All right.

Good evening, everybody.

I'd like to welcome you to tonight's work session here at the Eloy City Council Chambers.

It is Monday, January 29th, 2024.

The time is approximately 501.

I call this meeting to order.

Mary, can I get a roll call, please?

Councilmember Seton.

Here.

Vice Mayor Curtis.

Here Councilmember Wanowatha Rodriguez.

Here.

Mayor Powell.

Here.

Councilmember Schneider.

Here.

Councilmember Garcia.

Present.

Councilmember Taranko.

Here.

If we can all stand for the Pledge of Allegiance.

One nation under individuals and justice.

All right.

Any unscheduled public appearances tonight?

Probably no.

Thank you.

And if anybody has any questions or during the presentation, I'll allow that as well too.

Next we'll go to item five discussion of City Council Water Resource and Infrastructure Development Update.

David Farton.

I'm the clerk for tonight.

I'm Mr.

Mary Myers.

David Myers.

Okay.

Um, let's jump right into this.

Uh thank you all, Mayor, Vice Mayor, members of council for meeting on a work session tonight to go over our current water situation and where we're at.

We have been working diligently over the last two years, year and a half, two years with our water attorney, Mr.

Michael Pierce, who's in the audience with Gaming June Burnham to help with our modified designation of assured water application that we submitted to ADWR to revise an original 6,000 acre feet back to our 48,545 acre feet that we've held for for many many years.

So we've been working with development community, we've been working with landowners to try to put together a package that would suffice ADWR's requirements to keep our 48,500 acre feet to continue to move forward with our growth.

Um as you know, everybody's looking for water as they grow in Arizona.

So we had held a meeting similar to what you're gonna hear tonight back in September with the development and landowner community to go over exactly what we're gonna be going over tonight.

Just to talk to them, get their opinion.

It was going to help us to formulate a better response back.

We've also have an agreement that Mr.

Pierce has helped draw, which is a CAGRD, Central Arizona Replenishment and Groundwater District agreement that focuses around getting water for development.

You remember we did those DAs about 20, 25 years ago, back in the early 2000s, mid-2000s.

A number of those have since expired without any progress happening on those.

We've got a number of them that are still active right now that will be expiring either within the year or within five years or a little bit more than five years.

So we're we'll get we'll touch base on some of that later here in the agenda.

But uh this agreement was again to resolidify our position with the landowners in the development community that that would help us understand better where development is, how we can get water to it, how much water is going to be part of these projects, and also build in a factor that would so show some type of cost sharing so that the city didn't bear the entire brunt of having to pay for the water expansion, the water lines, the additional upsizing, etc.

So that has a component within that agreement that you saw that was in your packet that does have the developers paying a portion of that and committing to help the city with infrastructure development because as we know we just haven't had that flush of cash to put forth towards infrastructure development.

We've made good strides in the last couple of years.

One of the things I passed out at the beginning of the meeting was that exhibit that shows uh water rate increases both to our water system and our wastewater system over the next five years that will help continue to advance our ability to expand both wet infrastructure well all inf wet infrastructure throughout the city or in areas more directly related to where we anticipate growth or where growth has occurred.

So that's kind of the overarching introduction of what we're gonna be talking about today.

Well our first thing to discuss first is having our attorney, Mr.

Mike Pierce with Gam Engine Burnham come up and basically give you an update of where we are.

You know, what's happened in the two years since we got our MDOS with ADWR and what we're doing right now to continue to work for that forward with that process, and then we'll jump into review development agreements.

And then we'll jump into review development agreements.

We'll talk about a real silver letter that we finally have finalized that we've sent out to some development.

We've got uh one in the works right now.

We'll briefly talk about that water and wastewater master plan status report that you all saw at the last council meeting, given an update by Wilson Engineering.

Um our public works director, Matt Renscher is here to help with that.

And we'll run into wastewater capital improvements, infrastructure options.

We'll review the shared water supply allocation and that draft agreement that was within the packet, and then do next steps.

Now what are there you probably wonder where was the PowerPoint?

Why don't we see a PowerPoint for this?

There was just so much that we've got going on here that it was just difficult to put all this into a PowerPoint habit structure that we go through.

Uh Mr.

Mayor, like you mentioned at the beginning while we didn't have any people appear.

We did the same thing in the stakeholder meeting.

We started out, we started talking, got into it, and then questions and answers happened organically.

So that's kind of what we hope will happen tonight as well.

If there's confusion or more information, please just stop us and say, hey, can you do a little bit more on that?

I think the back and forth really helped that dialogue back in the fall, and we hope that that happens tonight too, just to kind of give everybody a more holistic picture.

It's a lot of information.

I'm not gonna sugarcoat it.

There's a lot there.

This meeting in the fall took two hours.

So, you know, it could be two hours tonight, but feel free to ask questions.

And uh additionally, we've got John Blaming here.

Everybody knows our friend John Flaming.

So he's been working very hard as well.

And we've got our finance director, Brian Wright to help with any financing questions because that's a big key component of this whole discussion is how the heck are we going to finance this stuff?

These are very costly projects.

And without the help of development, it could, you know, it that's a make or break in some cases with this.

So without uh, you know, any other discussion on that, I'll give the floor to Mr.

Mike Pierce, and he can kick us off with MDOS.

Yes, thanks, Mike.

And since there's no Monday night football, we can take all the time we want, right?

Is this working?

I can hear me all right.

Thank you very much, Mayor, members of the council.

Um really have enjoyed the opportunity to work with David and John and Matt on this project over the last couple of years, it's been a challenge.

So I thought that maybe one of the more helpful things I could do tonight is to start by looking at the big picture of water in Arizona and then bringing it down to a more local level with exactly what we're doing in the city of Eloy.

The water situation in Arizona has been uh changing very rapidly over the last few years, and not for the better.

Um, there has been a lot of concern expressed over the declining supply in the Colorado River and the impact that will have on those that particularly hold municipal and industrial priority M and I subcontracts with the Central Arizona project, which the city of Eloy also holds, um, but the impact that that will have on the big designated water providers in the Phoenix metropolitan area, the City of Phoenix, Chandler, Gilbert, Mesa, Glendale, Scottsdale, all of them, because they rely heavily on CAP water, and if that water is curtailed, uh, they are gonna resort to more use of groundwater, which is heightened the focus on groundwater.

Uh you probably heard and seen in the news that uh when Governor Hobbes took office in January of 2023, and her initial state of the state, she released the Houseyapa subbasin groundwater model, which declared that there was no available groundwater uh for new development in the Houseyapa subbasin.

She then followed that on June 1st uh with the release of the Phoenix AMA model, which covers most of the sub basins in the Phoenix Act Management Area.

Uh, not all, some of the outliers, Rainbow Valley Care Care Free Basin are not included, but the very large basins, Hasiapa, East Salt River, West Salt River, are included, and that model reached the same result.

There is no physically available groundwater for use for sure water supply purposes in the Phoenix Active Management Area.

Uh, that model's been heavily criticized, and there are negotiations underway to try and address that problem.

But what is a relatively new problem for those in Phoenix has been a relatively old problem for the folks in in Penal County and the Penal Active Management Area because in 2019, DWR released a model which again purports to show that there's no physically available groundwater in the entire Penal AMA for new development.

So this is the backdrop against we need to measure our relative chances of success in securing a large groundwater supply for the city of Eloy.

A little bit of quick history on that.

The city applied for a designation back in the boom years of the mid-2000s, 2004, 2005, 2006, there was a rush on entitlement seekers here in the city.

As David mentioned, many, many development agreements were issued for very large master plan communities.

And they expressed a very high demand for water.

And at the time, that would have been basically all groundwater.

And at the time, that was a relatively easy proposition.

The groundwater hydrology models that existed at the time would have easily supported very large volumes of groundwater for new development.

So that designation was issued for uh approximately 49,000 acre feet of water.

Then the recession hit, developments did not occur, and meanwhile, the Central Arizona Groundwater Replenishment District began imposing a series of charges on those that had very large groundwater allocations.

And those charges became invoices to the city of Eloy, and the numbers got rather large, up around a quarter of a million dollars a year.

And at that climax of that was about in 2016 when the Eloy began looking at its situation and thinking, do we really need to be paying these replenishment dues for development that isn't happening?

And believing that the groundwater situation would not change, uh filed an application for modification of its designation to reduce the groundwater demand from 48,000 to approximately five or six thousand.

Then the Penelope model was released.

All of a sudden there was much focus on the fact that there is no new groundwater.

And to Eloy's good fortune, the Department of Water Resources refused to act on that pending application to reduce the modification because it said that it could not issue any determinations of assured water supply, even a reduction, uh in light of the model.

So the application sat for several years.

Then as the situation began to get a little bit more difficult and the Penal stakeholder group was formed, there was a lot of emphasis on revisiting the model's conclusions and assumptions and premises.

And that sentiment led to the passage of a bill in the state legislature which said that for new determinations of assured water supply, the Department of Water Resources would not look at the physical availability of groundwater in the existing supply.

So once that bill was passed, that's about the same time I became involved with the city of Eloy, and it was very apparent to me that if Eloy were to give up its allocation of groundwater under that designation today, it would likely never get it back.

And so, with the cooperation of then City Manager Krauss, and now under David's leadership, we undertook to amend that pending application and reinstate the demand for 48,000 acre feet of groundwater.

That application was filed in November of 2021, and it has been somewhat dormant, but there have been some very important developments.

First of all, the Department of Water Resources looked at it and sent us a deficiency letter that said you haven't justified some of the points of assured water supply.

We responded with some of the additional information that we had, and they sent us another deficiency letter saying you still haven't met a couple of key points.

Please get back to us.

And that's where we have left it to date.

But the key points that they want to see are extremely important and extremely difficult.

First of all, when a city becomes designated and wants a block of groundwater reserved to its designation, there is a natural tendency on the part of the state to be careful as to how much water it allocates, because every city would want as much water as they could possibly get.

And they would take it all if they had the opportunity to do that, just in the normal course of human self-interest.

So one of the things that the department looks at very closely is what is the actual realistic projected demand of that city over the next several years.

The term of designations has varied.

Some of them were 10 years, some of them were 15.

When we filed our amended application at DWR in 2021, we were encouraged to apply for a 20-year designation.

So our planning horizon would have been 20 years.

Particularly due to the uncertainty of CAP M and I water in the Phoenix area.

So we're now looking at perhaps a worst case of saying, well, what do you need for the next 10 years?

Not full build out, not the build out that was described in the Water Master Plan through 2053 at 30 years, but just in the next 10 years.

So that's issue number one.

And infrastructure costs money.

So who's going to pay for the infrastructure?

And can you demonstrate to our satisfaction today that you have plans in place to actually construct this infrastructure?

Because the key to the assured water supply program is not that the water is just sitting there in the ground, but it can actually put into pipes and serve to meters to the customers that are going to rely on it.

And so those two issues have been driving the work that David and John and Matt and I have been working on over the last year and a half to try and develop a strategy to meet both of those criteria.

And we focus most of our attention on the financial side because without the money to construct the infrastructure, it's even more difficult to justify the quantity of the demand.

So we began looking, there's two ways to prove financial certainty in the assured water supply program.

You can do it for a city by an adopted capital and improvement plan that shows that the money has been budgeted over the next five years to actually construct the infrastructure.

Or you can rely on independent development agreements between the city and development interests that are willing to pay for the infrastructure.

So we've concentrated on both of those.

We've we certainly tried to incorporate a level of infrastructure improvement in the capital improvement plan.

But given the overall finances of the city, that's not going to be massive infrastructure.

To get to the level to meet these projected demands, we're going to have to have serious financial support from the developers.

That and the kind of nagging nuisance of having to continue to pay CAGRD dues for a volume of water that is not currently being used, led us down a path following up on the Lindmark example, which I was down here two years ago promoting, to say that, well, if you're a developer and you have land and you think you're going to develop, come to us and sign an agreement that says you'll pay for the infrastructure, and you'll help us pay these CAGRD dues in the meantime.

