[0:08] Good afternoon. I'd like to call the May meeting of the Central Arizona Groundwater replenishment district and underground storage committee to order, and I would like to ask Ms. Megan to call the roll please.

[0:23] Karen Cesar here, Lisa Atkins, it's not here, Rudy Fisher, Pat Jacobs, it's not yet with us,

[0:32] Steve Miller, Robert C. A. Go. Here, we have a core and madam chair.

[0:36] Great, thank you very much. I'd like to remind all speakers to identify themselves for

[0:41] the record if you do come up to the podium, and our first item on our agenda is the consideration

[0:46] of action to approve the minutes of our April 17th, 2025, the CHRD and Underground Storage Committee

[0:52] and the Terrible Intertain Emotion from somebody. Madam Chair, I'd like to make a motion.

[1:02] To entertain a motion to approve the minutes of the April 17th. Second. Thank you. Motion

[1:07] in second. Any comments or questions? If not, I'll in favor, please say aye. Aye.

[1:14] All right. Let the record reflect. All members present, voted in favor of the

[1:19] Next item on our agenda, just for information, not scheduled for action, is a report on the 2025 proposed legislation with potential impacts to CAGRD and underground storage, and for that we have our director of legislative affairs, Mr. Jeff Gray and welcome.

[1:38] Good afternoon, Madam Chair, warm welcome to the record Jeff Gray,

[1:42] I'm going to say the fair manager, so I will jump right and

[1:50] so first off good news.

[1:53] I think I've talked with a number of you about this already, but our bill,

[1:58] House Bill 2691, which amends the annual membership news calculation for

[2:01] number lands was signed by the governor on May 7th, so that is now official.

[2:07] I will say that I shouldn't say official in the sense of the actual law itself yet while

[2:11] same with the governor. All legislation, unless it's an emergency clause, is not effective

[2:16] until 90 days after the date of the legislature signing dies. So you have to add those

[2:22] days basically once the legislature wraps up and then it officially becomes law but as of right

[2:27] now it has been signed with the governor so that is positive news and we will have the exact

[2:32] effective date once the legislature signing dies for the year which at this point is somewhat

[2:38] the air. It's whenever they agree on a budget and wrap up for the air, which, unfortunately,

[2:42] right now, my crystal ball is kind of shady right now, so it's not a lot of idea when that's

[2:51] going to be wrapped up yet, unfortunately, so I wish I could predict a little better for you right

[2:54] now about that, but again, good news that has been officially signed. Great, and I just want to

[2:59] congratulate you and Jessica Olin-Nulin and the CAGRD staff on getting that approved and as much

[3:08] that made eminent sense and was necessary passing anything through the legislature and getting

[3:13] it accomplished is a huge, huge accomplishment.

[3:17] So congratulations, I'm speaking on behalf of the committee to say good job.

[3:22] Thank you, Madam Chair, and I do want to say thank you to all of the staff too that have

[3:25] helped out on this, both Ms. Cranionos, Mr. Seusuals staff and a number of other, our finance

[3:30] staff as well, on getting that bill ready to go and draft it. It was a lot of work,

[3:36] a lot of questions that we were coming back, and also Jessica really ran point with our team

[3:41] on that this year too, and she ran that bill through the process, testified for us for

[3:45] CAP.

[3:46] So that was really great to see that bill get through the process the way it did.

[3:49] So again, thank you for your comments, Madam Chair.

[3:53] So moving on, this will be the last bill.

[3:55] I'll provide a direct update on the ballots of these bills here in a moment.

[3:58] Just a status update, nothing new on the rest of these.

[4:01] But the substance of what I'll talk about here for the next couple of minutes is going to be

[4:05] back to urban legislation.

[4:08] And we do have some movement on that not in the form of bills within committee the whole,

[4:13] but there have been stakeholder meetings as of this week, updates on where that stands.

[4:21] So I'm going to provide you an update as well as some input that we provided the stakeholders

[4:25] in this process.

[4:28] So as you recall, there have been multiple iterations that we've looked at that we've analyzed

[4:33] to this past five plus months.

[4:36] We had the original rulemaking, the informal rulemaking, that DWR introduced, that was strictly

[4:43] at an acre foot per acre, provided just two member service areas, and so was limited in

[4:49] nature and scope as to the impact of the parties.

[4:54] Ultimately, the legislature introduced a bill, that ended up being a tiered kind of approach.

[4:58] So it had varying acre foot per acre, and there was percentage replenishment obligation within the bill.

[5:05] So it was, if you took a higher acre foot, you got a lower percentage offset and kind of went down.

[5:12] So, but again, the key there was that the percent that the GRD had to replenish for those bills was not 100% of the volume that was being pumped.

[5:21] And in those cases, there was, again, without directly calling it out, it seemed to be

[5:26] the looted to some kind of a groundwater allowance in there.

[5:29] So that bill, both made about it, made it out of committee.

[5:32] And that kind of kick started what has been the past, almost two or three months, as you've

[5:37] heard my reports, stakeholder meetings that the Senator has convened to continue to talk

[5:42] about this bill.

[5:44] And most recently, as of this past week, that the executive, so it's the same parties,

[5:48] legislature convened them now the executive convened a group.

[5:53] What we saw about two and a half weeks or so give or take was an amended proposal that

[5:58] came out of the Senate to put on the table and for folks to consider.

[6:03] What that did was have a single rate rather than this tiered kind of structure.

[6:08] It was two acre feet per acre, but it was a six year window.

[6:11] So it was a six year, it wasn't really called a pilot program, but it would require to be

[6:16] looked at within six years. It did apply to all member lands, as well as designations, eight

[6:22] hours providers, and so it was really kind of opened up. So we've mentioned these dials,

[6:26] these policy dials. We would really say all of these dials were somewhat turned up, but it was

[6:31] in a compressed timeframe. So the goal was to only have it done within six years, and then it

[6:35] would be re-looked at the legislature could decide to re-up it or not after that after that period.

[6:41] There was also some language in there about the plan of operation, as it relates to

[6:47] Aged Urban as well.

[6:48] So the goal there was that the plan of operation would not be impacted by any new Aged Urban

[6:53] Program in it, although it was a little interesting how the language was ultimately drafted,

[6:58] but that appeared to be the intent.

[7:00] But I think the big takeaway there was that the dials essentially were turned up to a large

[7:04] degree, although the time frame and the effect of the data of the legislation was meant to

[7:09] be compressed in nature.

[7:11] So I did leave some questions about would there be kind of a big run folks wanting to

[7:16] enroll into this program possibly get in under the deadline, what would that mean?

[7:20] So it was really hard I think to analyze but in large part it could have had still a pretty

[7:24] significant impact. But that proposal was out for about two or so weeks and there was an alternative

[7:30] proposal this past week that was put on the table. Now what is being discussed is an acre foot a

[7:42] So, those are the two numbers, so it's trying to turn the dials back to some degree about the impact.

[7:48] And also, make it consistent with the numbers that the parties have heard come out of the AMA's that they feel that could work, potentially.

[7:56] A couple of other highlights to this, too, is that what was rolled out and discussed would still be 100% consistent with the applicable management goal.

[8:06] So, again, one acre-foot breaker, one and a half feet for a Phoenix AMA, 100% consistent with

[8:11] the management goal, which means for the GRD, we are replenishing 100%, so that's an important

[8:17] feature.

[8:18] Member lands would also still be able to participate under this, but under a limited five-year

[8:23] window during which the credits may be applied to certificates of a short water supply after

[8:27] that they could not.

[8:28] So they're trying to limit the exposure of the member lands, even though they would be permitted

[8:33] under this idea.

[8:35] And there would be a 10 year Ag to Urban Program review as well.

[8:39] So again, I mentioned that the Senate proposal kind of turned them up, but again, had a shorter window.

[8:44] This one is starting to turn them back down, has a longer runway, but a shorter period for the member lands.

[8:50] So that's kind of where folks are at.

[8:54] A couple of things that we've recommended in this process that I do want to brief the committee on briefly as well.

[9:02] So now that we're starting to see a proposal somewhat solidify, again, I've walked you through

[9:07] kind of the history.

[9:08] The rulemaking, the initial Senate Bill, the Senate proposal, and then now the Executive

[9:13] Counter-Proposal to this, we're starting to see this solidify to a large degree, which helps

[9:19] us kind of understand what this, what we might need to help from a CAPGRD standpoint be able

[9:26] to administer a program like this.

[9:28] So a couple of things that we've recommended in one of them is one that we've talked through this committee you've heard me mention this in part of our original motion or position of the bill was continuing to obtain legislative support on the acquisition of potentially available supplies list of the plan of operation including clear path or on river acquisitions from willing sellers that's part of the plan of operation list of potential available supplies so that is one of them the other for that we've talked about include reconsideration of the replenishment reserve target

[9:58] So that's an item we believe that could be helpful in this discussion.

[10:04] Additionally, working with the state for G-R-D,

[10:06] that have access to state land, M&I, C-A-P, water.

[10:11] Thirdly, I'm going to assume you,

[10:13] fourthly, applying D-W-R's drought exemption to the G-R-D.

[10:17] And then lastly, the expanding G-R-D's access to the ground water

[10:20] transportation base in the specifically McMullan and Butler.

[10:24] You know, we already have that ability to understand

[10:25] for Harkwala, so this would be trying to get some clarification that those basins could also be utilized.

[10:32] So these items are what we've asked to be considered during these discussions.

[10:36] So there are obviously a large legislative package that is being discussed and for us to be

[10:41] able to administer that, we've asked for a consideration of some of these items as well to assist

[10:47] with the GRD administration on the back end from a supply standpoint and simply from a

[10:57] So with that, Madam Chair, I'm happy to answer any questions, but that's kind of the current status of this.

[11:02] We're somewhat of an holding pattern again.

[11:04] All parties have received some of the input from the most recent proposal that's been put out there.

[11:11] And then have asked to kind of go back to our organizations and look at this, kind of understand the impact and provide some official feedback.

[11:17] But that's kind of where we stand as of right now and again the input that we provided throughout these negotiations and this stakeholder process.

[11:25] So I'll stop there, Madam Chair, and see if there's any questions you or committee members might have.

[11:31] Great, thank you very much. Any question, Board Member Fisher?

[11:35] Oh, and before you to go, I would do would like to announce that Board Member Jacobs has joined us virtually as of about 1239.

[11:42] So welcome, Pat. We see you.

[11:47] Mr. Gray, just quick question for you that.

[11:50] So the act urban is kind of a big deal.

[11:53] How much is the legislature coordinating their activities with the Arizona Department of Water Resources, which is holding meetings on a monthly basis?

[12:04] And the reason I asked that, I watched just a couple days ago, the January meeting, and I think earlier today I was watching the March meeting, and it seems to me that there's still getting a lot of questions from bland owners, and some other pretty basic and pretty substantial.

[12:22] I'm much of the working together or is that a different off-track.

[12:26] Thank you, Madam Chair, former Fisher.

[12:28] They're directly involved.

[12:30] So the parties that are involved include, again, some of the major development interests.

[12:35] Obviously, GRD, you have municipal providers, governor's office, DWR.

[12:42] So they're all part of these discussions.

[12:45] So DWR is there.

[12:47] So when we talk about a state proposal back, that included DWR's input and analysis.

[12:51] us into all of that. So yeah, when I see the state, that includes both the governor's office

[12:56] and DWR under that, under that term.

[13:01] Thank you.

[13:02] Board members, Diego.

[13:03] Yeah, I just want to know.

[13:04] And maybe I'm missed it.

[13:05] But when is the last date they can actually do something with, are you saying that when they go

[13:12] totally out of session, then it's done if they haven't passed it out of the full legislature?

[13:21] The deadline to pass legislation is there really isn't a date, so it's basically when the

[13:28] legislature decides to be done for the year.

[13:31] The only real deadline they have is to pass a budget, and that's June 30 at the midnight.

[13:36] And even then, technically, if they don't pass it, you have a government shutdown, which we've

[13:40] seen at federal government side, we haven't seen really that at the state level.

