CENTRAL ARIZONA PROJECTCAGRD and Underground Storage Committee

May 21, 2020 ­ 12:30 PM

Virtual MeetingThe public may view the meeting at www.cap­az.com/board/meetings 

FINAL AGENDATimes shown are approximate. Some items may take more or less time than scheduled, or the Chair may 

grant requests to hear items in an order other than shown. 

1. Consideration of Action to Approve the Minutes of April 16, 2020 CAGRD and Underground Storage Committee ­ Megdal 

2. Discussion of Proposed Long­Term Storage Credit Acquisition Between CAGRD and Tohono O'odham Nation ­ Brooks 

3. Future Agenda Items 4. Public Comment 5. Adjourn 

* Please note that this tentative agenda may be changed prior to the scheduled meeting by modifying or deleting listed matters or adding new ones. Anyone interested in the final agenda for the meeting should contact the CAP office (623.869.2333) or consult CAP's website(www.cap­az.com) twenty­four (24) hours in advance of the meeting.

^ Linkage to 2016 CAWCD Board of Directors Strategic Plan. In accordance with the Americans with Disabilities Act (ADA), if you need reasonable accommodations due to a disability, please contact the CAP office at (623.869.2333) or TDD (623.869.2183) at least seventy­two (72) hours in advance of the meeting. 

CENTRAL ARIZONA WATER CONSERVATION DISTRICT CAGRD and Underground Storage Committee

April 16, 2020

   A meeting of the Central Arizona Groundwater Replenishment District ("CAGRD") and Underground Storage Committee ("Committee") of the Central Arizona Water Conservation District’s ("CAP" or "CAWCD") Board of Directors was called to order by Chair Megdal on 4/16/2020 at 12:30 p.m. The meeting was held telephonically and broadcast for the public via livestream.

Committee Members present were: Chair Sharon Megdal, Pima County; Karen Cesare, Pima County; Pat Jacobs, Pima County; Heather Macre, Maricopa County; and Jennifer Martin, Maricopa County

Committee Members not present were: Jim Hartdegen, Pinal County. Staff members present were: Ted Cooke, General Manager; Jay Johnson, General Counsel; Patrick Dent, Director of Water Policy; Bridget Schwartz-Manock, Director of Public Affairs; Chris Hall, Director of Finance and Administration; Laura Grignano, CAGRD Manager; Don Crandall, Water Control Manager; Phil Pagels, Water Transmission Supervisor; Megan Casey, Public Affairs Management Analyst; Jenn Miller, Board Support Specialist, and Nelle Carlsmith, CAGRD Specialist. 

 

1.  CONSIDERATION OF ACTION TO APPROVE THE MINUTES OF FEBRUARY 20, 2020 CAGRD AND UNDERGROUND STORAGE COMMITTEE - MEGDAL 

   On a motion (Board Member Cesare) and a second (Board Member Jacobs), approved the minutes of the February 20, 2020 CAGRD Committee meeting. Motion passed.  

Voting yes: Sharon B. Megdal, Karen Cesare, Pat Jacobs, Heather A. Macre, Jennifer Martin

 

2.  REPORT ON CAGRD MEMBERSHIP WATER DEMAND ANALYSIS - GRIGNANO / GARY WOODARD, GARY WOODARD WATER RESOURCES CONSULTING 

   Laura Grignano, Manager, CAGRD, reminded the Committee that in September 2019, CAGRD entered into contract with Gary Woodard, Water Resources Consulting, to analyze and evaluate Member Land water demand, and to identify and target water conservation opportunity. CAGRD staff will use information provided by Mr. Woodard to refine a proposal and timeline for the Conservation Program in August. Ms. Grignano introduced Mr. Woodard, whose background includes over 40 years of experience in water conservation consulting.  

Mr. Woodard provided data in his PowerPoint presentation to the Committee that included the diversity of CAGRD Members in the Member Land (ML) and Member Service Areas (MSA's) across three Active Management Areas (AMAs).

