FINAL MEETING MINUTES

Welcome / Opening Remarks

Chairman Rita Pearson opened the Arizona Water Banking Authority (Bank) meeting. All members of the Authority were present.

Adoption of Minutes of May 20 Meeting

The May 20 meeting minutes were adopted as submitted.

Discussion of the 1998 Annual Plan of Operation and staff activities

Tim Henley discussed water deliveries for the month of May. Approximately 25,200 af of water were recharged. Mr. Henley stated that in-lieu recharge numbers are relatively low because of the rainfall during the Spring. The Bank should “catch up” to projected levels over the summer.

The Bank has begun delivering water at GRUSP, although the delivery is still below the projected amounts.

Two potential new direct recharge facilities may provide opportunities for the Bank in the future. Vidler Water Company is developing a site at MBT Ranch in La Paz County, and Arizona Public Service (APS) is researching possibilities at Bouse Wash. These potential partners for the Bank would need to make presentations to the Authority before any agreements would be entered into.

Kim Kunasek, Technical Administrator for the Bank, explained that the Bank’s staff is working on the Facility Plan, which is required by law if the Facilities Inventory concludes that an AMA has insufficient water storage capacity. The staff is currently in the process of gathering data, meeting with the appropriate parties, and putting a preliminary draft together.

A draft of the Facilities Plan should be available for the July Bank meeting. Ms. Pearson suggested that a representative from the Tucson AMA and CAWCD be available at the July meeting for testimony.

Approval of FY 98/99 Budget

Mr. Henley provided an overview of the fiscal Year 1998-99 Water Banking Authority budget. Mr. Henley explained that the Bank would be 'under’ the budget stating that various bills for services provided by other entities were much lower than projected. The budget for 1999 should be $13,963,590.00.

The recharge figures for water are budgeted annually, but the funding is done on a fiscal year. Mr. Henley discussed how the budget compared with the Plan of Operation. He also explained the carryover of funds and how different monies come into the Bank at different times of the fiscal year. At some point in the near future, the Bank will need a larger general fund appropriation from the Legislature. If the cost of water to the Bank increases significantly, recharging water will become too costly, and much smaller amounts of water will be recharged as a result.

Ms. Pearson stated that if it is determined that that amount needs to be increased, the Bank can go to the Legislature to request additional general fund monies.

The Authority adopted the Bank’s Budget as presented.

Approval of 1997 Annual Report

Kim Kunasek provided the final version of the 1997 Annual Report and gave a brief overview of the sections contained therein. Arizona law requires the Bank to submit an annual report of the previous calendar year activities by July 1 of each year.

The Authority approved the Annual Report as submitted with any minor or technical changes.

CAP Action on 4¢ tax and 1999 Pricing

Mr. Henley summarized events from the last CAWCD Board meeting. The Board voted to make revenues from the four-cent tax available to the Bank in 1999 and also approved new water pricing. The CAWCD will charge the Bank $43.00 per acre foot for delivery of excess CAP water in 1999.

The Board voted to make the 4¢ per $100 of assessed property available to the Bank for its purposes. In the near future, CAWCD will be writing a letter to the State Treasury informing them about the decision, which was in the form of a resolution. The funds will be deposited in the Water Banking’s fund for uses that benefit the county where the tax dollars are colleted, as provided by law.

Presentation of Upper Santa Cruz CAP Utilization Feasibility Study

Allan Forrest, General Manager of Community Water Company in Green Valley, made a presentation outlining the Upper Santa Cruz CAP Utilization Feasibility Study. Mr. Forrest explained that the purpose of the project is to bring CAP water to the Green Valley/Sahuarita area. He explained that there is diverse water demand in the area, including municipal, agriculture, and mining. The project would help the Tucson AMA meet its groundwater management goals. Mr. Forrest believes that the location of the proposed project is good for recharge within the AMA, and recovery potential is also very good. The CAWCD and the City of Tucson are potential partners. Mr. Forrest explained that indirect recharge is a large component of the plan because of high demand in the agricultural sector.