[13:43] At least during my career we have it, but I know there's been some instances early on before

[13:48] time with that, but there really isn't a time frame that stops the

[13:53] legislature from continuing to pass legislation. Now, once they do decide

[13:57] they're done for the year and they make the motion for signi die to be

[14:02] wrapped up. If whatever is not passed at that point is effectively dead,

[14:06] so you've kind of heard my comments during the year as Bill says, Bill's die,

[14:10] nothing's dead until signi die. That's kind of the old saying. So, which is why

[14:15] these bills continue to be alive. They're both sitting in the house in the Senate. They could

[14:19] still move to the floor and be swapped and sent to the governor. That would be the parliamentary

[14:23] process to make that work. So these are all still alive and well and could be moved to the process.

[14:29] And tell them what essentially are actually adjourned and signed for the year. These still remain alive

[14:33] and could be in consideration. And is that because they've already been approved in both committees

[14:40] house in the Senate and so they're kind of just waiting to go to the floor.

[14:43] Madam chair that correct now had there not been two bills

[14:48] They would be effectively dead without some special permission

[14:51] So because there are two identical bills on either side. That's how it works. So one side would pass a bill sent it to the other body

[14:57] They would swap that bill on the floor and then that's what

[15:00] They would vote on. So that's the parliamentary process to make a bill. To pass legislation, what's the deadlines of it for committees? That's one way around that deadline. But again, both bills have had official hearings in both the House and the Senate since their deduction, but they were under separate bills. So that's yours.

[15:19] Great. Thank you. Any other questions? If not, do you have still some more to go over, right?

[15:24] Madam Chair, again, this was just an update on the status of these of these bills. These have not really moved since the last time we've updated the committee.

[15:31] So, this was just rather than having seven different slides after this, we compress these all into a single slide.

[15:37] So, you can see the updated status of each of these again.

[15:40] They haven't really moved much since we've, since we've updated.

[15:44] The only one I would point out is the last Senate Bill 1393, the groundwater replenishment,

[15:50] Penal AMA Bill was passed out of the house and was transmitted back to the Senate for a final vote.

[15:56] So that is one that could be sent up to the governor here, potentially fairly, fairly soon, but other than that, the balance of these bills have largely not moved.

[16:08] Great, thank you very much. Any final questions for Mr. Gray?

[16:12] If not, thank you, and maybe we'll see what happens at our next meeting.

[16:17] I'm sure I think we will have hopefully a more substantive update on the status and potential

[16:22] movement on the agger of an issue, I think, by then given where things are going, it seems

[16:28] to be certainly speeding up the conversations are, so we probably will have a more substantive

[16:32] update certainly by the time we update you next.

[16:35] I think we'll expect that. Great. Thank you so much. The next item on our agenda is,

[16:40] there is no report, so it's a placeholder we've kept to have a report on ADWR's informal rule-making

[16:47] process on the act of urban, but Mr. Gray just kind of rolled everything up into his report.

[16:53] So we will not have a report from Laura on that item, but we will have a report from Laura

[16:59] Gagnano, CAGRD manager on item 4, which is the report on modifications to the CAGRD 2025 plan

[17:08] of operations. So welcome, Ms. Grignano.

[17:13] Good afternoon, Madam Chair and can we any members for the record, Laura Grignano, CAGRD manager?

[17:19] And I wanted to give the committee an update today on the plan of operation review process.

[17:27] You'll remember back in March, I gave a report to the committee on the status of our plan of operation.

[17:36] I walked through the steps in statute of the plan approval.

[17:42] And ADWR, just as a reminder, has 60 days after we submitted the plan to determine whether we had submitted sufficient information for the director to make his determination on consistency with management goals for the 3AA Mays.

[18:02] We did receive a letter on February 28th of requesting additional information and modification of the plan.

[18:14] I reviewed this with the committee in March and I'll just summarize that again for you.

[18:18] Today, I'm bringing back the modifications that staff have made,

[18:23] pursuant to or based on these requests from the department, and we will be submitting the modified plan and additional information to the department,

[18:34] most likely within the next few weeks.

[18:38] So again, ADWR requested in the letter that we remove all NIA priority CAP water from our analysis as a source of supply to meet our obligations as well as to calculate the replenishment reserve target.

[18:53] And the department had made that request based on the future uncertainty and availability of that supply.

[19:06] Also, the department asked the GRD to either adjust the plans so that it does not rely on the replenishment reserve in the 20 year period or justified doing so.

[19:17] And I believe that I reported to our committee that we had not used or shown the use of replenishment reserve in the plan,

[19:26] but we did realize that there may have been some confusion on the use of what we call CAWCD dedicated credits.

[19:34] And so we made sure that we clarified that in the modified plan, and I'll walk through and show you those clarifications.

[19:43] We also were asked, again, to provide underlying data used to create certain charts and tables in chapter 3.

[19:51] That is the chapter that looks at the projected obligation estimates.

[19:58] And then finally, the department put CGRD.

[20:02] the unnoticed that it may require the plan to be revised at a later date to include any

[20:08] ag to urban impacts on GRD if a program was finalized and you just heard from Mr. Gray, the work

[20:17] that's going into possibly legislation that would enable ag to urban to begin. And so we are still

[20:28] really on on notice even once we submit this modified plan next week or the week after that

[20:34] we could have to modify it one more time.

[20:38] So I will keep the committee up to date on that last request and again they gave us 90 days

[20:45] for the additional information and that takes us out to May 28th so two weeks essentially

[20:52] from now that is due.

[20:58] So just in summary, here are the modifications made to the plan.

[21:03] I will walk through most of these in detail in the next few slides.

[21:07] But we did make a number of adjustments to tables in chapters 4 and 5.

[21:13] All those an associated text all having to do with taking out the NIA CAP priority from our analysis.

[21:22] We also revised Figure 4.2, removing the use of dedicated credits to meet the projected

[21:30] replenishment obligations in the Phoenix AMA.

[21:33] I think this was the chart that may have caused some of the confusion and appearance that we

[21:40] were using credits that should be used or should be used for the replenishment reserve.

[21:49] Table 5 has also been revised to show projected use of these dedicated credits again just to clarify

[21:55] what we're using projecting to use those for in the future.

[21:59] And then we also included some completed map legend and a few figures in chapter 3.

[22:07] And then we adjusted all of the long-term storage credit balances as of year and 2023.

[22:12] We had in some sections we tried to estimate the long-term storage credits as of the end of 2024,

[22:21] but because the official counting has not yet been supplied from the department, we decided to keep everything at the 2023

[22:29] balances, so that might be easier for the department to check those balances based on their records.

[22:35] So moving into some of these changes, I'll start with removing the NIA priority water from our analysis as a source of supply.

[22:46] I'm going to show you a series of tables and figures. I'll show you what was submitted, so this is table 4.1 that was submitted.

[22:55] This is the table that shows our current CIGRD annual water supply portfolio, and you'll note that this first lines show an NIA priority water.

[23:10] So CAP and IA water, the White Mountain Apache lease, are the reallocated CAP and IA water as well as the cap and A that we lease from GRICS.

[23:20] we modified that table. This is the new revised table that we will be submitting in the modified plan.

[23:30] You can see that we still kept those supplies in this table because we do have the legal rights to all of these supplies,

[23:39] but we did rate them out. We also show a total water supply annualized water supply at the bottom.

[23:48] that does not include those first three lines of NIA water. So you can see there's a

[23:54] great out a sum of just over 77,000 acre feet. That's great out because that includes

[24:00] NIA, the 38,000 does not include any NIA supplies. We also thought for clarity purposes

[24:11] is that we would split the long-term storage credit balance number.

[24:17] We had that annualized at 14,000 acre feed, that's the 1.4 million acre feed of long-term

[24:25] storage credits annualized over 100 years.

[24:28] We thought it would be helpful to show the three accounts that those credits are in because

[24:35] they can be used for, and should be used for different purposes, especially the replenishment

[24:41] reserve credits. And again, this is to make sure there isn't any confusion in the plan

[24:48] when we're referring to certain credit balances that it's just clear which balances we're

[24:56] talking about. And we do then further divide those accounts by AMA.

[25:04] The next table, table 4.3,

[25:07] potentially available water supplies. Again, this is the submitted table. And I'd like to call

[25:12] attention to the line that is the CAP project water.

[25:20] That here is approximately

[25:23] potentially available high level you want to see it at just over 400,000

[25:29] acre feet. I'm pointing to that number so that when I go to this revised

[25:34] table. You can see that all of the NIA supplies were removed from the potentially available

[25:43] water supplies in that category. That had the effect of essentially dropping those numbers

[25:49] in the high category down by about 200k and in the potentially low scenario by about 100,000.

[25:58] And you can see then it has a corresponding decrease in the total column.

[26:06] Moving on to table

[26:07] 5.2, the replenishment reserved target by AMA. Again, this is what was submitted, and I'd

[26:13] like to call your attention down to the last line, which is the target. And for the Phoenix AMA,

[26:20] you can see that it's just over 622,000 acre feet with a total of the 3 AMA's at 850,000

[26:32] or feet.

[26:35] The revised table, the total replenishment reserve target now for all three

[26:41] amays is just under 1 million acre feet with the Phoenix AMA increasing by about 150,000

[26:50] acre feet. And this is a result of removing the assumption that our NIA supplies would

[26:57] be available approximately 30% of the time, so maybe 30 years out of the 100 year period through

[27:06] that calculation, we were asked to remove that totally.

[27:09] So you can see that that did have a significant impact on raising the replenishment reserve

[27:15] target.

[27:17] And I will add that if we do need to modify this plan again to include Ag to Urban Impacts, you'll

[27:26] see this number increase even more, because it is based on our total obligation over 100 years,

[27:33] then looks at our supplies that we have available to meet that obligation and then multiplies

[27:38] up by 20.

[27:39] So this will likely surpass the million mark for total replenishment reserve target.

[27:47] So going back to the letter, the second request was adjust the plan, so we're not relying

[27:52] on the replenishment reserve.

[27:53] Again, I just want to note that we did not show no replenishment reserve credits were used in the initial submission of the plan.

[28:02] But we did identify some areas where we could see there could be some confusion thinking that we might have been using dedicated credits both for obligation and replenishment reserve.

[28:15] So I'll show you how we tried to mitigate any confusion.

[28:19] So, in figure 4.2, this is our CHERD water supply utilization.

[28:26] This is looking at just the Phoenix AMA, so the orange line is our expected replenishment

[28:32] obligation in the Phoenix AMA through the projected 20-year period.

[28:38] And then the supplies that we would use to meet those obligations.

[28:44] And in this initial submission, we did eliminate all of our NIA supplies.

[28:50] And so the top purple colored line here is illustrating the use potential use of CAWC dedicated credits.

[29:04] And these are credits that through policy.

[29:06] the board has dedicated to CEDGRD for either to meet its obligation or to build and maintain

[29:16] the replenishment reserve.

[29:18] So I think because we can use those to build and maintain the replenishment reserve,

[29:22] there was some confusion when we get to that next chapter on replenishment reserve that

[29:27] we were using these in both ways.

[29:30] And so we revised this chart and we have the number of long-term storage credits and, again, I showed you, there's three different accounts.

[29:42] We have enough long-term storage credits in the account in the long-term storage account to show we still meet this obligation in the 20-year period.

[29:51] And we've left those dedicated credits that purple bar off of this chart, and you'll see in the replenishment reserve table in a few slides that we should.

[30:00] Those being used to build and maintain the reserve. Think that a department just wanted to make sure we were able to have the credits, enough credits in these accounts to both meet obligation and also to build the reserve.

[30:17] Again, now this is the table that shows the summary of projected replenishment reserve credits available to the department.

[30:23] And we made some changes to just the titles here of the actual columns.

[30:30] Again, and here is where we cite that the CECWCD board amended its policy.

[30:37] Inside all policy regarding the dedication of CWCDs, existing long-term storage credits to GRD.

[30:44] Dedicating all unencumbered credits currently held by CWCD for the exclusive use by CAG-RD to meet its legal requirements towards replenishment obligation and or establish and or maintain the reserve.

[31:00] So this is now the revised chart.

[31:03] There are a lot more words in the titles of the columns but again it's just to make sure that there isn't any confusion.

[31:10] And we essentially show the number of C-A-W-C-D dedicated credits, but we also say, okay,

[31:19] we have in the Phoenix AMA, we have approximately 188,000 acre feet of credits.

[31:26] For this planning purpose, we are showing that we would be using those credits to build the replenishment reserve.

