Cave Creek Convenes Public Forum on Colorado River Crisis; Plans Water Exchanges and Eyes System Sale

All right. Uh, thank you very much for being here tonight. Uh, my name is Bo Larson. I'm the director of community community relations and, uh, communications for the town of Cave Creek. Um, tonight we're going to talk, as I mentioned before, talk about some a serious issue that's facing the town. And we have the experts here to explain it all for us. And so I want to give you a little bit of uh information so you know if you need to use the restroom if you haven't been here before.

The restroom's outside in the hall uh down there. Um also we have water if you need it. Um it's up here. And then also um this program is being recorded. It's not live but it's being recorded and will be on our YouTube channel um tomorrow morning sometime as well as a video uh with uh Grady Gamage who's a water attorney in the state.

uh that was just recorded today and we couldn't make it part of this presentation but it will be on the YouTube channel and as I understand um it's a really good information uh to uh watch and learn from because Grady Gamage is known um throughout the region southwest region uh for his water expertise. So that's on the town of uh town of Cave Creek YouTube channel.

But as we get started here, um I want to welcome you all again and and I want to introduce a few of our um elected officials that are here. Uh we have uh represent or council member Tom Magcguire. Thank you. We have council member Rice Mayor Katherine Royer, council member Cynthia Driscoll, and uh council member Joe Freriedman in the back. And of course, Coun I was going to get to him. He's the He's the big guy. I saved him for last. Um and Mayor Robert Morris, who's right up here front.

So, thank thank you very much. And and um I'm sure I'll hear if I miss someone. Um we also have Grady Miller who's here, our town manager. And we have and we have several directors. And of course, um, if you have any questions, um, following this event, uh, feel free to come up to me and I'll give you my card and I'll connect you to, uh, some of the people that you want to speak to.

Um, during our presentations today, um, it's it's okay to ask questions during the presentations, but I want to limit it. So, we have time at the end to ask more questions. So, I may um, accept a question or two during each presentation if you have one. Um, but I if we all prefer if you can wait until the end, that would be great. But we are taking questions if you if you want to uh provide one. So without further ado, let me start introducing everyone.

Uh with us here um Natalie Mast is with Central Arizona Project. Now you have all the you have the bios um in your booklet, so it' be a lot easier than me reading something off. So I just want to introduce So this is Natalie Mast, Central Arizona Project. Sean Cruz Weisner. He's the utilities director for the city of Poria. I did I say that he used to work there? Yeah. No, the town of Cave Creek.

He was in Puria last night um signing off on a deal or accepting a deal that he'll talk about further which is pretty cool. U Michelle Vanquatham um who's um of of the law law offices of Michelle Vanquam. She's an Arizona water attorney and she represents the town in our water issues uh throughout the region. And also coming is uh Brad Hill who's our uh Arizona Water Buffalo. He's a town consultant that works on our uh water issues as well with Shawn and team here at the town of Cave Creek.

So get that straight. So anyway, uh we're going to start off with a quick video that will provide an overview of how what the town's been doing um for the past seven, eight years, as well as the situation we're in with the Colorado River. And it's just a it's a brief video. It's about 7 minutes and it'll give you a good idea, good framework for everything that's going to be spoken about today. So with that, we're going to start the video.

With the construction of the Hoover Dam in 1935 to create Lake me and the Glen Canyon Dam in 1966 to create Lake Powell, the wild Colorado River was harnessed, protecting lands from flooding, generating hydroelectric power, and providing irrigation for an aid landscape and water for the population in the American Southwest. Farmers could grow crops year round to feed the world. Cities grew and economies flourished.

With the completion of these two dams, the American Southwest soon became a destination for families, industry, and recreation. Today, the Colorado River provides water to approximately 40 million people, including 29 tribal nations and 5.5 million acres of irrigated agriculture along its 1500 mile journey from its beginning in the central Rockies in Colorado to the Sea of Cortez.

The river's watershed touches seven states, including the upper basin states of Colorado, New Mexico, Utah, and Wyoming, and the lower basin states of Arizona, California, and Nevada. Cave Creek is almost entirely dependent on water from the Colorado River, managed and delivered via the Central Arizona Project or CAP. However, since 2000, the basin states have experienced historically dry conditions, reducing runoff into the Colorado River.

Today, the combined storage in Lake Powell and Lake me has reached its lowest level since Lake Powell initially became operational in the 1960s. Declining reservoir levels threaten Colorado River water supplies essential to the economy, environment, and health of the southwestern United States.

With reduced water volume in the Colorado River, the managers of the resource will be forced to adjust allocations of river water to its customers, including municipalities, industries, agriculture, and tribal nations. It is possible that Cave Creek will experience at least a 20% reduction in its water allocation in 2027 and possibly greater reductions in the coming years.

Since the town of K Creek currently relies on cap water for about 95% of its water supplies, town leadership has actively worked with state and regional officials for the past few years to help prevent deep cuts to its water supply or conversely augment its water resources. Over the past few years, the town has been saving excess water from its cap water allocations, which is stored underground as credits.

These water storage credits can be exchanged with another city or town for water that would then be transported to Cave Creek via the CAP canal. Currently, the town has tentative water exchange agreements with the cities of Surprise and Peoria. The exchange agreements will provide a short-term bridge for the expected delivery reductions from the Central Arizona project beginning in 2027.

Having these agreements will provide the town with some time to develop new long-term water resource solutions. The utilities department is working to rehabilitate and restart some of the town's old municipal wells. It is expected that the wells could supply as much as 200 acre feet per year to the town's available water portfolio for the next few years. This would be another bridge until new long-term water resource solutions are developed.

In 2024, the town joined the Salt River project in 23 municipalities and tribal nations as a non- voting member of the Verie Reservoir's sediment mitigation project, which is studying the possibility of enlarging the Bartlett Lake Dam to deliver additional lake water to the SRP and CAP water systems from the Verie River WHED. If the project is approved by the federal government in the next couple of years, the town would pay millions of dollars for its share of the project costs.

The federal government has already determined that 50% of any additional water would be for federal use. The town recently investigated the possibility of investing in the Harkah Valley LLC located west of Phoenix to provide 500 acre feet of water per year for the town. This new water resource could have helped meet shortages caused by the expected reductions and provide some water resources for system growth.

After conducting due diligence efforts, it was determined there were too many unknown expenses related to the infrastructure and treatment costs needed to acquire the water. This project may be re-examined in the future. To help improve the physical reliability of the water system, the town is working closely with the city of Phoenix on a new interconnect site.

This new connection enhances the reliability of the town's water system by allowing Phoenix to treat and deliver a portion of the town's water resources. When completed in the summer of 2026, the site can provide up to 1.4 4 million gallons per day of treated potable water, approximately half the town's peak day demand.

This new site will allow the Cave Creek Utilities Department to perform critical maintenance and repairs to the CAP water transmission line and water treatment plant without directly disrupting customer service. The site also contains a new 1 milliongal water reservoir to provide additional water storage and improve fire protection throughout the town.

In order to explore every option for securing long-term water supplies, the town is also considering the sale of all or part of its water system to a private utility that may have greater access to water resources and the ability to spread costs over larger numbers of customers. This preliminary exploration ensures the town is reviewing every possible option to provide the best water security, service, resources, and pricing for our water customers.

In addition, the town council has been preparing for the possibility of water reductions due to the ongoing drought and the lack of consensus among the seven states of the Colorado River Compact. The town is committed to addressing both short-term and long-term challenges in the water supply deliveries to all our water customers. As part of the preparation, the council adopted water demand management tools providing a roadmap in the event of declining central Arizona project water allocations.

These tools include the 2021 water resources policy and the 2022 water shortage and drought management plan. Then in 2023, town council passed an ordinance to implement these plans when the need arises.

While the town works to find affordable and secure water solutions, our customers can also help to extend the current water resources through conservation by using efficient landscaping practices, checking for and repairing leaks both indoors and outdoors, as well as reducing the amount of water used for showering, laundry, and dishwashing. Customers can help extend the town's water supplies.

The town provides water conservation tips as well as other online resources to help customers save on their water bills and water usage. Another great resource tool for all water customers is the My 360 application. This system allows users to see and monitor their water use and set alerts to help identify issues like leaks.