Mr. Woodard explained the three main objectives of CAGRD’s renewed conservation program are to educate, motivate, and empower CAGRD members to reduce their water demand by

CAGRD and Underground Storage Committee April 16, 2020 Page 2

providing them with the knowledge and necessary tools. The diversity of customers in CAGRD’s ML and MSA's makes conservation planning a challenge. The majority of water users in ML and MSA's are Single Family Residential (SFR). Enrolled homes vary in age from over 20 years old to brand new, and cover a wide range of homes values, housing styles, and lot sizes. There is a limited time following a construction of a home to influence homeowners’ decisions playing a part in water usage such as pools and choice of landscaping. There is a trend within the past five years towards installing artificial turf in SFR, despite limited information on artificial turf for homeowners and no workshops informing customers on selection or installation. Outdoor water use triples for homes with a pool compared to homes without a pool, as homes with pools have more backyard landscaping; a communal pool decreases installation rate of backyard pools by half.

Mr. Woodard stated that, in addition to partnering with water providers directly, he believes there is an opportunity to work with home builders and management companies of homeowner associations. A conservation program would have project objectives and goals providing education and awareness to CAGRD members on how their water use relates to CAGRD replenishment, associate costs of that replenishment, and what members, as water users, can do to use less groundwater and lower their costs. Committee members Megdal and Cesare asked Mr. Woodward various questions about his analysis. Board Member Cesare stressed the importance of green infrastructure when considering reducing outdoor water use. In terms of next steps, Ms. Grignano explained that CAGRD staff has already started to develop an outline on how to move forward based on the recommendations presented. Staff anticipates bringing a fully developed outline back to the Committee in August. Meeting recessed from 1:03 to 1:37 p.m. due to technical difficulties.

 

3.  DISCUSSION AND CONSIDERATION OF ACTION TO RECOMMEND THAT THE BOARD AUTHORIZE THE COLLECTION OF CAGRD ANNUAL MEMBERSHIP DUES DURING TAX YEAR 2020/2021 - DUNLAP 

   Doug Dunlap, Manager, Finance and Accounting, requested the Committee recommend the authorization of collection of CAGRD annual membership dues to the Board of Directors as authorized by statute.

On a motion (Board Member Cesare) and a second (Board Member Jacobs), recommended that the Board of Directors authorize the collection of Annual Membership Dues during Tax Year 2020/21. Motion passed.  

Voting yes: Sharon B. Megdal, Karen Cesare, Pat Jacobs, Heather A. Macre, Jennifer Martin

 

4.  DISCUSSION AND CONSIDERATION OF ACTION TO RECOMMEND THAT THE BOARD APPROVE A PRELIMINARY CAGRD RATE SCHEDULE FOR 2020/21 THROUGH 2025/26 - DUNLAP 

   Doug Dunlap, Manager, Finance and Accounting, gave a presentation to the Committee that included CAGRD’s revenue streams, a forecast of replenishment obligations as background and

CAGRD and Underground Storage Committee April 16, 2020 Page 3

a description of a revised methodology for proposed rate setting. He explained that the use of a “standard price” in the revised methodology for rate calculation serves to simplify how rates are calculated and align prices across the AMAs. Although there were some increases to certain assessment rate components from the advisory rates, all preliminary 2020/21 AMA Total Assessment Rates (composite rates) are lower than the previous advisory rates for 2020/21. Annual membership dues are lower than advisory due to lower projected obligations. Mr. Dunlap added that a motion passed earlier in the day by the Finance, Audit and Power Committee recommended the Board approve the CAP Preliminary 2021-2026 Water Rate Schedules with revisions to the capital charges of $53/af for 2021 and $50/af for 2022. He explained this change impacts the proposed 2020/21 CAGRD rates by decreasing the Water and Replenishment Component (WRC) for the Phoenix AMA to $239 and the Replenishment Reserve Charge (RRC) to $103 and a total assessment rate of $742. The provisional 2021/22 rates for Phoenix AMA would increase to $233 for the WRC and $103 for the RRC and a total assessment rate of $739. The rates for the Tucson and Pinal AMAs are a WRC of $243 in 2020/21 and $245 in 2021/20 and a RRC of $103 for both years.

On a motion (Board Member Cesare) and a second (Board Member Martin), recommended that the Board of Directors approve the CAGRD Preliminary Rate Schedule reflecting the revisions from the Finance, Audit and Power Committee on April 16, 2020 for 2020/21 through 2025/26. Motion passed.