[31:34] You can see this is the current balance, and this is what the projected balance could be just based on the availability of credits already in CWCD's possession.

[31:46] For the Penale AMA, we do use some of these CWCD credits to meet obligation.

[31:52] And so we just projected out the 20-year obligation, that's the 55,000-acre feed of credits.

[31:58] So we're saying we would use that amount to meet obligation and we'd still have over 255,

[32:07] how's an acre feed of dedicated credits in Penalty?

[32:10] I mean, it's reserved.

[32:15] So next steps, we plan to submit the revised or modified plan to the department,

[32:24] along with the additional information that they requested, and, like I said, we will do so by no later than May 29th or by May 28th.

[32:36] And we will continue to monitor act to urban legislation and its potential impacts on our obligations and whether or not we will need to modify the plan one more time.

[32:48] but they always see three times the charm.

[32:51] So, but with that, I'm happy to take any questions.

[32:54] Great, Ms. Greenal.

[32:55] Thank you very much.

[32:56] Questions from the committee, questions from committee member online?

[33:01] No, but thank you for walking us through the revisions

[33:04] and the steps and just know sometimes when you get through these processes

[33:09] of responding to comments and things.

[33:12] Ultimately, the documents better, the documents clearer,

[33:15] the documents stronger and so you know I think that you guys have done a great job of taking

[33:21] the comments figuring out what you know what they mean and translating that into a revised

[33:26] document. So we'll look forward to seeing the next steps. I will add that the revised plan will

[33:35] be posted on our website when we submit it to the department. Great. Before you leave, I now see

[33:42] at Board Member Jacob has his hand up, so I'll recognize him.

[33:46] Thank you very much.

[33:49] Last, I think it's the last one, age 16, able 5.5.

[34:01] So I can explain to people last week, what is 0, 0 mean for the two-time name,

[34:06] a garden, a dedicated credits, and what does it mean in terms of the long-term repunitment?

[34:16] Yes.

[34:16] Thank you, Madam Chair, Director Jacobs.

[34:19] So yes, the zero zero just means that there are no longer any CWCD dedicated credits left in the balance for the Tucson AMA.

[34:32] Those have been used.

[34:34] However, we do have currently we have the 42,000 acre feet in the replenishment reserve already.

[34:42] I, for context, the average annual replenishment in Tucson is approximately 3,900

[34:52] acre feet.

[34:53] So that's well over 10 years of replenishment obligation already in the replenishment

[34:58] reserve.

[34:59] And we have a footnote on the last column in the Tucson AMA under the 40, 2000.

[35:09] And that is also that footnote indicates that we have multi-year long-term storage credit deals

[35:18] with Tucson water and metro that we are continuing to acquire supplies or long-term storage

[35:25] credits with.

[35:26] And those are also credits that, you know, can be used in the Tucson AMA to build that reserve.

[35:31] So, although there's a zero balance in the CAWC, CAWCD dedicated balances, we do have other

[35:40] sources of credits to continue to build and maintain the Tucson replenishment reserve account.

[35:51] I guess, I guess, but there was a 20 year obligation, and there's 100 year obligation.

[35:58] That's not correct.

[36:00] 20 year review, I guess.

[36:02] Correct. We are required to show that we have the supplies planned, planned supplies to meet the 20 year replenishment obligation for our current members and the potentially available to meet new members in that 20 year and then potentially available for current and new out 100 years.

[36:23] The replenishment reserve target does use the 100 year obligation for the calculation.

[36:30] And these tables for the hundred years and there's another table for the twenty years.

[36:35] What we're saying?

[36:38] I just don't know.

[36:42] Yes.

[36:43] This is just an example of the current replenishment reserve balances and the dedicated credits that could be added to that account.

[36:55] But this is not really looking at the 20 or the 100 year period.

[37:04] So, so this doesn't speak to those issues.

[37:09] Did some of the other points, did there other other

[37:16] charts that do?

[37:21] Madam Chair, board member, Jacob, I'm sorry.

[37:24] I'm not sure I understand your question.

[37:27] Well, if I want to know what the review says and what the hundred years says, is there another one of these charts that I just missed?

[37:38] Yes. In chapter three, there are tables with numbers for the twenty years for projected obligation for all three AMAs.

[37:53] and then also in in chapter five in the replenishment reserve chapter you could see the

[38:00] 100 year projected obligation for each AMA that is part of the calculation for the replenishment

[38:06] reserve target. So, and I'm happy to point you to those numbers.

[38:13] Yeah, it would be very helpful. I'll try to find them, but can you solve a helping yet?

[38:19] Okay. No problem. Yeah. Thank you, Board Member Jacob. I think especially just keep in mind that what

[38:27] what we've been reviewing here are the things that change specifically based on the comments from

[38:33] DWR and there's still a lot more content in that report like you just you know asked. So

[38:39] you know we know from just going through the whole process probably if you have that question it's in

[38:45] somewhere and Laura's encyclopedia, encyclopedic knowledge of that report can

[38:50] point you to it. So, great. All right, thank you. Any other questions?

[38:56] All right, then thank you very much. We're going to move on now to item five, and that is

[39:03] discussion and consideration of action to recommend that the board authorized the collection of

[39:08] GRD annual membership dues during tax year 2025-26 and adopt the CHRD rate schedule for

[39:17] 2025-26 through 2020-29-2030 and we have our finance manager Doug Dunlap to give us a report

[39:28] out on this. Welcome.

[39:31] Thank you, Madam Chair. Members of the committee, Doug Dunlap, funny it's an accounting manager.

[39:35] So

[39:38] last month, we kind of walked through the C.A.Jardy bucket chart, which is basically the revenue stream of money's coming in for the C.A.Jardy, and then how that funds are used.

[39:50] So this focus is really on that left side of the charts, all the rates on the fees, the rates and the membership dues.

[40:02] I wanted to go through just a few of the assumptions for the rates.

[40:09] So rates are based on the CO2BCD rates at 1825,000 acre feet.

[40:14] This two specific rates for CAJ that have that direct relationship with CO2BCD.

[40:20] So water replenishment.

[40:23] So the funds that are collected to meet the obligations.

[40:28] And then the replenishment reserve.

[40:29] both of those are water related, so they're related to the CWCD rates.

[40:35] We have for the advisory years included in, if CWCD goes to different volumes,

[40:41] the 600,000 to up to a million acre feet.

[40:44] We should kind of what those two rates would do at those various water volumes.

[40:51] Another item, the rates that I'll be showing,

[40:55] I do a some collection of the annual membership dues at 100% of the allowable amount by statute.

[41:03] The next item you'll see, at least on the screen, I lined out.

[41:11] Before the AMD legislation was signed, we had posted TPD on all of those advisory years.

[41:20] it does not apply to the 2526. It's all the advisory years. Once that legislation was signed,

[41:27] we kind of made a quick update so that we always try and provide that information out there for

[41:33] planning purposes for all of our customers. And so we updated those. Again, that's all the advisory

[41:39] rates. They're posted on the website now as well as in this presentation. So that line did come out.

[41:46] We were able to post them, so we're glad to see that legislation signed.

[41:53] We will continue to meet the replenishment requirements that you're following the

[41:58] obligation is created.

[42:00] That kind of how fast you meet that obligation impacts what the water replenishment rate

[42:08] would be.

[42:09] If you delay it, like CJD has three years to meet that obligation, but further you go

[42:18] out, each year water rates are going up, so it costs more.

[42:22] So CJD has been taken the stance to do it in the next year to basically be the most

[42:28] financially efficient and nothing.

[42:33] And then lastly we will continue progressing toward replenishment reserve target at one third of the replenishment obligation when working to move toward that target.

[42:47] We look at what the obligation is and then add about a third of that amount to the replenishment reserve.

[42:56] That's how we show the continuing to make that progress.

[43:04] excuse me. It's kind of getting into, so how did the rates come out compared to the

[43:09] visor rates? So for the administrative rate, consistent as what was on the advisory,

[43:16] so no change on any of those. Water replenishment rates, the current year, 2526 does

[43:23] not change because by replenishment in that next year, we have actually already replenished

[43:30] What was I will have finished by this year, so there's no impact on the current rates the advisory rates will go up based on the C2B CD rates that are changing

[43:43] Basically the same rationale for their placement reserve

[43:48] We'll have done that out of this year's dollars so the 2526 does not change it will only the advisory rates went up

[43:56] And that's because of the volume changes if it starts on water rates

[44:00] rate, not changed from what either the provisional or the advisory, so not seen any changes in that.

[44:10] On the 2526 annual membership dues, you will see that those rates went up a little bit from what the advisory were.

[44:19] If you remember that methodology is you figure out what your collections on everything else,

[44:23] basically from your fees, enrollment and activation fees,

[44:28] and then what are you collecting from your rates?

[44:32] Basically, what are your obligations?

[44:33] Sometimes the infrastructure and water rights rate.

[44:37] Figure out what that total collection is,

[44:39] and then the total AMD collection

[44:42] can't be more than 25% of that total after collection.

[44:48] So, those mainly the obligations have gone up a bit

[44:51] and so that total bucket's gone up a little bit, so that's kind of the what's driving

[44:58] those increases.

[45:03] And I kind of already mentioned this one. The advisory rates, we have one head and updated that based on the new language that was recently signed.

[45:24] And a lot of numbers on this. So here's the CIGERD rates side. As I said, there's no changes on the 2526. The only numbers that would have changed would be these advisory years for the water replenishment.

[45:38] and the replenishment reserve the rest of the rates are consistent.

[45:47] As far as C.A.J.R.D. fees, that would be the enrollment

[45:50] and activation fees, no changes on any of those, consistent with what they were on the

[45:57] provisional, as well as no change in any of the advisory. Those are basically

[46:02] they're increasing about 5% a year. That was based on some earlier discussions and

[46:08] concurrence on those rates.

[46:12] AMD's, as I said, these are going up the 2526 are going up a

[46:19] little bit, I'll show those on the next slide, and then all of these rates out here are

[46:23] under the new legislation.

[46:30] Just zeroing a little bit on the current year, you can see what the

[46:43] roughly, you know, from $1.36 to $2.00 a lot on the, for member lands, and then the

[46:50] member service area does go up about $1.07.00.

[46:58] And if a lot of information at once, but I'd be happy to answer any questions.

[47:03] Great.

[47:03] Thank you, Mr. Dunlap.

[47:04] Any questions, part of member Fisher?

[47:07] Mr. Dunlap.

[47:10] So, the rates are based on the delivery of 825,000 acre feet of water, but I think this

[47:18] morning we were talking about during the finance water park may, you know, we actually delivered

[47:24] about 60,000 acre feet more than that.

[47:26] Does that change anything in the rates or how do you figure that in?

[47:32] So, on the CO2BCD side, those rates get reconciled.

[47:36] C.A.Jurdy for its C.A.P. contract will get that benefit of that reconciliation.

[47:45] However, the rates at C.A.Jurdy charges its customers.

[47:49] They go into effect the Monday after the board meeting.

[47:52] And then they, for member lands, get calculated, get onto the property tax, move forward,

[47:59] and the rest of the member service area, build that fall.

[48:04] So, any difference in what CGPAD versus what we estimated affects the future rates.

[48:14] So we don't reconcile the current rates that basically goes in and adjust the future.

[48:20] Great.

[48:21] Thank you.

[48:21] Any other questions?

[48:25] Or remember Miller?

[48:28] I don't have any questions.

[48:29] I'll entertain a motion.

[48:30] If you'd like?

[48:30] That'd be great.

[48:31] Let me just check with Board Member Jacobs online.

[48:34] Are you with good?

[48:37] Yeah, go ahead, please make a motion.

[48:40] I move that the CAERD and the Underground Storage Committee recommend that the Board of Directors

[48:48] authorize the collection of the CAERD annual membership dues during the tax year 2526 and

[48:57] approved the C-A-G-R-D rate schedule for

[49:01] 2,025,026 through 2,029,030.

[49:09] Thank you.

[49:09] To have a second.

[49:10] We have a motion.

[49:11] And a second.

[49:12] Any further discussion on the motion?

[49:15] Seeing none.

[49:15] All in favor.

[49:16] Please say aye.

[49:18] Aye.

[49:19] Any opposed?

[49:20] Let the motion reflect.

[49:22] All members present.