Right now, over 60% of the town's water meters are providing hourly water use data that customers can see, and we are working to provide that level of information to all customers. The town of Cave Creek is doing its best to ensure long-term water security for all of our nearly 5,000 water customers. By working together to combat a 30-year extended drought on the Colorado River, we can meet our goals. Thank you for your cooperation and understanding. Well, that gives you Hey, Brad.

That gives you a brief overview of kind of what we're dealing with and what we've been working on. Um, so as we uh that will lead into our presentations now, and I want to start with Natalie. Uh, you get to uh warm up the crowd with your uh information. So, I'll I'll I'll do my best. All right. Um, great. We'll give it a moment for the slides to come up. Uh, my name is Natalie Mast. I am the water resources and planning manager at the Central Arizona Project.

Uh, and I appreciate uh you all having me here tonight. Um, I'm going to be covering some background today on the Central Arizona project, uh, and our water supply, where that water comes from, and I'll talk about some of the structures that we have in place to address, uh, some of the uncertainty with those water supplies. All right. So, this is an image of the CAP service area.

We are the organization that is responsible for uh operating the infrastructure that delivers Colorado river water into central and southern Arizona. Um CAP delivers water into an area of Arizona where 6 million people reside over um over 80% of Arizona's population. Um and it covers uh Maricopa and Panal and Puma counties. Um 11 of Arizona's 22 tribal nations have rights to cap water. So that's more than a third of the tribes uh on the Colorado River Basin that receive water through the cap.

Uh the CAP actually delivers more tribal water than any other organization in the United States. You can think of us as an organization that delivers bulk water uh raw untreated water. Uh and there's a lot that comes with that and there are also a lot of other responsibilities that have been put on CAP as an organization over time. Uh the first four bullets on this slide are related to that infrastructure and those water deliveries.

uh we are responsible for managing our water users subcontracts and the details that go along with those subcontracts. We are responsible for repaying the construction costs from building the canal. We operate and maintain the cap system. Uh and we own and operate recharge projects where water is stored underground. Um, we also have under our CAP umbrella the Central Arizona Groundwater Replenishment District.

Uh, the CAGRD is an organization that replenishes certain types of groundwater pumping within the CAP service area to offset groundwater pumping. We also play a role in times of shortage. I'll talk about this a little bit later. Uh but by statute we are the recovery agent for the Arizona Water Banking Authority. And so we have a role of recovering that water that's been stored underground that the that the bank has stored underground for times where cap supplies are under a shortage condition.

Arizona has several sources of water. Uh we're I at least am going to be really focused on Colorado River water today because that's what CAP delivers. Uh but Arizona also has access to groundwater supplies, uh surface water from instate rivers like the Hila and the Salt and Verdie rivers and to reclaimed water in addition to that Colorado River supply.

So when you hear in the news a lot of this talk about shortage on the Colorado River, it is important to remember that that's just one piece of our water portfolio as a state. When we're talking about Colorado or excuse me, when we're talking about central Arizona project, we are talking specifically about that Colorado River water because again CAP is the organization that brings Colorado River water into central and southern Arizona.

We in Arizona have the ability to use Colorado River water because we are a part of the Colorado River basin. Uh this map shows the states that are a part of that basin. The green uh you can kind of see the green squiggly blob I guess up top uh represents the upper basin of the Colorado River. The yellow portion is the lower basin. Um and the the Colorado River basin covers seven states and also includes Mexico.

Um you can see though that the yellow the lower basin is the yellow lies within the yellow lower basin is almost entirely Arizona. It overlaps into New Mexico. It overlaps a little bit into Utah, Nevada, and California, but really Arizona is a large part of that uh lower physical lower basin of the Colorado River. Um the Colorado River Basin supplies water to 40 million people across the entirety of the basin.

It provides water to Denver, Las Vegas, Los Angeles, Phoenix, Salt Lake City, San Diego, Tucson, a lot of these really major cities. It supplies water to 30 tribes, 22 of which are in Arizona and irrigates uh around 5 million acres of farmland. It also includes large reservoirs. We'll talk about these reservoirs in a minute here that can store up to 60 million acre feet of water and those res reservoirs also generate hydro power.

So as you think about hydro power, the higher the level of water in the reservoir, the better your power generation. So, as we look at lower levels in these reservoirs, there's going to be less hydro power generation for for the western grid. The Colorado River Basin also supports national parks, wildlife refuges, recreation areas. A lot of what we think about when we think about water in the west is some of those recreation opportunities.

It it supports a lot of our economy, but there's also a lot of recreation associated with this water in the west. I mentioned the reservoirs and this is maybe where we start to get a little bit more bleak with my message. Um, as of uh so the Colorado River uh basin includes a network of reservoirs. Uh you'll hear about these reservoirs in the news or online and this uh graphic is one that we use pretty commonly to show the levels in those reservoirs.

Uh as of this week, the combined total system contents in those reservoirs is at just 34%. Uh so they are low. Um the snapshot on that last slide is the result of long-term declines. So what this slide shows is uh the uh elevations or the or excuse me not the elevations that's a different graph. Uh uh this is uh the combined storage or or the percent uh that a given reservoir is filled uh over time for Lake me and Lake Powell. Lake me in blue and Lake Powell in gray.

And what you can see in this graph is that there has been long-term decline in these two reservoirs. In 1999, the system was at 92% full 92% of its capacity. And as I said, right now we are at I already lost track of that number 32%. It it changes every week. Uh but we are also projecting that by the end of this year that uh by the end of this water year that that uh capacity will be at just 23%. How how long do we have to go to staff from one? That's that's a really good question.

Um and there's a lot of complexity to that. Let me maybe we can come back to that question because I'll talk a little bit about um the supplies in the two reservoirs, how Arizona gets its water and and what that means for central Arizona specifically. Oops. Sure. I noticed in the previous slides we had we get Cape Creek uh gets Colorado River water which about 30% next slide but then was 40 41% groundwater. I I assume that we were getting more groundwater.

Who's getting the who's getting the So So those numbers are for are on a statewide basis. So each individual city, each individual location is going to have a slightly different makeup. Some So, so Cave Creek has a higher percentage of of Colorado River water that you rely on. Some cities might be 100% groundwater, right? So it just depends on the specific portfolio of your city. This is total values looking statewide, not just Phoenix area, but across all parts of the state. Yes. Yeah.

and we'll address some of that in our presentation later. But yeah, the town is very dependent on the Colorado River. 90 95% of our water resources is coming through our central Arizona project, Colorado River water because the aquifer up here doesn't support the the amount of use. Um it never had. That's why the the water company shifted towards surface water, the Colorado River water supply back in the mid uh 1980s and then by 1990 had the pipeline in place.

So, one more chart if you'll bear with me. Um, so this chart is what's called a snow water equivalent. And what it shows is a number of different years of snowpack and the resulting uh runoff uh in the Colorado River Basin above Lake Powell. Um what you can see is uh the purple line at the top is the median from 1991 to 2020. Um we then have 2025 in green and the reddish color is 20 2002 excuse me.

2026 this past year or this year this water year is unfortunately the very bottom line on that graph. Um the long-term trend has been really challenging for these water supplies. There were already a lot of discussions being had on how to manage the river in the future and how to address the impacts of this long-term drought that we're in. And then this year really kind of put a point on all of that. The snow pack this year was historically bad.

that blue line at the bottom peaking both at a low peak and uh and it peaked extraordinarily early. Both of which are bad news for the total amount of runoff that you would get from that snowpack. Uh we've also been seeing this trend of a disconnect.

If you look at the uh chart on the right hand side of the slide, there's a disconnect between the snowpack and runoff where even in years like 2002 and 2000, not sorry, excuse me, 2022 and 2025 with near normal snowpack, we're seeing very low runoff. So in 2022 there was 90% of normal runoff or median runoff and there was just 63 or excuse me 90% of snowpack and just 63% of runoff. In uh 2025 there was 92% of snowpack and just 49% of typical runoff.

So we're seeing this disconnect where there's much lower runoff even with relatively normal snowpack. uh there I I am not the appropriate person to answer that question. There are a lot of physical and technical reasons associated with that. There's been a lot of research done into um soil moisture and that sort of thing. It it's a great question. There's and there's been a lot of research by folks who are much more qualified to speak on that than I am.

Um but but maybe the moral of that story and or or the message that that gives us is that we are just in an era where there's less Colorado River water available. Um so coming back to some of the conversations that uh have been had around water supply and water availability on the Colorado River, what this all means for cap water supplies. Uh the basin states have continued to negotiate with the federal government through the Bureau of Reclamation.

