Brian has pulled up our water master plan so we could answer questions directly as Mr. Rhodess, Councilman Rhodess um asked.

Uh so if we ever want to get to that point, maybe towards the end of this, don't mean to um you know, call you off guard, but those are the facts and we should have the facts before us and then we can answer them um when the questions are asked. Thank you. Well, thank you, Mayor Council, uh for those those comments. So again, I'm just going to this first these next two slides are really just a summary. So, uh, the short-term initiatives, when we think short-term, we're thinking before 2027.

Um, at this point, you know, we're talking about, and I'll get into more details of each one of these items, water conservation, um, investigating restarting the existing wells. Uh, the Cape Creek water system did start on groundwater wells and then convert it to, uh, surface water, uh, Colorado River supplies in 1990. So, can we go back and and can that help us out?

Uh, the water banking authority in this, in this case, the water this not the water banking authority, it's water banking with Phoenix. So the IGA that we have in place with the city of Phoenix right now to divert, treat and deliver water to us our water resources also allows us to recharge with them and have them uh um recharge into their act for storage wells and deliver that water back to us. So we think that's a solution.

They said they have capacity and then we've as I come forward to every quarterly meeting I talk about Ranchana Golf Course that's something I've been asked to deal with since I've been here. Uh we actually are working with them on short and midterm solutions to help lower their water use. um both the losses on the lakes and potentially irrigation improvements. We also have midterm projects that's that there's overlap between all these projects.

Midterm being zero now all the way up uh past 2025 in the next 5 years where we have to work on water agreements. And that's the goal there is to get us access to the long-term storage credits that the town does already have in our name and to give us access to the water that the Arizona Water Banking Authority has put in the ground for the on behalf of the state and the municipal industrial users of which the town is one.

Um and then we have to get into really looking at long-term solutions like Karkah Valley or the Bartlett Dam new storage project. You know, uh we need new water supplies.

Um there's no way around that and probably decisions are going to have to be made in the next uh next few years to actually participate and we were already part of Bartlett Dam um but you know we need to find a firm solution and then longterm is just any new agreements for water exchanges that can help add to that and is there any other way to purchase Colorado River supplies?

you know, everybody's looking for this and we're all working uh to fight fighting for the same water resources at this point in effect, but we're just going to keep our eyes opened on that. So, let me get into some more details about some of the specific initiatives we're working on. You know, water conservation, be able to work with our customers to actually limit their existing water use that does extend our water resources. Realistically, I think a 5% target is good.

If we can get more than that, great. I think that's realistic. You know, we have done uh we're getting close to the end of the upgrade of the metering system to the AMI automatic metering infrastructure where we actually will have almost not quite but close to real-time data from customers. So, we can actually start working with them. We can see things like leaks earlier help them also participate.

The my360.com is actually the application that they can be set up to they can set their own parameters. They can watch their own water use.

Um but helping to do that and then in the capital program we have rolling that out into Desert Hills also to try and get that wrapped up in the next couple years so that hopefully in a few years we have all our customers all 4,400 customers actually on the AMI metering system which will help us out to understand where the water's being used and help uh go after the high users. But we also want to work on focused efforts on the highest water users.

Um, you know, uh, there are some, uh, you know, we mentioned Ranch Minñan a lot, but there's actually a lot of individual, uh, customers that use a lot of water. In Desert Hill specifically, there's a elementary school out there that uses a lot of water. So, our our second biggest water customer in the system. So, we need to start working on and we figure by working on those hive customers if they can any reductions they do have a big has a bigger impact.

But we want all customers to work on this. Um, we put in the budget process for next year actually to develop the conservation program. So, that was a budget supplemental. We did $100,000 of to do the study to help wrap it all together to come up something that's going to work for Cave Creek and then uh the marketing materials, etc., and then $100,000 to initiate that program, whether that's rebates that we offer people or just outreach.

We might need to bring consultants into just to do the consult consultations. If we want to work with people on say outdoor landscaping sometimes that you need you need to actually go to the site and actually tell them you know this is your water meter. This is what type of watering that your plant needs. Our current staff resources are stretched just keeping the infrastructure alive. So this is augmenting that and going forward.

So we did $200,000 next year to kick the program off and then 100,000 ongoing and then we'll evaluate the effectiveness of that. But we're not sure what we're offering. Is it rebates or again just consultations? But that'll be coming next year which is only a few months into next fiscal year which is only a few months away. And then we also have the utility advisory committee.

One of the things that uh since we've re-engaged that group, we've talked to them about and they brought forward some great ideas on just marketing outreach and other things. So we want to use that as a as another tool. Again, this a community-based group that comes together that that can help go out back to the community and bring those ideas forward. So, uh, we're looking forward to it and we do think, uh, water conservation could help. It's not a solution.

It's not the silver bullet, but it could actually help us out and I think we need to be more proactive with that. Sean, the the 5% number, how do we arrive at that? It seems very low. Um, it it is that based on well, there are other towns that have been through this. Is that is that the number that they came up with? I've looked at some other conservation programs. I've worked in other municipalities and you know 2 to 3% is actually sometimes what you look at.

I think we can get a little bit better and with our metering infrastructure I do think the uh the 5% is doable just because we can effectively uh get things like leaks stopped earlier. So uh we could challenge ourselves to go higher. U we just threw this in as a staff target. We wanted to have a target to aim towards. So if you wanted us to go higher we could try that and see if that sort of challenges us to to reach that higher next higher level.

We use 75% more water in July than we do in January, which is why, you know, outdoor water use has got to be one of the main targets of the conservation because that's that explains that 75% when fewer people are in town and the restaurants aren't as busy. So, I I I think there's a pretty substantial opportunity, especially with outdoor water. That was our first swag at it. So we can challenge ourselves to do better. Well, what it Yeah. Yeah. No. Yeah.

We figured we if we had we had to have a number. So, uh yeah, maybe that's a little more conservative, but uh good feedback. Thank you. Um restarting the Cave Creek wells. So, a little bit of history. Again, it was 1950s, I think 54 that the Cave Creek uh water company started providing uh domestic water service. Uh we found some records from between 1985 and 1999 of Cave Creek water usage and uh the wells uh and they averaged about 308 acre feet a year. That was running 13 different wells.