[49:23] And online voted in favor of the motion.

[49:25] Thank you very much.

[49:26] Thank you.

[49:26] And Mr. Delavs is going to stay up here for the next item, which is the discussion and consideration of action to recommend that the board adopt an underground water storage rate schedule for 2026-202030.

[49:41] Thank you, Manager. Again, Dr. Delavs finds it's an accounting manager. So one of the other items under this committee is the underground storage. So we're going to turn to that side of the house for a minute.

[49:55] They see the underground storage rates actually show up on the C-A-W-C-D sheet.

[50:05] So it's kind of a bottom section of that sheet.

[50:06] Just want to mention that there's kind of two different rate schedules.

[50:12] The rates that are being recommended here are consistent with what we've been forecasting

[50:17] not just last year, but for several years.

[50:20] The pretty consistent, the underground storage has build up a reserve, recognizing that in some years they'll be more.

[50:30] Water going into storage in some years or less.

[50:33] However, kind of the maintenance activities are fairly consistent.

[50:38] So we've build up about a $8 million reserve that's where our target has been.

[50:44] So we're at that target and so we're holding our recommended rates at $15 for each of the

[50:53] AMAs and then to mention on the capital charges for underground storage, the only entities

[51:00] that pay that would be any federal customers any if we'd have any out of the three county

[51:06] areas.

[51:07] Any of our M&I customers, the water bank, the CHRD, none of them pay that capital charge.

[51:14] So very few actually pay that.

[51:16] Just want to mention that.

[51:18] And with that, I'd be happy to answer any questions.

[51:21] Great.

[51:21] Thank you so much.

[51:22] Any questions on this item?

[51:24] If not, I will recognize Board Member Miller for a motion.

[51:29] Thank you, Madam Chair.

[51:31] I move that the GRD and Underground Storage Committee recommend that the Board of Directors adopt the

[51:38] underground water storage, O&M, and underground water storage, capital charges rate, schedule

[51:45] for 26 through 2030.

[51:48] Thank you.

[51:49] Do I have a second?

[51:51] We have a motion and Board Member Fisher has seconded.

[51:54] If there is any further discussion on the motion, hearing none, all in favor of the motion,

[51:59] please say aye.

[52:00] Aye.

[52:02] Any opposed?

[52:03] Okay, let the record reflect that all members present in person and online voted in

[52:08] for the motion. Thank you very much.

[52:10] Thank you.

[52:14] Next item on our agenda is discussion and consideration of action to recommend the board

[52:20] approve a standard form member service area agreement for water providers obtaining a designation

[52:26] through the alternative path to designation of a shared water supply, also known as A-DOS.

[52:32] For that, we will have a kind of a tag team presentation of Ms. Grignano, our manager of

[52:37] R.D. and Kate Moranzoni. And to talk to us about this, this is I just want to note

[52:45] that a couple of things, this is a big milestone movement and a step along the way for a very

[52:51] important decision that the board will ultimately be making and the standard form for member

[52:58] service area agreements is a critical component of some water providers seeking a designation

[53:03] through A-DOS, something that has been in the works for a long time and is a, you know, seen

[53:09] by, you know, in the water industries, a very positive step forward to allow these water providers

[53:16] to stay in compliance with the groundwater code in recognizing some of the challenges that are present

[53:24] and doing so in certain areas. I'm also going to mention real briefly that, you know, this board

[53:31] and has a policy, a general policy, it's called the two-step process, and this is something

[53:35] that came about as a result of our customer service task force many years ago, where both

[53:41] members of the public and the board were saying, hey, don't drop something on us and especially

[53:47] applies to the board action. Don't bring something before us, expect us to act at that same

[53:53] time without really having had time to digest it and think about it, ask questions, and here

[53:58] at least at least once before being presented with a question to act on.

[54:05] In this case, that what we're doing is today is step one before the committee.

[54:10] We are going to then do our step two at the board in June and while sometimes it's in a

[54:16] perfect world, we would do two steps before the committee and then move forward to board

[54:21] action.

[54:21] But because we have our July break, and because this is such an important item to move down the line,

[54:29] we have elected to hear it today and asking the committee to make a recommendation to the board today,

[54:37] full board approval, obviously, of this is what is going to count.

[54:41] So public service announcement, this is step one, and we will have a step two coming forward,

[54:47] And I really think that we're doing two things at the same time, honoring the intent of the

[54:51] two-step process and honoring our commitment to our stakeholders to move things along.

[54:57] And sometimes we can do both.

[55:00] And it's a big deal in this committee.

[55:02] We have blue cards on this item, so we appreciate the people and after we have the presentation

[55:08] in board discussion, I will invite the submitters of the blue cards up to make some comments

[55:14] and let you know in advance, we really appreciate that you came to the committee today to talk

[55:20] to us about this item. So with that long-winded introduction, I will recognize Ms. Grignano

[55:26] for opening comments on this. Thank you, Madam Chair, and committee members, again for the record,

[55:32] Laura Grignano's CJRD Manager. Well, today, staff is pleased to be bringing forth to the committee

[55:39] two standard form MSA agreements for water providers getting designated through the new A-DOS program and I'll

[55:47] kick off as Madam Chair mentioned. I'll kick off the discussion with just some general background for context and then I will

[55:56] hand the presentation off to Ms. Moran Zoni who will dive into details of how these agreements are set up to work and how they

[56:03] different from differ from our traditional MSA agreements.

[56:08] Because some of these concepts are new to the committee

[56:11] and to the stakeholders, you'll see us repeating concepts

[56:16] throughout the presentation.

[56:18] So we apologize ahead of time.

[56:20] We may say the same thing three times differently,

[56:23] but you'll see there's some complex concepts

[56:27] in these new MSA agreements.

[56:30] So bear with us and we hope that we can explain it clearly for you.

[56:40] So much of last year as you roll recall, I brief the committee on the development and

[56:46] the eventual adoption of the new rules commonly referred to as A-DOS or the alternative

[56:51] path to a designation of a shared water supply.

[56:54] Now this program was created to assist city's towns, private water companies, obtain their

[57:02] designation. There were hurdles that some of these cities, city of Buckeye, Queen Creek, Arizona

[57:08] Water Company, Epcore, had to overcome those hurdles to become designated. And A-DOS was

[57:15] a program that was aimed to try to help meet some of those challenges. There are currently three

[57:23] A-DOS applications in process at the Department of Water Resources. And because it's a prerequisite

[57:30] to enroll in CHERD as a member service area.

[57:35] These same three applicants also have pending MSA agreements,

[57:39] or I'm sorry, pending MSA applications with CHERD.

[57:45] So that's why we're here.

[57:47] Over the last few months, CHERD has been working

[57:50] to develop a new standard form MSA agreement

[57:54] that can be used to enroll these applicants.

[57:57] And we started with our traditional MSA agreement, and then we may changes working with our

[58:04] leading legal staff, where necessary to account for the unique aspects of AdOS.

[58:11] One primary difference that you will see in the news standard form MSA agreement is the

[58:18] of an MSA in the Phoenix AMA to elect to temporarily keep any member land parcel obligation

[58:28] and replenishment assessments tied to the parcel.

[58:32] So those are essentially, and I'll walk through some illustrations.

[58:35] Those are essentially the member lands that those providers are currently serving,

[58:40] allows for a transition period.

[58:42] This keeps the financial responsibility for the replenishment with the member land land owner for a certain time.

[58:51] This was the result of last year's Senate Bill 1181 that was passed and signed into law.

[58:58] I think we last year Mr. Gray referred to it as the Queen Creek Bill.

[59:02] This was a legislation that was initiated by Queen Creek.

[59:05] And again, I have a series of illustrations that I'll have upcoming that will help you better understand what this transition period for memory land reporting looks like.

[59:16] An additional difference between a traditional MSA agreement and the A-DOS MSA agreements includes a consideration that the A-DOS rules provide a substantial volume of groundwater allowance that's given to the water provider upfront.

[59:34] And this groundwater allowance is a credit that the water provider can use to make pumping

[59:42] consistent with management goal, very similar to what replenishment also does.

[59:47] So in order to lead the requirements, they should water supply, you can either replenish your groundwater

[59:55] that you pumped or you can offset it using groundwater allowance or extinguishment credits.

[1:00:01] So another component of A-DOS that makes this unique is its requirement that the water providers obtain alternative supplies.

[1:00:13] And these are renewable supplies or non-AMA groundwater supplies.

[1:00:20] And I think, as you might recall, when we talked about this, there's a requirement that each time that water provider acquires an additional alternative water supply,

[1:00:30] that 25% of that new supply is used to offset the current or the groundwater pumping that they're doing.

[1:00:40] So both of which will result likely result in a reduced reliance on CEDGRD, then say a traditional designation that doesn't have that requirement to go out and get renewable supplies to offset the groundwater pumping.

[1:00:55] So, both the generous groundwater allowance and the 25% offset were things that considered unique components of the program that staff considered in revising this MSA agreement.

[1:01:08] And as you're later from Ms. Moranzoni, these unique aspects of the AZA program have allowed staff to consider minimum reporting requirements that will be tailored to the water providers projected on their long-term reliance on CHRD.

[1:01:29] Okay, so before explaining how the mechanisms of the new MSA agreement work, we thought would be helpful to walk you through simple cartoon illustrations of what the process of a member land provider

[1:01:41] converting to a traditional member service area looks like and then show you what that

[1:01:47] process will look like when a member land provider becomes an A-DOS member service area

[1:01:53] and elects to temporarily keep any member land parcel obligation and replenishment assessment

[1:01:59] tied to the parcel. Now I know that Mr. Seychelles gave a great simple illustration. I think

[1:02:06] It was on the exchange, not too long ago at the board meeting, and so in light of that and

[1:02:11] how well it was received, I thought we would do something similar and it's appreciated.

[1:02:18] And again, Ms. Moran Zony will cover the details of this process and more detail.

[1:02:23] So if something isn't clear at first, I think her slides will help you understand.

[1:02:28] These examples should provide additional context to help you visualize the primary differences.

[1:02:34] So, this first illustration depicts an undesignated water provider.

[1:02:43] So, we have an undesignated water provider serving uses in its service area.

[1:02:49] When a developer wants to build a subdivision, they have to go and obtain a certificate

[1:02:54] of a shared water supply for that individual subdivision that to get that certificate.

[1:03:00] get they have to enroll that subdivision has to enroll in the CIGRD as a member land.

[1:03:07] So this is the an illustration of an undesignated water provider, that water provider is

[1:03:13] reporting to CIGRD each year they use to the the member lands, the water being delivered

[1:03:20] to the member lands and they report a certain amount of excess groundwater that member

[1:03:24] land is using and CIGRD replenishes it.

[1:03:28] They do not, the surrounding, or the uses, outside of those, of those member lands, so the illustrated by the industrial uses, do not have are not regulated under the ShardwaterSpy program.

[1:03:50] When this undesignated water provider becomes designated, then all of the water uses within the water provider's service area, including the non-residential uses, now must comply with the A-DOS program.

[1:04:03] And it becomes a water provider that is now responsible for paying the replenishment assessments.

[1:04:10] And do directly to C-A-G-R-D.

[1:04:14] So now you have a designate provider, their entire service area has regulated under the Assured Water Supply Program.

[1:04:24] This changes the billing.

[1:04:26] We are not billing the individual member land homeowners via their property tax.

[1:04:31] This is now just one direct invoice to the water provider, city town or private water company,

[1:04:38] from CIGRD to the water provider.

[1:04:41] Then they can determine how they want to collect that from their customers through their water bills.

[1:04:50] So that's how the member land provider to traditional MSA works.

[1:04:59] Okay, so in contrast to this, now let's take a look at what happens when an undisognated water provider becomes an A-DOS MSA.

[1:05:07] And elects to keep their existing member land reporting and assessments with the member land homeowners.

[1:05:15] So, become a designated provider through A-DOS.

[1:05:24] Once a provider becomes an MSA under A-DOS, it is required to report access.

[1:05:28] It will be required to report excess groundwater to C.A.G.R.D. based on its total deliveries for its whole service area.

[1:05:36] However, if they elect for the first 10 years, the member lands can retain the parcel replenishment obligation.

[1:05:43] In other words, the homeowner continues to pay the replenishment assessments on their property tax.

