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ITEM 12
City Council Memorandum Public Works & Utilities Memo No.
UA23-093
Date:
May 11, 2023
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
Andy Bass, Deputy City Manager
John Knudson, Public Works and Utilities Director
From:
Simone Kjolsrud, Water Resources Manager
Subject:
Resolution No. 5689 Authorizing the Sale of the Storage Capacity at the New River and Agua Fria River Underground Storage Project to Avondale
Proposed Motion:
Move City Council pass and adopt Resolution No. 5689, Authorizing the Sale of 18% of the Storage Capacity at the New River Agua Fria River Underground Storage Project to the City of Avondale; Authorizing the Lease of 8% of the Storage Capacity at the New River Agua Fria River Underground Storage Project; Approving the Execution of an Intergovernmental Agreement and Lease Agreement to Effectuate the Storage Capacity Sale and Lease Back; and Authorizing the City Manager to Take All Action Necessary or Prudent in Furtherance of the Storage Capacity Sale and Lease Back.
Background:
In 2007, the City of Chandler partnered with Salt River Project (SRP) and several other cities in the construction of the New River Agua Fria Underground Storage Project (NAUSP) in Glendale, Arizona. Chandler owns 22.8% of the NAUSP storage entitlement and utilizes the facility for aquifer recharge to meet state regulatory requirements for groundwater replenishment. However, water recharged at NAUSP is disconnected from Chandler's local aquifer and does not provide a local aquifer benefit. Redirecting water recharged at NAUSP to facilities located in Chandler provides a benefit to the local aquifer. The City's sustainable aquifer management goals prioritize replenishment in close proximity to the location of groundwater pumping.
The Reclaimed Water Interconnect Facility (RWIF) is planned to be constructed by 2024 and will allow Chandler to begin delivery of SRP surface water supplies to the Tumbleweed Park Recharge Facility instead of delivering that water to NAUSP in Glendale. The City of Avondale would like to purchase 18% of Chandler's 22.8% NAUSP storage entitlement and has agreed to lease back 8% of that storage capacity through 2026. Chandler will permanently retain 4.8% of the 22.8% NAUSP storage entitlement to provide operational flexibility in the winter months when additional recharge capacity may be needed. The 8% temporary lease back provides a transition period during the completion of additional conveyance infrastructure to deliver additional water to Tumbleweed Park. Conveyance of the majority of Chandler's NAUSP storage entitlement will greatly reduce Chandler's proportionate share of the annual operation and maintenance costs of the facility.
The sale agreement with Avondale involves transferring 18% of Chandler's storage capacity entitlement, but does not involve any transfer of long-term storage credits. NAUSP is utilized solely for aquifer replenishment to offset groundwater pumping that occurs in the same month. SRP surface water is not permitted to earn long-term storage credits, and Chandler does not utilize NAUSP for long-term storage. Thus, there is no negative impact to Chandler's long-term water rights or portfolio of available storage credits as part of this agreement.
Financial Implications:
The purchase price for the City of Avondale to acquire 18% of the Storage Capacity at the New River Agua Fria River Underground Storage Project is $5,753,237.13. The proceeds of the sale will be deposited in the City's water enterprise fund and be used to support future projects, including the related RWIF construction. During the term of the lease, Chandler will pay Avondale a proportionate share of the annual operating costs of the facility, equal to the percentage capacity assigned to Chandler annually.
Attachments
Resolution No. 5689
Exhibit A - Intergovernmental Agreement for the Conveyance of Rights
Exhibit B - Agreement for Temporary Assignment of Declared Firm Lease Capacity
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