Uh and those have been long and very challenging negotiations. Uh and are made more challenging those negotiations are made just more challenging by this very dire hydraology. Um, I can't necessarily comment on the long-term outlook for the river because those negotiations are still ongoing and because that hydrarology has been changing so rapidly over the last number of years. But I can talk a little bit about what we expect for next year.

Uh, we are working toward a lower basin deal for next year with shared reductions on the Colorado River. And I'll use the next couple slides to talk through what that looks like for the central Arizona project specifically. Oops. Keep switching. There we go. So, before I get to actual supply for next year, uh, a little bit of information about CAP and how water gets delivered within CAP's system. Uh, Colorado River Water operates under a priority system.

And there's also kind of a second level priority system within the CAP. Um, you can think about this chart as filling from the bottom up. So that P3, priority 3 line at the very bottom is the very highest priority of water. Um, not all users have the same access to CAP supply. So different folks who receive CAP water might have different types of subcontracts uh or contracts for CAP water. Um P3 is the highest priority of water. Uh you see IM Indian and M&I.

M&I stands for municipal and industrial. Those two priorities of water are roughly co-equal um and are the next highest above P3 water. Then you have non-Indian agriculture, apool water and other excess water. The names of these pools have a lot of historical reasons behind them, but they don't necessarily neatly align with their actual uses. Um, NIA water, non-Indian agriculture water is actually tends to be quite a bit of city and industry. There's some tribal water in that pool.

Um, and so the the naming conventions maybe aren't quite as important as who actually holds the contracts or subcontracts for those uses. Um, I do expect that Sean will talk about this a little bit later, but I'll note here that Cave Creek holds subcontracts for volumes of NIA water and also for M&I priority water. So, uh, P3 is the highest priority of water. P the P there just stands for priority. So, that's the highest priority of water that comes in through the Central Arizona project.

If you look on river within Arizona, there are higher priorities. So you have P3, P2, P1 users that are on on river uses on the Colorado River within Arizona as well. Um so the P3 users within the central Arizona project, there are a number of cities that have access to um some of that P3 water through various agreements. That's right, Octin 2. Thank you. Yeah. So, so the information on this slide is still preliminary.

Unfortunately, uh we do not have uh firm numbers for next year's water supply, but the lower basin states have been working with the federal government on a proposed plan for the next two years. Uh that plan will have to be approved by reclamation in order to move forward. Uh but under that proposal uh the state of Arizona would take a 760,000 acre foot reduction to our 2.8 million acre foot allocation of Colorado River water.

And because of the nature of CAP's priority within Arizona, uh that cut would come almost entirely to CAP at a straight 760 cut to CAP. CAP had previously estimated zero availability of that NIA water and a 20% cut to the MNI priority water and a 16% cut to Indian priority. You might notice that the numbers that I have on this slide are a little bit different, which is good news. Um, this this will be the first time that there has been a shortage to those Indian and M&I priority uh priorities.

So, CAP is working to identify some additional resources to reduce that impact for 2027 and help ease some of that transition with additional supplies that we're still working to finalize. We have updated these estimates for next year though and we're now forecasting that the estimated cut to M&I under the lower basin proposal would be 14% for 2027 specifically question. Sure. What would the residents see in terms of physical cut? Would we get less water coming back?

Is there going to be increase in water or Yeah, maybe I'll maybe I'll let Sean take that. Well, yeah, as we get into our presentation and we've talked in our planning, we've been playing around a 20% cut and so hearing 14% actually is good for us. So, uh, for the next year, we're actually in good shape at a 14% cut to our municipal industrial supplies. We don't want to take the the foot off the throttle with things like water conservation and improving the system.

But that helps us out and gets us to the next, you know, what could be future cuts, but you know, uh we're trying to keep it everybody whole with water in their their faucets, but we want people to use less at the same time. So, yeah, we all going to have the weather coming out. Fingers crossed. Okay. Hey Sean, what are you doing to address the code book issues? On the one hand, I know where there's severe water shortage, but code book mandates you plant trees and plants in yards.

Hidden Rock alone had to plant over 70 trees over 700 plants in spite of multiple conversations about coming water. Are we going to address the codebooks issue and stop mandating people put it in if they can't water? Good question. We've actually talked internally about that. the the town does have uh um landscaping standards for construction. The town tries to encourage or promote the use of low water use.

And actually, if you read through the entire code, it actually requires that that that water get tapered off. So, we actually are having internal discussions about that. If we don't require people put landscaping in, then just have rocks. Do we want that? So, it's where's the balance point? But if you actually look at the town's ordinances and the zoning code, it actually requires a tapering off.

So, we're probably going to be looking at that more closely and and notifying people um of their usage uh especially for commercial customers and stuff like that where they're separately metered on the landscaping. So, um it's something we're having internal discussions on though. Yeah, good question. All right.

So there have been a lot of big picture discussions about Colorado River and shortage and CAP supplies and there are also actions that as as kind of came up just now that CAP and water users can are more broadly are taking to respond to shortage.

Uh this can include conservation actions like using less water for landscaping or uh storing additional water in reservoirs, considering demand reductions, water banking activities, storing some water for future shortage and other innovative methods to both diversify and further secure our our water portfolios. We don't swim. We have all this new construction going on in my neighborhood. Somebody put in there swimming pool.

I don't want to hurt the pool builder, but by the same token swimming pool. Yeah. Yeah. It's interesting in our community because that's something that came up when we talked about the drop management plan. We'll talk a little more when we get into our side of the presentation is that that came up as a conversation piece as we get into shortage situations and that was something we got proposed is to limit outdoor water use which could affect swimming pools.

It could affect people who have outdoor landscaping and uh people who have horses. Uh and that came a conversation. Yeah. Then it comes down which governs which is more important and that's is a conversation we need to have as a community and that's we'll point out later as as um uh we move forward with implementing things in the drought management plan that's actually a conversation we need to have with our council.

We put things into our town code but it was more of a list of things that we could look at and we want to continue to have that conversation which is most important. You know that that's a conversation for the community to have. And then if someone wants a pool, do we have to say, "Sorry, you can't use our potable water meter." We get to that restriction. You have to fill it and you have to bring in a water truck. You know, we can't restrict that.

You're getting into property right rules and some other stuff. And how are we going to deal with this as a community? And for the sake of time this evening, if we can let Natalie finish her presentation and then we'll have an opportunity for questions uh like this as well in upcoming presentations and at the end. So, thank you.

Um, so beyond post2026 operations on the Colorado River and within the CAP, other longerterm solutions for Arizona include some of the things you see on this slide, some of the things we've already honestly touched on. Um, so in terms of augmentation, finding new water supplies, we are looking toward identifying additional supplies to supplement Colorado River supplies.

Uh that might include desalination of ocean water uh moving non-col river supplies through the canal which we refer to as wheeling within the cap uh system. We uh in terms of conservation and efficiency, we continue to treat our water supplies within the state of Arizona as a very precious resource. I think living in a desert really draws a lot of light to how precious that resource is. and we're finding a lot of really innovative ways to conserve.

Um, some examples might include studies that allow agriculture to maintain yields while using less water. Uh, there are new storage projects uh within the Colorado River system that might can capture water that that can also capture water that might otherwise be lost. We're also uh working with others within the Colorado River Basin, including the Metropolitan Water District of Southern California and the Southern Nevada Water Authority to explore ways to purify and treat waste water for reuse.

Um recovery, this last item is going to be a major focus for the Central Arizona project as well. Um and this is something that my team is working directly on in the coming years. Uh the Arizona Water Banking Authority has over 4 million acre feet of water stored underground and that water was stored there with the intent of easing some of the impact of Colorado River shortages in the future and that future is here.

Um the when the bank provides that water to users in a time of shortage, they can either take credits from the bank and pump that water up, recover that water on their own. That's called independent recovery. or they can come uh to CAP and receive recovered water through CAP. So that's what it means when we say that CAP is the recovery agent for the bank. If someone wants wet water from the water banking authority, they get that through CAP.

Um so we are evaluating our recovery capacity as an organization uh and looking at how we expand the recovery capacity that we have and focusing on the most efficient the most costeffective ways to get additional water directly into the canal. Um, these are all things that our communities are working on and in many ways CAP is working on directly and supporting these activities because we recognize that these long-term solutions are going to be necessary for uh for these water supplies.