So um we're looking to restart a few. Um the groundwater uh usage peaked uh just in 1999 which is when the Cave Creek water treatment plant came on lawn when Cave Creek water transitioned uh to uh treating surface water about 378 acre feet. So this is good historical background to see how much potentially we were getting out of the aquifer, but they were also struggling. I think they they knew that they couldn't just rely on groundwater.

So moving forward and again I don't think we'll get 378 acre feet of groundwater supplies unless we try to get more wells functionally running and that's going to be difficult for us.

Um but we are looking at three existing wells and I got a graphic for the next slide will show that that we're trying to um um uh we've investigated uh well actually we've done videos on all three of them as of today and um we've uh cleaned and tested one and we've actually uh cleaned and we're about to test the second and we'll get the third one done before July.

That'll give us the parameters to then equip them next year and there's money in the capital program to bring those wells back into service to some capacity. Um we think that could provide some short-term relief. Um we have to we're actually testing both volume of water available at them um and then also the water quality.

So that's a big factor whether it it currently meets uh drinking water standards or is it something we could use for irrigation or to meet our obligations to Rancho Mñana or is it something we could with a little bit of treatment we could actually put through the water treatment plant and then uh use as domestic water. That's all what we're evaluating right now.

Uh so we do have a team of um Clear Creek Associates helping us with the hydro geology Black & Beach to help us look at evaluating what we can do with the water and then um uh yeah we'll wrap that up and then Clear Creek will come up with a a specification next year that we can then next I always say next year but it's next fiscal year which starts July 1st to then go out and equip these wells. So graphically these are the wells we're looking at. It's in the town core.

Um the ones in orange uh starting on the uh the west side, the triangle well spur cross and grapevine road. Um we actually just got that videoed uh today. Uh we believe there's some material to bottom. We're going to have to talk to the vendor to see if they can get remove that material out. There's a piece of wood down around 200 feet down and it looks like a section of um a column pipe that might have fallen down. So they may be able to hook it up and then find out what's down there.

The right well is the one on the treatment plant site and we tested that last year. It tested out about 200 gallons a minute. um it had fairly good sustained flows but then again if we run it consistently we expect that to drop. We see some old historical records and that was ran pretty consistently for a number of years and then just before the treatment plant came online they started uh the the flow started tapering off.

The pee-wee well on Linda Drive is uh uh was currently cleaned so we're going to be testing that. I think by next week we'll actually be testing that way. We can see the last well that was actually functioning in the system is the Vermesh well over in Desert Awareness Park on the east side of town. We've uh not neglected that one. We've elected to use that as sort of our last well because while it was functionally working, it also had a problem with the casing and and some sanding.

So, we probably have to do a redill on that casing, but it had high arsenic. So, we're trying to evaluate these other three wells to see if they have what their water quality is before we go back to the verme well. But the verme is still on our radar screens at this point. The good thing is that the old water company did actually do a well line that you're showing the the blue line on this graphic. The wells were all headered together so that they could be brought to the water treatment plant.

So when they built the treatment plant in 1990, they actually allowed that functionally. So we don't have to do wellhead treatment. We can have other options and we're going to pursue every option we can uh recharging with the city of Phoenix. What does that look like? So we have the IG in place. Uh it allows us to um uh use a we have access to three of their ARS wells, aquifer storage and recovery wells. Um they're south of Carefree Highway that they've identified.

They were identified in the IG. We have our agreements in place uh with Phoenix and we also have our permits in place through Arizona Department of Water Resources that we can actually recharge and recover from these facilities. So everything's in place. So Sean, we have about 400 people in town right now that are on wells and a whole bunch over in Desert Hills. I realize they're the Desert Hills folks are not our customers. We're talking about recharge, you know, with Phoenix.

Shouldn't we, if we're going to be pumping groundwater from our town wells, shouldn't we try to be recharging water from our wells? And we can do that quite easily with the equivalent of French drains. So for the people currently on wells, it would help if everybody had French drains in the lowlying areas of their property. That would recharge through the Khichi and it would provide more water availability to those town wells.

So maybe instead of getting three or four years out of them, you could keep it sustained. Yeah, a very good comment, Meritt Council member. Um, one of the things that we found out is because the subbasin that we're specifically in, the Cave Creek Carefree subbasin, uh, the groundwater table actually is fairly high in this area.

So the ability to actually for us to recharge is limited because legally we have an issue with trying to recharge because example the triangle, well, the groundwater table is actually down at 20 ft. Um, and the problem is if we try to recharge in any of the in our areas, but if we have the customers actually recharging, I'm actually talking about people who have houses.

So, anytime they want to build an addition or a cassita or anything else, you say, "Okay, great." Have all the water that comes off your roof go down into a French drain. That will then filter back downstream because we are the town of Cave Creek is downstream from the people further north. Mhm. that could just be a part. You might want to take a look at the town code and see if that's a that's a smart thing to do. Okay, thank you for the comment.

Yeah, again talking about recharging with Phoenix, our thought was for the last few years we've been um the town has had excess uh municipal industrial water supplies. Um so about three years ago we got all the permits in place to allow us to work with the uh both Phoenix and censor letters on our project. We elected to start by recharging with um central Arizona project. What we've realized is that water is sort of locked in those facilities. How do we get direct access to it?

So we thought the mechanism that's already in place with Phoenix is we pay them to recharge that or put the water into their wells and they can draw it and deliver it back to us. The mechanism is already there and we do think that this could help us out very quickly in the shortage and get us into 27 and potentially into 28 and bridge that gap and gives us more breathing space. So, uh, we've reached out to Phoenix.

Um, um, they, uh, have told us, I need to get just email from them that the capacity is available for us for after July of this year to actually recharge about 500 acre feet between those three wells this year.

Next year we do not expect to have any um um NIA water, non agricultural water, but we do think there might be some excess cap water and whatever we have would be best, I think, to put in that ground with Phoenix to make it physically available in the first couple years of the shortage to be be brought out to us. Um water exchange agreements. So that's getting us access to u Brad talked a little bit about that the long-term storage credits.