[1:05:50] This mechanism allows the water provider to ease into taking the financial responsibility

[1:05:54] for replenishment of the entire service area.

[1:06:00] So we will be collecting both from the property owner

[1:06:05] as well as from the water provider during this transition period.

[1:06:10] And again, Ms. Moranzoni will go into the details on how that will be done.

[1:06:16] And again, this was this transitional period,

[1:06:19] was established through the SB 1181

[1:06:22] and 81, or the Queen Creek legislation last,

[1:06:25] that was approved last year.

[1:06:29] So under SB 1181's transitional period,

[1:06:33] in year 11, the water provider must start to assume

[1:06:36] a percentage of the parcel replenishment

[1:06:41] until it is all assumed by year 20.

[1:06:45] So gradually starting in year 11, 10% than 20, 30,

[1:06:50] for gradually that water provider assumes that financial obligation and replenishment.

[1:07:01] Then until after year 20, the water provider assumes all financial responsibility for replenishment,

[1:07:07] like a traditional member service area.

[1:07:13] I'm just going to pause you right now to check and see if there's any questions on that

[1:07:17] information.

[1:07:19] Yes.

[1:07:22] Yes.

[1:07:23] officer. This is pretty complex transaction in my mind. So basically, you're saying that the

[1:07:30] user provides basically 125% of what they're going to use so that we can bank 25% of the

[1:07:36] water.

[1:07:39] Madam Chair, Board Member Fisher, the water provider through their designation of a

[1:07:55] essentially dedicate 25% of that to offset the groundwater pumping.

[1:08:02] So the GRDC is the benefit of that.

[1:08:07] We'll see the benefit of that through time by a decrease in groundwater reliance by that water provider.

[1:08:15] And therefore a decrease in potential in reliance on the GRDC.

[1:08:23] It's the Department of Water Resources that's requiring the offset through the designation.

[1:08:29] That's not included in this MSA agreement.

[1:08:37] And the provision that they keep going for the first 10 years,

[1:08:42] what's the effect of that?

[1:08:44] I mean, does that just help them or is that if they keep it for the first 10 years,

[1:08:50] do we have to provide the water for the first 10 years?

[1:08:55] Madam Chair, Board Member Fisher, really the first ten years is really more about just

[1:09:02] who is financially responsible for paying the replenishment for the replenishment

[1:09:08] of the groundwater being delivered to those member lands.

[1:09:12] It's all the same water.

[1:09:13] The provider continues to serve the customers the same way, they're just the reporting responsibility

[1:09:21] you just stays with the landowner, whereas in a traditional MSA, we would have just build

[1:09:27] the water provider for replenishment obligation of the entire service area.

[1:09:32] So it really is more about keeping that financial responsibility separate for the transitional

[1:09:41] period.

[1:09:42] So we don't have to provide any financing, but they're responsible for that part of the

[1:09:50] County. Madam Chair and board member, Fisher, if I understand your question, yes, we don't

[1:09:55] we don't provide any of financing.

[1:09:59] Great. No, and thank you. And if you don't mind, I mean,

[1:10:02] we'll do, you know, like I guess this is, this is, this is very, you know, data intense and

[1:10:09] kind of weedy and important. And so yeah, I'd rather, I'd rather break as we have the questions

[1:10:14] to move through, because I would not remember my question at the end of the presentation probably.

[1:10:19] So, all right, yeah, board member Miller has a question.

[1:10:25] And I, not necessarily, well, it is a question.

[1:10:29] It's, this mechanism is a way so that the new designated provider

[1:10:34] doesn't have to assume 100% of all of this just,

[1:10:39] it is a way for them to, to ease in to the, the, the, the total obligation

[1:10:44] of the replenishment dollars that will be put out there.

[1:10:49] It's just the way that easy homeowners into the program over that 20-year period, basically.

[1:10:58] Yes, Madam Chair, Board Member Miller, Spot-On.

[1:11:03] I just want to be clear.

[1:11:04] Okay.

[1:11:04] Great.

[1:11:05] Thank you.

[1:11:05] All right.

[1:11:06] Continue.

[1:11:07] Okay.

[1:11:07] And again, you'll probably hear these concepts repeated a number of times,

[1:11:13] so hopefully it'll be a little clear.

[1:11:14] I'm going to hand the presentation off to Ms. Moran Zoni now to dive into some more details on the member land and members service area requirements.

[1:11:23] Great. Thank you very much. And welcome Ms. Moran Zoni.

[1:11:29] Thank you so much and good afternoon Madam Chair and members of the committee for the record. My name is Kate Moran Zoni and the planning analyst with the GRD.

[1:11:37] And as Ms. Grignana said, I will be going into some more detail on some of these unique

[1:11:43] Adios components, like the transitional reporting period, which we were just introduced

[1:11:47] to, and the minimum reporting requirement.

[1:11:50] Because there are a lot of ideas to keep straight, this next section is going to begin by

[1:11:57] just laying the groundwork for traditionally what sorts of requirements need to be met by our

[1:12:03] and on the member land side, what mechanism are they using and same for the MSA?

[1:12:09] So with that, on the screen, I know I've got the fun illustrations, but I'm doing a table.

[1:12:16] So in this table, the center column is going to be the requirements.

[1:12:21] And depending on if you're a member land or MSA, there are, again, these different mechanisms that are used to meet that requirement.

[1:12:30] So, the first one here is annual reports and member land annual reports are at the parcel

[1:12:37] levels.

[1:12:38] So, the provider tells us how much total water, groundwater, excess groundwater, was used

[1:12:44] on a particular home or a common area.

[1:12:48] For MSAs, it's a little bit different and we actually just look at a service area level.

[1:12:54] So for the whole provider, how much, again,

[1:12:59] groundwater and excess groundwater was delivered.

[1:13:03] And annual reports are very important to us

[1:13:05] because that is how we arrive at our replenishment

[1:13:09] obligation numbers.

[1:13:11] And that obligation translates to assessments.

[1:13:15] So for member lands, it's that homeowner that's paying

[1:13:18] the parcel replenishment assessment on their property tax

[1:13:21] And for MSAs, similarly tied to that annual report mechanism, it's that one volume of excess

[1:13:29] groundwater multiplied by our assessment rate.

[1:13:33] And that is, and we wish to them, and what's called a replenishment tax, and, again,

[1:13:38] that is paid for by the water provider on the MSAs side, homeowner for the member lands.

[1:13:48] So another facet of property taxes and replenishment taxes for our members are annual membership

[1:13:54] and AMDs are the cost of being a member, regardless of if any obligation is being

[1:14:02] encouraged by the member. Member lands are assessed on AMD for a lot, so per

[1:14:08] housing unit, commercial unit, common area, MSAs are assessed per acre-foot of

[1:14:15] expected GRD reliance. And so this calculation of the distribution and the

[1:14:23] some cells are outlined both in statute, which as we heard earlier was recently amended to

[1:14:28] keep rates stable, and then also by board policy.

[1:14:36] Our next requirement here are activations.

[1:14:40] So for any law enrolled in the GRD, regardless of membership type, when the home builder is ready

[1:14:46] to sell off the home, they have to obtain a public report in order to do that sale. And prior to

[1:14:54] getting the public report, they have to show that they have activated those lots.

[1:14:59] So, they come...

[1:15:00] The GRD and pay a per watt activation fee, and the rate itself is dependent on the characteristics of either the member lands and it's based on one day in roll or the member service area, and that's similarly like the AMD's kind of tied to that near-term reliance.

[1:15:22] And the last requirement we have here is the replenishment reserve fees. So there are two ways that GRD collects for the replenishment reserve.

[1:15:30] The first one is the replenishment reserve charge, which I think most folks are familiar with and that's the replenishment reserve component of our assessment rate, so it's incorporated into those obligation assessments.

[1:15:46] The fee is separate from those traditional assessments.

[1:15:50] For member lands, it's an additional fee that the home builder pays when they come into

[1:15:56] active a lot.

[1:15:58] For MSAs, it's based on something called the excess groundwater increment.

[1:16:04] And this is defined in statute.

[1:16:06] And essentially what the increment is is when a provider comes in and has a new highest volume of obligation.

[1:16:15] So they take that compared to the previous highest volume and that difference there is the increment and so there's a fee associated with that increase

[1:16:26] So I know this is quite dense. I thought I'm hoping to get to the pause and see if there's anything I can clarify.

[1:16:31] Great. Thank you. Any questions on any of this?

[1:16:35] Either none or we're all just...

[1:16:37] We can always revisit, we're all this, we're all just trying to, you know, we're, we want houses and, you know, in era, no, this is great, no, this is great, keep going.

[1:16:50] So what traditionally happens when a variety of that serving member lands gets designated is that all of those mechanisms on the left side go away.

[1:17:00] So, there's no longer any distinction between a previously enrolled member land and the MSA.

[1:17:08] That is not the case for aid-offs providers that are taking advantage of that transitional reporting period.

[1:17:15] So, in those instances, some of those member land mechanisms hang on, and those are the mechanisms related to obligation and assessments.

[1:17:26] You might have noted that on the MSA side, this mechanism changed for punishment obligation from

[1:17:35] service area to non-parcel replenishment obligation.

[1:17:40] And so this is one of those kind of new concepts.

[1:17:43] So essentially, when these providers are reporting to us, they tell us, this is the volume

[1:17:49] of excess groundwater for the whole service area in this given year.

[1:17:53] And they get to elect how much of that excess groundwater is going to be, again, retained on those parcels.

[1:18:02] And whatever that difference is, if any, that is what we're referring to as the non-parsal replenishment application,

[1:18:08] and that's what the MSAs will be invoice for on the replenishment tax as far as application.

[1:18:14] And then those three requirements at the bottom of the table, those weren't called out in that SB 1181, that miscarriage amount of disgust.

[1:18:25] So it's really just this parcel replenishment obligation and assessment that stays distinct.

[1:18:33] And then once the transitional reporting period concludes, we are back to this, what looks like a standard MSA.

[1:18:41] So there's no distinction between what you

[1:18:44] speak in member land.

[1:18:46] It's all officially absorbed.

[1:18:48] And there's no separate reporting mechanisms.

[1:18:51] Great.

[1:18:52] I do have a question on the non-parcel replenishment

[1:18:55] obligation when that kicks in.

[1:18:58] I think I understand it's the everything else

[1:19:00] that's not a member land within the service area.

[1:19:03] Does that start immediately or is there a ramp into that?

[1:19:09] That I'm chair, yes, so that starts immediately, however the actual distribution of excess

[1:19:17] groundwater, like how much is staying with a member land back in very from year to year and

[1:19:21] the provider can choose to have that volume be the whole amount of excess groundwater, so in the

[1:19:29] first year there's not any non-parcel replenishment obligation.

[1:19:32] So, that must say really has full flexibility on how it gets lit up.

[1:19:40] Thank you.

[1:19:41] But remember Fisher?

[1:19:43] Yes, thank you.

[1:19:45] So, something that you said just kind of treats, something.

[1:19:48] So, you said that they report on the water, but is it self-reporting or is there

[1:19:55] some mechanism to ensure that reporting is accurate?

[1:20:01] Madam Chair and Board Member Fisher, so there are, the GERD has one annual report typically

[1:20:09] for MSAs and it's just one sheet and it says, tell us how much groundwater you use times

[1:20:14] your minimum reporting requirement and that's the amount of excess for MS or excuse me for

[1:20:19] member lands.

[1:20:20] It's much more finite at a parcel level, so the way, there's kind of a few ways that we can

[1:20:28] that was being reported to us is really what's being used. The first is that these providers

[1:20:34] have to submit reports to the Arizona Department of Water Resources. So there's a built-in

[1:20:40] verification that way and for member lands or providers that serve member lands. The GRD does have

[1:20:48] statutory authority to occasionally conduct records inspections and just ensure that we understand

[1:20:54] how they're taking their raw data and fitting it into our personal level.

[1:21:02] Thank you.

[1:21:02] I trust people, but I do like to verify.

[1:21:04] Soon.

[1:21:06] Well, and I think along those lines, it's a little bit of a detour.

[1:21:08] We've, in the past, if I recall, we've done this kind of just spot check.

[1:21:13] As part of our internal audit, you know, responsibilities.

[1:21:17] It's not, it's not that we don't trust or not trust.