So, with that, this is my last slide, so I'll I'll pass it off just in a minute uh to the next uh person, I think Sean. Uh I do want to note that CAP's website is a wealth of information. We have uh a news site that's kind of blog format that has a lot of uh interesting articles on current events and activities that CAP is doing.

We also have uh something that we refer to as CAP University where you can learn both about our system and we hold about quarterly sessions of our our CAP university on kind of present topics. So you can find a lot of both old videos of that on our website and uh sign up for notifications about upcoming dates on on our website. So with that, I'll hand it off and I I just want to say thank you. Thank you for having me. I appreciate all of you being here tonight. Thanks.

I guess we I just wanted to know how much water we lose evaporation. So, so we have a standard evaporation assumption on the cap canal of about 5%. um depending on conditions that might be higher or lower. Uh but it is something that we we track and and observe and think about as as we move water through the canal. Thank you. Thank you so much, Natalie. And again, I think we should all be appreciative that the CAP is willing to come out and talk to us about this.

And and what we're going to try and do is take what Natalie brought up as a statewide issue. Um you know they're the water provider for uh such a large number of people in the state down to how does that impact Cave Creek specifically. And I'll start off just by saying you know we are very dependent on our Colorado River water supplies.

The town um the prior water company made that shift before even the town b the water system just because the groundwater aquifer up here was not sustainable for the growth. So they did that shift and at the time it was it was thought to be the renewable and secure water supply. Well, now that security has been in question and then we're and we wanted to explain to the public how we have been working on that and we've had several conversations.

Brad and I were up here in January and this is just trying to reinforce to everybody what we're doing and give you guys um information. So, with that, Brian, can you break with slides? Okay. So, we're going to touch on a lot of topics tonight and oh, went too far ahead and some of it will be repetitive because again we are tied to the Central Arizona project.

So, uh we're going to talk about our supplies overall which just reinforcing what you heard, how it's going to impact us, what we've been doing to plan for that future and the things like the policies that we put into place to help secure the town's water resources. Uh we util brought up again that's always a discussion with us. You know, we're providing a service and what's the cost of that service? and we're going to wrap that all up and then hopefully take questions after that.

Um, so with that, I'm going to pass it off to Brad and we'll probably read through these first few slides because it's been covered. All right. Well, okay. Well, good evening. My name is Brad Hill. I'm sorry I came in a little late. Um, there there was a lot of rain in northern Arizona this afternoon. So, the monsoon has reached our northern part of our state, which is why I was just a little late. Um, thank you. So my background is I'm a hydraologist and a geologist.

I've worked in the municipal business for three decades in Arizona or more in Sean's job and in water resource planning. And in fact, Sean and I used to work together in one of those former cities. So the since Natalie already went over this, what the takeaway here, I'm going to put it a little different twist for you is there's two big reasons why there's an issue and why you're here today and we are here in front of you.

One is it's administrative, meaning the rules that govern the Colorado River end this year and we need to figure out we collectively central Arizona project and the state of Arizona need to figure out with the other basin states what that looks like. The second reason why we're here is what Natalie really emphasized and I will too as a hydraologist is it's all looking different today. the hydraology on on the uh on the Colorado River basin in partic and here in Arizona as well.

But if I can't leave anything for that, those are the two big reasons. There's an administrative challenge and there's a hydraology problem. And I won't go over this because Nelly I thought did a great job. However, I will say this came from the Department of Water Resources uh uh like a week ago and it's already gone down a percent. So just interesting. You said it was ch changing and it abs it absolutely is changing. Here's a little different look at the hydraology.

So what this is is it's a graph and I wouldn't be any good scientist if I didn't provide at least one graph. Actually I'm going to show you three. But this one's a very important one. I think that helps illustrate. And so the bottom is time. The left side is time since Lake Powell was created in 1964. And then the right and then over to the right is 2026. And then the vertical axis is volume. Every single bar on there represents how much flow flowed into Lake Powell as what's termed unregulated.

That doesn't really matter. That dash line across is the 30-year average. So really what this tells you in the last 15 years, the flows into Lake Powell have only been three times above average. And as Natalie talked about, the far right has a red, a black, and a green. That's because the federal government does projections. The green is what they think. They term it most probable. So again, it's going to be very, very dry. And the drive home the point is in n 2002. That's that little low bar.

and in 1977, that's that other low bar on the far left of this graph. So, we're talking those times for those of you that remember 1977 uh and and 2002, that's the significance of what uh what we're trying to convey in terms of the hydraology side of the issue on the Colorado River. So, the administrative side of the challenge as I mentioned is the um excuse me, this is not that's the next slide.

So the Colorado River reductions because of the hydrarology the bureau is going to come out the end of July and tell cap the state of Arizona what the shortages are going to be how much the reductions she Natalie referred to it we all think it's going to be 20%. And if and if central Arizona project can mitigate that to 14 that would be wonderful for town like cave creek but we'll all find out what it really is going to be in July.

Now, the nice thing is is it doesn't come into effect until January. So, that gives us time. But in the water business, we wouldn't be doing our business right if we were just going to wait for 6 months to hear the news and then go scramble to try to figure something out. Nothing happens like that in the water business. We work really, really slow. Um, and it's intentional that we do so. So, town has actually been working on this problem for several years.

And and if there's not anything we can convey out of here is is you have a great utilities director and we've been doing a lot and water lawyer. We've been doing a lot of work to help mitigate what the shortages are going to be at least in the near term. You still have challenges in the long term and I'm going to emphasize and show you that. But at least in the near term, uh Natalie already mentioned about the proposal so I won't say anything more on that.

So, here's some supplies uh for now I'm going to we just talked about the Colorado River Basin. Now, I'm going to drill it right down to what's important to you and here uh and Cave Creek. So, we have about 2,800 acre feet of volume of water. An acre foot is a term we use. We don't like gallons. It's too big of a number. Acre foot is one acre one foot deep. That's how we term that. So, what's that volume? Uh you don't need to know the gallons.

just that's the that's how you come up with that number. You heard Natalie mention municipal industrial non-aggricultural Indian non-aggricultural. So the city does have those water rights to those. We also have groundwater, but as Sean alluded to the the geology, you're on the edge of the basin of what we call the Phoenix, you know, the the Phoenix basin. So there's a lot more water down there than there is up here. You're on hard rock up here.

So it's very difficult to get any long-term sustainability. So that's why the town unlike other cities that I have worked in around the in Phoenix metro and northern Arizona, they have a lot of groundwater. This town does not. We also have that was just briefly mentioned banked storage credits. And I'm going to emphasize that as we talk a little farther, long-term storage credits. We are great in this business of throwing out acronyms and really big, you know, names for things.

So, I'm just going to try to simplify it. If you don't follow these terms, let me know. But, we're going to talk about long-term storage credits. Everything we have been doing to date has been about a 20% cut to municipal industrial and a 100% cut to non-Indian agriculture. That's a big deal. If we didn't have these cuts, you we wouldn't be having this conversation. The city has already planned sufficiently to have enough water supplies.

But because of these cuts, what we're putting up on this on this graph, it's a big deal. And the reason it is is if it were to be 20, let's just save Natalie's nice news that we're just hearing and let's keep it at 20%. That's what we're delivering today. So, if this is in January, you can kind of see where we're going. It's real cuts to this community now. Well, wait. I'll wait on that. Now, I think Sean is going to share a little more on what's going on here in Keith Creek specifically.

Yeah, we talk about water demands. You know, uh we have to look what we're talking about, what Brad talked about again. If we add a 20% cut with zero NA water, 20% cut to the municipal industrial gets us around 2,000 acre feet. Right now, we delivered just under 2,000 acre feet to our customers of have treated CAP water last year. This doesn't include the the little bit of of well water that we got out of the Desert Hills system.

We had about 200 acre feet of well water, but the well water in in um Desert Hills has been declining. So, we can't rely on that as we look forward and we're always thinking forward many years. Uh we actually did have non-pottable deliveries. The town does has effluent that we have um um from our wastewater treatment plant and we actually have what we call backwash water from our treatment process that we actually deliver and that's the deliveries we sent to the golf course last year too.

But when we're thinking about water, we're also thinking forward and that's what this slide wants to bring bring forward is that we have existing potential demands. Um we bring up existing subdivisions and final plats and there's an area that we talked about on the west side uh called the domestic water improvement district and we like our acronyms of Dwid.