That's the legal um that's the credit account that or the banking uh statement that we've put in place where we've recharged water somewhere and we've got paper water for doing that recharge. Um so we have uh the town has as I mentioned has worked with Central Arizona Project for a few years. So we have about 2,000 acre feet recharge and long-term storage credits. Most of that is in the hieroglyphics facility which is out uh north of Grand Avenue 163rd Avenue.

Um and then we have a little bit in the hour facility which is down in the hour by Lake Pleasant Parkway and Happy Valley Road. Um uh so we have act we we need to figure out how to get access to that water but we also have the Arizona Water Banking Authority as Brad alluded to a little bit earlier. So it it started in 1996.

Um they were putting unused uh uh CAP Colorado River water into the ground and what I got off their website was just they have 3.8 million acre feet of store credit on behalf of Arizona. And that was put in the ground specifically for municipal industrial users like the town. So now the next trick is how do we get access to that water? And that's what we're looking at.

The water exchange agreements would be you know we do not have physical access to our water at the car in the hieroglyphics or our free facilities because we're not there. We don't have wells next to it and we don't have where Arizona water banking authorities put the ground water into the ground. We don't physically have a way of draw it but we can work with the agencies that do that are located near those facilities so that we can actually pull that water out.

We're talking to a couple of West Valley cities um that have ability to actually recover that groundwater on our behalf and do arrangements with them. Um we've had some good discussions. We hope by the end of the year we can actually bring one of those agreements to council. So that'd be something that again just we're working with other agencies and just using connections and just also, you know, goodwill and just saying, you know, how can we how can we can can you help Cape Creek out?

And they're actually willing to work with us as so far. So, um, but again, getting access to that water is going to be something that while we have that checking account of water credits, we need to get physical water to be able to put in the pipes. And that's what we're working on these agreements to do that.

Uh, Ranch of Minñana Golf Course, we always talk about that, you know, we deliver our effluent to them and we also deliver them backash water um from the water treatment plant and then in the past we've given them ground water from the wells. We also give them right now since the wells aren't functionally we actually during the summer peak demands we send them raw cap water. Um so the lake system that we deliver to um we know has issues. It's got uh liners that are leaking.

There's evaporation just on the fact of surface area and there's actually overflow which is almost the worst of the three which is when we can we don't have control over our deliveries to them. They've the the lakes are full and they effectively overflow down the wash. So, we've looked at all three components and we've talked to them and actually we have really good discussions with them.

Um, they're willing to work with us on an evaluation uh study to look at the liners to see what it might take to repair those liners so that um and then as part of that they're actually we had open discussion with them saying evaporation which is really based on the surface area. Why do you need the three lakes? What would happen if you eliminated them? So, um could we get them to eliminate one or more of the lakes? That's a discussion.

Part of the study looking at the liners is just to try and capture what you know um they have no drawings. The current staff at Ranch Mina have no drawings. So they don't know the depth of those lakes and then uh we need to evaluate what it would take to repair those liners effectively and and to try and couch uh you know is it a million dollar or a $5 million project to replace that.

So we'd be working on a small study with them, split the cost of $25,000 worth of studies about $12,000 for the town to participate in and we can get move them help them move forward to actually figure out what the process may be to figure that out because anything we can save on the on the the their lake irrigation system is actually water we don't have to provide to them. So it goes back into our water portfolio. So that's where we see the benefit to the town.

We're also working with the city of Phoenix on their the the connection. So again, the the overflow is that something that we need to control, which means we need another spot to put our effluent. When it's a wet winter, which sadly we didn't have this last year, or if there's a good monsoon storm during the summertime, those lakes peak up very quickly because they don't need the irrigation demand, and then we need to put put that water somewhere else to benefit.

So our our thought was and came out of the master plan is a connection to the city of Phoenix to send them the effluent down to their system and then we get an effluent exchange for raw for actual water resources that then can be delivered back to us through the connect site. So do do you have a a measurement device on the overflow?

So if so if we have a big monsoon uh going you can actually stop stop any uh take the uh effluent from the wastewater plant put it to Phoenix and and capture rain water thereby yeah mayor council we've actually looked at actually and they the golf course staff have been really agreeable we've actually talked about doing something inside of their pumping station to get both their flow meter data directly and then putting a a level transponder into their wet well so we'd know the level of the lake right Okay, we do have an overflow meter at the we're just trying to figure out how to connect that together.

But this really the lake level we need to monitor and we're actually thinking about putting a mission system out there. So we'd actually see their irrigation demands as well as the lake levels directly so that we better understand it and if we start seeing them going up they either we know because their pumps aren't running and they're not pushing water in the system and the lakes are coming up we know to divert. So good that's that's good project. Yeah.

Sean, do you want to also talk a little bit about they actually offered up some turf reduction? And I know the bullet said that, but they they offered some serious um turf reduction. You want to just highlight that? Yeah, you know, overall regimen is a fairly efficient golf course when you look at the size of turf per per um hole. Um but we we had conversations where where they could potentially trim and one of the ones was actually the um the um driving range.

The driving range is about 8% of their total turf area. So we talked about, you know, why do you need to have why do you need to be irrigating that? So they they offered up about not even overseating as the first thing. So that helps out and then they are looking at some of the other holes where they might be able to trim and help that out.

So while they overall in the if you look at the scheme of how many acres an 18hole golf course has ranch mat is fairly efficient but they're willing to work with us to be more efficient also. So, I think it's a good partnership and I'll give credit to uh Mike Carl Red and and um Andy uh Short, the the owner and the general manager out there. They're willing to come to the table and work with us.

They understand the issue the town's facing and they understand, you know, they while they have a contractual obligation, they also understand that if if it comes down to it and I have to decide between keeping their lakes full and delivering water to the customers, it's going to go to the customers first. They understand that conversation. So, they're they're directly involved in a solution. So, we've mentioned Harkahala Valley before.

Um, this is a sort of a long-term solution we're looking at, and I'm just just sort of repeating some stuff that I I put out um before just about the project itself. So, Harkah Valley is is um an area west of Tonapa in in far west. It's outside of Maropa County and it's actually set it's an area that was set aside for groundwater withdrawals.