We floated that proposal out to a variety of landowners around the valley here, and we've gotten some positive response.

It hasn't been overwhelming.

And we'll get into that in much more detail as we progress here tonight.

But the idea is that we're looking to these developers to sort of put their money where their mouth is, so to speak, and come up and sign up for not only the enormously valuable uh opportunity to access groundwater under this designation, uh, but to put up the financial cost of producing, treating and delivering that groundwater.

So I I got a note from the Department of Water Resources the other day saying, well, where are you on all of this?

We need to hear from you.

So that among other things precipitated this discussion tonight, so we can get an idea of where the city council is on some of these key issues and uh and plot a path forward.

We're gonna have to go back to the Department of Water Resources with some pretty serious data, information, and justifications for our position.

And we're very much interested in in hearing from the city council as to your thoughts and your suggestions as to how we might proceed.

Thank you.

When you did that landmark several years ago, I remember that.

Um has anybody stepped up and done the same type of contract or or uh agreement?

Uh nobody's actually signed one.

Uh sorry, Mayor and members of the council, nobody's actually signed one, but uh we have drafted a modified version of that in generic format and circulated it.

And we've got what about a half a dozen, I think, of people that are very seriously looking at it because they realize the potential.

And then we've got probably another half a dozen or more that are just thinking.

Just there.

Yeah.

So so if they were to sign it like the landmark develop uh land over there, what's uh what's the positive side for the city of Eloy?

Not for them, but for the City of Eloy side.

Uh two things, uh Mayor and members of the council.

The question was what's the positive for the city of Eloy?

Two things.

It helps justify the continuation of the groundwater allocation of the designation, which is a vital resource to the city for its development future, and it also guarantees that the landowners will be committed to uh construct the infrastructure, design it, engineer it, and construct it to make these developments actually happen.

So those are two very positive benefits for the city.

Okay.

And if they don't, then where do we go if say I think it's the right term and expiration date, 10 years?

Um what happens at at the end of the agreement?

Uh Mayor and and council, the the tenure timeline is uh extremely difficult.

A big piece of the feedback we got from the landowners at the meeting that David was describing was that 10 years is too short.

Our little draft agreement says you've got 10 years to put this water to use or reverts back to the city.

But if you're making progress in 10 years, come and talk to us and we'll extend it.

Um that was a major point of pushback, as I said, the uh developers said, no, 10 years isn't long enough, we need 15 or 20.

And our response to that was the problem with that is that nothing will happen and we'll have water tied up for 20 years again, which is not what we want to do.

We want to force things to happen.

And by putting some real incentive on making you move, uh, we think that's uh uh a positive way to do that.

So what if they don't?

Well, the way the agreement's written, the water reverts back to the city and they can allocate it elsewhere.

We also put in a provision to incentivize interest to say that if you have excuse me, one of these allocations, but for whatever reason you realize that you're not going to be able to develop will allow you to transfer it to somebody that can.

You can't profit on it, but you can transfer it.

And that way, if uh you know certain things work out that one area all of a sudden becomes very popular, but they don't have any water, we can move some of this water around.

But the the bottom line answer to your question is that the idea would be that the water would revert to the city.

Okay.

Anybody else on council have any questions?

How many other localities there's uh or a situation like Yi uh here you're talking about the requirements of AEWR on you know the financial plan to do this?

I'm just thinking of the big water companies that have that financial ability to do some of the infrastructure help towns and so forth, but Eloy having own water company doesn't have that uh how many other are we a lone wolf or how many other localities within the state are in a similar are we just gonna get overrun by these big water companies because uh the only small towns have the money.

Uh Mayor and Councilman Schneider uh it kind of runs across the the gamut on that.

There are some that are similar to you, and then there are some that are quite independent.

City of Phoenix comes to mind, they have a very large capital budget, and they've been undertaking some very significant infrastructure uh improvements at their own cost.

Um Buckeye, whom I work for, uh, is more similarly situated to Eloy.

Uh it has perhaps a little larger budget, but it certainly doesn't have the kind of budget that would allow it to build the infrastructure necessary to serve North Buckeye.

So they're going to have to rely on the developers, and those infrastructure charges could be dramatic.

Because if that involves importation of water from the Harquahla Basin and things like that, uh they're gonna have to have water treatment, uh, certainly at least storage and recovery options, major uh effluent treatment facilities, all of that would be largely, if not entirely borne by the developers.

So and there's a mix in between Prescott, uh, who I also work for has a little bit larger capital improvement budget, but they still look to the developers to uh supplement it.

So thank you.

Anybody else?

No.

Okay.

Sure.

We can jump uh next is just a review of the development agreements.

Like um, well, let me ask one more question, I guess.

With all our solar that's going down south, they're obviously not using it because it's not residential where they would need to use it.

What what about that?

Is that being included in our 48,000 right now?

Or if it's not being used, you know, can we lose it?

Uh Mayor, the the land bases that comprise a lot of that solar territory did have some of these large development agreements, and their projected demand for master plan development was included in that 48,000.

Okay.

So that's another complicating factor because as those land bases go solar with little to no water use, that demand kind of evaporates or disappears.

And so it's hard to justify getting anywhere back towards 48,000 when a large what would you say 40 percent, 50 percent of that development land base is leaning more towards solar.

But after 25 years, if they want to take the solar out and redevelop that whole area, they wouldn't so I didn't if 20 years say they want to rip that solar out and and put residential there, they have the the water to do it.

Yes, Mayor, that's exactly right, and that is why I try to emphasize the point that it's very difficult to hold water for extended periods of time.

Okay, water traditionally in the West has been governed by the rule of use it or lose it, uh put it to use or don't, but you can't just sit and hoard it.

So um the assured water supply kind of follows that same formula by saying if you're gonna do great things 20, 30 years from now, come back and see us 20, 30 years from now.

Don't try and hold the water today.

That's not what you want to hear, I know, but that's that's the reality of the of the program and the situation.

Okay.

All right, thank you.

Yep, Mayor.

So the map that we have on display on the screen right now is the entire all of our agreements that we've had, whether they're active, terminated, or no DAs, no development agreements.

The black outline that you see is the solar areas.

So down in the south, these are areas that we know are going solar, and then up here are areas that have gone solar.

So you can see some of those development agreements that already exist in that area.

Um, when we did this and put this whole thing together, we went back through all these agreements, and we ended up looking at the total of our ADWR demand calculator, and that ended up being 54,245, well above our 48 that we have right now.

So that's a bit of a problem because even you know, like Mr.

Pierce was saying, trying to even go back to ADWR and asking for an increase, even to meet this per this demand would be a no.

Um, so at some point, there are gonna be people it sorry to put it crudely, but there'll be winners and losers.

There's just some development that's gonna happen and some that won't in this scenario.

So our exercises that we've been working on are many fold.

One creating maps such as this that illustrate what we're up against, but additionally looking at I'll bring this next one over here.

These are the our active development agreements.

So these are all the development agreements that we currently have in place.

So when we talked about some of those ones from back in the early mid-2000s, here you go.

And then if we scroll down here, I'll make it a little bigger so that folks in the audience can see as well.

These ones that are highlighted in yellow, uh, we have reached out to those development uh entities to try to terminate because as you see, they expire less than five years.

Uh there's just realistically, it'd be very difficult for any of those land holdings to do a major project in less than five years to meet the water demand in their original DA.

So those are out there.

We have submitted those to those uh property owners.

Uh, and then once then eventually in the next uh two weeks.

Well, actually, at the end of this month, February, we're giving them all 30 days to respond back.

Uh you'll see another slew like you had previously last year of ordinances to terminate those agreements.

But uh just with the ones that are currently in play right now, we're looking at 30,572 in what is needed to do these development.

And uh one of the interesting points to showcase on this map is uh a lot of these developments are all south of town.

So you'll see there's a substantial part where solar's already been active.

Uh, we've got some properties up over here to the east and north of our our downtown core and east of 87 over by Mount Newman area.

Hey David, yes.

How does this impact say a developer wants to come in and do some new development?

How does this impact them?

Is this constraint on new development by having all these things out here with a less than five year expiration?

Um if ADWR reduces our allocation.

Currently, right now we're working with 48,000 acre feet.

So any new development that comes in, we're telling them yes, we have 48,000 acre feet right now.

The sooner that you can go through the entitlement process, the sooner that you can get your land into a platted development, that's considered committed demand by ADWR.

So once it's in plat and it's committed, ADWR can't take away that water.

It's good, it's good to go for their development.

And then we'll bring down here's another switching gears here, real quick.

This is no development agreement.

So this is a map that showcases those to your point, uh, council member Sutton.

Developments that have come across our plate that want to do something, but haven't entered into a D8 with us.

So you'll see we've got this uh, you know, there's a big chunk of land in there here that encompasses the 10-8 business park owned by Kevin Peterson and his company.

So that's over here, and then we've got a bunch of different scattered property throughout.

Um again, it it's really fascinating when you peel apart the onions of these maps and you look at in the previous map, we saw where a lot of the DAs were that stuff that was south of town where we saw a lot of that land grab back in the early and mid-2000s by the council members to annex into Penel County and create a lot of development.

There was a bunch of hype that a lot of stuff was gonna happen at that time, and it really didn't.

Whereas now when we look at what's happening today and possibly in the future, we're seeing more of this interest happening north of the I-10 and within the I-10 um Jimmy Kerr area, as well as a little bit there off to the the west of Sunland Gin Road.

But again, these are folks that to your point, council member could come in and say one of the 106 that has actually come in.

So 106 come in here and say, okay, I'm I'm ready to go.

My entitlements are done.

Here's my site plan and start running it through the community development process for you for approval.

And once they get their they could plot this entire 600 acres, and once they do, we'd look at their demand calculator, determine how much water that they needed as part of the application process, and once it's approved, they would be receiving that much, it would go into our committed demand portfolio that we submit every year to ADWR.

So if if they're if they come forward, say that 106 area comes forward and and they don't have a platter area, they don't have the all the designs, they're not gonna get a designation from us until we get that.

Correct.

I mean, all we can hope for is this whole exercise say, for instance, ADWR drastically reduces us to I don't know, let's say in worst case scenario, we've got 6,000 acre feet, is what our MDOS is for.

We would have to look at what we currently have and come into demand, which is what we have to supply, and we'd have to look at what we have left.

And you'd be left with tens of thousands of acres of water demand from various developments throughout our city that we wouldn't be able to supply.

Do do other cities do it like that?

They come in with the hit come in with all the plated PO PADs and everything, or do they just come and say we're gonna do this?

It generally, yes, it depends on who's servicing it.

Like if Arizona water mike, maybe you can help with these they've got us because I'm not sure how that works with Arizona water.

Mayor, if I understood to, and council mayor, if I understood the question, is is that a typical pathway for development?

Well, it's more to do with the assured water supply program.

It has three categories of water, current demand, which you're actually serving, committed demand, which is a defined term, and it is platted but unbuilt lots, and then projected demand is everything in the future.

So if you're a designated provider like the city is, and you authorize the recording of the plat, uh by doing so, you certify as a designated provider that you're gonna provide water to that platted subdivision, and it becomes committed demand, and you can't really revoke that without revoking the plat.

So that's the way it works across all of the providers that are designated.

They all have to obey those those same rules.

Doesn't that take longer to do though, instead of coming in and just I guess getting the designation without the plans and the maps and everything, the PAD or the um yeah, the I guess all the neighborhoods that it has right there?

Couldn't that stall a development?

It uh yeah, mayor and council, it certainly can't.

That's a very that and that's why it is so significant, because you cannot get through a city planning process to a recorded plat without a lot of effort.

Okay, and and yes, that's that's why it's such a significant thing, because when the city authorizes a recreation of that plat, that means everything is in place.

