Central Arizona Water Conservation District (“CAWCD”) has entered into three agreements over the last 12 months to purchase long-term storage credits (“LTSC”) in the Phoenix Active Management Area (“AMA”). All of CAWCD’s purchases were made for Central Arizona Groundwater Replenishment District (“CAGRD”), a department of CAWCD, to meet replenishment obligations and increase the replenishment reserve account.
In November 2016, CAWCD executed an agreement to purchase 2,112.20 AF of LTSC from Del Webb Corporation at a price of $206/AF. This agreement is contingent upon Del Webb entering into an agreement to lease additional Central Arizona Project (“CAP”) water from a tribal entity.
Under the second agreement, which was approved in December 2016, CAWCD will purchase LTSC from the Town of Florence. The initial agreement begins in 2018 and has a five-year term with three consecutive five-year renewal options. Each year, Florence will sell to CAWCD all LTSC created by storing its CAP water minus losses—which is expected to be approximately 1,946 AF/year. The price is determined according to a formula based on CAP rates. Using the provisional rates for 2018, the price for the first year is anticipated to be $247.87/AF.
CAWCD approved the third agreement in January 2017 to purchase 50,000 AF of LTSC from Active Resource Management, LLC (“ARM”) at a price $250/AF.
ARM, a company whose primary asset was LTSC in the Roosevelt Water Conservation District in the Phoenix AMA, was acquired by Vidler Water in 2010 (see WS December 2010). In 2014, Vidler entered an agreement to sell 2,450 AF of ARM’s LTSC over seven years to a golf course in Queen Creek. The price was $250/AF, escalated by 7% annually. Vidler is now actively marketing additional LTSCs.
Arizona Water Banking Authority (“AWBA”) approved a similar agreement with ARM for 50,000 AF at a price of $250/AF in December 2016. AWBA was initially created to store Arizona’s excess Colorado River water. Amendments to its enabling legislation allow it to store other supplies and to purchase storage credits after available excess CAP has been scheduled for storage. According to AWBA’s 2017 Annual Operating Plan, excess CAP will be only 17,630 AF—the lowest point ever—so the Authority is seeking to develop 80,770 AF of LTSC and 7,000 AF of additional credits under its agreement with the Gila River Indian Community.
Written by Marta L. Weismann