Um it's uh since it's outside the Phoenix AMA, it was actually set aside for to to import water into the Phoenix Active Management Area, which Cave Care Cave Creek is part of. So, we're looking at evaluating that project. There were a few months ago, we came forward uh with a non-disclosure agreement, so I can't ask uh add too much to it, but this is one of the long-term projects we're considering. And just graphically, it shows Harkah Valley is on the on the extreme west side.

The advantage of the town is that Harkah Valley water the thought would be that water can get put into the cap canal can be delivered to the town to our treatment plant or to our partner with the city of Phoenix so they can treat and divert that to us. So it's something I think it's worth us looking at as a long-term solution. Again we need to add as as Brad's slides pointed out we need to add to our water portfolio. John, can I just interrupt real quickly? Uh how long term five years 10 years?

When we talk about long-term in the case of groundwater for valley, that's actually would be a 100redyear sheer water supply. I know, but before we would get a drop of that. Oh, u mayor council member. Yeah, you know, that's what's being discussed and that's part of what we have to negotiate with that group. Um, you know, could we get it in the next 5 years? I think it's might be realistic, but there's a lot of other things need to be put in place.

It's it's getting access to the groundwater and then also uh figuring out uh and then probably participating in other projects to withdraw and treat and deliver that water to the cap canal and then working out all the agreements cap canal. So, you know, with what's happening in the water resources area right now, everybody's searching for solutions.

So, I think a lot of projects are going to accelerate very quickly in the next few years and especially as we get closer to a determination on what is the cut to Arizona going to be and specifically to Colorado River users. Another big issue is that the as I understand it, correct me if I'm wrong, uh that that Arizona will no longer allow subdivisions to be built based on groundwater, which means Michelle, I knew you were here for a reason, Michelle. Correct my mistakes. That is true.

Inside the most of the basins in the Phoenix AMA currently, the Department of Water Resources says we're finished growing on groundwater. I don't know if that's true or not because there can be arguments either way, but we're close. Um, the Harka groundwater, it is groundwater, but it's not considered groundwater in the same way because it's specifically authorized for use. So, it would be allowable to support growth.

I I I think the point is though that that if you're going to build new subdivisions in the AMA, it's going to be hard. It's not going to be Capwater. and it's not going to be groundwater that's in the AMA. So, what's left? Well, there are there are designated providers that still have room to grow in their own portfolios. So, it's it's it's a situation of halves and have nots. We're one of the have nots, by the way.

So, how much is roughly the harquala to get a drop get a acre foot of water to Cave Creek? What's the difference in price between Bartlet Lake Dam and Harka? Rough order of magnitude. Well, we can't talk about the price of Harka because that would be something covered by the non-disclosure agreement, but I think Sean knows what the um we kind of have it down here on page two. I for for budgetary purposes in the capital program, we had to put something in.

So, Mayor Council member, um that's a guesstimate. Yeah, we we we threw something in just because obviously with the next five years, we do believe the town's going to need to make a purchase of new water resources. We did an estimate in the capital program, I think, of just to hold a number of $20,000 per acre foot for the water resource allocation and up to $7,000 for treatment of that water to put into the system.

So and right now in the capital program there is a project associated and we put something in bless you um to to hold the number we don't know how firm those numbers are and how realistic they are but we needed to put something in for the capital program in relation to Bartlett I can do next slide to show you that um uh so the Bartlett dam expansion it's formerly called the Verie reservoir sedimentation uh mitigation project it's a it's a bit of a mouthful because Bartlett Dam is on the Verie River and it's addressing the issue of of of of Horseshoe Dam.

Um the cementitation behind Horseshoe Dam limiting the storage capacity. Uh we were just informed we are now we are a participant in that um in September last year town uh uh council authorized us to join the the steering committee. We're a non- voting member in the steering committee and we asked for a,000 acre feet of storage which would get us 286 acre feet per year of average annual yield out of that. Can't be used for growth. That's what they've told us.

But the cost increase to that project is recently just tripled. So we were just notified as a steering committee member that um what we were thinking is 10,000 um uh or $10,000 per firm acre foot of of of available water has now gone up to $30,000 on that project. So So it's something again at this level it's it's all budgetary numbers. Um but yeah, they came back with a more detailed design.

They'd been spending some time looking at the actual dam construction, which goes back to where can you actually um extract material, what you're going to do to have to treat it. So, they've gone that next level and they've actually gone out and done some draft quaries, so they know where they can actually pull the material. Um it's going to be a a roller compacted concrete uh structure. So, now they've actually tested that out with the Bureau of Reclamation.

They understand what it's going to take to do that. So, that's why the estimate they have much more details. Um why it tripled is partly just the market and they are still forecasting out. You know they're not anticipating that project even getting author congressional authorization till after 27.

Um and that's the goal would half of it be funded by the congressional u um allocation and then u that they're looking at they're they even suggested that the cost estimate could go up but they they felt comfortable in coming up with an estimate that's three times. When we joined last year, there was talked about a billion dollar project, $1.1 billion dollars.

When we joined last year, the new estimate is 3.3 and that's not accounting for the relocation of a 69 KVA or 230 KVA power line that needs to get relocated because of the quarry. So, there's challenges no matter where we go. These are large projects. You know, I you know, we talked about Harkahle. We're we're not just committed to any one project, but we need to be thinking about everything. And this just just to show you the scope of the Bartlett Dam project.

This is a the graphic of the existing dam which was surprisingly built in a thousand days. This is a sort of a marvel, an engineering marvel how it got built, but trying to expand that structure is basically they're going to bury the existing structure in the new one. It's going the new structure will be a little bit downstream of it. Um it's a massive project undertake. Um and just you know I thought it's good just to take a second just to reflect.

So, what has the town staff done in relation to not just do our master plan, not just do everything else, we've actually put some policies in place. So, we've been thinking about this for a while. In 19 uh 2021, we did the water resource policy. So, that had changed and updated the 2017 policy. So, this town has been thinking about water resources for a number of years and and and commitments of those water resources.

