Consideration and Approval of Acceptance of Grant Funding: U.S. Department of the Interior, Bureau of Reclamation FFY 2012 North Central Arizona Water Supply Grant for the Red Gap Ranch Feasibility Study in the amount of $300,000.

Authorize acceptance of grant funding in the amount of $300,000 from U.S. Department of the Interior, Bureau of Reclamation for cultural, biological and groundwater resource assessments at Red Gap Ranch.

Acceptance of this grant will permit the City to receive Federal funds through the U.S. Department of the Interior, Bureau of Reclamation Rural Water Supply Program in order to continue conducting the Red Gap Ranch portion of the North Central Arizona Water Supply Feasibility Study.

The City is authorized to receive the $300,000.  The City has met its minimum required contribution of 59% cost-share with no further cash obligation because the City is pledging $1,662,451.80 (which equals 85%) for work already completed at Red Gap Ranch.

A sustainable community through economic vitality, environmental protection and social inclusion; Collaborating with our regional partners on this study effort will ensure the studies meet the guidelines of different entities.

Yes. On August 23, 2011, Council approved an Agreement between Reclamation and other stakeholders to participate in and provide funds and in-kind services for the North Central Arizona Water Supply Feasibility Study.

1) Approve and accept the $300,000 grant from Reclamation; 2) Do not accept the grant. The City could elect to not accept the Federal grant and pay its own way on the resources assessments, however, the City would miss an opportunity to meet its cost share obligation and accept grant funds as per the North Central Arizona Water Supply Feasibility Study Agreement.

The Coconino Plateau Water Advisory Council completed the North Central Arizona Water Supply Appraisal Study in 2006.  That study identified that the City of Flagstaff may experience a shortfall of water supplies at 8,027 AF/year by 2050.  Scenario planning conducted by the City, as discussed in the Water Resources Master Plan (WRMP), estimates that under a normal climate scenario, and assuming a historical growth rate of 1.4%, the shortfall could be upwards of 12,100 AF/year at full development in 2080.  The Appraisal Study identified numerous solutions to this long-term water supply shortfall.  Reclamation is currently investigating the feasibility of the various projects that were identified in the Appraisal Study, one of which is the Red Gap Ranch project. 

On August 23, 2011 City Council approved an Agreement between Reclamation, Coconino County, City of Flagstaff, City of Page and the Arizona Department of Water Resources to provide funds and in-kind services for the North Central Arizona Water Supply Feasibility Study (Attachment A).  That Agreement permits the City to receive the $300,000 in Federal funds by meeting the non-Federal cost share of 59%.  The maximum cost share the City is liable to provide (in-kind or direct) for the Red Gap Ranch component of the Feasibility Study is $1.18 million in accordance to Attachment B.  The City pledged the following work to receive the $300,000 grant (Attachment C), mostly funded by City Utilities through WIFA Federal loans, towards the cost share:

1) $28,148 for the Red Gap Ranch Data Analysis Report by HydroSystems, Inc., in 2009
2) $1,634,303.80 for the drilling of six shallow wells and setting surface casing at four additional sites at Red Gap Ranch by Layne Christensen Company, in 2011

In total, approximately $1.66 million, was pledged in the grant application towards the cost share Agreement (Attachment C).  While the City was required to match the $300,000 at 59%, the dollar amount in excess of this will be applied towards future Reclamation and Rural Water Supply Program grants as they become available.  By the City executing the grant, it is recognized by Reclamation that the City has also met its maximum cost share obligation of $1.18 million. 

As mentioned previously, the City is awarded the grant of $300,000 to hire environmental and hydrologic consulting firms for cultural, biological and water resources assessments (EA). This effort will represent the start of the required Environmental Impact Statement (EIS) process pertaining to the future pumping of groundwater at Red Gap Ranch.  This effort will also satisfy a provision in the Stipulation between the City and the Navajo Nation (see section on "Key Considerations") to work together to evaluate environmental impacts of pumping groundwater by the Navajo and by the City.

An EA, as described in Section 1508.9 of the Council of Environmental Quality's National Environmental Policy Act (NEPA) Regulations, is a concise public document which has three defined functions:

1) it briefly provides sufficient evidence and analysis for determining whether to prepare an EIS;
2) it aids an agency's compliance with NEPA when no EIS is necessary, i.e., it helps to identify better alternatives and mitigation measures; and
3) it facilitates preparation of an EIS when one is necessary - Section 1508.9(a).

Completion of each EA will be used to prepare a site-specific EIS proposal and scope consistent with NEPA and Reclamation policy. 

Acceptance of these funds will be used to satisfy Provision No. 3 written in the 2011 Stipulation between the City and the Navajo Nation (Superior Court of the State of Arizona, Civil No. 6417), part of which states: "The Parties agree to work cooperatively and in good faith to evaluate environmental impacts, if any, from both the City's pumping of Underground Water at Red Gap Ranch and the Navajo Nation's pumping of Underground Water along the south-western portion of the Navajo Nation."  The EA scope of work process involves collaboration of all stakeholders within the study group, which includes the Navajo, and it is through this relationship that the provision of the Stipulation is satisfied. 

Additionally, Council approved in July of this year, a Joint Funding Agreement with the U.S. Geological Survey (USGS) for the monitoring of the C Aquifer over an area that includes Flagstaff to Red Gap Ranch and baseflow to the Little Colorado River, Clear Creek and Chevelon Creek.  The Navajo Nation has been a financial contributor to this data collection effort since 2005 and Staff recognized this collaborative opportunity to support monitoring of the C Aquifer within a groundwater basin that both parties share.  Data from this effort is necessary baseline information for the water resources assessment task of the Scope of Work.

The community will benefit not only financially by receiving Federal funds with no further cash obligation, but also in that application of these funds as described herein support two objectives: the work necessary to start the Environmental Impact Statement process for wells and infrastructure at Red Gap Ranch, and to fulfill a provision in the 2011 Stipulation with the Navajo Nation to work collaboratively on evaluating any environmental impacts of pumping groundwater by either Party.  Ultimately, the community will benefit through working in a collaborative manner to derive at a regional solution for a long-term, sustainable water supply.

The Coconino Plateau Water Advisory Council has been actively involved in the development of the North Central Arizona Water Supply Appraisal Level study and in developing the Scope of Work for the cultural, biological and water resources assessments.  Moving forward with the environmental and hydrological assessments will involve collaboration with the Navajo Nation, U.S. Fish and Wildlife, U.S. Department of Interior, Bureau of Reclamation and others to ensure stakeholder concerns are represented and addressed.

09/18/2012 Approved EAB