Voting yes: Sharon B. Megdal, Karen Cesare, Pat Jacobs, Jennifer Martin

Not voting: Heather A. Macre

 

5.  DISCUSSION AND CONSIDERATION OF ACTION TO RECOMMEND THAT THE BOARD APPROVE A PRELIMINARY UNDERGROUND WATER STORAGE RATE SCHEDULE FOR 2021- 2026 - DUNLAP 

   Doug Dunlap, Manager, Finance and Accounting, provided a brief presentation on recommended underground storage rates, noting the Committee has purview over the Underground Water Storage O&M and Underground Storage Capital Charge rate recommendations. He explained that the proposed rates do not reflect any changes from the advisory rates due to consistency with the plan of operations and ensures the underground water storage program reserves are at adequate levels to support operations.  

On a motion (Board Member Cesare) and a second (Board Member Jacobs), recommended that the Board of Directors adopt the Preliminary Underground Water Storage O&M and Underground Water Storage Capital Charge Rate Schedule for 2021 through 2026. Motion passed.

Voting yes: Sharon B. Megdal, Karen Cesare, Pat Jacobs, Jennifer Martin

Not voting: Heather A. Macre

 

6.  REPORT ON 2020 RECHARGE CAPACITY AND TONOPAH DESERT RECHARGE PROJECT OPERATIONS - PAGELS 

   Phillip Pagels, Water Transmission Supervisor for CAP presented an overview of CAP recharge projects and operations and the Tonopah Desert Recharge Project (TDRP) in particular. 100%

CAGRD and Underground Storage Committee April 16, 2020 Page 4

of operational capacity for 2020 has been allocated at the sites within the Phoenix AMA, a 22% increase from 2019. This is prompting CAP to re-open TDRP and have it operational by beginning of third quarter of 2020.  

Patrick Dent, Water Policy Director, added entities have requested CAP open TDRP for limited operation in 2020 due to the relatively high demand on all other Phoenix AMA recharge facilities, due to the wet winter and spring. CAP would be open to requests to store water in 2021 if circumstances warrant. Mr. Dent also responded the cost to reopen TDRP is relatively low and within the existing budget and workload is being managed in light of circumstances surrounding the COVID-19 pandemic. Mr. Dunlap confirmed that storage costs are consistent within an AMA and there is sufficient reserve for this work.

 

8.  FUTURE AGENDA ITEMS 

   Chair Megdal announced the next CAGRD and Underground Storage Committee Meeting is scheduled for May 21, 2020. Unless the Board sends back rate related items to the Committee for action, the primary agenda topic will be the rescheduled presentation from the Kyl Center for Water Policy. There is no CAGRD Underground Storage Committee meeting scheduled for June.  

 

9.  PUBLIC COMMENT 

   No additional comment.  

10.  ADJOURN 

   There being no further business to come before the Committee, the meeting adjourned at 2:58 p.m. ___________________________ Sharon B. Megdal Chair 

 

623-869-2333 | From Tucson 520-579-0046 | Fax 623-869-2332 | CentralArizonaProject.com

Agenda Number 2

CONTACT: Christopher Brooks623-869-2438cbrooks@cap-az.com

Laura Grignano623-869-2113lgrignano@cap-az.com

MEETING DATE: Thursday, May 21, 2020

AGENDA ITEM: Discussion of Proposed Long-Term Storage Credit Acquisition Between CAGRD and Tohono O'odham Nation - Brooks

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE:CAWCD Board of Directors Strategic Plan

Water Supply: Obtain Sufficient Water Supplies to Meet Replenishment Obligations

PREVIOUS BOARD ACTION/ACTIVITY:May 7, 2020 Executive Session Discussion

ISSUE SUMMARY/DESCRIPTION: In early April 2020, CAGRD and representatives of the Tohono O’odham Nation (Nation) completed a draft agreement under which CAWCD will acquire from TON a total of 50,000 LTSCs, half in 2020 and half in 2021. This agreement was approved by the Nation’s Water Resources Committee on April 14, 2020 and by the Tribal Council on April 28, 2020. The CAWCD Board will be asked to approve this agreement during the June meeting.