You have all of your services in place, you have your engineering plans in place, you have your financial commitments in place.

Everything is basically done at that point.

So jumping, if you were one of these yellow properties and you said, Oh, I want a plat today, you're not gonna get a plat today.

You're gonna wait until you go through all of the um city processes that are required for good land use planning to get to the point where the city's gonna say, okay, we'll approve it.

And that process is at least several months, correct?

I mean, you have preliminary plats, you go back and forth with the town's engineers, you revise it, revise it.

Um so getting no final plat is is um an exercise, but that is the dividing line.

Once the final plant's recorded, that water demand is committed.

Okay.

That makes sense.

All right.

Go ahead, sir.

So basically, while we have the 49,000 um square feet designation, if someone wants to come and do one of these yellow things and turn it into a plat, they're still good.

But if we get reduced, then that's when it becomes a big issue.

Yes, Mary.

Okay.

Councilwoman Curtis.

The um the whole idea of projected demand in the designation is to allow you flexibility to do this over time.

So I wouldn't want to give the impression that you know the city is trying to game the system.

But on the other hand, if there is near-term development that wants to move forward, we have the ability to commit service to those.

And that's another subject that'll come up on the agenda here tonight.

What the what the significance of the notice of intent to serve is.

So, yes.

Okay, thank you.

Yeah, anybody.

Okay, I'll just continue on then.

So in this map that we saw with these that have got reached out to us, have interest in development, but no development agreement.

Um this represents 12,526 acre feet of water.

I mean, you can see all these different properties here.

Interesting note on these maps as well.

Is I'm gonna scroll up, sorry for moving fast on you guys.

This blue outline within the map, that's our current water service area.

So all these areas that you see where the blue is, that's where we can serve water.

Those are locations of wells.

Future wells, potential wells, according to our 2005 hydraulic study that we did.

The city wells are red, I apologize.

So you'll see those red dots are right here.

And then the last map that we have, I'll throw on the screen here is our terminated ones.

So these are the ones that we went through.

You see, this one is associated with solar.

These are agreements that either had reached their end of life according to the contract, or they were part of that first wave of those agreements that had within five three years before they could do anything.

There's just there is no way that the development could happen.

So uh council officially terminated those agreements last year, and that effectively took out 13,343 acres of development.

What an important note is not to say that any of these projects couldn't come forth and want to be a future development.

This doesn't mean that they're dead.

This just means that the formalized agreement that the city held with these landowners and developers back in the early 2000s has effectively expired, or we expired it through that ordinance last year.

Um I do know that there are a couple of uh folks, 403 and 405, particularly are still interested in doing projects.

So they would be included in that previous map of developments, but no DA.

We didn't do an overlay, but you know, as a reminder, our fund, you know, this is we may have to do an overlay map, I'm thinking of our zones.

Uh last year at this time of year, we presented this to council during the budget work session, and this was where we loosely um kind of focused on priority areas within the city.

So that will have to be another map we'll have to work on.

It's putting those agreements over the the zone map that we're doing it.

And as a reminder, we you know we're focusing on E right now and parts of A up and up in there, EC and A, but mostly this is the area between E and C that we're really focusing on.

And there are several development areas within these with the Corey work on that map, Matt.

Get that done.

So what any good news?

Any good news?

We have water still, we still have 48,545 acre feet of water.

Yeah, the good news is you know, one of the projects that we worked on as well was a will serve letter.

Um, Matt worked on putting that together, utilizing examples from the city of Mesa.

Matt, you want to kind of come up and talk about that?

Uh, we've got that out on the street.

That basically, I'm finding it here.

It is what the will serve letter does is it basically allows a developer to have financial securities to be able to take to the bank.

Um that that's been a big issue too.

Some developers are saying, well, you know, we have no assurances from the city that you guys have water available for development, which makes banks a little leery about loaning money for those projects.

So this is escape uh a stop gap to help with that so that they can take to the financial institutions and still be able to get awarded uh financing for their project.

So I'll turn it over to Mr.

Runcher and Mr.

Mayor and Madam Vice Mayor and Mr.

Malice.

That is that is absolutely certain that is absolutely true true.

What he said, a lot of times the developers will use the will serve letter to take to the bank to get the funding for their product.

As as you can imagine, a major infrastructure project, a major housing project will take significant amount of capital, and they don't have a lot of times they don't have the capital on hand, and so they go to a financing institution with this commitment of the of the city to serve the capacity to the to the water in the sewer and to to get the financing for that.

And what we did is we didn't have a form on hand that we could send out that had some study behind it.

And so what I did is I poked around and I actually found one on the City of Mesa website.

And rather than reinvent the wheel, I just took their form, it's a simple form, it's it's web-based, so all they have to do is the developer comes in, clicks on that link, it's inputs all the information, it generates a report to us.

Then we as the engineering team can go through and review it and see if if one we have the capacity to meet the demand, and two, if that's the best use of this limited resource.

We've had several um potential projects that have come in that are they're extremely high water users with with little to no benefit to the city of Eloy.

Um I I don't know the the name of it, but they were coming in and they wanted to um excavate underground basins for a natural gas holding.

So basically, so what they do is dig big holes underground, fill them up with water, let the water evaporate out, and then use the salts in the water to coat the the inside of the inside of the caverns for lack of a better term as a natural gas holding facility.

And though we have the capacity to do that, that would take more than our current capacity or more than our current demand.

And we didn't feel that that was the best resource, the best use of the limited resource that we have in the water.

And so with this will serve letter, once we review those, once we we look at those and see yes, this is a good use of our limited resource, with that we are we are exercising that good stewardship and that responsible stewardship to make sure that we are getting developments in here that are conducive to growth that are conducive to homes that are conducive to the growth that we want to see here in the city of Eloy.

And what we do is once we have that form, we send it out and we send out a will serve letter, which basically says that the city of Veloy will commit to serve and will commit to provide the in the water to that infrastructure that the um will serve letter subject to certain criteria and those criteria are outlined one, two, three, four, five in the as you can see on your screens.

Um that is a a cost sharing that we are not going to be putting in all of the infrastructure to do that, because if you want to build a project, you need to put some skin in the game for lack of a better term.

And it also has some conditions in there that if no development happens or if nothing's progressing, just like to Mr.

Malowitz's point earlier, if there's a development that's just sitting on this will serve letter, not doing anything with it, we can at that point revoke that will serve letter, and that reverts back to our available resources to give to somebody else who is making project uh making progress with that.

One of the things too that we have in here is is particularly as as Mr.

Pierce alluded to earlier, the designation of assured water supply is governed by the Department of Water Resources.

So if the Department of Water Resources, for instance, were to come in and say, we are limiting your your designation of insured water supply to 5,000 acre feet, then at that point we can we can say we can issue a will serve letter up to 5,000 acre feet if we don't have anything, if we have something beyond that, then we are responsible or the developer is responsible for finding an alternative method of of getting the water rather than the groundwater, whether that's through recharge, whether that's through purchase on the private market, whatever it is.

And and that's one of the conditions of that will serve letters that if there are factors beyond our control, beyond the city's control, that are influencing us that are precluding us from providing this water to this development, then we can we can rescind that that will serve letter.

Um to Mr.

Maliwitz's point earlier, we've we've already sent one out to a developer.

Um we are working with with my staff to get this form up and available on the website so they can just click on the website, submitted all the information and get it and generate the report.

Right now we have to send it out, they fill it out and send it back to us.

So we're we're working on bringing that up.

Any questions on the well serve letter?

Dan.

Matt, I have a question on and I don't know if you're the right person to answer this, but we look at this assured water supply and we keep talking developments, but what about the industrial side?

This covers the industrial side as well.

Yeah, okay, because some of those areas we talk about south of 10, we think of housing, it probably won't be housing, but maybe there will be industrial developments in those areas.

So if we have 48,000 acre feet now, and let's say if some of that was going to be industrial, and how much of it do you think we might need for residential development?

If we had 25,000 acre feet or 30,000 acre feet, what kind of population might we support with that kind of uh acre feet?

Mr.

Mayor, member uh council member Snyder, that's that's uh an excellent point.

And it it segues it's a nice segue into the wastewater master plan and the water master plan that we're presenting last week.

We'll touch on a little bit briefly.

But this will serve letter, we do have the capacity and and the applicant when they submit in the information can indicate if it's residential, commercial, or industrial.

And if they if it's industrial, then they can also indicate if there is industrial pretreatment waste way for the wastewater stream.

So we can we can analyze all of that with that, and and we certainly have a an allocation for industrial usage as well as in our reports to the Department of Water Resources.

What would the population be at 48,000 acre feet of water?

I believe that population is around 80,000.

I'm not 100% certain.

We can certainly look into that and see what population that existing 48,000 feet or 48,000 acre feet would support.

Because we're projected to be one of the largest due to our land mass, largest in Panao County.

That's correct.

And the the populations that the population projections that we have from the wastewater and the water master plans that were presented last week or have us at a population of about 115,000.

We also have some population estimates from the Sun Corridor MPO.

So we'll we'll be coordinating all of that to get the information for to determine what's what's sustainable with with that what that designation can support as far as population.

And that that also includes um commercial industry.

Yes, and less than 80,000.

And again, I I'm not uh I'm not sure what the conversion is.

We can we'll certainly look at that and and bring it bring bring back an answer either to council and in whole or uh we can send that out to the city manager and he can distribute that to the council as well.

Okay.

I thought I remembered someplace at one acre foot one acre foot feet of water would support uh three to four houses.

Is that if that's the same?

Kevin said his thumbs up.

Today it's more right.

Yeah.

You'd have a mix of industrial and houses within whatever blend you have a population for the future of the market.

Right.

So we would look at the land use plans, we would look at what corridors are proposed for commercial, whereas residential proposed, whereas commercial, where is industrial proposed?

And that that is in the water and waste water master plans as well as the reports that we have to the Department of Water Resources.

I don't know if this is directed towards you or just a thought out there, but in the audience we have so developers and real estate people.

I mean, it's they they are actively marketing their locations throughout the city.

Um some are have designations, some don't.

But it's not like they're not doing anything to come to us.

You know, they're they're they're actively marketing.

How do we protect them that are actually doing something?

And they may lose it because we don't have the water.

Well, and and and to that point, um, if they are actively marketing it, if they are working on a development, if they have plans for it, we can work, we can certainly work with them and give them a portion of the existing designation of assured water supply that we have right now.

Um and that's that's where the communication is key with us with the developers, with the development community development team, with the engineering staff, with the developers, with the marketers in in some cases they have a different form that's that's marketing the the property.

That's that's where the communication and and the meetings back and forth with with us with the city come into play.

I I think it's important that that you know they're doing their part, you know.

We don't want to lose them for whatever reasons, you know, and and it's valuable.

Now, one thing that I know that's not popular whatsoever, and Dan brought it up about we don't have the money because we have our own water system, our own water operations here.

What if, and council this is just a what if question?

What if we were to bring in a global or Arizona water that has more money than God that can actually put in infrastructure?

Could could the city do something like that with the partnership or we could, and and that's actually something in the in the earlier earlier discussions that we had um the latter end of last year with uh city manager Mallowitz, myself, and and John Blaming, um, we met with global water resources.

We have an existing agreement with them that that provides for that public partnership framework.

Because that could help us financially with the investment with that we need.

It could and and and there are certain cases, there are certainly cases where a a public pride public private partnership is is the best for all.

We we will not have the infrastructure that we need to support the growth that we all want to have.

So something like that, you don't give up full control, you just like lease in it, I guess.

Like it could be at least it could be um that they provide service to that area within the city limits in exchange for let's say just a franchise fear for for lack of a better term, where it's three percent of their gross revenue, they would revert back to the they would they would pay back to the city as as for use of operating under our designation of assured water supply with our designation of assured water supply.

