water resources acquisition fee update report and ... · appendix d: water resources acquisition...

WATER RESOURCES ACQUISITION FEE UPDATE REPORT AND

INFRASTRUCTURE IMPROVEMENTS PLAN

City of Phoenix, Arizona

November 14, 2014

Prepared By:Brown and Caldwell1697 Cole Boulevard, Suite 200Golden, Colorado 80401

Project No. 144934

1697 Cole Boulevard, Suite 200

Golden, CO 80401

Water Resources Acquisition Fee Update Report and Infrastructure Improvements Plan

Prepared for Cit y of Phoenix

Phoenix. Ar izona November 17, 2014

ii

Use of contents on this sheet is subject to the limitations specified at the end of this document. WRAF Update Report_FINAL_11-17-14.docx

Table of Contents List of Figures .............................................................................................................................................. iii

List of Tables ............................................................................................................................................... iii

List of Abbreviations ................................................................................................................................... iv

Executive Summary ............................................................................................................................... ES-1 Selected Level of Service .................................................................................................... ES-1 Water Resources Acquisition Fee Analysis ........................................................................ ES-1

1. Introduction .......................................................................................................................................1-1 1.1 Purpose ...................................................................................................................................1-1 1.2 Assumptions ............................................................................................................................1-1

Reference Documents .............................................................................................1-1 1.2.1 Selected Level of Service .........................................................................................1-1 1.2.2 WRAF Update Timeframes .......................................................................................1-1 1.2.3 Cost Estimates ..........................................................................................................1-2 1.2.4

1.3 Selected Methodology ............................................................................................................1-3 1.4 Definitions ...............................................................................................................................1-3

2. Evaluation of Water Resources ........................................................................................................2-1 2.1 Current Water Resources .......................................................................................................2-1

On-Project Areas .......................................................................................................2-1 2.1.1 Off-Project Areas .......................................................................................................2-1 2.1.2

2.2 Water Demand and Supply Projections.................................................................................2-2 Land Use and Future Demand Projections .............................................................2-3 2.2.1 Supply Projections ....................................................................................................2-5 2.2.2 Water Supply Surplus/Deficit Analysis ....................................................................2-7 2.2.3

2.3 Equivalent Demand Units .......................................................................................................2-9 3. Water Resources Acquisition Projects .............................................................................................3-1

3.1 Description of Water Resources Acquisition Projects ..........................................................3-1 White Mountain Apache Tribe CAP Settlement ......................................................3-1 3.1.1 Aquifer Storage and Recovery (ASR) Well Projects ................................................3-1 3.1.2

3.2 Summary of Project Capital Costs .........................................................................................3-3 3.3 Water Resources Acquisition Project Implementation .........................................................3-4

4. Water Resources Acquisition Fee Development .............................................................................4-1 4.1 Fee Determination ..................................................................................................................4-1 4.2 Cash Flow Analysis..................................................................................................................4-1 4.3 Alternative Revenue Offsets...................................................................................................4-2 4.4 Credit for Private Water Resources .......................................................................................4-2

Table of Contents

iii


5. Conclusions and Recommendations ...............................................................................................5-1 5.1 Recommended Fee Schedule ................................................................................................5-1

6. Limitations .........................................................................................................................................6-1

Appendix A: Proposed WRA Fee Areas ..................................................................................................... A-1

Appendix B: Water Supply and Demand Analysis Summary (Off-Project Only) .................................... B-1

Appendix C: Water Resources Acquisition Projects New Supply Capacity Projection ..........................C-1

Appendix D: Water Resources Acquisition Projects Capital Cost per Acre-Foot................................... D-1

Appendix E: Water Resources Acquisition Projects Implementation and Financing Plan .................... E-1

Appendix F: Water Resources Acquisition Projects Capital Costs (Escalated to Mid-Point of Construction) ..................................................................................................................................... F-1

Appendix G: Water Resources Acquisition Fee Fund Potential Cash Flow Analysis (Excluding Financing) ......................................................................................................................................... G-1

List of Figures Figure ES-1. Off-Project Water Demand Projections (2015-2024) ..................................................... ES-2

Figure ES-2. Supply Surpluses/Deficits Compared to Projected New Customer Demands ............. ES-4

Figure ES-3. Simulation of ASR Well System Operations .................................................................... ES-5

Figure 2-1. Off-Project Water Demand Projections (2015-2024) ..........................................................2-5

Figure 2-2. Impacts of Moderate Shortage on Off-Project Water Supplies ...........................................2-7

Figure 2-3. Supply Surpluses/Deficits Compared to Existing Customer Demands ..............................2-8

Figure 2-4. Supply Surpluses/Deficits Compared to Projected New Customer Demands ...................2-9

Figure 3-1. Simulation of ASR Well System Operations .........................................................................3-3

List of Tables Table ES-1. Inventory of Existing Off-Project Water Supplies .............................................................. ES-2

Table ES-2. Summary of WRAF Fee Calculation .................................................................................. ES-6

Table 1-1. ENR 20-City Average Construction Cost Index Summary (2008-2012) ..............................1-2

Table 1-2. Cost Information Sources .......................................................................................................1-3