Under the agreement CAWCD will acquire, for use by the CAGRD for fulfillment of its replenishment obligations, 25,000 LTSCs in 2020 at a cost of $6,250,000. This is equivalent to $250/LTSC. In 2021, CAWCD will acquire an additional 25,000 LTSCs. The cost for the 2021 credits will be based on inflating the 2020 price per credit by the percentage increase in the cost of CAP Excess Water. Based on the preliminary rates, that should be an approximately 1% increase next year. The 2020 acquisition will occur after CAWCD Board approval in June. The agreement allows CAGRD to schedule the 2021 acquisition to coincide with inflows to the CAGRD I&WR fund, ensuring adequate cash reserves for all 2021 financial obligations.

Of the 50,000 LTSCs included in this agreement, 40,000 are located in the Phoenix AMA (New Magma Irrigation and Drainage District and Hieroglyphic Mountain Recharge Project) and 10,000 are located in the Tucson AMA (Pima Mine Road Recharge Project). This acquisition adds approximately 1.5 years of replenishment obligation in the Phoenix AMA (at current annual obligations) and approximately 3.5 years of replenishment obligation in the Tucson AMA to the existing water supply portfolio of the CAGRD.

ATTACHMENTS: 1. Presentation2. TON-CAWCD Purchase and Sale Agreement for Long Term Storage Credits

1

Proposed CAGRD – Tohono O’odham Nation Long-Term

Storage Credit Acquisition CAGRD & Underground Storage Committee Meeting

May 21, 2020Chris Brooks, Senior Water Resources Analyst

1

Agreement Key Terms:

• 50,000 LTSCs acquired over 2 years– 25,000 in 2020

– 25,000 in 2021

• Credits located in Phoenix AMA (40,000) and Tucson AMA (10,000)– Phoenix credits include: 24,650 at New Magma Irrigation and Drainage District GSF and 15,350 at Hieroglyphic Mountains USF

– Tucson credits all located at Pima Mine Rd. USF

2

2

3

Hieroglyphic Mtns USF

New Magma IDD

4

Pima Mine Rd. USF

3

Agreement Key Terms (cont’d):

• 2020 acquisition price: $250/LTSC x 25,000 LTSC = $6,250,000

• First acquisition completed approximately one month after final board approval

• 2021 acquisition price: $250 + % increase in CAP Excess water rate from 2020 to 2021 (currently projected to be ~ 1%, resulting in price of $252.40 in 2021) = $6,310,000

• CAWCD will notify TON in Jan. 2021 of date for completion of 2021 purchase

• This allows for completion of end‐of‐year forecast for cash flow in Infrastructure & Water Rights fund during 2021

5

Next Steps:

• June 4, 2020 CAWCD Board meeting; Vote on approval of agreement

• CAGRD submit LTSC transfer request to ADWR within 10 business days of agreement execution

• CAGRD pays LTSC transfer fee to ADWR

• Confirmation of receipt of transfer form by ADWR marks completion of transfer

• CAWCD submits payment for LTSCs to Tohono O’odham Nation within 20 business days of completion of transfer

6

4

7

Questions?

PURCHASE AND SALE AGREEMENT FOR

LONG TERM STORAGE CREDITS

This Purchase and Sale Agreement is made this _____ day of _____________, 2020, (the "Effective Date"), between and among the Central Arizona Water Conservation District ("CAWCD"), a multi-county water conservation district organized and existing under the laws of the State of Arizona, and the Tohono O’odham Nation (“Nation”), a federally recognized Indian Tribe.

RECITALS A. CAWCD operates the Central Arizona Project ("CAP"). CAWCD also provides replenishment services to member lands and member service areas under authorities provided in Title 48, Chapter 22, Article 4 of the Arizona Revised Statutes. These replenishment authorities are commonly referred to as the Central Arizona Groundwater Replenishment District (“CAGRD”). CAGRD is not a separate legal entity, but functions within and is operated by CAWCD.

B. CAWCD desires to purchase Long-Term Storage Credits developed by the Nation pursuant to Arizona Revised Statutes Title 45, Chapter 3.1, for the benefit of CAGRD member lands and member service areas.