And and those are things that would be negotiated with an agreement, uh, whether through a memorandum of understanding or or a contract with that that private entity.

Okay.

I think um, and to further the discussion, I think it's important to know what when you ask um, you know, what what can we do to protect the people that have land holdings or developers with their property so that they can still develop you know and ensuring that we can get proper infrastructure out to them.

You can just reverse that question.

What are they doing to ensure that their property is more marketable?

We have several properties that could that landowners and developers could be doing stuff on there to make it more marketable.

Um you hear the term pad ready a lot.

We've got a lot of land out there that is not shovel ready or pad ready, and there's in there's instances where they could expand water lines on their properties to do something.

Um typically in the past, we've heard we're and we're kind of in this position because we've got you know substantial land areas that are a mile from a water connection, but they don't want to pay to have the water line sent there.

That's like two million dollars.

They don't want to do it, they want the city to do it.

We bet in those discussions.

Well, we're not doing it.

The city, you should do it.

You want us here, you run the line.

So chicken and egg scenario.

I mean, and then you know, we we as a city don't make the market.

I mean, the developers and landowners are the ones making the market, they're the ones building it.

So that's been a difficulty, and some of the reasons why we're here today is because we've had landowners and developers that aren't willing to foot the bill to get the water or wastewater systems to the development so that they can develop.

They want the city to pay that bill.

Um, you know, Mr.

Pearson, our team has has talked about you know the cost of water now.

What is it at 48, $5,000 an acre foot right now if you're going buying on the open market?

$13,500 an acre foot if you're to go buy water in an open market.

Some of these developments need 2,000 acre feet.

If they don't want to pay $10 million to run infrastructure to their project for water, what's cheaper?

Having to buy the water on the open market or paying for infrastructure improvements to get water to your development so that you can make something of the property you own and you can make money off of it.

I mean that's kind of we're at the city, we're at that crossroads right now.

And you know, we talk about having cap water, we haven't really talked too much about our cap allocation, but you know, we've got 2,171 acre feet of that.

That's worth a lot of money, 13,500 per acre foot times 2,171 acres.

But that that's it's that's the difficulty we're facing here.

That's where some of the C A GRD agreement comes in, where right now the CAGRD fees are being paid for by the city residents.

They're paying those.

Those are coming out of the water rates.

They're the ones having to pay the bill to keep the water there so that development can maybe happen.

So what are we doing to advance development and keep things marketable?

Well, the city residents are paying a what was it 200 it's about 250,000?

Yeah, where was that number?

Yeah, 250,000.

Oh, here it is.

There you go.

Last year it was 264,147,000 being paid for by the city of UA residents to keep the CAGRD in place so that we can have water.

It would seem to me too that you know you say it's like a partnership, like what's in it for the city, what's in for them.

But if you look at the maps you showed, and you look at where some of our current infrastructure is at, if the city would spend money to increase the infrastructure, we're going to do it where we're gonna biggest bank for the buck.

That's certainly not way south.

It would be up in that you know, A and B area you identified near the map, because the potential for return, if you will uh for the city is much greater there than doing something way down south.

I think that's something you need to throw out to them as well.

Is that yeah, the city will do things, but we're gonna pick where we get the biggest bank for the buck on it.

Yeah.

And you know, we may be forced into that, depending on where we are at the end of the day with ADWR.

That's the real tough part too.

Is you look at this, and if we get severely caught by ADWR, um, there's they're certainly not gonna help you pick and choose for us, but uh we're we're gonna have to do that.

That's back to your point.

That's gonna be like, okay, we're this is where the winners are, and sorry guys, uh, if you're in the loser section, apologies.

Anyone else?

Oh, Matt, do you want to I mean do you want to touch base on that that master plan again real quick?

Is there anything in particular from last week?

Just briefly on that.

Um, last week, as you recall, we had Wilson Engineers here to present that.

Um, that will be finalized.

We will be taking the water master plan, uh, the wastewater master plan with some of the in other information that we're gathering to meet with Department of Water Resources.

Probably by the end of February, we will bring forth the draft of the master plans, both the water and the wastewater master plans for for adoption to the council.

That way at that point, we will have an adopted water master plan that will supersede the previous one that will that will guide development from from here going forward.

I don't want to rehash that from last week's discussion.

But if if any of you have any questions, I'd be happy to answer those.

The water and wastewater kind of go hand to hand.

They do.

Yeah.

Interesting.

Well, next up, uh, if you don't have any questions on that, is just briefly talking about our capital improvement plan project summary.

Uh, you know, we're kind of changed it a lot since last year.

I I do have last year's CIP, but you know, at this point, I think it's kind of move.

I we we've Matt has been working diligently on redoing it, meeting some of the deficiencies that were addressed in the the letter to make sure that we are getting the water the infrastructure built out there, um, and and making that more of a holistic approach.

You'll see more of that at our budget retreat when we get those to you, so we can talk more fully into that.

But I think the key takeaway to our water and wastewater capital improvement plans is we totally understand where ADWR stands as for uh for financial where for all to make this happen.

So, understanding our current you know conditions, where where we are financially, what we can comfortably do.

Matt has done a good job at building that out.

He's even extended it out to a 10-15 year CIP.

Uh not a requirement of ADWR, but does give a larger picture of of what we can do and how we can get there.

And we're exploring every option that we can.

Uh that's the next point, infrastructure financing options.

Uh Brian Wright's helped us out, and we've gotten together with our Whipper representatives.

We've got several WIFA loans that are out there right now that we're working for to help build the infrastructure.

We've uh you know, we did the Vergy contract, that's about 95% wrapped up right now to help with energy efficiencies in our operations.

The biggest hurdle that we run into with our loans, there, you know, everybody says, Oh, there's a lot of money out there.

I just heard it today talking with another uh community member about oh, there's all these loans, there's all these federal loans, and we are looking into them, we were researching them.

We run into a couple of issues in that a lot of the ways to get these loans is you have to have plans already in place.

And over the years, we don't we didn't do those.

So we don't have the groundwork in place to be eligible for these loans.

Um we also just had our designation from an urban community to a rural community, so we're looking at different avenues for USDA loans with that.

Um, but I think and and Brian can maybe come up and talk a little bit about this.

I I think our our huge hurdle is these loans aren't necessarily for new infrastructure.

What we've run across is the loans that we are eligible and we can get are for current infrastructure repairs, not expansion.

So when we want to go put a new line a mile down, that's gonna cost three million dollars.

It's it's not there.

We we we don't meet that requirement, right?

Um is there anything else you want to add on that?

Because we we've been talking with WIFA, we've been looking at Brian's been digging in this fiscal year to see what other options we have to maybe even repay our some of our WIFA loans early to free up additional revenues to go towards capital improvement projects that we could use.

Yeah, Mr.

Mayor, members of the council.

Um, when it comes to WIFA, yeah, WIFA has money that you can borrow, you can, but it has to be for your current infrastructure.

Like Dave said that when it comes to WIFA, even USDA GATA, which is a greater Arizona development authority, it's gotta be for existing expansion and existing lines, repair of existing infrastructure.

So that's the that's the problem we have is there are a lot, but to expand it three miles up the road to an own unknown development or vacant land.

We don't have we can't go through WIFA for those fundings or USDA or GATA.

Um the problem with USDA is the last time that we did a USDA loan is when we did the um toll tech uh sewer line where we expanded the sewer line and actually got homes connected to our sewer clapped clapped their septic tanks.

But when we did that back in when the city did that back in 03 to 05, we were below the 10,000 population.

And with USDA is when you're below that, when you go get a loan, they give you you can get a grant.

That grant then you don't have to repay.

We're over that 10,000 population because after we got that last one, that's when we had the three prisons built.

That population counts into our overall limit.

Um so we get kind of handcuffed when it comes to trying to look for funding for out there.

I mean, a lot of it is gonna have to be the back on either the city, like what's been talked about, or developers with it.

You know, we do have impact fees, but our impact fees we stopped and we converted them to uh capacity charges.

Even though that we have some, but it has to be for new development, we we have very little because all the houses that we get from ropes and don't have to pay for water and sewer impact fees.

It's just what we've gotten so far.

So I think it's online in the development impact fee report.

We got maybe 500, 600,000 between um for water and wastewater that can be looked at, but it has to be for you know new growth in some of the areas.

We can't expand lines and use some of this where it's not to where some of the impact fees have come from.

So I mean we are capped on some of that.

Um we'll talk a little more on this weekend when it uh comes to some of the financing on it, but yeah, it's you know, secondary property tax is a is a means that you can do it, but you gotta ask the vote of the public for that.

It's really tough issue on that one.

And we you know, we to your point earlier, we really are looking at all avenues.

Uh in the past, I had heard that we didn't do CFDs, community facility districts weren't something that were popular.

But now we feel more strongly that that that is an avenue for to help with development.

We're currently working with several property owners up in the e-section over here to form a revitalization district.

So you know, we're as as a team, we're looking into that toolbox, and we're trying to find anything that we can to help with the situation to ensure that these developments can happen.

And we want the development community to know that that we're willing to partner like like Mr.

Rentcher said, you know, if we got to do a PP3 or we gotta go into a CFD or CAGRD or any agreement that will help get the infrastructure in place to get these developments to occur so that we can get the water to them and get that into a committed category so that it's not something ADWR can take away is is our goal.

I mean, we we want to see that happen.

We've listened to uh council members and listened to your direction, and that we want to see growth.

We want to see we want to see the retail, and we know before the retail we got to have the rooftops, but we're also needing to make sure we have good quality jobs here.

So our economic development team is working well, Jeff and McKinsey and them are you know to bring in industry and we're digging as far as we can dig to find those options for infrastructure growth, and that's what we're gonna take to ADWR.

That's part of our story to get them to understand, even though we are a small community, we're limited on our resources, like Brian was pointing out, we're looking towards whatever avenues available that will get us to Young Game.

And the last thing I and we'll talk a little more about it this weekend is you know, what we're you know, maybe with some of our reprioriting reprioritizing our current CIP projects, it might be a good time because last when we did do the last rate study, we said, you know, probably mid, you know, in between year three-ish, we should just revisit it to make sure our rates are in line.

We know with our capital, maybe it's time to reprioritize what we have, look at our rates study, recommission that to make sure that our rates are gonna support what's in our capital, make sure that we do have a good plan moving forward, you know, in those that time.

So, you know, we're gonna talk a little about it more this week.

And and just to give you a little bit on the WIFA side, we have a total of seven WIFA loans outstanding.

Uh four of them in water, and three of them are in wastewater.

Um actually the and then we have one USDA debt in the water.

So I mean, and to give you an idea is our the one that matures first is uh matures in seven one of two thousand twenty nine.

You know, that debt repayment is probably about 40,000, 50,000.

You know, it's not that much, but it is something that will mature, you know, come in 2029.

All the other ones are in 2031 to 2042.

So we have some you know debt that's on the books that have been out there from improvements and loans that uh that we've got for our current water systems anywhere from our water systems to meters to wells, those are all the things that the WIF loans cover.

So if you have any questions with that, if no, not right now.

I want to ask the anybody from in the public that wants to speak if you guys have any.

Yes, Kevin?

Come on up.

Yeah, you're the first one.

I didn't even get finished my statement.

You say ah, you can just state your name and uh Kevin Peterson.

Uh I represent the uh 10-8 business park, which is about 1200 acres, and we have about another 240 acres of residential property in the the town of Eloy.

Um excuse me.

Um I don't know how much if I'm limited to the three minutes, but if okay if it's okay, I will.

I can put up a clock if you want to.

Um three minutes and two seconds, Kevin.

I hope to articulate um so the council and again to staff, and we've visited with staff a developer's perspective on what's happening, and I maybe want to use the 10-8 business park as a as a as a basis, and this could apply to a variety of different developments.

But since the 108 business park is one that uh we're we're involved in I can maybe use that as a case example.

