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ITEM NO. 4g |
TOWN OF PRESCOTT VALLEY
STAFF REPORT
STAFF REPORT
DATE: 08/06/2026
TO: Mayor & Town Council
THROUGH: Gilbert Davidson, Town Manager
FROM: Skyler Barton, Assistant to the Town Manager/Interim Utilities Director
DEPARTMENT: Utilities
AGENDA TYPE: New Business
SUBJECT: Type II Water Right Lease Agreement with VPN Development LLC - Consideration & Possible Action (Authorize Signature) [Tracy Lund, Water Resources Advisor]
TO: Mayor & Town Council
THROUGH: Gilbert Davidson, Town Manager
FROM: Skyler Barton, Assistant to the Town Manager/Interim Utilities Director
DEPARTMENT: Utilities
AGENDA TYPE: New Business
SUBJECT: Type II Water Right Lease Agreement with VPN Development LLC - Consideration & Possible Action (Authorize Signature) [Tracy Lund, Water Resources Advisor]
| VISION 2024 FOCUS AREA: Water and Land Stewardship - Responsible planning for sustainable water management and land conservation. |
SUMMARY/BACKGROUND:
The Town of Prescott Valley owns a Type II Non-Irrigation Grandfathered Groundwater Right (58-111699.0004) to withdraw up to 75 acre-feet of water per year from the Prescott AMA Groundwater Basin. This right is owned by the Town to provide operational flexibility for such things as establishing new service areas, developing wells, and other unusual circumstances.
In 2017, 2019, 2022, and 2024, the Town Council approved one-year lease agreements (that included an option to continue for an additional year on a monthly basis) to Arizona Eco Development, LLC for construction water (e.g., dust control and related incidental uses). Arizona Eco Development LLC has not asked to renew that lease in 2026. However, VPN Development LLC has indicated a desire to lease a portion of the Type II right for the same purposes as part of its work on Viewpoint North. The lease would be under the same terms as the leases previously entered into with Arizona Eco Development. Such use of this water right conforms to Arizona law and provides the Town an opportunity to exercise the right, reduce impacts to Town’s Service Area water rights (that would otherwise by impacted by use for construction water), and recover costs for the original purchase of the Type II right.
The payment rate under these leases is based on the established market value for water specified in the Effluent Water Auction Agreement dated November 19, 2007 between the Town and Water Property Investors, plus 10% (as required by Section 12.15 of that Agreement). The market value was set at $35,000 per acre-foot for a 100-year supply in previous resale agreements (or $385.00 per acre-foot/year…$350.00/acre-foot/year + 10%). Revenue under the lease for the initial term would be $7,700.00.
In 2017, 2019, 2022, and 2024, the Town Council approved one-year lease agreements (that included an option to continue for an additional year on a monthly basis) to Arizona Eco Development, LLC for construction water (e.g., dust control and related incidental uses). Arizona Eco Development LLC has not asked to renew that lease in 2026. However, VPN Development LLC has indicated a desire to lease a portion of the Type II right for the same purposes as part of its work on Viewpoint North. The lease would be under the same terms as the leases previously entered into with Arizona Eco Development. Such use of this water right conforms to Arizona law and provides the Town an opportunity to exercise the right, reduce impacts to Town’s Service Area water rights (that would otherwise by impacted by use for construction water), and recover costs for the original purchase of the Type II right.
The payment rate under these leases is based on the established market value for water specified in the Effluent Water Auction Agreement dated November 19, 2007 between the Town and Water Property Investors, plus 10% (as required by Section 12.15 of that Agreement). The market value was set at $35,000 per acre-foot for a 100-year supply in previous resale agreements (or $385.00 per acre-foot/year…$350.00/acre-foot/year + 10%). Revenue under the lease for the initial term would be $7,700.00.
RECOMMENDED MOTION:
Motion to authorize signature of this Lease of a portion of the Town Type II water right (per Town Code 2-02-040) between the Town and VPN Development, LLC. VOTE.
STAFF RECOMMENDATION:
Town staff recommends authorizing signature of this Type II water right Lease with VPN Development, LLC.
FISCAL ANALYSIS:
Revenue Impact: The Type II Water Right Lease Agreement will result in revenue during the initial (and any subsequent) term of $7,700.00 per term.