C. The Nation is willing to sell and transfer certain Long-Term Storage Credits to CAWCD under the price, terms and conditions set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of

which are acknowledged, and intending to be legally bound, the parties hereby agree as follows:

ARTICLE 1 DEFINITIONS

As used in this Agreement, the following terms, when capitalized, shall mean:

1. "ADWR" means the Arizona Department of Water Resources. 2. "Agreement" means this Purchase and Sale Agreement for Long-Term Storage Credits. 3. "CAGRD" means the Central Arizona Groundwater Replenishment District, the

replenishment authority operated by CAWCD.

4. "CAGRD's Account(s)" means (i) the long-term storage account established pursuant to Arizona Revised Statutes § 45-859.01 for the Phoenix Active Management Area, Account No. 70- 441120.0001; or (ii) the long-term storage account established pursuant to Arizona Revised Statutes § 45-859.01 for the Tucson Active Management Area, Account No. 70- 411120.0001.

5. "CAWCD" means the Central Arizona Water Conservation District.

6. "Long-Term Storage Credit" is as defined in Arizona Revised Statutes § 45-802.01(11). 7. "Long-Term Storage Credit Transfer Form" is a form, approved by ADWR, to effectuate

the assignment of Long-Term Storage Credits, as defined in Arizona Revised Statutes § 45-854.01(B), and more specifically described in Article 3 below.

8. "Nation" means the Tohono O’odham Nation.

9. “Nation’s Long-Term Storage Account(s)” means the Long-Term Storage accounts established pursuant to Arizona Revised Statutes § 45-852.01 in Nation’s name, including Tucson AMA Account No. 70-084101.0000 and Phoenix AMA Account No. 70-441218.0000

ARTICLE 2

PURCHASE OF LONG-TERM STORAGE CREDITS

2.1 2020 Sale and Purchase. Subject to the terms and conditions of this Agreement, the Nation agrees to sell, transfer and assign and CAWCD agrees to purchase, accept and pay for 25,000 acre-feet of Long-Term Storage Credits in 2020, as set forth in Exhibit A. 2.2 2021 Sale and Purchase. Subject to the terms and conditions of this Agreement, the Nation agrees to sell, transfer and assign and CAWCD agrees to purchase, accept and pay for 25,000 acre-feet of Long-Term Storage Credits in 2021, as set forth in Exhibit A. 2.3 Type of Water. It is the intent of the parties that all Long-Term Storage Credits purchased and sold under this Agreement shall retain the identity of the source of water used to generate such Long-Term Storage Credits. 2.4 Long-Term Storage Credits. The Long-Term Storage Credits to be sold by the Nation were stored at the underground storage facility(s), under the ADWR Facility Permit and ADWR Water Storage Permit set forth in Exhibit A hereto. 2.5 Annual Purchase Price. The Annual Purchase Price for the Long-Term Storage Credits to be transferred pursuant to this Agreement will be adjusted from the first to second year of this Agreement. The purchase price for the 25,000 acre-feet of Long-Term Storage Credits to be sold by the Nation in 2020 under this Agreement is $6,250,000.00. The purchase price was calculated

using a per-credit price of $250.00. The purchase price for Long-Term Storage Credits to be sold by the Nation in 2021 shall be based on an escalated per-credit price, to be calculated as follows:

Purchase Price = [Quantity of credits purchased] * [$250 + ($250 * Percentage Increase in Published CAP Rate)]; where Percentage Increase in Published CAP Rate = (CAP Published Excess Water Rate, 2021 – CAP Published Excess Water Rate, 2020) ÷ CAP Published Excess Water Rate, 2020; And CAP Published Excess Water Rate is the rate shown on the Published CAP Rate Sheet for 2021 for Excess Water, which is comprised of the Capital Charge for Municipal & Industrial Subcontracts, the Fixed OM&R, and the Pumping Energy Charge

By way of example only, if the CAP Published Excess Water Rate in 2021 is $217 and the CAP Published Excess Water Rate for 2020 is $211, the per credit price in 2021 would be: $250 + $250 *(($217 - $211) ÷ $211)) = $257.11