Um, but first let me answer the high-level question.

I think uh Councilman Snyder or maybe was Councilman Rodriguez asked about how many how much population, 5,000 acre feet or 58, 50,000 acre feet.

Again, just a real high level.

If if we're talking uh a development of approximately three units per acre for 50,000 acre feet, that means uh 150 plus 150 to 200,000, depending upon what your density is.

If you get shrunk down to the 5,000 acre feet, that means you're 15 to 20,000 people as far as maximum.

Again, that's that's high level, and and uh the engineers can confirm that, but maybe to put perspective.

Um let me tell you what our concerns are.

We understand Eloy's challenges with writing the check.

We understand that staff is right working hard to try to come up with a solution.

But the solution that we're looking to try to implement right now has some major fundamental flaws from both the city standpoint and also from the developer standpoint.

I want to use the 10-8 as an example.

On the 10-8 business park, we have 1200 acres, and let's assume that and by the way, I want to make a correction.

The the map on the yellow does not encompass all of the 10-8 business parks.

So maybe we can get that that corrected and make sure we have the right request.

But let's let me back up just two more seconds.

We met this week with two major brokerage firms, and we're gonna choose one of them, or if not both of them, to do a major national full-out marketing perspective on the 10-8 business park.

Both brokerage firms believe and admit that the 10A business park is the finest business park in Penau County right now.

It has the most potential of any business park in Penell County, and we should be in a position when I say we as landowners and use the town of Eloy to any new users that look in the future for the for Penau County, we are gonna be in the ball game between being available with our zoning, with our utilities, and also with the marketing efforts that we're gonna spend.

Now Mr.

Pertz mentioned infrastructure.

For example, the 10-8 business park has basic infrastructure to get started, water, sewer, fiber, power, everything ready to go.

We have a PAD in place that that gives us the zoning.

Uh so uh the industry will say uh shovel ready.

We we are shovel ready for the most part to get the 108 business park started, and we're ready to go.

But what staff is asking us, and what the town is asking us right now is to skate on thin ice.

Even though we've spent all this time and all this effort to move forward, and we're going out nationally to make sure that the 10-8 business park is in the game going forward.

The reality is if if we came in today, staff says, well, we have 48,000 acre feet, and you have a appropriate water user, we can sign you up.

But the minute the Department of Water Resources maybe reduces that from 48,000 feet to 5,000 in a worst case scenario, and now you've got that $5,000, 5,000 acre feet already allocated out to other development agreements.

I think David said there's 30,000 acre feet out there that you're trying to get canceled.

Guess what?

No matter what the user is, no matter who we bring to the table that's ready to go infrastructure, bring in jobs, bringing tax revenue for the 10-8 business park, there's no water.

So that's the thin ice work we're we're scooting on.

That's that's the reality if the water allocation comes down as we're out there working, working, working.

The second scenario, which is being proposed right now for the development community, is help us pay for the 250,000 dollars per year, and we'll give you rights for 10 years, and if you don't use it, we'll bring it back.

Well, the challenge with that is you heard in the presentation.

You have 48,000 acre feet, 50 some odd thousand acre feet wanted, and they're maybe willing to write that check.

But even in that situation, let's say the 10-8 business park got a thousand acre feet of that, and let's say we had a user that needed 1,500 acre feet.

We don't even have the extra five, you wouldn't even have the extra five hundred acre feet to allocate to a business that's now ready to go because you now have allocated all your water out to the forty-eight to the fifty some odd thousand acre feet that are paying the help paying the two hundred and fifty thousand dollars a year.

Then it's the if it make it worse, and let's think that this is probably the reality.

The Department of Water Resources is probably not going to allocate you the full 48,000 acre feet.

There's it's gonna be somewhere in between probably the 5,000 and the 48,000, low case 5,000.

If we get all the developers on 50 some odd thousand acre feet now to start paying, and then you allocate the 10,000 or the 5,000 acre feet, basically none of us have the ability to develop.

We we each have a 20% right to whatever water is available, but none of us have enough to do a development.

Not my development or not even the guys in the future.

Does that make sense to everybody?

Is that make I am I am I so this is this is what I'm pleading with the town to do.

Let supply and demand determine where your water goes.

You all have got don't give up control of one drop of your water to a developer.

Cancel every development agreement that you can cancel.

Don't renew anything until a developer is ready to go.

Work with the town to figure out how to pay, whether it's the 250,000 thousand dollars a year or the ten thousand or whatever allocation you end up with, but then you have control to allocate that water to the 108 business park or to the other project that's ready to go, don't allocate that water to something that's 10, 15, 20, 30 years out, or even 10 years out.

Wait until supply and demand dictates where that water should go.

Then you guys are in the driver's seat.

You could then you could do a dupe with Arizona water if you wanted to, or to with global, or stay in stay or or do your own thing, but you're at least in the driver's part.

Don't give any of your water rights up to any developer until they are ready to develop.

That means that when the guys are ready to develop, whether it's the 10-8 or whether it's anybody else, then whatever you have, the 5,000, the 10,000, the 15,000, then you have the ability to make things happen.

It's not allocated out everywhere because someone helped pay.

Find a way to pay the citizens back.

I mean, when a developer is ready to go, whether it's the 10-8 or any other project, if there's an impact fee on the water to help pay back what the town is advanced or the citizens advanced with profits, then that's fine because they have development ready, they have users ready, they have a check available at that point to write the check.

And they're facing with what Mr.

Pierce said was $12,500 an acre foot.

So whatever you charge them is probably going to be significant significantly less than that.

But at least the people that are ready to develop are willing to put in the infrastructure or have the infrastructure or doing the development agreement, not promises to, but actually are doing it, then you have the water to give to them.

They can pay you back, the citizens back for whatever they've advanced, but you control your destiny.

Don't give up your control of water to the maybes out there that's going to develop over the next so many years.

Keep your water for those that the market says are ready to go, and then allocate it and charge them appropriately.

Any questions for me?

Any questions for Kevin?

I have a question.

Yes.

Just think of what you were saying, and of taking uh and having so many acre feet and you're gonna pay so much.

What if you're part of a big pool and the big pool include 40,000 acre feet and you pay so much money you take the total cost of that 40,000 acres, you divide up and say, okay, it's like when you guys are ready to go, how much of that's left, who's watching you.

So instead of charging each individual person, you are part of a pool of developers or people that own the total thing.

What the problem is something like that.

The problem is this.

Let's say the pool gives, let's just use the 108 business part, 500 acre feet.

Because we're you wouldn't have it.

You just part would you be uh like a shareholder.

You're asking developers to get along in a pool.

Well, but that would give you access to the water when you need it.

If you did your idea fundamentally would work, but you'll you'll never get the development community to do that.

That there, there's whatever's mine is mine, and that's that's why the town is I need more than that.

But that goes back to what I'm saying.

The town needs to control whether you got three drops, five drops, or five thousand drops, or forty-eight thousand drops.

You need to control that water for those that are ready to go when they're ready to go, market demand, not some agreement, not some will serve litter, not so some hypothetical, not some I'll pay for the infrastructure, not I'll pay my share to the you know, it keep control of your water.

That's just my that's my message.

You know, I say that selfishly too, because we're one of the ones that we think are ready in the relatively near future, and I want to make sure that I'm not on the thin ice.

I want to be able to go out there and I bring in a user at six months from now.

I I want David to be able to say we got water for you, we didn't allocate it to 48,000 acres right now, and now you you need a thousand acre feet, and we only have 500 allocated to you because these guys are all writing a check for $15,000 a piece, and then we're all at a disadvantage.

Does that make sense?

Yeah, here you go.

Sarah?

That's my concern.

Any other questions?

I have a question.

Yes, please.

So you know, say we did that, and we just you know kept everything in our control and somehow paid all the fees.

This might partially be a question for David, but maybe you also know the answer.

Is there a catch 22 in that that if we didn't have development agreements, it also might be a question for you, then the ADWR might say, well, wait a second, you know, they're they don't have these development agreements in place.

So why are we gonna keep this 49,000 acres square feet or whatever that uh the amount is?

Um is there like if we say no, we're holding it all until development's ready, we're not gonna uh uh have an agreement with anyone.

Is there a catch 22 in that where we could lose it because of that strategy?

The answer is I'm assuming there could be, and let me explain.

The town is asking for us to do development agreements, all everybody that wants water, so they can turn those in the Department of Water Resources to say we have a need.

But I think the Arizona Department of Water Resources is smart enough to realize that if all of a sudden 48,000 acre feet of water in Eloy came in and said we're gonna develop in the next 10 years, they're gonna we don't care if you have a piece of paper.

You can correct me if I'm wrong, Mr.

Pierce, but they're gonna look at their own economics.

But I think what they're gonna want to say is there's interest, but there's not that's that does just because you have an agreement that that does not represent reasonable supply and demand.

Does that make sense?

Or demand.

So I think that you can make your case personally with the Department of Water Resources, just showing all the prospective potential developers that they've already done, showing that there's eventually 200,000 population that's gonna be coming down the pike at some point whenever the market demands, and I think that's gonna give you enough credibility with the Department of Water Resources versus having an actual development agreement, in my opinion, because the development agreements are just best guesses in the first place.

And I think the department's gonna look at that and go, well, we're gonna really recognize we're gonna really guess, do our best to guess what the next 10 years is gonna bring.

That's just my opinion.

Well, the the agreement, and to second that on what Kevin said, the agreement also here, I was swinging over here.

You know, one of the like Mr.

Pierce mentioned is the financial ware for all that even do this.

So part of that agreement, as you see in the highlighted area shows that the landowner is actually agreeing to at their sole cost and expense to construct that.

And that's a big piece of that.

That deficiency letter is having the financial warfare.

So if the city can't afford to do it, this agreement is in place to say that we have the financial means that the developers agreeing to that they will pay for those infrastructure to do that in the next 10 years.

So that is that that big piece of that deficiency letter, having that financial warfare not predicting whether or not it's not a just a piece of paper that says that oh, we got interest in yeah, well, we're we're gonna do that.

We're gonna show them the maps, they've seen some of them say, hey, we we do have interest, but then there's that financial piece to get the infrastructure in place that'll be exists so they're every developer will sign that piece of property because there's no obligation to that, other than when the time comes for them to do it, because there's no financial assurances.

I just pulled out our PA document for the 10-8.

It says in that document the city will give us water and we will pay for the infrastructure needed.

So that's a that document that part is part of a is the normal zoning process when a PAD gets approved or a plat gets approved, uh, regardless of of having that development agreement.

And that piece that paragraph right there says the good says a good thing, but it means nothing because there's no financial assurances.

So is is landmark they did the same thing.

They they they did this contract right.

I think they did that.

Excuse me, landmark?

Yeah, landmark.

I'm sorry.

So that's similar.

It's not exactly this, but do we give them a uh sunset clause on there?

Is it 10 years?

Okay.

It was 10 years.

Okay.

Which two are going.

I don't know the landmark deal, but let's just say back to my scenario.

Let's say landmark, you have obligated 5,000 acre feet to add landmark, and they might not develop for 15 years.

If the 10-8 business park or near the project that's ready today comes to the water, comes to the table, and you only and you got reduced to 5,000 acre feet.

We can't develop because you've just allocated your 5,000 acre feet to something that's maybe 15 years ago, 15 years down the road.

So that's part of the problem that I'm saying.

That's why you guys see don't sign these agreements, keep control.

Okay.

Anybody else on council have any questions this time?

Anyone else have any questions or comments?

Thank you, Kevin.

Thank you.

More questions?

Anyone else in the audience?

This is staff, so I'm only looking at you guys over here.

So you look like you want you want to say something, King.

Yeah, come.

My name's uh Jack Dowdy.

I'm an agent for the Boule family that has about 2500 acres that stretches from um the Nicola plant south to Milligan Road on the east east side of one nine uh the highway there 87.