[1:21:19] It's we have a duty to audit and it's not.

[1:21:25] the ability and the staff to go check all everybody, but if I, and I will look to Ms.

[1:21:31] Graniano, if I recall, the results of our audits have always been that the reporting

[1:21:36] has been, you know, our independent look has been in line with the reports we've been given

[1:21:41] and we have not, you know, we've not found any kind of busts and not as I glance over to

[1:21:47] Ms. Graniano for verification.

[1:21:49] Madam Chair, that's correct, and we are conducting some records inspection this year that the

[1:21:54] will hear reports on later this year. We also do extensive QAQC queries on all of the data that's

[1:22:03] submitted to us from all of the water providers every year. So we're looking at the parcel of my

[1:22:08] team works really hard to review those do we have a number of queries that we run to look at

[1:22:15] variances over the last three years of water use. So if there's a spike in water for that parcel

[1:22:20] So we're looking into it, is that just, you know, somebody fat finger the data wrong or is that really a leak?

[1:22:27] Did they, did they move in a new owner come in and, and plant a lot of, or put in a pool?

[1:22:32] So we're doing that check extensively in reports are due to us the same day they're due to the Department of Water Resources March 31 of each year.

[1:22:42] And then our team has approximately three to four months to do all of the QHC on those, and in addition,

[1:22:49] conduct potentially some additional inspection notices with individual providers.

[1:22:56] Thank you.

[1:22:57] Barbara Miller.

[1:22:58] Yeah, and I think it's to the advantage of the water providers to really, they are looking

[1:23:04] at everything there, either for billing purposes or is there a leak in the system?

[1:23:09] I mean, it's to their advantage to make sure that they monitor it very close, at least that's

[1:23:15] been my experience with the water companies.

[1:23:19] Yeah, no, and that's an excellent question, and again, something that bears bringing up occasionally

[1:23:25] because, you know, especially sitting up here, it's like, how is all this happening?

[1:23:29] You know, who's doing what?

[1:23:31] And there is a very thorough and robust process, you know, the back of the house, that verifies

[1:23:37] all this. So, the important and great question. Thank you. All right, please continue.

[1:23:43] Thank you, Madam Chair.

[1:23:46] So that was quite a bit of detail. So I'd like to zoom out for a moment

[1:23:51] and just quickly summarize the key points that have been discussed so far. So the first thing

[1:23:58] that I would like to emphasize is that an ADOS is still a designation, meaning that the entire service

[1:24:04] area is designated. Sometimes with this transitional reporting period and these transitional member

[1:24:11] lands, there's a thought that the service area has these holes and it where the member lands

[1:24:17] are that they're not included. That's where we get the Swiss cheese term. And so it's not

[1:24:23] the case, it's a full, it fully encompasses everything that the provider serves. And then

[1:24:30] The last point here is about the groundwater offset, and so, as we touched on in the beginning

[1:24:37] of this presentation, providers will be taking any new alternative supplies and a portion

[1:24:44] of that goes towards reducing the groundwater in their designation, and this is actually going

[1:24:50] to lead to less reliance on the GERD over time, which is not typically what we see, and

[1:24:56] So, this led to a consideration that potentially the minimum reporting requirement could be adjusted downwards.

[1:25:05] So, you can talk a bit more about minimum reporting requirements and what they are and why we have them.

[1:25:14] So, for some background, members service areas typically do not want to report excess groundwater to the GERD.

[1:25:22] When we did stakeholder outreach for the plan of operation, the GERD was sometimes referred to as a supply of last resort, typically because of the financial implications.

[1:25:34] So if the GERD isn't making this groundwater goal consistent, how are the providers doing it, and they can use extinguishment credits to do so, or they can do groundwater allowance.

[1:25:48] and the water providers through AdOS get a very hefty groundwater allowance.

[1:25:55] So the risk with that is if a provider isn't required to report any of their

[1:26:03] ground water as excess and they go through and use up all of their groundwater

[1:26:08] allowance, when that runs out, the GSD suddenly overnight has this huge spike

[1:26:13] sometimes call it the the cliff. So that becomes an issue because we haven't been collecting on any

[1:26:23] obligation and so just a lack of revenue. So that led to the minimum reporting requirement being

[1:26:31] implemented in MSA and member land agreements and the goal there is just to ensure that

[1:26:37] portion of that groundwater use is reported as excess so that we can be collecting revenue

[1:26:43] and preparing for that eventual grader reliance. So that portion has

[1:26:48] typically been two thirds. So take the total groundwater used, multiplied by two thirds,

[1:26:54] and that is your excess. However,

[1:27:00] the aid us providers, because they're going to rely on us

[1:27:03] over time, most likely things look a little bit different.

[1:27:10] So adjusting them in a mum reporting

[1:27:11] requirement is one way to align that reliance with the revenue collection. In order to come up with

[1:27:19] a minimum reporting requirement that is different than the traditional fraction, GRD has established

[1:27:27] a uniform standard approach to arrive at that number and it's based on the provider's portfolio

[1:27:34] and their designation and they're projected long-term reliance and generally it lands somewhere

[1:27:40] between a third and two-thirds. A couple of things to note on that are that in the

[1:27:48] panel AMA because the groundwater allowances are so substantial and also perpetual for some

[1:27:54] amounts that minimum might be a little bit different. And then also GERDI has historically

[1:28:02] provided a ramp up to that minimum reporting requirement and the purpose for that is kind

[1:28:07] of too old helps the provider not have to be facing down this obligation overnight financially

[1:28:14] and it also helps us not have to face down a huge spike in obligation.

[1:28:20] So with the philosophy

[1:28:22] of aid as being based on the provider getting new supplies, reducing that groundwater volume,

[1:28:29] That is obviously the goal, but in the meantime,

[1:28:33] GERD is assuming the risk of all that groundwater.

[1:28:38] And so in the agreement, we've built in some flexibility

[1:28:41] so that if the provider has not decreased

[1:28:45] their reliance on groundwater in 25 years,

[1:28:49] then that minimum is going to be adjusted back to two thirds

[1:28:52] and again, this kind of acts as like a ramp

[1:28:56] rather a smoothing of the cliff, so that we're not facing down this cliff again.

[1:29:04] It slows it.

[1:29:05] Yes.

[1:29:05] A slope, but if it's not a cliff, it's a slope.

[1:29:07] Right, right.

[1:29:14] So the other, while this minimum reporting requirement being adjusted downward is beneficial to the

[1:29:25] We've been meeting with them, we've heard that they want to use this groundwater allowance

[1:29:30] this asset that they get through eight hours.

[1:29:32] And so having a lower minimum gives them the opportunity to use it.

[1:29:38] The other part is that, again, it uses that financial burden on them because we want them

[1:29:43] to go out and get these new supplies.

[1:29:44] We don't want our providers to have to develop these huge amounts of monetary resources

[1:29:49] is to the GRD when they could be using those to go out and develop their own renewable portfolios.

[1:29:56] I'll note the asterisk on the first bullet point, so the ADA...

[1:30:00] Rules do cap the amount of groundwater in a provider's designation. However, there are programs that could add physical availability, so increase that volume of groundwater.

[1:30:13] So, act urban is one of those. And because of that, we did build in some more flexibility into the agreement so that we could adjust the minimum as need be, because more groundwater alliance is more risk for us.

[1:30:28] And so this last slide is meant to put some of those puzzle pieces together for all the different topics we've been discussing.

[1:30:36] So the minimum reporting requirement, whatever that number is, decided to be for that specific provider, will be applied to the total groundwater used in the whole service area.

[1:30:49] Now, if the provider has elected to do this transitional reporting, they get to decide how much of that minimum volume of access stays with the parcels or is taken on as non-parsal replenishment obligation.

[1:31:03] And because the minimum reporting requirements in the member lane agreements are suspended, the provider really has maximum flexibility to do what they need to do as they see fit to achieve those goals.

[1:31:17] So, I, with that, unless there are any questions, I'll pass it back over to Ms.

[1:31:21] Grignano for some closing comments.

[1:31:24] Great.

[1:31:25] Or, remember Miller?

[1:31:29] Okay, we'll let, we'll let, um, great.

[1:31:32] Then we'll, we'll get the wrap up and then we'll have a chance to have any other committee

[1:31:37] comments or questions.

[1:31:38] And then after that, I will invite the blue card people to come up and give us their

[1:31:43] comments as well.

[1:31:45] Great.

[1:31:45] And I'll be brief.

[1:31:46] Madam Chair, I just wanted to wrap things up by saying that this is like you said an action or an item schedule for consideration of action by the committee.

[1:31:57] There are two standard form MSA agreements in your packet.

[1:32:01] One is for water providers in the Phoenix AMA that elect to retain the member land parcel of replenishment and the other is if they do not elect to do that.

[1:32:11] So it's closer to that more of a traditional MSA.

[1:32:16] But it also could be used by the penow water providers that are becoming

[1:32:21] designated through A-DOS because as of yet,

[1:32:24] penow providers don't currently have that legal ability

[1:32:27] to do that transition period.

[1:32:30] As Mr. Gray mentioned, though, Senate Bill 1393,

[1:32:33] if passed, would then allow them to be able to do that

[1:32:37] like the Phoenix AMA water provider.

[1:32:39] So we have the two standard forms just for the one that

[1:32:42] elects and then a panel or possibly a Phoenix provider that

[1:32:46] doesn't elect to retain those parcel member replenishment.

[1:32:52] Again, because in rolling in the G-R-D is a prerequisite

[1:32:55] for obtaining a designation and because the committee

[1:32:59] and board have recessed in July, applicants and staff wanted

[1:33:04] to try to get this to the committee now and to the board

[1:33:08] before that recess.

[1:33:08] So with that, Ms. Moran Zoni and I are happy to answer any questions.

[1:33:14] Great, thank you very much for that, Board Member Miller.

[1:33:17] Thank you, Madam Chair, and I want to be the optimist that I am watching House Bill 2753, which is the mirror, I believe, of 13.

[1:33:32] So, we pass all of this. We won't have to come back and modify anything for any other designation for some other reason.

[1:33:40] This applies to anybody that goes to the ADI's process at this time.

[1:33:45] This is good to go.

[1:33:46] Madam Chair and Board Member Miller, that is how we have structured why we have to.

[1:33:53] Yes.

[1:33:54] Okay, I just want to make sure that there's not another hang up at some place that happens occasionally.

[1:34:01] And remember, that's a great point just to reiterate that these standard form agreements that we as a committee, you know, get to examine and learn about and recommend to the board. So they'd be approved.

[1:34:15] That's exactly what it gives the staff the ability to proceed with these agreements without having to keep coming back to the board.

[1:34:22] And the only time that it would come back to the board

[1:34:26] is if there was a circumstance that was there's substantial changes.

[1:34:32] So there's within this standard form agreement,

[1:34:35] there's always as long as it's minor changes in tweaks.

[1:34:39] This form has been crafted and worked on with our stakeholders

[1:34:43] to accommodate everything and that doesn't mean that in the water world

[1:34:47] something completely new is going to bubble up.

[1:34:50] if something happened like that, then at the discretion of staff, they would, and knowing how

[1:34:55] staff is very considerate of saying, hey, that's a little far afield.

[1:35:02] We need to bring this back to the board.

[1:35:05] Then it would come back and it would come back through the committee and that would be a one-off

[1:35:08] situation.

[1:35:10] But the intention here is with approval of standard form agreements, you know, where they

[1:35:16] can proceed and that does a couple of things that allows these agreements to move forward without

[1:35:22] having to track with a board and committee schedule which does take a little bit of time and

[1:35:27] it allows staff to just get that done and there will be I think typically there are regular

[1:35:33] reporting back to this committee of what's been going on so we'll hear about things but that's

[1:35:39] the intention. So, yes, and then, yes, and then board member C. I go.

[1:35:45] Okay, thank you, Minister. I do want to thank staff and I hope the committee is allowing

[1:35:53] us to do this kind of accelerated process to this is the first step. We'll do the second

[1:35:59] step at the regular meeting and then hopefully we'll be able to move forward there. I appreciate

[1:36:03] the consideration by the department to allow us to take this process today.

[1:36:11] So, thank you very much.

[1:36:13] Great, thank you.

[1:36:14] Board members, Diego.

[1:36:16] Thank you, Chair.