Table 2-1. Inventory of Existing Off-Project Water Supplies ...................................................................2-1

Table 2-2. City of Phoenix CAP Water Indian Community Leases ..........................................................2-2

Table 2-3. Off-Project Equivalent Demand Units Summary ................................................................ 2-10

Table 3-1. Estimated Capital Costs and Yield of WRAF Projects ...........................................................3-4

Table 5-1. Summary of WRAF Fee Calculation ........................................................................................4-1

Table of Contents

iv


List of Abbreviations AF acre-foot

AF/yr acre-feet per year

ASLD Arizona State Land Department

AWBA Arizona Water Banking Authority

AWS Assured Water Supply

CAP Central Arizona Project

CCI Construction Cost Index

EDU equivalent demand units

ENR Engineering News Record

ft feet

FY fiscal year

gal gallon

gpd gallons per day

IIP Infrastructure Improvements Plan

MAF million acre-feet

M&I Municipal & Industrial

mgd million gallons per day

NCS New Conservation Space

NIA Non-Indian Agricultural

SRP Salt River Project

SU Service Unit

WRAF Water Resource Acquisition Fee

WSD Water Services Department

Yr year

ES-1


Executive Summary The City of Phoenix (City) charges a Water Resources Acquisition Fee (WRAF) to new customers to fund the acquisition of water resources and related infrastructure needed to serve those customers. The funds collected by the fee are not used for operations, maintenance or rehabilitation purposes; and are not used to meet environmental or other regulations for existing customers. The WRAF is calculated for two distinct areas of the City – the area provided water by the Salt River Project (SRP), called ‘On-Project’, and the area provided water by sources other than SRP, called ‘Off-Project’. Based on legal and institutional precedents going back over a century, On-Project areas are primarily supplied by water from the Salt and Verde river systems through a series of reservoirs and canals managed by SRP. Off-Project areas rely upon other sources such as Colorado River water, delivered via the Central Arizona Project (CAP), and service area groundwater.

Selected Level of Service The level of service selected by the City for the WRAF update requires that the City have water supplies sufficient to provide a 100-year assured water supply to existing and new customers under moderate shortage and moderate demand conditions. As such, there could be circumstances for which existing and newly-acquired water resources would not be sufficient to meet all demands, such as a severe shortage or higher than anticipated demand.

Water Resources Acquisition Fee Analysis

On-Project Areas

Initial calculations indicate that water supplies for On-Project areas served by the SRP system are adequate to meet future development even under a moderate shortage scenario, and that no additional water resources or associated infrastructure are needed for those areas over the next 10 years. As a result, the WRAF is proposed to be adjusted to $0 per connection for On-Project areas.

Off-Project Areas

Projections for Off-Project areas indicate that additional water resources are needed to provide a 100-year assured water supply under moderate shortage and moderate demand conditions. A summary of the WRAF fee analysis process and assumptions for Off-Project areas is provided below.

Demand Projections

• Projections were made of the total demand level of existing customers over the next 110 years to provide an estimate of the amount of water required to meet the City’s current water delivery obligations. A 110-year time frame was used because the fee calculation assumes a 10-year period over which new development occurs and fees are collected and spent, and a subsequent 100-year period over which the City must provide an assured water supply. These projections are not based on a static or straight-line continuation of current usage patterns by existing customers. Instead, they incorporate assumptions about future reductions in demand given the best available information on appliance, fixture and landscape preferences and technologies.

• Projections were made of future demand associated with new development added over the 10-year infrastructure improvements plan (IIP) period. These projections were extended for the full 110-year period associated with the required assured water supply for the new (anticipated) customers under a medium growth scenario.

Water Resources Acquisition Fee Update Report and Infrastructure Improvements Plan Executive Summary

ES-2


The following figure illustrates demand projections for the 10-year IIP period.

Figure ES-1. Off-Project Water Demand Projections (2015-2024)

Supply Analysis

• An inventory of existing water supplies from the CAP system was compiled, taking into account prior rights and established priorities in the event of various shortages or restrictions wherever possible. A minor amount of sustainable (of indefinite duration) groundwater production and use (less than 5 percent of total supply) was also assumed.

Table ES-1. Inventory of Existing Off-Project Water Supplies

Source Typical Annual

Delivery Amount (AF/yr)

Priority/Type

RWCD Assignment (SRPMIC Agreement 1988)

1,136 P4/Agricultural

Hohokam (Cliff Dam) Water (AWSA/GRC Settlement)

36,144 P4/Agricultural* (*Agricultural through 2043, M&I starting 2044)

Colorado River Exchange – Welton-Mohawk (SRPMIC Agreement 1988) 4,750 P1-3

M& I Subcontract (1984) 122,204 M&I Salt River Pima Maricopa Lease (SRPMIC Agreement 1988)

3,023 P4/Indian Community Leases (Expires 12/31/2099)

Fort McDowell Lease (FMWRSA 1990) 4,300 P4/Indian Community Leases


ES-3


Table ES-1. Inventory of Existing Off-Project Water Supplies



Priority/Type

(Expires 1/1/2100)

Gila River Lease (AWRS 2005) 15,000 P4/Indian Community Leases (Expires 1/14/2108)

Total CAP Supplies 186,557 Service Area Groundwater 10,000 N/A

Total Off-Project Supplies 196,557

• CAP deliveries, which are derived from the Colorado River, are subject to shortages and can vary due to factors such as: − Hydrologic variability; − Colorado River Basin administration; − Delivery orders in the Lower Basin; and − Upper Basin development.