So, in 2012, the policy uh said that, you know, we allow up to a 1- in meter for property, and it uh basically put a restriction that any new subdivisions need to bring new water resources. Well, that helped us out because especially in Desert Hills, um we were getting a lot of lot splits, and our definition of a lot split was the the split of a lot into uh uh three splits to create a fourth lot was a subdivision.

So we actually were able to use that policy very effectively for a number of years to actually restrict uh the limit the number of new uh re um new connections we're making in Desert Hills. In 21 we went through the evaluation. We actually uh I think it got mentioned before is that Clear Creek did an evaluation and showed that Desert Hills really was a system that was built on groundwater resources and it didn't have there wasn't sustainable groundwater resources out there.

So the town made the hard decision of limiting new um connections outside our municipal limit which is includes desert hills and then also um putting a volumetric limit on new connections of half an acre foot. So it's really good policy in 21 and we've been living with that and it's been very effective for us to to restrict our new water customers and make sure that we grow sustainably.

Um in 20 after that water resource policy is put in place in 2022 we we finished off our water storage and drought management plan. And that was the document that then took that that water resource policy and then and put it into effect. And we actually with that policy um that management plan, we actually did a lot of code changes. And those code changes specifically gave us a definition of what water shortage is to Cave Creek.

That was more specific than the tiered reductions that they were talking about on the Colorado River. It went from a zero to a level four. uh zero being that there's uh more water there's excess water available to us and we actually have water available to recharge to a level four meant that we are actually forecasting a 20% shortage in our water resources available based on our our what we expect our customers to use.

So, but it also changed town code to allow council to enact things quickly in case that gets that that um um severe allows for u um uh violations, warnings, and search charges to be put in place. So, we're, you know, by having that 22 policy in place, that sets us up for what we think might happen in 27. And that was good. So, we've been doing this and we've been talking about this for a long time.

So just to summarize everything because I know we've talked about a lot a lot of Star you know I remember back in 2023 as part of the master plan we actually presented a lot of these projections back then people remember it but I've been you know it's been on my forefront uh ever since that time frame from the master planning efforts that we showed shortages but we've been working to try and address this you know as as Brad said you know we don't want to present you with a problem and walk away you know as staff we've been working diligently to try and put solutions in place we've uh met modified town code and policies.

Uh we've done extensive work just to clean up our mapping of the systems and where our certificates are. And then with the master plan, we we mapped out again where the certificates are, where they are in their buildout projections and where we have existing neighborhoods that might not have a certificate, but do we have to say do they have a a right that we need to oblige to to meet as well as mapping out who could connect to the system?

You know, how far could the system because private wells start to drive up dry up, people may be asking to connect to our system. So we did all that as part of the master planning exercise which then wrapped together in the integrated master plan to help clarify all these issues for us.

So we're working on all these solutions short, mid and long term that you we're sort of we have to prioritize but we're also working there's a lot of things in the air but there's not one simple water solution for this town and that's our sort of our takeaway and just we want to leave you with that. But, you know, we are diligently working on multiple solutions to try and come up with uh you know, we're not going to have one silver bullet, but we're going to have multiple solutions.

And as um Brad's slides allude to, they're going to add together to help balance our portfolio for what we expect to be. Uh we're planning for projecting for a 25% cut. If if they come back and say that it's going to be higher than that, yeah, I won't say all bets are off. We're just going to have to potentially look at accelerating some things.

And for this town, it is difficult because we will have to look at how we can pay for these things, especially if we're talking about new water resources and new water projects. It is a challenge to build it into the capital program. But we've done our best with the uh draft capital program that you have seen before you. The 26 to 30 CIP has money set aside for water resource related projects. Um and that's our best uh projections at this point.

And and on top of that is there there are infrastructure things that we need to finish off and improve to improve the system also. So, with that, we're sort of at the end of the formal presentation and we can take any um more questions, council, or I'm not sure if you want to open it up to public questions or not. Um, we'll stick with council. Yeah. Questions or or I I guess the the deliverable out of this meeting is direction.

So, uh, at at some point I'd like to have staff indicate whether what direction you'd like to hear from us so we can do that. We can't vote, but we can talk about it. So, Tom, go ahead. Um, I just had a question. Uh, is there anything not in your report that you would recommend without putting you on the spot, but putting you on the spot that we could be doing with Town of Carefree?

any partnership opportunities or any any approach that they're taking that we might want to mimic anything happening over there that could be of interest to us.

Yeah, I talked a little bit and council I've talked to a little bit crossbin so you know as far as physical interconnects there's only one after all the disconnect work and it's actually a one-way interconnect for us to treat and deliver uh water to them is actually what it's set up as per the IG that's still in place between the two agencies.

Um, you know, we've looked at we're trying to leverage the our relationship with City Phoenix because there's two things is they can treat, divert, treat, and deliver water to us. And then the J also allows for up to a 60-day emergency, which we've had that conversation what that would be. Um, so while we're limited to 1,000 gallons a minute uh average through the interconnect site, they think they could support up to 1500 gallons a minute if necessary in emergency.

But as far as discussing water portfolios, balances, we haven't really had that much discussion with with Greg Crossman, my peer over there, their general manager. Just two more quick questions. Uh, do we provide water as a town for water haulers for town customers?

Currently um right now there are two active Desert Hills there's two active remaining Desert Hills water uh hall accounts uh which we do want to they come in they they request that service and then we still do have the water fill station at the water ranch for the west side customers. So, um those that's the specific area on 32nd Street um north of uh uh Joy Ranch Road where those customers the town put that in place in 2017 for them. But those are the that's the limit of what we allow for.

So, it was set aside for some specific areas and there's just two existing active customers in Desert Hills that are still uh getting any halt water service. And then just one last question uh unless I'm understanding how would you get the effluent from the ponds to Phoenix? Do we have the current ability to transport that or would we build that? Yeah, it's a good question.

It's actually what we're looking at is leveraging the effluent uh pipeline that runs from the plant at 44th Street and Carefree Highway and along the north side of Carefree Highway. Uh city of Phoenix has uh their sewer system is just south of Carefree Highway. Um it's not Black Mountain. I I forget the name of the road. It's right near next to Fry. There's actually a 10-in sewer line. So we uh Black and V had actually done some modeling for us as part of the master plan.

