Title
ADD-ON - Enter into a System Conservation Implementation Agreement with the U.S. Bureau of Reclamation (Ordinance S-51563) - Citywide
Description
Request to authorize the City Manager, or his designee, to enter into a System Conservation Implementation Agreement for the disbursement of federal funding from the U.S. Bureau of Reclamation’s Lower Colorado River Basin Conservation and Efficiency Program. Further request to authorize the City Treasurer to accept, and the City Controller to disburse, all funds related to this item. Through the System Conservation Implementation Agreement, the City will commit to contributing water to Colorado River system conservation. In exchange for these conservation actions, the City will receive up to $300,000,000. These funds will be used to support construction of the North Gateway Advanced Water Purification Facility.
Report
Summary
The Colorado River supplies water to over 40 million people. However, recent decades have seen the lowest Colorado River flows in more than 1,400 years, resulting in major threats to water systems throughout the west. As a result, the Bureau of Reclamation (BOR) has declared a water shortage on the Colorado River in 2022, 2023, 2024, and 2025.
The City of Phoenix has been a leader in supporting Colorado River resiliency. This has included contributing to “system conservation,” a process by which water users are compensated in exchange for voluntarily leaving some of their Colorado River allocation in Lake Mead for the purposes of stabilizing the system for all users. The City has previously committed its waters directly to these programs, most notably through a commitment of up to 50,000 acre-feet (af) per year to phase one of the BOR’s Lower Colorado River Basin Conservation and Efficiency Program (LCRBCEP) for calendar years 2023, 2024, and 2025.
In a continued effort to stabilize Lake Mead, BOR launched the second phase of the LCRBCEP in the summer of 2023. This phase has a dual mission: 1) to directly conserve water in Lake Mead through voluntary, compensated conservation, and 2) to use funds from this compensated conservation to implement projects that increase resiliency to future Colorado River Shortage.
To support these goals, the City has proposed extending its system conservation commitment for additional water. In exchange for these conservation actions, the City will receive up to $300,000,000. These funds will be used to construct an advanced water purification facility at the future North Gateway Water Reclamation Facility. Phase One of this facility will be capable of producing more than 7,500 af per year of potable water in perpetuity, providing a drought resilient water supply to a critical growth area. To formalize this agreement, the City and BOR must enter into a System Conservation Implementation Agreement.
Financial Impact
The estimated total cost for the North Gateway Advanced Water Purification Facility is $570,000,000. The federal payment for system conservation is up to $300,000,000. The City’s cost would be approximately $270,000,000.
Concurrence/Previous Council Action
The City entered into previous system conservation agreements with BOR for calendar years 2022, 2023, 2024, and 2025 (Ordinance S-48254 on January 5, 2022; Ordinance S-48859 on July 1, 2022; and Ordinance S-49774 on May 31, 2023).
Department
Responsible Department
This item is submitted by Deputy City Managers Ginger Spencer and Alan Stephenson and the Water Services Department.