Ms. Pearson asked about other potential partners. Mr. Forrest stated that at this time the study’s participants include the CAWCD and possibly the City of Tucson, and the Bureau of Reclamation (USBR).

Mr. Forrest stated that he would like to continue dialog with the Bank staff keeping them apprised of the results of the feasibility study and explore further the potential participation of the Bank and what the Bank’s role could be in the process.

Dennis Rule representing the Tucson Water Company stated that the City of Tucson thinks the study is important. The City has a particular interest because the study area is up-gradient of the city and because it could provide an opportunity to resolve some of the issues associated with SAWARSA and the San Xavier District. Mr. Rule stated that one of the major issues for the nation and the district is pumpage and water levels declining in the region of the San Xavier district and that the study could address those issues.

Update of CAWCD/USBR Settlement Negotiation and Lawsuit

Grady Gammage, Jr., discussed the status of the CAWCD lawsuit against the USBR. He explained that the CAWCD Board intends to proceed “full speed ahead” with litigation. Judge Carroll has set the date for Phase I & II of the trial. Phase I will address the repayment ceiling, and that Phase will commence in early August. Phase II will address with the allocation issues, and that Phase will commence in mid-September. Mr. Gammage stated that the allocation issues may be more important financially than the ceiling issue. CAWCD was satisfied with the order in which the issues will be considered at trial. Mr. Gammage stated that the CAWCD is encouraged by Judge Carroll’s decision both with regard to the order of the trial and with regards to the dates that have been set.

Ms. Kunasek updated the Authority on the USBR Motion to Amend the Counterclaim, which, if granted by Judge Carroll, will allow the USBR to claim that the CAWCD is not permitted to sell excess CAP water to the Bank.

Discussion with CAWCD Regarding Recharge Agreements

Mr. Henley stated that the Bank continues to negotiate the terms and format of a contract with the CAWCD for Bank water storage at the Avra Valley Recharge Project. Negotiations are near completion.

Chuck Cahoy from ADWR legal staff stated that the CAWCD is still exploring whether the state demonstration projects statute provides CAWCD with indemnity from the State and whether that indemnity provides the CAWCD adequate protection.

Mr. Henley stated that CAWCD is currently recharging water for Metropolitan Water District and they are about to reach their capacity and CAWCD is concerned that they will have to shut the facility off. Mr. Henley indicated that the CAWCD is willing to continue to recharge water for the Bank pending finalization of an agreement in the near future.

Update on Study Commission Activities

Herb Dishlip of the ADWR updated the Authority on the Study Commission’s activities. He explained that the subcommittee work has been completed. Mr. Dishlip reviewed the schedule of the remaining full Study Commission meetings and the topics to be discussed at those meetings.

The final report is due in November 1998.

Update on Interstate Discussions

Ms. Pearson stated that the seven basin states will meet in July, and hopefully the six basin states will get a more definitive report on the progress of California’s so-called “ 4.4 plan.” A letter was sent by the six basin state directors to Secretary Babbitt reiterating their concerns that they did not want to have continued surplus declarations to benefit California and the six basin states believe that California must finalize its plan. The letter also stated the six basin states would not support future surplus declarations unless they serve flood control purposes.

Interstate Water Banking
Mr. Dishlip stated that the federal regulations governing interstate water banking are not yet complete, but the Bank can expect a requirement to comply with the National Environmental Policy Act (NEPA). There have been discussions with Nevada on what might be involved and what kind of time frames would be involved after the agreement on satisfying the federal requirement for NEPA. The Bank has held discussions with Nevada on the time frame and structure of NEPA compliance.

Sonny Bono Salton Sea Memorial
Mr. Henley updated the Authority on Salton Sea issues. He explained that the most recent amendment to a bill in the U.S. House of Representatives provides that only flood flows will be available to augment water supplies in the Salton Sea. The U.S. Senate is currently considering an amendment that reduces the project to a feasibility study.

Call to the Public

Chairman Pearson adjourned the meeting at 10:55 a.m.