[1:36:17] So, after this is approved, and then the people that want to be the MSAs, they submit their form.

[1:36:25] How long do you see it taking for them to get approved by the CIGRD?

[1:36:30] So Madam Chair and Board Member Siego, so we do already have the three applications to become

[1:36:39] a member service area.

[1:36:43] There will, once the standard form agreement, if approved by the Board in June, we will

[1:36:48] be working with the individual water providers on looking at their groundwater reliance on

[1:36:54] the GERD coming up with the minimum reporting requirement.

[1:36:58] the numbers, you'll see there's a blank space in the standard form for the minimum reporting.

[1:37:03] That will be dependent on that portfolio, that individual water providers portfolio,

[1:37:08] and the groundwater allowance that they receive.

[1:37:11] And we can work concurrently as the board is looking to approve this.

[1:37:14] We can work in the next few weeks with some of those providers on those numbers.

[1:37:18] Then there is a process, once the standard form agreement is approved,

[1:37:22] that we give that agreement to the provider, and they do have to execute a resolution, claiming

[1:37:32] that they want to become a member of service area, and that has to be publicly noticed

[1:37:37] in the newspaper for two consecutive weeks.

[1:37:41] Once they execute that resolution, they do the public notice, come back to us with the proof

[1:37:48] of public notice then we can execute that agreement. So there will be another, say, month or so

[1:37:55] of work after the board approves the agreement. But I think we can do all that work,

[1:38:03] legwork to get that provider or providers ready to do that while we're waiting on the board to

[1:38:10] in June. Great, great question. Thank you. Board Member Fisher. Yeah, I just

[1:38:16] clarify a question. So this gives a lot of, I think, flexibility to MSAs, does

[1:38:24] the CAG or D still report the water that has been set aside in our reports or

[1:38:30] does that get reported somewhere else?

[1:38:35] Madam Chair, a Board Member Fisher, when you

[1:38:37] set aside. Do you mean the offset or the, or can you, or if I wait you by the set aside?

[1:38:46] Again, that is water. The alternative supply of the water provider is going out and acquiring

[1:38:52] and reducing their groundwater reliance essentially. So we would, we would likely see the

[1:38:59] result of that in reduced reporting of excess groundwater to us because they're using an alternative

[1:39:08] supply. Their alternative supply is supplementing the groundwater that they were pumping.

[1:39:19] I think that's an excellent subject of another cartoon graphic. Where's the water? I mean,

[1:39:25] It sounds, I mean, we're laughing at it, but not only for us, but for the public and people those graphics really, you know, do a lot to help explain where the water's coming going, who's getting what for why and so, you know, those are, because it is complicated.

[1:39:43] I think showing a juggler would do that.

[1:39:44] There we go. And Barbara, for sure, we'll, we'll sing and juggle while doing that. So anyway,

[1:39:49] If we have no other comments or questions of the committee, I'd like to call Doug Dunham from

[1:39:54] ECCORE up and welcome.

[1:40:03] Thank you, Madam Chair.

[1:40:04] Thank you, committee, for having hearing this.

[1:40:08] I'm here on behalf of ECCORE.

[1:40:10] My name is Doug Dunham.

[1:40:12] I'm the Director of Water Resources for ECCORE USA.

[1:40:17] And if you're not familiar with us, we are the largest private utility in the state of Arizona.

[1:40:22] We managed water drinking water and wastewater systems across the state and if you would squish all of our customers together

[1:40:30] We would be the fourth largest city in the state of Arizona

[1:40:32] So we've got a pretty significant footprint

[1:40:36] I wanted to start off with thanking Laura and her staff on all the work that has got into this up to this point

[1:40:42] We have been talking nearly weekly if not more to work through all the details of this

[1:40:50] I think the plan that they have come up with bringing these two forms forward to you today

[1:40:57] works really, really well.

[1:40:59] We look forward to meeting next week and starting to hammer out the details of our application.

[1:41:05] We were the first to apply at the department.

[1:41:08] And I'm hoping we'll be the first to get through the gate here.

[1:41:12] And just to let you know how significant this is,

[1:41:16] as the chairwoman, so noted at the beginning of this section is this is very monumental for

[1:41:24] the state of Arizona and in fact whoever gets through the gate first here this will be the

[1:41:29] first time in over 30 years that a new provider has been designated under the U.S. water supply program

[1:41:36] in the Phoenix AMA so it's not a small undertaking, it's very significant and from a water resources management

[1:41:45] perspective, management of groundwater provides an excellent opportunity for water providers

[1:41:51] to reduce what we call that legacy pumping.

[1:41:57] So all of the development that is occurred over time outside of the certificate assured

[1:42:02] supply process.

[1:42:03] So your commercial pieces, your circle case, your grocery stores, all those things fall outside

[1:42:09] of the definition of what requires the certificate.

[1:42:11] And this brings that in and it's very beneficial to the aquifer over all.

[1:42:19] And again, with the structure of the eight odds, our actual reliance on groundwater and the

[1:42:26] services of the year, we'll go down over time because every time we bring in a new bucket

[1:42:31] of water, 25% of that has to replace groundwater use.

[1:42:35] So instead of a continual reliance and growth on on the GRD, this actually will limit and shrink over time.

[1:42:44] So I think it's got multiple benefits across both for the GRD and as far as the offer for management of the state.

[1:42:53] And with that, I'll take any questions you may have.

[1:42:56] Great. Thank you. Any questions?

[1:42:58] For that. No. All right. I thank you very much for coming here today and for your comments.

[1:43:03] Um, I'd like to invite Maggie, uh, go, go, go, go, what's your name, go, go, go, go, help me out.

[1:43:11] Maggie, please come.

[1:43:15] Nice to see you.

[1:43:27] Um, that I'm chair member of the committee.

[1:43:29] Members of the committee.

[1:43:31] Um, my name is Maggie Galogley.

[1:43:33] And I'm waiting for one of my nieces or nephews to become super famous.

[1:43:37] So I, so everybody knows how to pronounce my name.

[1:43:41] Some day in the future hasn't happened yet, but thank you first winter.

[1:43:46] Thank you for making me feel the slight bit better.

[1:43:49] No, it happens all the time.

[1:43:51] So, it is Maggie Glogley.

[1:43:54] I'm a attorney at Sennelmore Craig.

[1:43:56] And I'm here today to speak on behalf of Greenstone,

[1:43:59] which is one of our clients.

[1:44:01] They work very closely with a number of water providers

[1:44:04] to try to assist them in acquiring water supplies.

[1:44:08] So, we just wanted just very briefly.

[1:44:10] we appreciate the opportunity to speak today and we just want to express our support for the

[1:44:19] concept of keeping flexibility in these contracts to deal with the minimum reporting requirements

[1:44:26] for excess groundwater. We think that's a very important concept that's built into these contracts

[1:44:34] And because we think that we'll allow GRD to keep their replenishment obligations as low

[1:44:41] as reasonably possible, which will help with this plan of operation and future plans of operation,

[1:44:49] every time you increase the minimum reporting requirement, you are also increasing your GRD obligations.

[1:44:57] So if it goes up to 2-3rds, that high.

[1:45:00] That's a lot more obligation. You have to find water to replenish. And we think it makes a lot of sense to look at each of these member providers individually and try to tailor the minimum obligation, minimum reporting obligation to their circumstances.

[1:45:19] We think that will help GRD. We also think will help the providers because the money they give you for replenishment means they have less money to go out and buy water.

[1:45:29] And that's the whole purpose of ADOS is to let them buy water and try to get off groundwater reliance.

[1:45:38] To avoid the spike or cliff that has already been raised,

[1:45:43] we do think it makes a lot of sense to have a phase in of the minimum reporting obligation

[1:45:49] or minimum reporting requirement, I should say, to allow it to start off at a low level

[1:45:57] when they have these big groundwater allowances and then build up if need be over time

[1:46:03] if that allowance goes down and they have not purchased these alternative water supplies.

[1:46:10] So you could adjust it very pretty easily periotic basis and Greenstone has reached out already

[1:46:21] to GERD staff to talk about one way of doing such a phasin. They probably could be done a lot of

[1:46:28] different ways, but we had a concept that we'd like to discuss with staff. We won't bring it

[1:46:34] forth today because really it's something that we would need to go into a little detail with

[1:46:39] staff, but frankly there's a lot of ways to skin the cat, and we think these contracts do give you

[1:46:46] staff the flexibility to incorporate something like a phase in. So we generally support the

[1:46:53] the way it's been set up for it now. So happy to answer any questions if there are any.

[1:47:00] Great and thank you very much. Any questions for Maggie?

[1:47:04] All right, thank you and thank you very much for coming and speaking today.

[1:47:07] Our final blue card is Terry Sue Rossi with Arizona Water Company.

[1:47:16] Yes, but remember Miller I think well Terry Seeswalking up Doug brought up an interesting kind of interesting fact about this

[1:47:27] whole

[1:47:28] eight hours thing

[1:47:29] If you notice the remember the cartoon with the four houses

[1:47:33] a factory and it looked like an apartment building

[1:47:37] that will maybe this will ease the pain or the the discussion on

[1:47:41] on the, the, you know, that the department complex operations don't pay their fair share.

[1:47:49] So I, I just kind of wanted to point that out.

[1:47:52] I thought that was a good point.

[1:47:53] I think so.

[1:47:53] Yes.

[1:47:54] Yeah.

[1:47:54] The factory.

[1:47:55] And then the high rise, the high rise condos that were in their high rise, the apartments.

[1:48:01] Great.

[1:48:02] All right.

[1:48:02] Thank you.

[1:48:03] Terry Sue.

[1:48:05] Hello.

[1:48:05] Thank you so much.

[1:48:07] My name is Terry Sue Rossi.

[1:48:08] I'm the vice president of Water Resources for Arizona Water Company.

[1:48:11] And I appreciate being here today.

[1:48:15] I first of all, I just wanted to applaud the work of Lauren, her staff.

[1:48:21] I honestly do not expect them to do this in this quick of a timeframe.

[1:48:26] And I know that it was a big lift to do that.

[1:48:28] So I just want to thank you.

[1:48:30] I think it's really important that the cadence of this has been what it is.

[1:48:35] There's just so much pressure to deal with this issue.

[1:48:38] And the panel A may we've been without a new certificate of a Shared Water Supply since July of 2011 if you can believe that and so we're long over due for things to open up

[1:48:49] And so this is a huge step in that direction Doug was alluding to that a little bit and I think so was Laura the significance of this change and so

[1:49:01] Maggie and Doug and I who have been doing this for a very, very long time, I think Laura's younger, younger than us, but

[1:49:08] Anyways, I would argue and I think they would agree that this is the most significant change that we've seen seen to the assured water supply rules

[1:49:16] And since 1995 when they originally passed, so this is a really, really important change

[1:49:24] And just like I would say that the creation of the GRD, it was on the level of, it's on the level of that kind of change.

[1:49:32] So it's exciting to see this happening, it's exciting to see that we're going to see things open up.

[1:49:40] And I'm proud to be a part of the process that got us to this point.

[1:49:45] And I think you should be proud of being a part of this process, too.

[1:49:49] And when Doug was talking I thought, oh my gosh, I should probably say something about my company.

[1:49:54] And so Arizona Water Company is the second largest private water company in the state of Arizona.

[1:50:01] And I like Doug was talking about how I think he said you guys are the third largest or fourth largest.

[1:50:06] So I'm thinking that's Phoenix, Tucson, Mesa, and then they follow closely behind that.

[1:50:11] So I did just a quick check to see where we fell in that and Arizona Water Company, we have

[1:50:17] about 110,000 connections.

[1:50:19] We estimate that's about 300,000 people would just put us right above the next city.

[1:50:24] So I think we're number five.

[1:50:27] So I don't know where Doug you fall into the mix.

[1:50:30] We serve a valid.

[1:50:30] There's not a competition, right?

[1:50:32] There's no competition.

[1:50:33] There's not a competition and everybody who knows me knows that I worked for what was citizens

[1:50:39] before it became Ep Corps. So I've fondness for that organization as well and fondness for

[1:50:46] Doug as well. But I'm going to guess if we're 300, they're probably 400, maybe 1,000 people

[1:50:52] or more. Yeah. I would say 4, maybe 5. And so when you put that together, that kind of just gives

[1:51:01] you an idea of the significance. If you're just looking at the two private largest, the largest

[1:51:06] private water companies. That doesn't include Quink Creek, which you'd have to ask Nicole

[1:51:11] how many they've got, but I'm going to say maybe they're around 120 if I'm just guessing.