The um and I I agree a lot with what Kevin said.

I think Eloy needs to stay in control.

Um but first and foremost, um you need to keep that water.

It's a shame that it at the time it made sense, but you ratcheted you requested 6,000 circumstances allowed that not to move forward and approved, and I applaud you for having Mike Pierce involved to try to make sure you get that switched over to make sure you preserve that 48,000 acre feet, 48,500 acre feet, because that's paramount, you need it.

We all need it.

It's for the benefit of all of us.

I I uh the bridge is I think you're trying to look for funds for the CAG grid um to recoup that.

So I think that ADWR is trying to determine um does Eloy do they really need this water?

And we're we're trying to prove that.

So you floated out these agreements, if I understand correctly, to the landowners to try to get a sense, are you on board or not?

And that agreement does have some challenges, like Kevin says, you're um it's kind of a mini development agreement, and I think as landowners, we're comfortable with that.

Hey, we'll uh if it says that we don't have to obviously if the supply and demand dictates that our properties ready to go before another one, we we're gonna need that water first.

But if we're way further out and the water's gone before we get there, you you gotta go to the people that need it.

I and that agreement is really asking the landowners to uh agree that uh when the time comes and and we need the water, we'll make sure that infrastructure's built to connect to the line to get it to both the sewer and and receive the water.

And I uh I I think Kevin, I think if we can get an agreement uh or some kind of an agreement that just helps Mike Pierce get us over the finish line with the ADWR, there ought to be um an agreement that can accomplish that, but still leave Eloy in control to let that water go to the uh highest and best use at the moment when it's ready.

So I uh I uh I just want to make that comment that as a landowner, you know, we really are praying that Eloy is gonna get there and be there for all of us.

Um so that was really my comments.

I appreciate all of you guys and uh good luck with that uh application, like Ken Raycraft, Inside Land represents several property owners in the region.

And what we've been doing is we've been uh just had a meeting last week with Gil Griffin.

She's the chair of the natural resources committee for the state.

And basically her uh assessment um of the water situation is it's very political.

Um we're getting very bad media for the whole rap right now with the study that's flawed from the beginning.

Um I don't know how we change that uh perception of what's going on with water just in general, but really DWR is a puppet of the governor's office, and unfortunately does not have anyone's ear.

They're they're very they won't take meetings, but they also work in a vacuum.

So there's a lot of problems at a very high level, I think that Mr.

Pierce would attest to when it comes to water.

And I do agree with Mr.

Peterson, giving up your water um is uh it's a slippery slope.

And how do you move forward as a city?

Maybe it is bringing in a global or something like that to help bridge some gaps.

And uh David, I don't know.

I think I saw that the 200 2,000 acre feet of water you had that you're leasing to surprise, is that help offsetting some of your payments to the CR GD?

Yeah, let me bring that up.

Yep, absolutely it is.

And so, you know, how much are you really talking about?

And I know Mr.

Pierce has been working very hard to get these agreements, you know, passed, but the landowners that I'm working with and represent there's several issues with it, you know.

The the the time horizon is one.

Uh also you have if it's not developed out by 50 percent, the city can you know pull the rug out from under you anyway.

And I don't say that I'm not saying that that would happen, but it's certainly an issue that as a landowner, if you're making payments for 10 years and you're 25 percent through your project, and then they say they come back and say, Oh, you're we're out of water, you can't, we're not gonna give any more water.

So there's there's multiple things in there, I think that that need to be addressed.

Um, but I think the city having that water is is is critical for the success.

And to Kevin and even Jack's points, I mean development's gonna drive this city.

It's not landowners that I represent or that Jack represents.

It's gonna be where where is it practically uh, you know, where does it make sense for a new industrial park or a new you know housing community?

So I think you know, everything I think that the the city, the direction that that the David and Mr.

Pierce are going, I I there's merit to it, but at the end of the day, I don't know that it really makes a lot of sense.

Especially when you dive into the agreement and you talk to landowners that some are for of it, some are for it, some don't even want to, you know, uh talk about it.

Um but at the end of the day it's it's probably just not a good idea.

Okay from my standpoint.

All right, questions?

Yeah, sir.

Which part is not a good idea?

Uh the the agreements, you mean?

The water agreement that uh Mr.

Pierce drew up, and it's really from the landowners or the developers' perspective on the timelines that are in it.

Um, you know, uh again, if you've been paying for 10 years and after that 10-year period comes and goes, and you're uh either you've got no development or if you haven't developed 50% of your project, the city has the ability to pull that allocation from you.

So that that's one of I think many there's several in there.

Uh I didn't have a chance to review it unfortunately before the meeting uh was in my office, but um there are several issues, I think, when you look at that agreement that people just aren't comfortable with even if they are willing to make the payments.

But to get you know, to Kevin's point, if you allocate it and you know, development's going somewhere else, you know, it didn't address you know how much of a uh a buffer the city would have as far as you know, uh a special user comes to the or employer comes to the table.

Uh I didn't see anything in that agreement that set aside five thousand acre feet for special purposes.

And you know, so maybe that's something that could be addressed if if you guys choose to move forward with that.

But there's like I say, the various problems, unfortunately, with it.

From the feedback I'm getting from landowners that we've talked in great detail, we've had Zoom meetings, uh 40-50 landowners on the phone over the last few months after our initial meeting in September, trying to get to some resolution here, and and it's we're I'm kind of pushing water uphill, unfortunately, but you know, still a cheerleader at the same time.

Yeah, yeah.

Thank you, Ken.

Any anybody have a question for them?

Yeah.

All right, thank you, sir.

You bet all right.

Well, that pretty much uh was point number seven.

Review the assured water supply allocation infrastructure and the CAGRD agreement.

Um, the next is our next steps with MDOS and ADWR.

And then we've kind of done a QA throughout.

So I don't know, Mr.

Pierce.

Is there yes?

That you have this up, uh the cap water and the surprise.

Yeah, I know you've got the the figures down here.

Yeah.

Uh just uh up in the air.

Are we charging enough for that cap water?

Um probably Brian's no.

Probably not.

Brian's gonna say no.

Probably not.

I mean, you can see down here in this lower right.

I remember when we signed this agreement a while back.

The the impression I had, because I think I was on council then.

Do you want to come up over here?

The impression I had was we were going to be made whole by what we received from surprise.

And I look at the revenue now we get from surprise from this cap water, and it appears that we get maybe half of it back.

That uh the expenses are what I'm running uh a couple hundred thousand dollars, two to three hundred and fifty thousand dollars a year beyond what we paid surprise, and uh so I guess that I'm a little bit uh surprised, if you will, that our uh expenses I was under the impression when we did this deal that we were gonna be made whole, and that's why we were doing it.

Or receive some kind of funds, yeah.

Yeah.

Uh Mr.

Mayor, uh members of the council, um customer Snyder.

So in looking at their what surprise um kind of invoices, they don't take 12 months um of the allocation.

They they they take about 10 months out of the 12.

So that means there's two months that we that we don't receive billing from.

So I mean they they take um we get reimbursed for the M and I and capital charges for 10 out of the 12 months.

So that means that's why there's an always be a uh a variance, a negative variance, because we are still paying the cap charges for 12 months and we have reimbursement for 10.

And they dictate how many like that they'll say I'm we're good, we're not taking any more than we have that excess water that goes towards into the uh what I believe to the water storage credits, but they they don't take all uh 12 months of the allocation.

Well that being said, is it I think that agreement was that each either party could give could pull out after six months notice.

I think so it was was written.

That being said, should we uh rethink that uh and how much money we get for that cap water, or is there a market for it somewhere else to kind of help the financial situation here?

Just uh I thought out there.

Um Mr.

Mayor members of council and councilman Snyder.

I mean, I've I've heard that I mean I had Steve Miller come up to me and probably Dave and uh you know other people pass saying well, you know, that Pennell County would love to try to keep it in the the county and and pay.

I mean, I've heard had people at Verage things say that they've got uh they know people that would probably buy it.

It's up to the, I mean, there's probably a market for it.

It's just we're being made whole, but if that ever stopped, that bill goes right back to our either water customers to pay.

So I mean there is a probably a market, it's just something that um has to be explored probably more and brought back to council, probably another workshop on a Monday.

When there's just baseball.

Matt, do you have anything on that?

I don't know.

One thing with this with this agreement that we have part of the fees that were um paying for the CAP and the CAGRD are twofold.

One's the CAP expenses, and the other one is the CAGRD expenses.

So the City of Surprise covers the CAGRD expenses, but that still leaves us on the hook for the CAP, um, the CAP expenses that that we get for ongoing maintenance for receiving that 2,000 acre feet of of water.

So that's something that we need to look at as well.

That also needs to come into this discussion as well.

Mr.

Pearson, what is the CARGD do exactly?

It seems like there's another tax.

It's a tax.

Well, I can answer that question.

The Central Arizona Groundwater Replenishment District or CAGRD was formed to allow the development on groundwater with the promise that that groundwater would be replenished by the CAGRD.

So their mission in life is to go out and find water supplies that they can bring into the at least semi-local basin and put back into the ground to make up for the water, groundwater that was taken out.

Um it's a fairly large responsibility, tens of thousands of acre feet currently and projected amounts much more.

So CAGRD began to worry that they didn't have the financial resources to meet these commitments.

So as I mentioned earlier in the uh in the teens, 11, 12, 13, they got legislation to allow them to issue bonds, but also to begin to tax some of their constituents so that they could raise money.

And one of the taxes is what you are paying here when it says, I think it's the top table up there that says membership dues.

That is just a price that you pay to be a member of the CAGRD.

But you don't get a designation of assured water supply based on groundwater unless you are a member of the C A G R D.

So it's a necessary tax, it's the cost of doing business.

Uh and a lot of people think that the CAGRD is expensive and will get more expensive.

Uh that's justified criticism, but it's the only game in town right now.

It's the only entity that's statutorily authorized to do this replenishment obligation, and it costs money to belong.

So that's the reason it exists.

Is there a benefit that the public reads from them being doing what they're doing as far as the replenishment side of it?

I mean, most water companies like Epcore or even global have injection wells or cities have injection wells to replenish those aquifers.

Is there a real benefit?

Do you see a robot?

Oh, yes, I do because the the idea of the CAGRD was to keep the aquifer stable.

So that when major development comes in withdraws a lot of groundwater, they put it back in and more or less over time the aquifer is is stabilized and it doesn't decline.

Uh yes, cities do collect effluent, they do put it back in the ground, but oftentimes they do that and keep it in their own account.

It belongs to them.

So it's not really the aquifer's water, it's their water.

So the whole point of the CAGRD is to make people pay uh for the privilege of using groundwater by putting it back in.

So it was a program that was negotiated in the 1990s.

Um, and it's operated very successfully.

Um there are a lot of people that really support the CGRD.

But mostly because they don't believe that the CAGRD can fulfill its mission.

That what will really happen is that there will be massive development based on groundwater.

The CAGRD will fail in its mission.

That water will never be replenished, and the aquifers will drop.

And that becomes kind of a philosophical question, social question.

Do we want to plan our water future on declining aquifers?

Even let's assume that there's plenty of water to support development and continued use for the next hundred years.

If we reach the bottom of the aquifer in a hundred years, is that the social strategy that we want to base our future on.

There are a lot of people that think no, that would be foolish.

So the CAGRD is supposed to be somewhat of a balance between those two consequences.

No development or development to the depletion of the aquifer.

That's what it's for.

And the first point I think I'd like to make is that be a little bit careful of the allure of a private water company, because global water resources and Arizona Water Company, they don't have ready capital either to build infrastructure.

They look to their developers to build the infrastructure.

And I've negotiated many an agreement with these water providers where it's basically you build everything, you design it, you engineer it, you build it to our standards, and then you give it to us.

That's the standard of the industry for development in the private water company.

And neither one of them has an assured water supply in this area.