They think if we extend a line south of Carefree Highway, we'd be able to actually divert uh create a diversion structure on the north side from our effluent line and actually divert it directly down into their sewer system. What they don't want is the pressure at on that line. So, we have to that's the details we have to work out. You know, that line operates about 180 pounds of pressure. So, they don't want that directly going into their sewer system.

So, we have some details to work on, but we actually have a meeting um with them in two weeks with their um engineering staff to go through the details of the next step. And we've actually invited them to participate in uh we put it into the capital program for next year for design services and uh their staff are going to participate in that selection process and be part of that team with us to help us select someone to help us do that detailed design. Thanks. Yeah. Yeah.

I I think we're going to end up whether we want to or not participating in both Bartlo Lake Dam and the Harka Basin. And I I'll tell you why. Anytime you're pumping groundwater, the more you pump, the deeper you have to go. The deeper you have to go, the more expensive and the more treatment that's going to come with it.

So, I don't see where I I think for 10 to 15 years will be great and then I think it's going to start getting more expensive where I think Bartlett Lake Dam it's a once one and done and I think we're unfortunately we need more than one or two sources of water. We live in a desert. We really need at least three. And I just don't see any other opportunities to do it. And I understand that's the worst of all worlds because it's the most expensive.

But I just don't see where we can say we'll do this and not do that because if we make the wrong choice, we're screwed. I mean, totally as a as a town. And it'll affect all of our property values. it'll affect all the future of the town. And I think unfortunately uh this council and and a couple councils previous to this are being saddled with some lack of vision in past councils. And I'm talking past councils 15 to 20 years ago.

So I I think I think we need to think long and hard, but I don't see where we can back out of anything to do one over the other. I think we're going to have to do all of them, unfortunately. Other comments and questions, I I have a just a question about the Phoenix Interconnect. Sean, can you tell us give us an update on the status of that project and how valuable that is to us? Um, yeah. So, for construction activity, we've we're getting close to the midway point.

Um, right now the anticipated completion date is June of next year because of uh the delivery of the main switch gear which I keep u asking them to to uh accelerate. So by the end of this calendar year, Phoenix has told us they'll be complete with their improvement south of Carefree Highway, which is their pipeline work and their work on their booster pump station. So they'll be ready to deliver water to us. Sadly, it's going to take until next summer before we can uh uh accept that water.

Um it's a huge impro improvement to the distribution system because it also it's got a um 1,00 gallon a minute of treatment delivery up to 1,000 gallons a minute of supply. So put that in context, our CAP pipeline right now delivers a maximum of 2100 gallons a minute. So it's almost half of our CAP supply.

But the fact that we can put it into a million gallon storage reservoir and keep that reservoir there means that in case we have an outage on the of our treatment uh plant or our cap pipeline, we could run the system uh off the storage we have in our other reservoirs and off the city of Phoenix interconnect and again because because with our conversation with Phoenix can temporarily we could ramp up I think up to 1500 gallons a minute. So almost meet all of our demands for a few days.

So we had a major catastrophe on the pipeline. So it'll also help improve just the distribution system. Right now we're seeing some challenges in our pressure zone one and that's south of stage stage coach past the states from cave creek road all the way out to 24th street because it's all fed from pressure reducing valves. Um it's hard to balance that pressure.

The city of Phoenix interconnect actually put a new booster pump station down in pressure zone one to allow us to base uh pressurize that. So we'll think we'll even out the pressures down there.

Um and yeah, the fact that we can uh especially in the winter time, we will get enough flow, even a thousand gallons a minute to potentially um run the system off the Phoenix water and then do major improvement work on the both the cap pipeline and the treatment plant are huge for us from a maintenance standpoint. You know, it's it's hard to the analogy I was given once is running this this uh uh system is like uh trying to to maintain an airplane while you're in the air.

You're out on the wing here trying to make sure that the engine's working. you know, we'll be able to actually shut the plane down and land and do some work and then take off again, which would be a huge improvement for us. So, yeah, from an infrastructure standpoint, it's substantial. I think just from the ability to be tied into a much larger system, although we're they're treating our water resources to be able to have that ability to get that water into the system.

I think it's going to be a huge thing for the town moving forward. And and Brad, I was just wondering if you were able to find out uh the total committed acre feet that we have for the town. Yeah, mayor, vice mayor, I was. And so in the master plan, it's roughly 800 acre feet additional above existing demands. So that's total of roughly 2600 acre feet. So you guys have pretty good memories. Thank you. Yeah. Brad, uh Flagstaff and you were a director at Flagstaff.

They had a robust u conservation program. How much did they save? So council there set a target of it's not in terms of percent, it's in terms of GPCD and Sean just we just talked about the 5% literally and you need to do some conversions. Uh so they projected a 20 GPCD and I need to do the math and what it means to you to for the town of what a we about 300 I but that includes Rancho and Yana. Yeah. So, we need to parse it out a little better before I give you some numbers, mayor.

I know you're a numbers person, so I don't want to give you anything. Um, however, but what the town did or what the city of Flagstaff has done is a very detailed analysis of to come up with your five or 10 or whatever target council's interested in is staff had to go back and figure out well instead of a pie in the sky number, let's analytically figure out of all the different uh conservation options, how much of those are going to if implemented fully, how much water will you save?

And then you'll have a suite of options of those and then you then we'll be able to come up with a better number of what John is saying is it 5% is it 10% on realistic quantitative numbers. So that's what the city did and that's how they derived their 20 GPCD over 20 years more than what they've already done. I'm sorry vice mayor what what the city has already done to date since the '9s. Was that voluntary or mandatory conservation?

So all of what this flag staff is doing is voluntary at the moment, but they thinking about mandatory. And one of the challenges, and I just was quickly looking at your numbers here, is um uh mandatory takes enforcement. Enforcement takes people. I'll just kind of leave it at that. It's not just mandatory. It actually takes a whole program on now that community does every summer. They have what they call water cops which are just people uh riding around. It's educational. It's not enforcement.