ARTICLE 3 TIME AND MANNER OF TRANSFER

3.1 Long-Term Storage Credit Transfer Form. To evidence the transfer of Long-Term Storage Credits in 2020, the Nation and CAWCD shall complete, sign and deliver the Long-Term Storage Credit Transfer Form to ADWR within 10 business days of full execution of this Agreement. A copy of the Long-Term Storage Credit Transfer Form is attached as Exhibit B to this Agreement. After the Nation has executed and delivered the Long-Term Storage Credit Transfer Form to CAWCD, CAWCD shall promptly deliver the fully executed Long-Term Storage Credit Transfer Form to ADWR.) CAWCD shall confer with the Nation by January 31, 2021 to determine the date for completion of the Long-Term Storage Credit transfer for 2021. 3.2 Additional Actions and Documentation. CAWCD shall pay any administrative fees established by ADWR to effectuate the transfer of the Nation’s Long-Term Storage Credits into CAGRD's Account(s). The parties shall cooperate to take such further actions and execute such further documents as may be determined by either party to be necessary or advisable in order to complete the transfer of the Long-Term Storage Credits contemplated by this Agreement.

ARTICLE 4 COMPLETION OF DELIVERY AND PAYMENT

4.1 Completion of Delivery. Delivery of the Long-Term Storage Credits to be transferred pursuant to this Agreement shall be deemed complete when ADWR notifies CAWCD in writing that ADWR has received and accepted the Long-Term Storage Credit Transfer Form and intends to transfer the Long-Term Storage Credits from the Nation’s Long-Term Storage Account to

CAGRD’s Account(s) ("ADWR Acceptance”). CAWCD and the Nation shall cooperate with ADWR to facilitate completion of such transfer by ADWR. 4.2 Payment. CAWCD shall pay the Nation the full purchase price amount in each year of this Agreement as calculated pursuant to Article 2.5 above, no later than 20 business days after ADWR Acceptance.

ARTICLE 5 REJECTION OR INVALIDATION OF

TRANSFER 5.1 Rejection or Invalidation of Transfer. If ADWR, pursuant to Arizona Revised Statutes § 45-854.01(C), rejects or invalidates any transfer or assignment of Long-Term Storage Credits made hereunder before CAWCD has paid for such Long-Term Storage Credits, CAWCD shall not be obligated to pay for the number of Long-Term Storage Credits affected by such rejection or invalidation. If such rejection or invalidation occurs after payment has been made by CAWCD, the Nation shall refund an amount equal to the number of Long-Term Storage Credits affected by such rejection or invalidation times the price per acre-foot for the affected Long-Term Storage Credits, as such price is established in Article 2.4 above. The Nation shall refund such amount within 30 business days after either CAWCD or the Nation receives any notice of rejection or invalidation from ADWR. CAWCD shall transfer and assign back to the Nation the number of credits affected by any such rejection or invalidation. The Nation's obligation to refund any payments under this Article 5 shall expire 30 calendar days after ADWR has issued a non-appealable final agency decision approving the transfer and assignment of the Long-Term Storage Credits into CAGRD's Account(s). The Parties' rights and obligations under this Article 5 shall remain in full force and effect, and shall survive termination of this Agreement for purposes of addressing a circumstance where ADWR rejects or invalidates any transfer of Long-Term Storage Credits made hereunder.

ARTICLE 6 EFFECTIVE DATE AND TERM

6.1 Effective Date and Term. This Agreement shall be effective as of the date it has been executed by both parties hereto, which date is set forth in the introductory paragraph of this Agreement (the "Effective Date"). This Agreement shall stay in effect until all provisions under the Agreement have been met unless terminated earlier in accordance with Article 7.

ARTICLE 7 DEFAULT AND REMEDIES

7.1 Default. The occurrence of any of the following events constitutes an event of default by a party to this Agreement:

7.1.1 The failure of either party to perform any term, covenant, or condition of this Agreement, if that failure continues for 30 days following the receipt of written notice from the other party.

7.1.2 (i) The filing by or against either party of a petition to have the party adjudged

a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against a party, the same is dismissed within 60 days); (ii) the making by a party of any general assignment for the benefit of creditors; (iii) the appointment of a trustee or receiver to take possession of substantially all of the party’s assets, when possession is not restored to the party within 60 days; or (iv) the attachment, execution, or other judicial seizure of substantially all of a party’s assets, where such seizure is not discharged within 60 days. 7.2 Remedies. If an event of default occurs, the non-defaulting party may immediately terminate this Agreement by written notice to the defaulting party and/or may pursue any other rights available to it in law or equity. The obligation of the defaulting party to pay any amounts due but unpaid as of the date of termination under this provision shall survive such termination.