And global has designated status over in Maricopa, but in this eastern territory, East and the eastern side of Eloy, there's no there's no assured water supply there.

So they don't have any water to bring to the table either.

So it's really more focused on the ability of Eloy to maintain a water supply that facilitates the development of this portion of the Penel AMA.

This is really your burden, but consider it a burden if you will, but it's also a privilege to be able to be the water provider that can make this this area grow and prosper.

To Mr.

Peterson's point that this the city should maintain control over the water and allocate it in its wisdom to those that are most ready to develop and most uh beneficial in terms of economic return on investment to the city.

That is a very, very fine strategy.

Uh and that's why certain cities that are financially able to do so follow that very course.

They put up the money, they build the infrastructure, and they get to decide who gets the water.

Our problem, the problem that we're facing today is that we don't have the money to prove that we're entitled to the water resource.

So without being able to prove that, we don't have the water resource.

So there's nothing for the city to hold or allocate in the future.

To try and reach some middle ground in that situation, this development agreement that we've been talking about was intended to say to a landowner, if you want to pay in this program, we will try our very best to reserve you a quantity of water that would justify your investment.

That's somewhat beyond our control.

If we fail in our mission to save enough water to meet all of these agreements, there's not enough water to go around, and there's nothing we can do about it.

So the agreement provides that everybody will get reduced prorrata if that happens.

That's not a great solution either.

One of the issues that we see in the large-scale developments in Buckeye, as an example, is that these large-scale developments depend on large-scale infrastructure.

And it's very difficult to build large-scale infrastructure to sell 500 homes.

And then you can start talking about the kind of uh capital investment it takes to build some of these large sewer treatment plants and water production and importation facilities.

And that is a real problem in Arizona water management right now.

We're kind of at a crisis point where our state is telling us you don't have any water to develop, go out and find it.

And our development community is saying, first of all, where do we find it and how do we finance it?

How do we entice investors to invest in our development and to invest in the city of Eloy if we can't even show them that we have the water to develop?

There's no easy solution to that.

So that is one of the reasons that the flexibility to move water around within the agreements is helpful.

I don't know that it's the total solution, but it's helpful that if somebody is really anxious to develop and somebody else is not, maybe the water can move back and forth.

But if we had the present ability today to declare ourselves a designated water provider for 30,000 acre feet, I would be standing here recommending to you exactly what Mr.

Peterson is recommending to you, that you hold control of that water and you allocate it as you see fit.

Unfortunately, we're not in a position to be able to do that.

Um I know that whenever you write an agreement, there are going to be issues with it.

But actually, the people that have looked at this agreement carefully and have submitted comments haven't been overly critical of it.

There have been some legitimate comments and some things we'll have to address.

We put it together as an initial draft, expecting comments and expecting criticism on it.

Uh and and we're willing to entertain that.

Uh, but only if it's real criticism towards the goal of of making it work.

If it's just to complain about it, that isn't getting us anywhere.

So uh any comments that are uh made in good faith and with the right spirit of cooperation, we'll certainly be entertained.

And that's our job is to entertain these comments and make adjustments as necessary.

And then ulti to do that.

Ultimately it comes before council for approval, anyways.

So we would make the final say when the agreement comes to us.

And that's you know, to piggyback on that's kind of where we're at tonight, is understanding from council if you think that continuing forth with doing this agreement and getting developers to sign it to bring forth to you all, because that's what we would have to take to ADWR signed agreements, or if council believes that that you know you want to whether you want to direct staff to continue the path forward of working towards these signatures and these agreements that we would take as a package part plan, sorry, to ADWR, or we use it as a as it as what it is.

It's a template of what could be.

We've got interest from our development community.

We have you know there Kevin, I think at one point when you and I were meeting, you talked about maybe doing like a petition that these developers would get together and say, hey, we we petition to commit to helping fund, we don't want to sign the CHGRT agreement, but we would petition on behalf of development community that you could take to ADWR to support that, and then we would have that agreement as that attachment.

So ADWR could see that why there's you know, if council believes that there may be resilience in the community to sign on to this, or or maybe there's some heartburn as to Kevin Kevin's point about you know designating that water, and then to Mr.

Pierce's point about having the flexibility, that's that's kind of why we're here today.

We we want to make sure we understand that council's direction of continue on with getting them signed, or let's have it as a placeholder that we put with a petition out to have signed by the development community that goes to ADWR as part of our package.

I've got a question.

So what if you know somebody comes up and they want they want to do housing and all of a sudden they switch it to apartments?

Do you still need all the acre feet or per house, or is it just by the development of the apartment complex?

I'm not sure I I understood that.

So instead of doing instead of doing houses, we did apartment complexes.

Yes.

Okay.

What's the difference of that with the water allocation on those two properties, two developers?

Mr.

Pierce, if I may jump in on that.

Mr.

Mayor, the that's the point of the Will Serv letter when they submit in the the application for the Will Serv letter for the city to provide water and wastewater services to them, they have to designate what they're doing.

So if they come back in and change that, if they say originally they submit in for 150 homes or 500 homes, and then come back at a later date and say, well, just kidding, we want to do 2500 apartments, then at that point we will rescind that original will serve letter and say, okay, you need to provide us with the most accurate information that you have so that we can move forward with that and not and not just take something that that may or may not be.

Okay.

But does it change the water distribution from the I I guess I I heard that I don't know if you maybe the it's different with apartment complexes versus a residential development.

I I I think I understand what you're what you're getting at.

Let me let me address that and see if I'm on the right track.

Okay.

Um there's a lot of talk going around today that apartments and industrial users do not need an assured water supply.

So an undesignated providers like Arizona Water Company's provision of service to the city of Castle Grant, there's a lot of development of non-subdivided land, an apartment building or an industrial use.

And they can do that, and Arizona Water Company can agree to serve them that water, groundwater, uh, without an assured supply.

Okay.

The reason that's so much in the news is that over the course of all this concern about about the availability of groundwater, some people have characterized that as a loophole and apartments and and build a rent, even build a rent single family dwellings can go forward without an assured water supply and without having to replenish the groundwater they use.

Well, whereas a residential master plan community being subdivided land has to join the CAGRD and has to have an assured supply.

The city of Eloy is a designated provider, you have to cover all of your demand with an assured supply.

Every Circle K, every car wash, every apartment building, data center, free-to-lay, potato chip manufacturing, whatever it is, because it's coming out of your water portfolio, it's all assured.

So in an ideal world, if you had a portfolio of water to give, and somebody said, Well, I was gonna build 350 homes here, but a much better use is to build uh some apartments and and commercial enterprises and things, and you agree with that as a city council, that's a better use.

You could just switch.

You're not bound by that original plan.

Um I think that would be true even under these development agreements.

If somebody came in and said, I reserve a thousand acre feet of water to do this, that, or the other, but I'd rather do this, and the city council says, Yeah, we'd rather you do that too.

You're not bound by that.

You could just as easily authorize that that new use as long as you stay within your water alley.

And that's the letter that Matt just talked about right there.

So yeah, that is well, that's the whole point of the escape clauses and notice of intent is to say that you know we can serve you based on these understandings.

If those understandings prove to be not true, then we're not committed anymore.

All right, Kevin has another so is it appropriate to have a little discussion on Paul's comments with the idea of it maybe being productive, not to be uh uh challenging.

Is that I ask a poll?

Yeah, yeah, that's fine.

Um correct me from my I think Mr.

Purse said that in a best case scenario, the recommendation that I gave to have Eloy control their water is best case scenario, and not involve any agreements with the developers.

But he said that it may or may not or is not the option because of this 250,000 dollar per year payment that we're trying to allocate to the development community that's willing to sign something, and let's assume that the development community does sign something and they do get a prorated allocation, or let's pick a number, 10,000 acre feet, 15,000 acre feet, whatever the department eventually blesses the town with.

But again, back to the fundamental problem.

If you allocate whatever you get, that may not be enough, and it's probably not enough for the ready-to-go development when they get their prorated share.

And I know Mr.

Pierce said, well, they can swap water around for no money.

Well, that's not gonna work.

If I on the 108 business part, my allocated share that eventually comes down the pipe is 25% of the water I need and we need to do a development right now, and someone that's down the road on the south side of the freeway that's 30 years away, they've got a water right, and I've got to go to them and say, Will you sell me or will you lend me or you give me some water rights?

It's not gonna happen.

And then you got your hands tied because you have no water to give me because I only have 25%, even though I'm ready to go.

So I'm curious on.

I mean, it sounds good to allocate and prorate, but in reality, I'm struggling trying to figure out how in the world that would even potentially work.

Because what it'll do is it'll shut off development that's ready to go because the allocations prorated will be too low for now development.

Okay.

Well, if we're allowed to discuss this, and that's fine.

We're all family here, so go ahead.

Well, it's a very valid point.

I don't disagree with it.

In fact, I would I was trying to agree with it.

But um, I don't know what the alternative is.

Uh if and and let me say a couple of things about why we're going down the path that we are, that may help clarify.

First of all, that 250,000 that we're paying to CAGRD isn't driving this decision.

That's that's not a small quantity.

I know it's a strain on the city's budget, but the real purpose behind these agreements is to prove financial capability to put a block of water to use so that we can keep that block of water in the designation.

That to me is the important part.

Um I can't speak for the city or their budget or anything else, but I would give up on the CAG RD part and say, give me the water.

That's what I really want is the water.

And that's what I'm trying to, you know, assist the city in getting.

So allocating the water to a development, let's say a lot of developments, and then we get cut dramatically, 50%, and we have to cut every development 50%.

That is a very bad scenario.

Uh, and we're hoping that that won't happen.

But we can't control that.

So we can ask for 100%, but if we don't get it, we don't get it.

But the idea that we thought would bring this to the surface, is that those landowners that are truly ready to develop that think they can actually put something in the ground in the next 10 years, would be very wise to invest in trying to secure a water supply through this type of an arrangement.

It's the cheapest water they will ever get.

And if they're not prepared today to commit financial resources to do it, then they're probably not uh uh ready to develop.

And like I said before, this is a use it or lose it principle.

We can't keep this water if we can't use it.

So those that that self-elect to not participate are self-electing to say that I can't develop in this time frame.

And that's not a happy situation either.

I understand that.

We'd love to have water to last us through 2050 or 2060.

We're not gonna get it.

So if the people that do step up and want to participate, um are justified in their ability to do this, the idea would be that it would at least get that much water preserved, so that those developers that really are ready to put their money on the line today, have the best chance of success.

Um but I fully understand that's that's not the ideal circumstance.

Paul have I have a quick Paul.

I have a question.

Is it possible in the agreement to put some kind of some kind of sliding scale in?

So that okay, yeah, we agree to this, but you know, over you know, if you do something five years or or ten years, all of a sudden your allocation would drop some way.

So it would kind of piece somebody who does come in in the next five years wants to do something, they'd have the sure water.

But those that just kind of sitting on it for the next 20 years know that your ability to get it maybe go down because you're not doing something.

Is it possible to write something into the agreement that says that?

Uh you know, uh, Councilman Sterner, I uh I think we could.

I I think what it says now, and others can refresh my memory.

But I thought we tried to say that we'll give you 10 years.

And if you come back and you're 50% built, you automatically get extended.

If you're not, but you're on the path, you're actually doing something, uh grading roads and installing pipes and things, we'll talk to you about extending it.

Now that's not a guarantee.

I understand that, and that's not what every but developer would like.

But on the other hand, if somebody's actually moving forward at a development of this scale, what is the likelihood that the city is gonna say, no, we think we'll stop you and give the water to somebody else?

That's not a very likely scenario.

Uh it's a risk, and maybe it's an intolerable risk, but other than guaranteeing a water supply for 20 years, I don't know what else to do.

Michelle has a question.

Okay, so I I'm trying to get this water stuff right.