Um in some of those cases that they have um the town's committed water to them and in some cases they have what's called a certificate of insured water supply. Why is that important? They've actually um those are some subdivisions that uh to get a final platear assured water supply. How do you do that? You actually go to a water provider and they allocate that to you. In our case, we don't have a design what's called a designation. So we go through a statewide program.

So they look at our water balance and they say yes, you can sign off on that final plat. That's actually a contract for them. So when we think about future planning for demands, we have to account for that because that's a legal document. In some cases, those um those properties that signed on to a certificate of shared water supply actually helped pay for the water system.

I want people to realize that when the the water company uh shifted from groundwater to surface water supplies and built the 12mi pipeline down Cave Creek Road to the Cap Canal and built a water treatment plant, they put a tariff in place. that tariff was helped largely paid off by the subdivisions that actually got certificates of insured water supply.

So we have to think that and you know in fact we wouldn't have the system we had today without some of those future developments that are on the books. But we have to plan for that. You know that's over 800 acre feet between the two water systems of those contractual obligations we have out there.

And we also when we did our master plan we looked out you know uh if we allowed continued to allow connections to the system what could that potentially be and just looking out 500 ft from our existing distribution system. And in a lot of cases, our lots are, you know, an acre or more. So you could have a 300 foot wide lot. That's a couple acres deep from our dist existing system. That's another 500 acre feet of demand we could potentially have on the system and all the infill.

So it's something that we need to be cautious of that when we're looking at today's demand, but then do we have future obligations we need to meet? If it gets dire, yeah, the town's going to be an interesting or bad situation. We're going to have to have the conversation. We can't meet those obligations. What do we need to do? But we just want to show you that when we plan, we plan at both levels.

what we have today and what we need to do have to commit to in the future when those other commitments will be there. That's that's that's part of the crystal ball and that's some of the magic we need to do and look at. Yes. Audible and nonpable. Audible is drinking water. Non-pottable is something you shouldn't be drinking. So, make it potable. Oh, in our case, the the non-p potable is actually um our wastewater treatment plant collects some flows from the the few customers.

We have 940 customers on the wastewater system. We treat that through the the through the plant and we treat it to an A+ standard actually being used for irrigation. So not for not for consumption, it's being used for irrigation. So to that so their water is then turned in to water for live golf courses. In fact our the town's commitment is the um the wrenchman on golf course gets the effluent right now.

We have a contractual obligation through 2049 to actually send them the effluent from that plant. So yeah and a lot of jurisdictions will have that. If you know Scottsdale they have their a lot of their golf courses. A lot of those golf courses help build the a re reclaimed water system that they get the reclaimed water deliveries from. So, thank you for the question. Not in Cave Creek. I don't think statewide. Maybe Michelle can.

Um, the certificate is really just a a permission from the state that you need to get a subdivision plat approval. And so it really isn't it's a point in time determination that there's likely to be a hundred years worth of water for that subdivision. And so we won't really know if there's a failure to meet those obligations until, you know, maybe year 89 or 90. So So there could be, but it's really just an opinion looking forward. Does it look good? And they do a pretty rigorous review.

And if they agree that it looks like that there's a responsible source of water for the subdivision, then they give them the certificate. Yeah. I'm going to pass you back to Brad because I just want to again we're going to go through some slides of what what have we been doing. You know, we've been thinking about this. We've been in front of the the public before. Um this is not something new. Uh and we're going to go through some of the things that we have been doing and working on.

So here's the second graph. Um, let me spend a a few minutes talking about what this graph is in its in the generalities. It's if there were a 20% cut to CAPMI and 100% cut to NIA and what if the town did nothing? That's what this is. So, what if we just didn't do anything? It's important to look at that as your base and then what are those opportunities that we can do looking into the future. So again, the x-axis across is time starting in 2025 on this graph and we just looked out to 2040.

The vertical axis is volume and then each bar is the stacks of various water supplies that the town has access to and and what so those are the different colors and I just highlighted the blue is cap supplies but they're the other ones that we talked about whether it's desert hills groundwater the backwash and and and reclaim water and then there's a horizontal yellow line and what that is is today's deliveries That's what the city well technically last year's deliveries 2025.

What if we just keep that as that's a flat uh constant delivery and then we added a 2% growth on top of that. That's roughly what your utility system is experiencing is a 2% growth. So what does that look like? And then superimpose all of that with a decline in the surf in the cap supplies. So, if you look at the three bars in from the left, you notice how there's a big drop and there's that blue color drops with the little arrow showing you that's representing a 20% cut to the city.

And so, what that instantly shows is that little fuchsia pink, you're in a shortage at 20% to existing customers and future, but existing customers in in 2027. And then it only grows greater for there's a reason because there's some embedded um declines that we did. We Sean mentioned we don't think the Desert Hills wells are going to produce like they are today into the future. So that's the reason why some of that uh water supplies change with time.

U so if you understand that now I'm going to go I'm going to go to the next slide because we certainly would never want to give you a problem without some kind of solution. Right. That's never at least my bosses never liked that when I was working for people. Not at all. So here and the biggest one what we've mentioned before and I said it is long-term storage credits. Thanks to your council and town management, they have been putting storing water underground.

And the simplest analogy you can think is putting money into your checkbook. Just don't spend it yet. You've been doing that over the last since 2022.

putting money in underground in some of actually central Arizona projects re recharge projects and then with withdraw that there's a term that we use in our businesses recovery of those credits now that might sound really simple but it's actually extremely complicated both hydraologically and administratively um but you have stored the town has stored enough credits over time that if we begin to recover those and get that water to your treatment plant.

It mitigates the problem for at a 20% cut for at least 7 years. And Sean and I were just at the city of Poria council meeting last night because that's who we've been working with for nearly two years to get an agreement with Poria to help have them help us get your long-term storage credits out of the ground and here. Technically, the molecules won't be the same, right? It's called an exchanged. Again, we're a little complicated here.

Uh, and so that's a very significant piece of that that we're putting the administrative parts together and it's before your council next week. The same agreement. Puria has to approve it. The town has to approve it. We then give it to Central Arizona Project and they have to approve the deal because we're using their water. You know, it's so everyone's got to approve it basically.

Uh but it's a uh um it's significant and I and I I can't say enough of the work that everyone has done on this table and still still needs to do. We're actually also going to work with another town city is surprised.

they've been willing to the conversation and and I'll just kind of share with you because what they have all said is if one town in this community in the state lower part of the state fails in terms of can't deliver water to its customers everyone fails and so that was told to their council and to Puria's council and they all got it and they voted 70 so that's a big deal and you'll see it on the news tonight because I got called by channel 12 today. Uh they're interested. Yeah. On the Yeah.

So that's a big deal. Okay. Sorry. It is. So it's very very exciting because I've been doing a lot on that. So but we call that a bridge solution. That's only shortterm. So we can't leave you with all just good news. You still got work to do. Uh so molecule correct. Please explain that. I I can Well, no. So, so the town has put Colorado River water underground. And I'm going to show you some pictures of this later because I'm a visual person. I figured that would be easier.

And then they're going to the city of Puri is going to withdraw that groundwater. There's a little nuance there, but essentially. And then they're going to leave their call cap M&I water in the canal and deliver it to the treatment plant. So it's why it's it's it's an exchange. They're getting the groundwater, we're getting the cap water, but it's all the same. You know, from a checkbook perspective, it's all the same.

Sub economic water suck out of the ground, more subsidance you have, what that impact's going to be. So to address that, um, absolutely. I used to work with the Department of Water Resources and we we looked at that. So there isn't subsidance up here meaning by these recharge projects because they've been recharging since 20 25 years. So there's a lot of mounding meaning terms of groundwater there absolutely is is a lot of subsidance mostly in the panel county area.

I do know the city and that was one of my former cities I used to work with has had central Arizona project on recovery say we need to watch that issue and I don't know Natalie if you want to address it. So there's no subsidance now, but central Arizona project is absolutely in tune to that. Yeah. And so we actually are just in the process of starting a large uh study to look at some of really exactly that.

As we move into this era of of largecale recovery of these credits, what are the physical impacts going to be? How do we need to locate those recovery wells? All of that. making sure making sure really that we're evaluating exactly that.

That's going to be a significant part of that study is making sure that we are analyzing how the water gets drawn down, whether we expect there to be subsidance and then looking at infrastructure around where potential subsidance could be and thinking about minimizing maybe relocating wells and that sort of thing to make sure we're minimizing that type of uh potential impact. Yeah.

