Title
Intergovernmental Agreement with City of Tucson for Storage, Recovery and Exchange of Colorado River Water - Amendment 2 (Ordinance S-46987)
Description
Request to authorize the City Manager, or his designee, to amend Intergovernmental Agreement (IGA) 146866 between the City of Phoenix (Phoenix) and the City of Tucson (Tucson) for storage, recovery, and exchange of Colorado River water to: allow Phoenix to annually store a volume of Colorado River Water up to the equivalent maximum volume authorized by the Arizona Department of Water Resources (ADWR) in the Water Storage Permit issued to the City of Phoenix; and authorize the Phoenix Director of Water Services to mutually arrange optional long-term credit transfers and purchases of long-term storage credits with the Director of Tucson Water at cost. Further request to authorize the City Controller to disburse all funds related to this item. There is no cost associated with the amendment of the IGA.
Report
Summary
On Feb. 15, 2017, City Council authorized the City Manager to enter into an IGA with the City of Tucson, and on Jan. 10, 2018, City Council amended that authorization to clarify a term in the IGA related to Phoenix's priority to Tucson's storage capacity. The current IGA authorizes Phoenix to store and recover up to 37,000 acre-feet (AF) annually of its Colorado River Water in Tucson's Southern Avra Valley Storage and Recovery Project (SAVSARP).
This amendment would authorize Phoenix to store and recover up to the maximum amount authorized by ADWR in the Water Storage Permit issued to Phoenix. The current Water Storage Permit issued by ADWR authorizes storage volume up to 50,000 AF annually. In addition, this amendment to the IGA would allow the Phoenix Director of Water Services and Director of Tucson Water to mutually agree on transfers and purchases of long-term storage credits obtained from each City's respective Colorado River allocation during the term of the Agreement. The price for the credits will be based on the actual annual storage costs and costs of Colorado River water during the year the credit purchase agreement is adopted. Any proposed purchase agreement that results in a purchase price in excess of those actual costs would require approval of each party’s respective Mayor and Council. The purpose of this amendment is to allow the cities greater flexibility in short-term water management decisions, consistent with the overall purpose of the IGA to store, recover and exchange Colorado River Water.
To date, Phoenix has stored over 100,000 acre-feet at Tucson’s SAVSARP, a volume that would serve most of the residents in the northern portion of Phoenix for a year. As part of the existing IGA, Phoenix pays to Tucson a Water Storage Fee that covers Tucson’s operation, maintenance, replacement, and administrative costs, as well as a fee to facilitate expansion of Tucson’s storage facility to accommodate Phoenix’s stored water. The Water Storage Fee is not impacted by this amendment, nor is the term of the IGA, which continues through Dec. 31, 2027.
Financial Impact
There is no cost associated with the amendment of the IGA. The annual cost to store water under the IGA varies based on the water order, but per the original 2017 IGA, the cost to store each AF of water will range from $69.80/AF in 2021 to $73.66/AF in 2027. The volume of water stored will vary from year to year. Funding is available in the Water Services Department's Capital Improvement Program budget.
Concurrence/Previous Council Action
The City Council approved:
- IGA 146866 with the City of Tucson (Ordinance S-43264) on Feb. 15, 2017; and
- IGA 146866 with the City of Tucson Amendment 1 (Ordinance S-44180) on Jan. 10, 2018.
Location
Out of City
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services Department.