Uh just to begin uh to be in the community and just telling uh sharing that with people whether by request or whether by drivebys and they see some ordinance violation. That's how that community started to do their uh uh customer outreach is being active in the community for education. Um, I think there's been discussion here historically, but I'm not sure.

But, uh, has there been or should there be discussion on Desert Hills regarding potential interest by the city of Phoenix to maybe acquire it? I guess apparently there's not a lot of interest in buying it outright, but um would it improve the town situation to get back to its original purchase of the Cave Creek Water Company? Then we had the situation years ago where Desert Hills was bought for reasons which probably cannot be articulated this evening, but have we explored that?

I think there's been some discussions, but is that something we should talk about or consider? You know, I think the town needs to be considering everything. Um, council member, um, my discussions with, uh, prior town manager, Car said that she had, uh, actually had that discussion with City of Phoenix and, uh, they sort of, uh, said no, no, thank you. Partly because of the the infrastructure out there, the way they look at it, um, would be there would be a total rebuild for them.

Um so they would be starting from scratch or having to build a program to basically rebuild all the system out there. So whether it's worth of pursuing that again it's really the the challenge with Desert Hills is the water resources. You know um people I know this council is very much aware a lot of I think our our public are aware is that you know the town purchased Desert Hills and purchased uh Cave Creek water in the same year.

Um but ever since then we've been having to augment um the groundwater. uh the failing uh the well production has not been as high as desert hills as they need to be. So while the system year-over-year hasn't grown substantially um we've had this the well production has decreased from 2007 till today by about half.

So we've had to supplement instead of putting four sending them 400 acre feet of water we've uh depending on whether we have wells we've gone over 600 650 acre feet of water that we've had to send to them. That's while they have some uh we were able to secure uh non-Indian agricultural water that's a very u we expect that to go to zero. So while it was still beneficial for us to complete that purchase, we're having to augment that system with municipal industrial supplies.

The one thing I will point out is with Desert Hills, you know, it is it helps share the burden of running this system. You know, it's 1,900 customers that do pay their bills that helps on that helps us distribute the the the cost of running the system. Otherwise, we're trying to balance all these large capital projects and improvements on on uh you know 2400 or 2500 cave cave customers. Just Mr. Mayor, can we speculate what you think the reason was back then that the plant was purchased? Why?

It's not inside the town of Kfrey. Why would we have extended service? What would have been the advantage of providing water service outside town limits? I wasn't here member to I I I can I don't know if I it's my perview to speculate. I think I understand why things were happening and I do think it had to do with the fact that I think uh uh Global Water, which owned the water company at the time, the Cave Creek Water Company was looking to purchase Desert Hills.

Had they had purchased Desert Hills, it would have been more difficult for Cave Creek, Cave Creek, the town of Cave Creek to then what we did is condemn the water system. So I think that was might have been strategically one of the reasons that we did it. And then last question. So, you think it's an advantage to have obtained it perhaps today because the base of financial impact is widened with them?

Because my question was going to be, are we risking the original water company purchased by the town of J. George's company with the current ownership of Desert Foothills? Do you think, uh, mayor council member, that'd be purely my opinion, speculation. I I from what I know of the numbers and how our capital program works and our rates work and in in 2020 is when we actually uh separated out and actually differentiated the rate base out there.

So up until uh from 2007 till 2020 uh um we charged the customers the same. We differentiated that in 2020 to say no they're actually importing water resources and there's an additional cost to that. So you know they're been good customers. They're really good customers out in Desert Hills and I, you know, I to me it's our water system. I treat them the same and I think my staff treat them all the same and it does help balance that out.

You know, this is an expensive little system to run and just having only 24 2500 customers in Cave Creek to support the full operation is difficult I think. I'm sorry, just one last question. Do we charge for Graywater Durant? Um, Mayor C. Yes. So, yeah, the agreement is that they get charged. There's a specific there's actually multiple components. They get charged if we send them cap water. They also get charged the effluent at a certain volume.

It's actually um it's the cost of the um it it's equivalent of raw cap water and then they also pay for a cost of pumping it up to them. Um so it's actually a multiple uh multiple tier calculation. Actually one of our staff members, Ryan Hill, spends a fair amount of time every month and he's got it down actually to a pretty pretty art where he can actually pull that all together. So we we do charge him for that.

The problem we have with ranch mñana is right now the imbalance between they're they get charged for what they draw off for irrigation use not what we deliver to them and that's why there's usually about a third of an inefficiency to their so for every we deliver typically 450 to 500 acre feet a year they only use 300 so we've got a gap in water resources to them right now. Okay. Other questions? uh being a numbers person.

Uh if if if you lose 1,900 accounts out there, you're talking about water bills that are approaching $200 a month from where they are now. Um it's I I think the criteria for that is what's in the best interest of both Desert Hills people and our own custo our own our own residents. And I don't think they're going to be happy with a doubling of water bills.

Um if and but if we got if if someone else furnished the water and we didn't have to buy 20 or $30 million worth of water, uh that would offset a fair amount of that. I also estimated with both systems that just the cost of the water on an average account of 4,400 accounts is about 30 bucks a month. So, even with all those extra customers, we're talking about a sizable uh increase to cover the bond payments.

Uh what that is is a number to cover the bond payments for a uh I'd use 20 or $30 million, I forgot, but it's big. I think that's that's the bottom line. It's it's it's going to be expensive to buy this water. And I'm um you know, we could run the string out on Bartlett uh Lake. Uh but uh the Department head of the Department of Water Resources recommended Parkway to us in our meeting down there six months ago, eight months ago. Uh it's our best.

It's our best and our quickest and everybody's doing it. There's lots and lots of people, lots and lots of help there. um Bartlett, you know, we paid $200,000 to join the consortium. Uh before they let us know that it was 3.3 billion rather than 1.1 billion.

So, um uh the higher that goes and all the uncertainty, you talk about uncertainties, well, hey, look, they're going to find a a burial ground or an ancient village or a salamander or something is going to be found on the Verie River up there and the lawsuits that are going to slow that down. That's uh so and and that's there's risk there, but there's risk in everything we're doing here. We have some things that are pretty cut and dried, but Guala has a little bit of risk.