Uh we are uh so there have been there's been long-term monitoring of subsidance done by the Arizona Department of Water Resources. They have a really really talented team and and a lot of uh really great information on their website. Um I also used to work at the department.

So um um and CAP separately from that monitoring activity that DWR is doing, CAP is also initiating a study to look specifically at our recovery activities and what we expect the physical impacts to be and making sure we're mitigating those impacts. Water usage there going to be massive subsidance. It means crack foundations, roads, everything else. I mean it it can be substantial.

it there's there is potential for subsidance and it's something we are going to look into evaluating how how it might be minimized if you spread out the withdrawals if you if you do it in different ways if you do it in different locations the subsidance really occurs dependent on the physical characteristics of the location from where the water is being withdrawn I would just point out that there are a lot of groundwater uses already and so subsidance is already a concern because of that so this is something that.

Yeah. And that's true. I think you're right. And they'll be watching that because we do go through a level of subsidance review with all the permitting, but there is going to be more that needs to be done. Understanding that the Bumper Basin has over 7.8 million acre feet to lease area is part of the compact.

What percentage of that 7.8 million acre feet could go to California before we get the draw if in fact they could number 7.8 million acre feet 4.4 so handful of us could answer that question but the way the way the law of the river is set up is it's 4.4 million acre feet of the 7.48 that's required to flow from Lake Powell to Lake me now all that's changing at least the flow out of Lake Powell is but the rights on the river Arizona gets 2.8 million of it California gets 4.4 for first and Nevada gets 300,000 and that was dealt with in 1964 Supreme Court case.

Yeah. Should we be able this is um should we be able to expect any um changes to the basin supply or um theances to like different municipalities and industries of agriculture. uh that could help um change things by 2034 when our credits run out. I'll address that. Yeah. So, so there are there are laws and people love love their allocations. So, what we're more likely to see is voluntary uh agreements.

Um, for instance, San Diego is willing to allow some of its Colorado River to flow potentially to Arizona in exchange for a project there. You're going to see a lot of wheeling and dealing, but I think the law is probably going to stay right where it is. So, all great uh all great questions. So, um, we've talked about what's going on and we want to talk about what how that comes back to us and what initiatives we've been working on specifically. And we we go back to this exchange group.

You'll hear that several times from us because I think it's very important that we had that uh solution in place for us now. And again, it was the work of over two years and largely from from Brad. Um what are we trying to do here? You know, we wanted to uh work with you as the citizens and our customers. Water conservation, you know, we want to educate people what's going on. You know, you all being here tonight and passing this forward.

Again, we are a small community with limited water resources. we are tied to a uh what we thought was a secure water supply where the the level of that security is now unknown. Um so how do we keep moving forward? We all have to work together as a community. So um we I don't think conservation will get us there completely, but it's something that we all need to be working on and and cautious of. Uh we've talked about restarting the Cave Creek wells.

You know, the water system was started in 1954, I believe, um on groundwater wells and they moved away from that because they realized that they couldn't rely on the groundwater aquifer in this area to support the water system. That's why they went and did the the heavy lift of building a 12mi pipeline, the booster pump stations, and a water treatment plant. Desert Hills has a few wells, but those have been in decline, too. So, uh it's a stress point.

We're on the the upper area of the the aquifer. In fact, we're in the Cave Creek Carefree aquifer up here. We're actually on the the shallow end of that aquifer. So, while we have a large wash that runs through here, we can't rely on that and we can't rely on as a reliable water supply. So, we are trying to restart some wells. Um, we're actually done some well testing.

We're actually trying to uh work on uh the there's a water line that used to convey the raw water well throughout the town as as we've been mapping it out because there's actually very limited mapping on it. Um, and uh we've actually every time we test it, we break it. So, we're working our way through the system, but our goal is to get that online and bring some wells back online to help us get some groundwater. Then we have to figure out where where that water goes to and best use of it.

Um water bank recovery. That's a huge thing. Uh you'll hear that number of times. We have put water in the ground is getting that water back out for the specifically for the for um Cave Creek. Natalie mentioned that they do it at larger level, but we needed to have some assurances that we had access to the the 3,000 uh acre feet of water that we put in place. That's why we're working with Poria and working with Surprise to get that out.

We will continue to work with CAP as they move forward with their reach recovery projects and as being able to access the water bank authority water that's been put in the ground and uh the town has uh know you know sort of big big thing in the room. We've evaluated the ability or selling the water system. Why would we even consider that water security? You know as we move forward the town has a this system has some structural issues that need to be corrected with capital improvements.

Uh people remember when it got bought the water system in in um uh I'm trying to think here 2007 when the the town bought the Cape Creek water system. They immediately went into an improvement project. It lasted 16 months and had to spend $16 million just to rebuild the infrastructure to make a reliable water system. Those debts are now finally being paid off. But as we look forward, there's still other um capital improvements that we need to build.

You know, the cost of the interconnect with Phoenix is very high. We built those into the rates. But as we look forward and have to look to purchasing new water resources, it's very expensive. Can the town do both? So, it's a discussion that was asked of us. It's not a done deal, but we were asked to evaluate a staff. Uh we did in the fall, we we did a solicitation of um selling the Desert Hill system specifically.

Um we looked at those numbers and uh the council direction we got was well, they weren't as beneficial as we thought they were. So, what would it look like if we sold the entire system? And again, it's it's maybe looking at for water security is as 4,100 water customers. It's hard to to play in the big picture. We're talking interstate agreements and all that. So, if we were part of a larger water system, could that actually help water security for the customers?

I'll allude to that a little bit more, but we want to make sure that people are aware. There's there's an invitation for biders that'll be out um for all the systems in a few weeks and we'll start that process and we want to make sure everybody's aware. That's something we just have to look at. The town wants to continuously keep you all informed of what's going on. That's why we're doing this forum. We did one back in January.

Looking back, we didn't realize that we actually done one in January. So, but and then every time I do quarterly reports, we got to keep everybody updated. We might be more frequent as we get closer and as we learn what's happening. Once we learn what's happening in the Colorado River, um you know, and when CAP can come down, you know, they're estimating 14%. If it gets different, then we'll we'll bring that forward. Yes.

back to the fourth bullet point what you just went through alluding to the the potential sale of Desert Hills water invitation to the biders. So that's going to happen. The the invitation for bitter for Desert Hills actually occurred. Um the town did receive um some proposals. They evaluated that and actually um chose to to uh move forward now with an idea and those the bids are actually being held.

It was put in place and the the companies that supplied bids had to hold them for I think close to 400 days. So we're still they were still valid bids. What the town is looking at now is doing an invitation for bid for all the utilities. Cave Creek Water, Cave Creek, Desert Hills Water, and Cave Creek wastewater and the town's not required to accept a bid. Yeah, this is just an invitation to look at them. So yeah, desert his neighbors that live in desert hills are certainly concerned.

our our water supply is uh it's is pretty frightening with with only reliance on wells that uh that aren't delivering the way that they used to. Agreed. And again that was where again the the initial thought was you know the the water resources that are actually being used to support Desert Hills are actually the what were the Cave Creek water company uh cap water supplies desert hills didn't have any allocation.

So, ever since we bought the company before the company was purchased, um there was uh Desert Cave Creek was sending water over there. In fact, people in remember um in 2006, I think it was, there was actually an emergency interconnect up to Anthem because the the wells weren't producing out there. Um so, they had an interconnect with Cape Freak Water, but they had to do a second pipeline up to Anthem to get water from Anthem to keep it going. I think it was in place for like 18 months.

So, yeah. Can you give us an update on the status of a nuclear decalization plant rocky point piping water? It's been discussed for a decade where we know where that stands. I do not know much about that. Michelle, it's it's always on it's always on the horizon, but it's not there yet. Okay. Can Can your qu to keep moving? Can your question wait just a little bit? Thank you. and other projects we're working forward.

Um the uh exchange agreements, you know, will sound repetitive, but that was such a key thing for us to get access to that store credit. Um we've been looking at the Bartlett Dam project, and I got a slide that'll help get more details. We did an evaluation of the Harkah Valley that was alluded to in the um the video presentation. I'll explain that again. We we uh did a due diligence period just like we go if you're doing a purchasing a a property.

And in January 2026, we actually came to our council and uh did an evaluation. We elected not to move forward for specific reasons. I'll I'll get into that a little bit more. We're looking at additional agreements. We're always keeping our eyes open for is there other water exchange agreements out there and is there ability to purchase more water resources?

