6.I

CITY OF BUCKEYE
City Council Regular Meeting
Council ACTION REPORT

ACTION / MOTION: (This language identifies the formal motion to be made by the Council)

Council to take action on the Central Arizona Project (CAP) Water 2019 Delivery Agreement between the City of Buckeye and Del Webb Corporation, for the delivery of 280 acre feet of CAP Water to Festival Ranch.

RELEVANT GOALS:
GOAL 1: Fiscal Wellness and Financial Flexibility and Accountability

PROJECT DESCRIPTION: 

The City would like to deliver its calendar year 2019 Central Arizona Project (CAP) Water to Festival Ranch.  The City has a calendar year 2019 CAP Water allocation of 280 acre-feet (280 acre-feet is about 91 million gallons).  The City provides water service to customers within the City’s service area, including the Del Webb master planned community of Festival Ranch, which is located in the northern part of the City.  Festival Ranch is also located immediately adjacent to the CAP canal.  Festival Ranch currently arranges for delivery of other CAP Water to the Festival Ranch golf course.  Festival Ranch currently operates two side by side pumps that can withdraw water from the CAP canal.  One pump delivers CAP Water to the golf course lake (water is withdrawn from the lake for landscape watering).  The other pump can deliver CAP Water to construction water reservoirs.  Festival Ranch can use the City’s 280 acre-foot CAP Water allocation in 2019.  Del Webb, on behalf of Festival Ranch, would like to receive delivery of the City’s CAP Water in 2019 for landscape watering or construction uses at Festival Ranch.  Del Webb is offering to pay the City’s costs for the water plus a 20% markup. The City delivered its 2018 CAP Water to Festival Ranch.  Prior to 2018 the City was unable to use its CAP Water in the past for the following reasons:  (a) the City does not own infrastructure to directly deliver the water to customers within the City’s service area (Festival Ranch does have the infrastructure to deliver the water to the golf course lake or to construction water reservoirs); and, (b) the City cannot receive long-term storage credits (LTSCs) for recharging the water or storing it at a groundwater savings facility because the City does not have a Designation of Assured Water Supply (DAWS) [the following statutes:  A.R.S § 45-852.01(B)(1) and A.R.S. § 45-802.01(22)(c) currently prevent the City from receiving LTSCs for CAP Water because the City does not have a DAWS].  Consequently, prior to 2018 the City paid annual capital charges for the CAP Water but was unable to use the water.  Staff recommends that Council approve the CAP Water 2019 Delivery Agreement between the City and Del Webb Corporation.                                            

BENEFITS:

The City will be able to deliver the water within its service area.  Prior to 2018 the City was paying annual capital charges for the CAP Water, but was unable to use the water.  Del Webb is offering to pay the 2019 CAP Capital Charges, plus a 20% markup.  Del Webb is also offering to pay the 2019 CAP Municipal and Industrial Long Term Subcontract rate, plus a 20% markup.  The City’s total costs for the 2019 CAP Water will be $55,720.00, but Del Webb is offering to pay the City $66,864.00.  Therefore, Del Webb is offering to pay a markup of $11,144.00 ($66,864.00 - $55,720.00 = $11,144.00).   

FUTURE ACTION: Council and staff; does this need to be communicated internally/externally?
None

FINANCIAL IMPACT STATEMENT: Must be completed before submission

City’s total costs for the CAP Water will be $55,720.00, but Del Webb is offering to pay the City $66,864.00.  Therefore, Del Webb is offering to pay a markup of $11,144.00 ($66,864.00 - $55,720.00 = $11,144.00).  See Attachment 2:  Additional Financial Impact Statement Details.

CURRENT FISCAL YEAR TOTAL COST:
66,864.00
BUDGETED

FISCAL YEAR:
FY2018-2019

FUND/DEPARTMENT:
40003210-52034