| ITEM #: 15. DATE: 07/08/2024 AI #:2082 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | DEVELOPMENT AGREEMENT WITH OLAM PHOENIX ARIZONA LLC RELATED TO OWNER’S REQUEST THAT THE CITY SUPPORT FOR EPCOR TO PROVIDE WATER SERVICE TO OWNER’S PROPERTY |
| STAFF PRESENTER(S): | Barbara Chappell, Water Services Director |
SUMMARY
A development agreement with Olam Phoenix Arizona LLC (“Olam”) setting forth terms for city’s support for EPCOR Water Arizona, Inc. (EPCOR) to extend its Certificate of Convenience and Necessity (CC&N) to provide water service to Olam’s property, which is currently located in the city’s water service area.
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
ADOPT RESOLUTION NO. 2024-2410 APPROVING THE DEVELOPMENT AGREEMENT (WATER SERVICE) WITH OLAM PHOENIX, ARIZONA, LLC.; PROVIDING DIRECTION AND AUTHORIZATION, AND AN EFFECTIVE DATE . (Barbara Chappell, Water Services Director)
FISCAL IMPACT
The purchase price that Owner will pay to the city for the Long-Term Storage Credits (LTSCs) is $500 per acre-foot, for a total purchase price of $57,250.
BACKGROUND AND PREVIOUS ACTIONS
Olam Phoenix Arizona, LLC (the “Owner”) owns approximately 42.11 acres of property located at the southeast corner of Citrus Road and McDowell Road. The Property is located within the city’s water service area but would require extensive infrastructure in order to serve a single parcel adjacent to the Loop 303 and Interstate 10.
The Property was rezoned by the city on September 25, 2023. During the rezoning of the Property, it was contemplated as an option that the City would allow the Owner to use a private water service provider. Specifically, at the rezoning hearing, Stipulation 3 was amended to read: “Prior to the issuance of any permit, excluding mass grading, Owner shall provide the city with either (1) evidence that the Arizona Corporation Commission has approved the contiguous extension of EPCOR’s Certificate of Convenience and Necessity (CC&N) to provide water services within the applicable area of the Property or (2) that EPCOR has obtained a Commission-approved Certificate of Convenience and Necessity (CC&N) authorizing EPCOR to provide water services within the applicable area of the Property."
The terms and conditions of this proposed Development Agreement are consistent with the Property's rezoning.
The Property was rezoned by the city on September 25, 2023. During the rezoning of the Property, it was contemplated as an option that the City would allow the Owner to use a private water service provider. Specifically, at the rezoning hearing, Stipulation 3 was amended to read: “Prior to the issuance of any permit, excluding mass grading, Owner shall provide the city with either (1) evidence that the Arizona Corporation Commission has approved the contiguous extension of EPCOR’s Certificate of Convenience and Necessity (CC&N) to provide water services within the applicable area of the Property or (2) that EPCOR has obtained a Commission-approved Certificate of Convenience and Necessity (CC&N) authorizing EPCOR to provide water services within the applicable area of the Property."
The terms and conditions of this proposed Development Agreement are consistent with the Property's rezoning.
STAFF ANALYSIS
Staff reached out to EPCOR and EPCOR is willing to extend its water service territory to serve water to the Property if the Owner provided EPCOR with a water resource necessary for EPCOR to serve the property. EPCOR estimated 114.5 acre-feet were necessary based on the project’s demands, which city staff found to be reasonable. The Owner does not have the water resource and asked the city to provide the water resource required by EPCOR. Staff has concluded that the transfer of 114.5 acre-feet of water credits will minimally impact the city’s water resource portfolio.
Although the transfer of the credits will have minimal impact on the city’s water resource portfolio, the credits have value. Staff has conditioned city support for the transfer of the water credits on receiving adequate compensation for the credits. Staff worked with the Owner on an agreed upon price of $500 per credit.
Under the terms of the agreement, the Owner will ask EPCOR to extend its CC&N to provide water service to the Property. When requested, the city will provide a letter in support of EPCOR’s submission to the Arizona Corporation Commission (ACC) to amend it’s CC&N to provide water service to the Property. Once the Owner notifies the city that the ACC approved EPCOR’s CC&N extension and pays the City $57,250 for the 114.5 acre feet of water credits, the city will execute the documents necessary to transfer 114.5 acre feet of water credits to EPCOR.
Although the transfer of the credits will have minimal impact on the city’s water resource portfolio, the credits have value. Staff has conditioned city support for the transfer of the water credits on receiving adequate compensation for the credits. Staff worked with the Owner on an agreed upon price of $500 per credit.
Under the terms of the agreement, the Owner will ask EPCOR to extend its CC&N to provide water service to the Property. When requested, the city will provide a letter in support of EPCOR’s submission to the Arizona Corporation Commission (ACC) to amend it’s CC&N to provide water service to the Property. Once the Owner notifies the city that the ACC approved EPCOR’s CC&N extension and pays the City $57,250 for the 114.5 acre feet of water credits, the city will execute the documents necessary to transfer 114.5 acre feet of water credits to EPCOR.