You know, that's a tricky question because you have water resources on the c on the Colorado River and the amount of water available on the river is decreasing. So, what contracts are out there? But that's something we we watch for. you know, between Michelle and Brad, we have a very great team here uh to keep things going. And I'll point out Brad mentioned me specifically before about keeping things going. Your utility staff is amazing here.

So, um you know, we've got some some staff members in the back there. So, yeah. Yeah, you got to dictate people here.

um conservation outreach cactus Charlie um you know we came up with something unique for the town you know we're we set a goal for ourselves of 5% um we're trying to look at that to work with our citizens to to reduce that um we've we're trying to come up with a unique theme you know our utility advisory board actually came up with the cactus Charlie um theme and we're trying to look at working with our highest water users um we're still currently developing the programs um this year has been good for doing stuff doing the outreach has been a lot of uh great things in our utility advisory board and I'll mention that we actually have a consultant who's actually helping us really dive into that.

Um uh there we talk about what's in the drought management plan and there's some sometimes there's confusion about that because we went through that process in uh 2022 and 2023 we did some town code changes. Um, what we put in there was actually just a list of options and and I don't want people to think that yes, you know, when we get into a severe drought situation, it says in town code that you no more outdoor water use and I think it listed specifically and use for pools.

What that was is an attempt to give a a a um a list that the council could then do uh to then react to. So, it actually takes council action to go back and actually we'll have to have a conversation with them and say yes, we are in severe enough drought that we do believe that we need to do uh not go beyond voluntary restrictions into mandatory restrictions and what does that look like and the town council has to agree to what that menu is going to look like.

So, I want to make sure everybody's aware of that because I've heard that people are concerned that we are going to require people to drain their pools or not have, you know, uh horses or something like that. That's not the case. It's going to be something that we have to decide as a community. It's in town code to give council some direction, but that's going to be a conversation we need to have.

Um, we've, you know, probably should have put the slide about the our meters in front of this one, but we actually do have a firm that's going to help us look at the analytics to really help us hone in on what's going to be the best conservation efforts for the town. There's a firm uh we're going to start kick off a project here really uh shortly with Mattis Water Management. They do this for a number of communities. They've done it for Flag Staff.

Um uh they currently do it for Prescott Valley in the state. They've done other agencies, but they're going to look at our actual data set and the data set is really good right now because last year we completed the upgrade to the Cave Creek meters. We have uh we know we have good metering and now we actually have really good precise metering down to hourly level for close to 60% of our customers. That's going to allow us to really hone in on where we should be looking at.

Uh we'll look at things like evaluating peak demands and looking for um what customers can we get the biggest bang for the dollars? Who should we focus on? People sometimes focus on, you know, a one individual big water user. Well, in fact, the water reclamation plant is one of the biggest users of potable water. So, we want to actually have a study specific to that to see if we can get that and that's specific to the um wet odor scrubbers that we use at that facility to keep the odors down.

But, is there something else we can do? You know, when we we always show up on the list of the high water users and it's something that as a good steward of our water, can we can we change to rec recycled water or change to a different technology?

there are costs associated with that but those are things we're going to look at uh the the study we're going to kick off with Mattos which should be done before December will actually help us give datadriven conservation matter me measures and identify what we should be focused on and look at things like cost benefit cons comparisons to really help us again focus on where where's the best bang for our dollar to get our uh customers who again over 85% of our customer base is residential 15% is non-residential businesses we have you know a handful of schools and and other things in place.

But should we be working with them? Who should we be working on and how can we work best with our citizens? So, uh that'll be moving forward. So, you'll be seeing some outreach from that. Well, actually, you'll see that also in our utility advisory board meetings moving forward. So, I look forward to if you go you can attend those or actually we we um videotape those, you can watch those also, participate that way.

The water meter upgrades was another huge thing I think that really helps us as a community to to see where our water is going. We use the acronyms AMI is automatic metering infrastructure. That is uh the system actually was a what we call a driveby system where we actually had to have a truck with a radio repeater. In fact, when we bought Desert Hills, it was a walk by system. So, they actually manually had to go read the meters when the town bought the system.

So, in 2012, they actually started changing that out to a system where we can uh do a a driveby system. But through a grant that we got last year, we were able to um um Desert Hills got changed out through a few years um of um ongoing operational work. So they have good meters out there. Um but then Cave Creek uh the meters had fallen behind. So we actually got them replaced. So now they're all were on consistent.

We actually were ironic, it's hard to believe that a small utility does we actually ran two different meters uh two different metering systems. It was just a nightmare. And in Cave Creek there was seven different meter types within the system all trying to read together. So we're unified on one common system now and we're able to make the leap to what's called automatic meter infrastructure where now we're actually getting 60% of our customers we're getting hourly data from.

That's that's that's great for us and we're actually able to provide that access back to the customers through the my 360 portal that allows people to actually see their data and um you we're hopeful that more people join onto the system. Right now we rolled it out last year. We have about 10% of our customer base is on the my 360 that allows you to see and this is an example of hourly data on this graph or um daily data.

But um if you're if we're picking up your meter, we're actually you can click on that next bar and you can go down to hourly data and you can start seeing. So now you can start seeing your usage. Um we look at it as a systemwide level. So we're looking for things like leaks. In the old system, we drive by once a month, pick up the data. It takes us a little bit of time to analyze it. You don't get a bill for two to three weeks afterwards.

So, if you've had a leak, you could have a leak potentially for six, seven weeks before we notify you with a pretty hefty bill saying, "Hey, by the way, you got a bill and the next one's going to be coming because you've kept that leak going. Now, we can try to look for it, but we're help, you know, we can't do it ourselves. We're hopefully we empower the citizens to look out and look at their their data themselves." So, again, we have 10% people signed up for the Maya 360.

I'd hope we get more and you can start setting your limits. You don't need to look at it every day. Once you set your limits, you can see your usage. Then, you can see the anomalies. If you go away for a weekend and you get your irrigation system breaks, it should show up on the system. So, you can tell your neighbor before we send you a big bill and say, you know, hey, you you you need to pay this. Um, this will help preserve the town's water resources and bring it forward.

And even those meters that we don't get the hourly data from, it's still important. If you sign up for it, you're still going to get the data, you know, a few weeks before we send you the bill. So, it's actually still beneficial to those. And as we convert the system over uh and get it, you'll get if you're only getting monthly data right now, um then you'll get to the daily and hourly data as we convert the system over. So I encourage everybody to sign up.

Uh this is a great thing for everybody and um so those are some initiatives we've been working on and um you know we talk about bridge solutions. Those are the our efforts to you know how do we get to um uh you know a long-term solution? And that's what that's how we're terming bridge. You know, uh we don't have a a single long-term solution in place for the town.

I wish I could say yes, we've got a purchase out there outstanding that's going to give us,000 2,000 acre feet of water that we can grow into. Um you know, a the cost of that would be horrendous right now. Um but you know, we we we're trying to work on multiple solutions and we and and knowing that the cuts were coming, not knowing how far they were going to be, you know, we put a bunch of solutions in place uh to get us there and I'll let Brad start speaking from this.

So, just really quick, uh, we've already touched on this a few things a few times, but again, this is your checking account. Kudos to your council for funding staff to be able to put this water underground just for times like these, but the challenge was how do we get it out of the ground? Um, and that's been that's the piece that we've been working on. You've also been um heard about the Arizona Water Banking Authority. I think I mentioned that earlier.

So that was a statutoily created entity essentially within uh at the state level. They have been funded to since 1996 to be bringing in unused Colorado River water and putting it underground. So they have over 3.8 million acre feet stored within central and southern Arizona. So the other piece to this conversation is not only how do we get access to yours which I think we figured out is how do we get access to the states 3.8 million acre feet. Um and so that's a broader conversation.

We've been poking them and so have others uh cities in particular saying we need to know how to get access to that. Uh and I just watched her present last week at the water bank meeting or whatever it was. So you you applaused about this these exchange agreements and I was kind of excited. I'm sure the whole team was that because that is such a good thing. And let me just leave you with these pictures because I was always what do we mean by putting a water underground or as a bank.

So Natalie showed you the cap canal. Uh the three different colors on there are the three service areas that that blue line goes through. Excuse me, the three county service area. There's two red dots and one yellow. The yellow is where we're at roughly. The two red dots are where these recharge projects are. The hieroglyphic mountain or the one on the left to the west, the first one on the canal that's essentially located in the city of Surprise. So they have the infrastructure.