So if correct me if I'm wrong, but what I understand is if it was a perfect world, we could go to a ADWR and say we need our 48,000 acre feet because we're going to eventually go have this development.

But what these agreements are using these agreements is our hope is that that will help us with ADWR to allow us to keep as much of that acre feet as possible.

Am I correct?

Yes.

Okay, that's what I thought.

Sure, I know yes.

So, and then my other question is is um if there was something brought up about a petition to be signed by the developers or these agreements.

Um would one or the other have more weight with ADWR?

Um, if there wasn't was that what it was, a petition that would be assigned signed by all the developers in the area, or those um agreements.

Would one or the other do you believe as an attorney who handles this type of stuff, would one of or the other um have more weight with ADWR to allow us to keep as much of that as possible?

Yes, uh Mary.

Thank you.

Councilmember Tarango, uh I've not known DWR to accept anything less than a signed agreement.

Uh I think what perhaps Mr.

Malwitz was was suggesting is that we could, as an interim step, float this out to the department and see if we're wasting our time anyway.

Uh if they said, no, that that looks like it would be sufficient proof of financial capability, uh, then I think we'd turn up the pressure to get them actually signed and implemented.

Uh, if they told us that no, that's still gonna be insufficient, then we'd probably have to rethink our entire strategy.

Uh so that might be an interim step, and that might be a very worthwhile interim step uh before we put too much pressure on developers to actually sign these agreements.

Uh but it would be nice, and I think that's what David was referring to in the petition idea, to have at least a list of people that were had given us every indication that they were willing to move forward.

And um I I think uh Mr.

Peterson wanted to have the last word.

I'm I'm happy to give it to him.

Go ahead, Kevin.

You're gonna allow me.

I love what I just heard that the 250,000 isn't the driving force.

So I I think that's important just to uh to to think about because that 250,000 is what controls your destiny, regardless of what the amount of the water is that we eventually get, either by signed agreements or by petitions or begging, doing whatever we need to do to get whatever amount of that 48,000 acre feet back that we can.

If we get all 48,000 acre feet back, we don't I mean the world is happy.

We're happy you guys are happy.

But but again, I don't want to beat a dead horse, but the reality is if we get substantially less than that and we allocate it to whatever developers are willing to sign this agreement, we run the risk of no one having enough water because the allocation is insufficient to do any development, whether it's today, tomorrow, or in 30 years, the water is just not enough if it's allocated.

Now there may be a hybrid.

There may, I heard somebody say setting aside some water for negotiations and and such.

I just don't want us as developers that are working really hard that are in the short run, and you as the city that really want to get out there and be a going concern and grab this next wave of of Nicolas and the lucids that come to the table in the Procter and Gambles that you really want to want to go and and we really want to go, but your hands are tied, our hands are tied because we've allocated and it's gone, and I gotta go to someone and say, Can I have some of your water?

And I gotta go to someone and say, Can I have some of your water?

And that's not gonna work.

So again, keep control of your water is my hope and recommendation.

And we're gonna keep working hard to try to make Eloy a fabulous place and bring development.

So any other questions to me, and I'm not trying to be like can you guys hug now, hug it out, hug it out, Kevin.

I just wanted everyone to really understand our from our at least our perspective, our concerns.

Yeah, thank you.

Okay, thank you.

And somebody else question uh the Sarah So, Mr.

Peterson, don't go I I have a question for you.

Um I think everybody here is now kind of an agreement that the most important thing is we keep the 48,000 acre feet, right?

Do the best.

Yeah, that we do whatever we do, and we need to have the best strategy to keep that water, otherwise it's a moot point, no one's gonna have any water anyway.

Um so what I'm asking you is if we went with your recommendation to not do any of these development agreements, is there an alternate idea or solution that would help us keep that water in the first place?

Okay, let me stress I'm not opposed to everyone doing a development agreement.

Uh if there's any way it can be written in a way where it doesn't get everybody in a pickle, because if we don't get the 48,000 acre feet, I think Mr.

Kirk said, hey, maybe half of it.

Well, that means now everybody has half of what they need.

Because remember, we had 48,000 acre feet and we had 52,000 acre feet demand.

So we're already oversubscribed.

So if we get if we get half of that, that means that we got 52,000 acre uh acre feet now trying to get 15,000 acre feet.

So now everybody from today for the next 10 years or whenever we have half of what we each need to develop so no one can develop.

So that's the the challenge.

What I was recommending, and I think David alluded to, is in lieu of getting development agreements signed by the developers, which Mr.

Raycraft and others say is is got has some challenges with it based on the existing agreement.

Let's still all as developers and the development community will get behind the town because we want to get as much of that 48,000 acre feet as we can.

Is there another alternative in lieu of actual signed development agreements, which really don't frankly mean anything anyways, until you have the water?

Can we go to the Department of Rotter Resources and still say that these are all this is all the activity?

These are all the developers, these are everybody that's committed to a solution.

These are people that want to work toward development agreements, and we will work toward development agreements and get as much of that as we can, but then at that time have the Department of Water Resources saying, Yeah, this works.

We can see the vision and let's move forward.

Or they say, No, you have to get development agreements.

And if you get development agreements, we'll allocate this amount.

Right now, we're just kind of throwing it up in the air and saying, well, gosh, if we get development agreements, they're gonna maybe give us more.

But uh the development communicating is community uh from what I'm hearing, based on the concerns that was given and the concerns that I have is we're just not willing to sign those development agreements right now in its current condition because of the fundamental problems with it.

That makes sense, or I confuse it worse.

Well, it basically that's the 48 million dollar question that we're all trying to answer right here.

Is the development agreements gonna get us the water?

Um, or is there another alternative?

I think that there was another alternative that Mr.

Pierce would be presenting it, right?

Can I make a real goofy?

Can I make a really goofy and I hate to even bring this up?

But it's better to have 15,000 acre feet in control with no development agreements than 48,000 or then 15,000 acre feet with a bunch of agreements that everybody has 50% of the water they need, because then no one can do anything if that makes any sense at all.

Okay.

So what about farming?

What about farming, agriculture?

I mean, we talked about the residential and uh developments and you know, commercial, industrial.

What about farming?

I will speak to that.

Sorry to keep you guys later.

There's there's uh obviously a lot of farming in this area.

Um there's been no determination that the water is there for a hundred years, and there's been no meaningful ability to convert a farm parcel to an urban parcel.

So that issue has been talked about for years uh on and off, but in the governor's water policy council, which met last fall, there was uh some discussion of people have different names for it.

Ag to urban is kind of a good name.

Um it seemed to have quite a bit of support.

In fact, it had quite a bit of support from even some of the most strident anti-groundwater uh advocates on that council.

And all with the understanding that if you take a an acre of farmland that's consumptively using three or four acre feet of water per acre and develop it so that it's using 2.1 acre feet of water per acre, you've actually improved the condition of the aquifer over the long term.

So there have been different proposals.

Uh Representative Culloden has proposed, actually written a bill, introduced it in the legislature that would allow irrigation grandfather rights to sell their water across basin lines by taking a cut.

I thought it was 50 percent.

David said it was more like only a third.

Um that bill is going to be challenging to uh get passed and get the governor's signature.

Meanwhile, I have been working with several others on another bill that would allow somebody that owned irrigated land and had to be currently irrigated three out of the last five years, uh to convert it to an uh a municipal use uh at the old type one ratio, which works out to be somewhere around two and a half acre feet per acre, which is enough to develop on.

Um the one qualification would be that that landowner would have to have an agreement with the municipal provider, City of Eloy in this case, to serve that land with that water.

So the water would have to come back to that land.

Uh that bill has gained a lot of traction.

Uh there's a lot of support for it.

Um it was introduced by Senator Schope.

He held a stakeholder meeting at the state legislature this afternoon to hear comments on it.

Uh I understand it's going to be heard in Senator Kerr's Natural Resources Committee, the Senate on Thursday, and in replicate Representative Griffin's uh natural resources committee in the House next Tuesday.

Um we're very hopeful it will pass.

Um there has been some pushback from the governor's office.

I think the two point something acre feet per acre is too high.

They want a much lower number, and they want the water replenished by the CAGRD if it is used.

Um there may be some negotiating room in those, but uh I helped work on the original draft of the bill, and one of the things I wanted to make clear is that if this were to pass and become law, if somebody came to the city of Eloy and said, I have a section of AG land, I want to develop it.

I've got 1,200 acre feet of water to go with it, here you go, that that would be incorporated ministerially or almost immediately into the city's designation.

So if somebody brought that piece of paper to you and said, I'm ready to go, you could turn right around, not only issue a notice of intent, but get serious about development agreements and moving that moving that to plat without a lot of administrative delays and acquiring that additional supply.

So that represents a water supply that would be on top of whatever we get in this designation process.

It would be, I think, a huge benefit to the state of Arizona and myself and many others very keenly support this.

And I'm glad you mentioned it because we can use all the support we can get, and if the city of Eloy would voice its support for it to its appropriate uh legislators, uh that would be much appreciated.

Go ahead, Dan.

I have a question.

It goes along.

We have an irrigation district in our area that owns a lot of wells.

Yes.

Uh what restrictions are are they under to on groundwater?

Because I know the uh I guess I've heard that because of restrictions of the cap water, they've been using the wells groundwater to replenish uh canals to service the farmers.

So is that irrigation district that and I understand it's over a hundred wells they own in this area?

The landowner owns the well.

That's that's right.

And then so there's an allocation of that to that landowner on how much they can pump or what I've just I'm confused there.

If I may uh the irrigation is kind of an approved district that received CAP water below to the farmers, and they made the decision that they would control the wells for the district, the actual wells on the land out of the district gas, but it is reasonable.

Yeah, okay.

Okay.

But I think your your question is maybe more towards the volume of water that how much they can pull.

Yeah.

And the district doesn't really hold any its own independent water right.

The landowners hold the right to use groundwater, and they are regulated, and they are given a maximum volume per acre that they can use.

That's why I didn't know that's not and that's where the the so-called water duty of the agricultural land comes from.

And it varies farm to farm because it was based on historic cropping patterns, but it can be well, you probably know better than I anywhere from three and a half acre feet on up to five and a half acre feet per acre.

Thank you.

All right.

Any other questions?

Comments?

Yeah, just a comment.

First, I'd like to uh thank our guests here today for this crash course in water.

And I'd like to thank our staff here from uh the last one we had with the Wilson Engineering and all all the work you guys did on that.

We all learned this water is not really a kitchen table subject, at least not in my house.

So I believe we all learned a lot here on the council in these last couple of days, and you've given us a lot to uh very nicely laid out for us to digest and to think about, and then I thank you.

Thank you.

Anybody else?

David?

Oh, thank you, Mayor.

Members of council.

Yeah, I would just reiterate what Councilman Sutton said.

Uh, you know, I really appreciate the council members are taking the interest in the time to be here tonight to listen to this.

Uh, I do thank staff, you know, everybody that's been involved that's here today, and and Mr.

Pierce and his time for you know, we've been at this for a while, and and we're really working hard at getting it done and trying to get across that finish line and getting something that uh will work for us for our growth.

It's it's like councilwoman uh Curtis pointed out, it's it's what matters for us for to continue to grow.

So again, thank you to all the staff that's been involved with this and Mr.

Pierce and his office for helping out and moving us along and for all the comments tonight and guests that showed up, and I'm sure there's many more there listening to it online.

So thank you for your interest and thank you for your feedback to the city.

It's helped us out tremendously.

All right.

Well, thank you guys.

I appreciate it.

I know it's uh two and a half hours, but uh very educational, so I appreciate you guys.

Um that's if anything else to present.

Uh we're not making any action, just formal discussion on this one, and then I'm sure you'll bring it back to council later on.

Okay.

Appreciate all the hard work.

You guys have a safe trip home and uh stop off at the store so we can use some tax money because we're not getting any water.

So you guys have a good night.