[1:51:16] And that doesn't include buck eye. So this is really a very significant change. And so I just

[1:51:23] wanted to make sure everybody really understood kind of where we are at this point in time in history.

[1:51:29] The other thing I wanted to do is I just wanted to describe a little bit how this would work for

[1:51:33] on a water company. And I think this might answer some of the board questions that you all have.

[1:51:39] So, the way that our system is going to work and we're perhaps more blessed than, say,

[1:51:46] Queen Crink and Buckeye are. But we have a CFP entitlement and we're going to be designating our

[1:51:52] canal water system. And that's about 120,000 people itself. And we have a CFP entitlement

[1:52:01] of around 11,000 acre feed. We also have a pretty good chunk of certificates in our area.

[1:52:08] There is a very generous groundwater allowance that will come with those certificates of around

[1:52:12] 23,000 acre feet that does not include the allowance. We will be afforded for our legacy pumping.

[1:52:20] And so we plan to file our designation and the exact number that we're going to be coming in for we haven't quite honed in on because there are a few things that are still in flux.

[1:52:31] But our objective is to rely on the gerry as little as possible and to maximize the use of our groundwater allowances and our CAP water.

[1:52:47] We are also in active discussions with our communities about using F-land in particular for the growth and let me describe exactly how we would bring growth into the system and this will get to the 25% offset.

[1:53:00] So we talk about this in terms of we've got a couple of prototype subdivisions who are going to join us in this process to show that this will in fact work and we've been assuming

[1:53:11] acre foot of 300 acre foot of demand for a subdivision.

[1:53:16] And so the way that it's going to work or the way that we're designing it to work is that

[1:53:20] these utilities that we have an arrangement with our community to bring the effluent that they produce the wastewater

[1:53:26] and bring it back and recover it and deliver it back to them volumetrically.

[1:53:31] So roughly let's just say a third of their demand is going to be offset by the effluent that those communities would produce.

[1:53:37] That leaves another 67% of the demand that we're then requiring them to go out and get a non-ground water supply renewable water supply.

[1:53:47] Now, if the act of urban goes through, then that will provide them with some long-term groundwater use, like let's say a third of it.

[1:53:55] But they're still going to have to bring a non-renewable supply to the table.

[1:54:00] We have committed that we will take and change how we use our CAP water in order to make it available as part of the groundwater offset.

[1:54:10] So, every time a new subdivision comes in, we basically multiply their demand by 33%.

[1:54:16] And that in a case of a 300 acre foot subdivision, it would be 100 acre feet.

[1:54:20] And we dedicate that to going back to offsetting our groundwater demands.

[1:54:24] And so that's how we will operate our system so all the new developments will be coming in on a non-ground water supply except for the cases where there would be somebody dependent on act urban and in that case we're going to be looking at probably water resources fee just as Maggie was pointing out one of the things that we want to do is not spend our money and replenishment we want to spend our money on acquiring renewable supplies

[1:54:52] we want to spend our money on acquiring

[1:54:54] extinguishment credits, perpetual extinguishment credits,

[1:54:57] so that we can create a future for our residents.

[1:55:01] We don't want to be living off of replenishment

[1:55:04] obligations for the rest of our lives.

[1:55:08] So the other thing that I was going to just address really quickly,

[1:55:11] because there were some questions about it,

[1:55:14] is how what do we do on the reporting side?

[1:55:17] So I want to give you some confidence that we take that

[1:55:21] function very seriously and I know that Doug does as well and I'm sure Quink Creek does as well but we use our GIS system. We extract the customer data by month out of our customer service system. We connect that to personal data.

[1:55:38] We go through our own very involved quality control to figure out what's going on making sure that it's correct because last thing we want is to turn that over to the GRD

[1:55:48] and then find later that we gave them the wrong number after the tax bill has been paid.

[1:55:54] And so these are our customers.

[1:55:56] These are the constituents that live in the communities that we serve.

[1:56:00] And so it is very important to us that that information is accurate.

[1:56:05] Is it an extremely honest activity at the parcel level?

[1:56:08] Yes it is.

[1:56:09] So I'm looking forward to it moving into the service area mode as we go into the future.

[1:56:14] But I wanted to assure you that that is an activity that we take very, very, very seriously.

[1:56:20] And I'm in charge of it in my company, and I have a very strict standard for that.

[1:56:29] And so with all that, that's to say that we encourage you, and I know I'm not the only one of the finale,

[1:56:36] and we encourage you to support the approval of this standard form agreement of both of them.

[1:56:44] And we're looking forward, we appreciate the streamlined process that you laid out, and we're just very excited to move forward, we're excited to have discussions with Laura and come and fill in the blanks in our agreement, and we are hoping to beat up core.

[1:57:03] To being the first designation of a shared water supply, there was approved under the A-DOS process, so if you have any questions, I'll answer them otherwise.

[1:57:11] Thank you. So there is a tad bit of competition is what I'm hearing. Just a tiny friendly friendly competition

[1:57:17] which is not a bad thing.

[1:57:20] Thank you so much. Thank you so much for your comments and your specific comments and the high level comments on the importance of what we're doing, what we're taking the next step in doing here today.

[1:57:31] So appreciate that. Any other questions or comments from the committee?

[1:57:38] online. Okay, well, I'm just before before I asked for the motion, I'm just going to say really quickly again,

[1:57:43] I commend staff, commend everybody that's been working on this. It is so incredibly complicated and the concepts, the ways that

[1:57:53] it feels like every eventuality has been has been thought of and baked into this agreement and the transitions and

[1:58:01] trying to not have, you know, hills, not cliffs, and transitioning in a manageable way, but

[1:58:10] it's also, I'm hearing, that there's a lot of incentives by these water providers

[1:58:14] to move to the transitioning process to the member service area, but the creative solutions

[1:58:22] and the ways that these agreements have been able to be put together to allow for that.

[1:58:27] I can appreciate it, and I'm just going to also remember that this is all being done.

[1:58:34] While the small staff at the GRD is responding to the DWR on the plan of operation and working

[1:58:40] on their day-to-day business, I don't know if Laura sleeps or her staff, but your hard work

[1:58:48] and your attention to detail is definitely noted and appreciated.

[1:58:53] with that I would ask a board member Miller for a motion.

[1:58:56] I'm happy and proud to provide this motion.

[1:59:00] I move that the committee recommends the board approve the standard

[1:59:04] form a member service area agreement for water providers obtaining

[1:59:09] designations through the A-DOS and

[1:59:12] authorize the general manager to execute them in

[1:59:17] substantially similar form.

[1:59:18] Thank you. And second by board member C. I go. Thank you very much. Any further discussion on the motion?

[1:59:27] Seeing them all in favor. Please say aye. Aye. Aye. Any opposed? All right, let the motion reflect that all members present and online voted in favor of the motion and and good luck on the next steps and and we will be like I said.

[1:59:40] This is recommendation to the board.

[1:59:43] So in a few short weeks, we will be taking this to the full board for the final vote on this.

[1:59:51] Thank you.

[1:59:54] And we are at 2.30, but if we do have our final agenda item for...

[2:00:00] Which is a report on our 2025 member land service area. Can we go for a few, can we go over a little bit, we good?

[2:00:06] Then let's go ahead and complete agenda item eight with Kate Moran's only coming back.

[2:00:13] And the item is the report on the 2025 member land and member service area enrollment and activation through Q1, first quarter of this year and welcome back to the podium.

[2:00:23] Thank you, Madam Chair, and good afternoon for the record.

[2:00:27] My name is Kate Mornzoni, planning analyst with the GRD, and this is a very brief report,

[2:00:32] so it should be going too far over.

[2:00:35] So looking at our activity through Q1 of this year, we have our two standard tables on the

[2:00:43] left are our enrollment numbers, and if they look a little anomalous, that's because they

[2:00:50] So we did have a member land enroll in the East Phoenix AMA and this was mentioned to the committee back in Q3

[2:00:59] I believe that we had a pending application again some developers are just getting their place in line in the event that they're able to get a certificate down the road

[2:01:09] So that enrollment was completed, which is reflected here

[2:01:13] There were actually no other enrollments in either canal or Tucson and Tucson of course

[2:01:19] is still able to get certificates of assured water supply on groundwater.

[2:01:23] So we will stay tuned how that transpires for the rest of the year.

[2:01:28] So because this enrollment was quite substantial we have already surpassed the number of lots in

[2:01:33] world last year.

[2:01:34] That 480 that was in the Tucson AMA.

[2:01:36] So things are changing all the time, and this just really reflects that.

[2:01:43] And our team on the right is for our activation totals.

[2:01:48] On the memberly inside, just over 1,200 lots were activated and a bit more for MSAs, just over 2,100 for a total of 3,341 lots.

[2:02:00] This is a bit lower than Q1 last year and it's hard to know exactly what the reason

[2:02:06] for that is I think a lot of us have been seeing articles on the housing market maybe

[2:02:11] cooling down just a little bit so it's possible that's being reflected here but at the

[2:02:16] same time we do usually see a surge in activations right before rates are adopted in June

[2:02:22] so we'll have to see how Q2 turns out.

[2:02:26] Taking a visual look at our enrollment. The Blackline represents our 2015 plan projection because the

[2:02:34] Jav 2025 plan has yet to be approved. That projection isn't incorporated here

[2:02:39] But you'll notice on the far right we have our first quarter

[2:02:42] bar, which is green. We haven't seen a lot of green the last couple of years and

[2:02:47] our

[2:02:48] operational forecast had about

[2:02:50] 450 loss being enrolled in the Tucson AMA

[2:02:54] Again, not expecting any Phoenix enrollments and sometimes we could be surprises, so we'll probably likely end up somewhere close to 450

[2:03:02] Lots being enrolled in the Tucson and they have some point in this year.

[2:03:09] And lastly, I'm looking at our activation so far.

[2:03:13] So again, a bit of a slow start.

[2:03:14] Our operational forecast is expecting about 18,000 lots to be activated.

[2:03:20] So we're not quite the quarter of the way there, but we will see if Q2 has a higher rate of activation.

[2:03:29] And then the other thing to note is more member service area lots were activated than member landlots.

[2:03:35] So MSA lots are represented with the hatched area.

[2:03:39] So nothing exceptionally unusual just a lot of movements in different ways.

[2:03:46] So we will see how the rest of the year transpires.

[2:03:50] Is that how I'm happy to answer any questions?

[2:03:52] Great, thank you very much.

[2:03:53] Any questions for Ms. Lawrenceoni?

[2:03:55] All right, thank you.

[2:03:57] All right, moving on, we are on agenda item number nine,

[2:04:00] which is future agenda items.

[2:04:02] And our next meeting will be on June 12th here at 1230.

[2:04:08] I want to note that this is the second Tuesday of the month

[2:04:12] because our schedule changed

[2:04:13] because of the Juneteenth holiday,

[2:04:15] which would be falling on our regularly scheduled board meeting.

[2:04:19] So just to just, we'll have our board meeting and then the next week we're going to have our

[2:04:23] committee meeting.

[2:04:24] So it's going to be a back-to-back and at that time we will hear update on legislation,

[2:04:30] report on Ag to Urban Rulemaking process and continuing updates on our 2025 plan of operation

[2:04:36] that will also mark our last meeting before our summer recess and just given it's looking at the

[2:04:45] calendar is our next meeting for August is an until late and it's about as late and

[2:04:51] August as you can get. So we'll have quite a break and expect to have a lot to go on

[2:04:57] when we get when we we can be in August. And then item number 10 is our public comment.

[2:05:04] And since we had a robust public comment on item 7, I don't know that we have any other

[2:05:10] comments. Madam Chair, we do not. Yeah, great. Thank you very much. All right.

[2:05:14] Well, again, with my congratulations to the committee for our work, and especially on item 7 today, and to the staff, along with our rates, so let's not, you know, we've got a lot of complex. We don't, you know, we've had an action packed meeting. So, with no further business and my appreciation, we're adjourned.

CAGRD and Underground Storage Committee

Agenda

Transcript