They have wells adjacent to it, etc. You don't. Cave Creek doesn't have wells way out there. So we need to do this kind of an exchange. The Albuquera is in the city of Poria roughly and the same thing. Um, and these are these are cap recharge projects that other cities and the town have have leased capacity and our own capacity. And that's what I mean by you've done a bank account.

They're right offline off the cap canal and they infiltrate the water into the ground and ready to be recovered uh at some other point in the future. And the beauty of these exchanges is you don't have to find a well site. You don't have to build a well and you don't have to pipe it to the canal. That's what's wonderful about having other city councils approve using their infrastructure. Now, you're paying for that, but it's a reasonable price compared to anything else that's on the market.

Um, and so with that, I'll kind of leave you with that vision of what we mean by recovering long-term storage credits. Oh, sorry. Hey, we're also trying to keep our eye keep our eyes out for larger things. Um want to bring forward one one thing you might have heard in the news. There's been a lot of uh discussions in the news uh swap uh secure water Arizona program.

Um it got announced uh it's an exchange agreement that PIN and Tucson are taking the lead on but it's actually looking at a way to identify u water users who have maybe some excess water um and and uh people like G Creek who might need that. So, it's trying to create emergency reserve. Um, it's it's there's no real program in place right now. They Phoenix actually presented to their council on April 28th. If you want to look back, you can see it.

They uh their um uh utilities director and their water uh services director um water resource director actually have a really good presentation on this and they're trying to uh it's great that they're pulling this forward and they actually kept us informed about it. And you know, it's great that Cave Creek's name is out there. Um, we've been championing saying, you know, we're in a situation with with what how we're tied to Central Arizona Project Supplies that we need some help.

And we have not been shy about asking that. And because of that, um, we didn't do that to to ask for for people to give us uh pity, but we did that to to say, "Hey, we're being serious and we're being honest." And that's actually opened up some doors for the town because we were honest about it. People said they were shocked that we were willing to have that conversation and say that.

So, and things like that where we're where, you know, we we have an infrastructure agreement with City of Phoenix, but they're also watching out for us. So, you know, we've got some good people helping out. Um, swaps one program. We've talked about inter interstate. You know, there's in the news recently, there's the uh the three lower basin states were talking about exchange agreement to try and keep water on the river to help support the uh the the reservoir storage on the river itself.

But, that still has to be agreed to by the federal government. Um, I hope they do allow something like that. But we're always keeping our eyes. You know, again, you got a great consultant team here who helps us and informs us of when we need to jump in and what we might need to do. You may see something show up on an agenda item because we might have to enter into an agreement where we have to get into a non-disclosure agreement to talk about something.

So, um there's a lot of activity behind the scenes. Sometimes we can't mention it because it's we're not sure what the details are. We just keep our eyes out there. Yeah, sure. That hurt. So, on the interstate exchanges, I just wanted to make the point because we talk about these long-term projects. We talked about the Harkua with the council, and I just want to re-emphasize for everybody, they're extraordinarily expensive.

The deal with San Diego would require Arizona probably to pay 10 times as much as we currently pay for raw water. So, this is not something that anybody's taking lightly and it's not easy. and we are all going to be paying more for water. So, you know, kind of understand that that's going to come with all these solutions and it's not it's not something we're not already aware of. So, yeah. So, what are possible long-term solutions uh for the town? Um I was going to talk about a few.

Think about it as sort of I use the three-legged school analogy which is you know we've got water resources that you know paper water you know we we've looked at opportunities to to get paper water for the town that that doesn't help me as utility director put water into the pipes.

So we have to when we al look at projects we have to be the context can we get legal accessibility to water can we physically deliver that water and then we're also looking to diversify our water supplies you know rightfully you know people may say why are we so tied to the central Arizona project because we live in an area where the groundwater aquifer does not really support the the system and the growth that we have right now the old water system water company actually had the foresight to actually go and get a municipal industrial subcontract and build a 12mi pipeline and and a water treatment plant.

Had they not done that, this community couldn't have grown the way it has. So, but we now need to look to the next phase of that again. They did that assuming it was the renewable um uh long-term water supply. Well, the security of that water supply is now is in question. So, now now we got to feel the next phase and getting a diversity is what's going to be key for this community. We got in in quotes there. All the inexpensive easy water has been developed.

New long-term supplies are going to be more legally challenging and expensive. As Michelle pointed out, you know, the the easy water is gone. So, how how and then we're always looking for this community again, how how can we get something that's going to meet uh our abilities to pay for it. We already have higher water rates and we're very cautious of that. We're very conscious of that. Couple projects we did consider or are part of considering is the Bartlett Dam project.

And uh quickly graphically, it's uh it's a it started off as a drainage project on the Verie River. Um you have the Bartlett Dam and the Horseshoe Dam. The horseshoe dam has sedimentation in it. So it can't they can't actually get the storm water um capacity that they're uh that they need on that system. So they went to look at raising Bartlett Dam.

And when they raised Bartlett Dam they started looking out saying hey if we're going to raise it if we raise a little bit more there's actually more capacity here and can we actually store water for other agencies. So typically for Salt River project very river flows into the Salt River project. You need to be on what's called on project lands. The town is not on project lands. Those are lands that could be served by gravity flow from the salt river. We can't get that.

But by entering into the Bartlett Dam, we can actually get access to that system now. Um um but it's not cheap water. We requested a thousand acre feet of storage. Um that would cost us at today's the estimate that they g us now is 11.5 million to get that 1,000 acre feet, but we're not going to get that reliably every year. What they said is that's that's the maximum storage, but annually you can assume 286 acre feet.

So, it gets to be very expensive water for us, but it helps diversify our supplies, which meets one of the the criteria we're looking for. It can't be used for growth. So, it can't be tied to a new development agreement or a new subdivision, but it helps back up our water supplies. It's very expensive. Um the the future ongoing cost of that water, the operational cost, and then for us, how do we get access to that?

Well, we've had conversations with the city of Phoenix because they do have Salt River project treatment plants. So while we have an ig with them to treat and deliver our cap water, they said they would entertain if we were to continue with Bartlett Dam to actually modify that to take our SRP water, then we'll have another cost. So we have some mechanisms in place, but we don't know and they haven't given me what that cost would be. Um uh we are part of the project.

It's going through what's called an environmental impact statement. Um that's going to be completed sometime we think next uh uh next um calendar year. Um and they're going to be presenting that to the federal government. The way the project is structured right now is that they're they're trying to ask Congress to fund it. Federal government says they'll help at this point, Bureau of Reclamation asked for half the water that the project provide.

They'll help secure half the funding, but we have to come up with the other half the funding. And the way they want to do it is actually have the participants have the funding available for course of construction. So that sort of ties us together. So by the end of next year, we're going to have to make that decision. Do we stay in or out of this project? So uh we did look at Harkah Valley earlier this year.

Um, Harkahala um, uh, Valley is a is an area west of the Phoenix metro area that was set aside as a groundwater management uh, an import basin. Effectively, when the groundwater management act was put in place, uh, the the um legislation was put in place and there was identified basins to say, hey, you know, the Phoenix metro areas where you have a concentration of users, there's not going to be enough water uh, to support it.

Therefore, we're going to set aside areas that you can harvest ground water and bring it in. Um, that's that's the gist of Harkah Valley. So, we looked at one project out there. Um, it was going to be for 500 acre feet of water per year ongoing. Um, and just the the paper water rights to that water was 11.25 million.

Uh what we didn't know is the we had given a have given a preview of the capital cost what they were going to take to build the infrastructure uh to get that to the cap canal because that's what we're going to use is basically it's going to augment if the cap didn't have Colorado River rights to supply to us for our subcontracts. We were going to use the CAP canal to put water into it to augment that effectively bringing us back up to our full uh subcontract values.

So we didn't know the we had an idea of the capital cost. They gave us some briefings, but they still didn't have everything under contract. So, that wasn't firmly set. And they didn't they couldn't provide an an ongoing cost for the operational cost to get that water into the ground. They were mining groundwater, so would it need treatment? Actually, some of it they knew they needed some treatment uh for arsenic and I think there was one constituent.

So, as they mine more groundwater, will that change have to more cost? They couldn't tell us that. And they also couldn't tell