ARTICLE 8 MISCELLANEOUS PROVISIONS

8.1 Interpretation. This Agreement is governed by and must be construed and interpreted in accordance with and in reference to the laws of the State of Arizona, without regard to its conflicts of laws provisions. Any action to resolve any dispute regarding this Agreement shall be taken in a state court of competent jurisdiction located in Maricopa County, Arizona. 8.2 No Third-Party Beneficiaries. This Agreement is solely for the benefit of the parties and does not create, nor shall it be construed to create, rights in any third party unless expressly provided herein. No third party may enforce the terms and conditions of this Agreement. 8.3 Amendments. This Agreement may be modified, amended or revoked only by the express written agreement of the parties hereto. 8.4 Entire Agreement. This Agreement constitutes the entire agreement between the parties and no understandings or obligations not expressly set forth in this Agreement are binding upon the parties. 8.5 Waiver. No delay in exercising any right or remedy shall constitute a waiver unless such right or remedy is waived in writing signed by the waiving party. A waiver by any party of any right or remedy hereunder shall not be construed as a waiver of any other right or remedy, whether pursuant to the same or a different term, condition or covenant. 8.6 Captions. All captions, titles, or headings in this Agreement are used for the purpose of reference and convenience only and do not limit, modify, or otherwise affect any of the provisions of this Agreement. 8.7 Rules, Regulations and Amendment or Successor Statutes. All references in this Agreement to the Arizona Revised Statutes include all rules and regulations promulgated by

ADWR under such statutes and all amendment statutes and successor statutes, rules, and regulations to such statutes, rules, and regulations. 8.8 Conflicts of Interest. The parties to this Agreement are hereby notified of A.R.S. § 38-511. 8.9 Severability. The provisions of this Agreement are severable to the extent that if any provision is held unenforceable under applicable law, the remaining provisions of the Agreement shall remain in effect, if the intent of the Agreement can be accomplished. 8.10 Indemnification. Each party to this Agreement is independently responsible in the event of its own negligence. Neither party agrees to indemnify the other party. 8.11 Notices. Except as otherwise required by law, any notice given in connection with this Agreement must be in writing and must be given by personal delivery, overnight delivery, or United States certified or registered mail. Any such notice must be addressed to the appropriate party at the following address (or at any other address as a party may hereafter designate by written notice given as required by this paragraph): CAWCD: For delivery use: c/o General Manager 23636 N. 7th Street Phoenix, AZ 85024 For U.S. Mail use: c/o General Manager P.O Box 43020 Phoenix, AZ 85080-3020 TOHONO O’ODHAM NATION: For U.S Mail use: Tohono O’odham Nation P.O Box 837 Sells, Arizona 85634 Attn: Attorney General Notice is deemed to have been given on the date on which notice is personally delivered, delivered to an overnight delivery service, or mailed. Notice is deemed to have been received on the date on which the notice is actually received or delivery is refused.

IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of the date first set forth above. CENTRAL ARIZONA WATER CONSERVATION DISTRICT By:___________________________________________ Its: President ATTEST: _______________________________ Secretary TOHONO O’ODHAM NATION, a federally recognized Indian tribe. By: Its: APPROVED AS TO FORM _______________________________

EXHIBIT A

to Purchase and Sale Agreement for Long Term Storage Credits

LONG-TERM STORAGE CREDITS

Facility Name ADWR Facility Permit No.

ADWR Water Storage Permit No.

ADWR Long-Term Storage Account

No. Credits

(AF) Water Source

Pima Mine Road USF 71-557501 73-577501.0900 70-084101 5,000 CAP

Hieroglyphic Mountains USF 71-584466 73-584466.1300 70-441218 7,675 CAP

New Magma GSF 72-534888 73-534888.0900 70-441218 12,325 CAP

EXHIBIT B to

Purchase and Sale Agreement for Long Term Storage Credits

ADWR LONG-TERM STORAGE CREDIT TRANSFER FORM A.R.S. §45-854.01