Bartlett has a lot of risk. Um yeah, we're we're dealing in a risk and uncertainty era right now. And I just want to say that um I couldn't be happier with a super team we had working on this. It has been a pleasure watching the information. And of course, Michelle uh was a part of that water policy that uh that separated the two water rates between and that was a major break for the uh rate payers in Cape Creek.

Um I think your work has been incredibly comprehensive and um I you know I I don't know who else we'd have in the world with the team we have working on this. It really is a pleasure to watch them attack these problems and the uncertainty. I just can't express the uncertainty that we have. Nothing is certain except the wells aren't certain. The uh the water quality isn't certain. Harka isn't concerned. Bartlet's not we don't have any leadership in the ver reclamation.

We don't have procedures to get the emergency water that's stored by the state. Uh uncertainty is everywhere in this whole situation and we have the right team to deal with that. And I I want to thank each of you for for your efforts and what you've produced so far. Yeah. So to piggyback on what the mayor just said, um I know when Councilman Bunch was still here, he had mentioned that the Sierra Club was also getting to be more powerful these days.

And if there's a bird or something down there, as he mentioned, some sort of animal that could just throw everything into chaos. But we have time to make that those decisions. the both the hala and the Bartlett are still out in front of us. But I I I don't think and I'd like council to I don't think we ought we ought to be charging for one or the other in the rates.

I don't think we can afford to um and we shouldn't uh uh start collecting money from our water customers until it's the smoke clears a little bit. We're going to we know we're going to have to do some water, but not all the water. Um, I I just uh you know, we've got more time to to deal with those rates, but I don't want to charge money too soon. It's it's tough enough to charge higher rates without doing it too early. Question.

So, currently um we paid for uh $200,000 to be um in the room basically with the uh Bartlett Dam. Um what would it cost us at this point with the um inflation already being predicted to be um voting members should we get voted in by the towns? Um just to rephrase this mayor council member. So um yeah so we joined on as a non- voting member.

I don't think they would allow us to change the I think the cost if we had wanted to go in as a voting member was I think off top of my head right now it was uh four or $500,000 or it might have been closer to $600,000. Um so I can't remember exactly but it was it was a step increase. I'll I'll say the one thing that we have cuz uh Brad's joined me at a few of the meetings.

Um it's actually been good just because of the connections we've made with some other u water users and water resource people throughout the valley. So I would say it's not money thrown away for this town. I think it was good for us to be part of that and we are still committed to the project right now. So but it was a substantial increase. I think it was like a factor of three if I that's just top of my head right now. 600. Yeah. So 600. Tomorrow night is the C meeting.

Tomorrow night Central Arizona Project is hosting its annual East Valley dinner uh for customers out in the East Valley. And uh perhaps they'll have something definitive. Doubtful, but I we did hear through the grapevine that sidebar discussions are happening uh between the upper and lower basin executives. So uh we're hoping that somebody can come to an agreement and give us some solid numbers on what to expect.

Joe and I are going to attend that meeting tomorrow night and we'll have a report back. Are you gonna go, Sean? Good. Okay. Uh just in closing um you'd asked earlier if there was uh any council direction. We we think um one of the purposes of today's meeting was to give you a comprehensive strategy. Um the council as a whole has not really seen um our short-term, midterm, and long-term strategies other than some of these big projects like the Phoenix Interconnect.

We also have brought like a wheeling agreement uh recently. Um, we're going to be bringing some other like water exchange agreements to the council. So, it's very important for you to see today how all these pieces fit together and the big picture of what we're trying to do. And, and as the mayor said, uh, we couldn't really do this without the help of the team that we have here. So, um, we really appreciate it. We also got the message loud and clear about the rates.

And when you get when we um are working on the rate analysis this summer, we'll try to make sure that we're not having too much in the way of water acquisition resources built into the rates because it's not going to be something that the the rate payers are going to be able to sustain. So you will see that when it comes back this fall for you guys to consider the um rate adjustments that are going to be over the next five years.

So, um, unless there's no further questions, uh, we really appreciate your attentiveness today and, um, we we think this is really good and you're going to probably see this coming back probably every six months for updates and then obviously along the way if there's any water exchange agreements or IGA or things of that sort. We're very it's very promising.

Phoenix has really I I think you got the answer from Sean, but that Phoenix interconnect has just really opened doors for a lot of different on a lot of different levels. Um, plus the discussions we're able to have with them on um a variety of different water resources. So, I think this is all very exciting and yes, it was probably the most expensive project in the town's history, but I think it's starting to pay dividends um not only now, but into the future.

I think it's the second most looked at uh construction project next to the bumblebee uh robot thing. I think you're right. We should paint it yellow and black. I wrote myself a note so I wouldn't forget. And Cave Creek 5,500 residents. Uh what I'm hoping as we go forward is we can have some workshop discussion about if any of the water companies have water and if anybody wants to uh look at purchasing the water company or companies here in Cave Creek.

We bought the water company for 19 million and took $2 million debt on something that was appraised originally for $5 million. the town have spent between a quarter of a billion or a third of a billion depending upon the numbers that you take a look at.

So, I'm not a water expert and I'm not speaking against the proposals here on the table, but for 5,500 people, we have a history of spending money and then later having a difficult time to explain why we made these purchases, why we made these decisions. So, as we go forward, now that we're down to two options for future water, I had heard I thought that there might be some potential wet water available. The attorney is saying no. If that's not the case, then it's completely discounted.

But, um, if there's anything else either with care for your or other options, it would be great to have some time to take a look at that. I think that commercial companies provide an economy of scale. So, it's something we ought to take a look at that that we just can't do. I mean, Phoenix has a large water company. Scottsdale's got a large water company. You know, there's five or six cities here that have really big water companies.

Uh they can do a project for, you know, twothirds of what we can do. We're also at the end of nowhere. So, we get to pay the 20% Cave Creek discount just because where we sit. So, I I do think we ought to take a look at everything. Any other comments? Our business is concluded. Mar meeting is journed.