• Groundwater produced within the City’s service area is drought-tolerant and is considered sustainable for the 100-year assured water supply period at the assumed level of annual delivery capacity.

• Projections of future potential reductions in CAP supplies under various scenarios were examined, and a ‘moderate’ shortage scenario was established based on a variety of available information; including tree ring research, historical records of river flow conditions going back over a hundred years, and known institutional and legal rules governing allocations in times of shortage.

Water Supply Surplus/Deficit Analysis

• The anticipated water supply associated with the moderate shortage scenario over the next 110 years was compared with the projected demand for existing customers over the same period to estimate how much water might be available from current supplies to meet projected demands associated with new development. This calculation yielded a surplus situation in all years, indicating that under the moderate shortage scenario the City’s current supplies can meet existing customer demands and surpluses are available to serve new customers.

• Future demands associated with new customers added over the 10-year IIP period were then compared with surplus supplies available during the subsequent 100-year assured water supply period under the moderate shortage scenario. While the existing water supply portfolio is sufficient to meet new customer demands in many years, potential shortages were identified in 16 of the 110 years. Cumulative shortages over the 110-year period totaled approximately 84,240 AF, with the greatest annual shortage estimated at 9,500 AF (Figure ES-2).


ES-4


Figure ES-2. Supply Surpluses/Deficits Compared to Projected New Customer Demands

Water Resources Acquisition Plan (Infrastructure Improvements Plan)

The gap analysis indicates that additional water resources and related infrastructure are needed to provide the selected level of service for new Off-Project customers, which is a 100-year assured water supply under moderate shortage and moderate demand conditions. The costs and contributions of a combination of new surface water and groundwater supplies were evaluated to develop a 10-year IIP and to calculate an updated WRAF. • The City has an agreement with the White Mountain Apache Tribe (WMAT) to lease its CAP

allocation, which is 3,500 AF/yr, but the City must make a one-time payment of $11 million to effectuate the lease. The IIP assumes the City would make the lease payment and this CAP allocation would be added to the City’s portfolio. However, even with the addition of the WMAT’s CAP allocation, there are projected shortages during 14 of the 110-year analysis period. The cumulative remaining shortages total approximately 43,700 AF, with the greatest annual shortage estimated to be 6,400 AF. Therefore, additional water resources are needed to meet the selected level of service.

• An ASR well system was conceived and simulated to mitigate the anticipated shortages remaining after addition of the WMAT CAP allocation. The proposed ASR system consists of five wells. One well would be installed in the vicinity of the Deer Valley Water Treatment Plant (WTP), and would inject/store a portion of the City’s New Conservation Space (NCS) water currently stored in Lake Roosevelt. Water recovered from this well would be delivered to the Off-Project service area. The other four wells would be located in northeastern Phoenix and would inject/store surplus CAP supplies. The ASR system would be constructed in the early stages of the 10-year IIP, and store surplus water supplies in the aquifer system for subsequent recovery during periods of shortage. The system was sized to have capacity to store enough water within the 10-year IIP period to meet the total projected volumetric shortage of 43,700 AF and a recovery capacity adequate to meet the projected maximum annual shortage of 6,400 AF.

(20,000)(10,000)

010,00020,00030,00040,00050,00060,00070,00080,00090,000

Supp

ly o

r Dem

and

(AF/

yr)

Annual Surplus/Deficit from Existing Demand New Customer Demand

Annual Surplus/Deficit after New Demand

Projected Shortages


ES-5


The ASR system simulation is cumulative in nature and utilizes a series of annual “deposits” and “withdrawals” (Figure ES-3). As shortages are projected to occur on the CAP system, the stored water is withdrawn and delivered to the water system. Even though the timing, duration, and magnitude of year-specific CAP system shortages will inevitably vary from those projected in the WRAF analysis, the cumulative nature of ASR system operations tends to negate inherent short-term variability in the timing of annual shortages.

Figure ES-3. Simulation of ASR Well System Operations

Fee Calculation

Once additional surface water (CAP) and groundwater (through ASR) resources were identified to provide a 100-year assured water supply for new Off-Project customers, the cost of securing those resources was estimated. Each ASR well facility is estimated to cost approximately $3.6 million (2014 dollars), the WMAT settlement will cost $11 million, and CAP delivery charges (for ASR) are estimated to be $7.51 million over the 10-year IIP. An estimated construction schedule and cash flow analysis were prepared, and capital costs were projected to the mid-point of construction using a 4 percent annual escalation rate. The total estimated costs of the 10-year IIP are estimated to be $40.63 million. The City currently has $13,299,845 in its WRAF fund that can be utilized to pay for a portion of the new water resources and infrastructure. Therefore, the total estimated unfunded capital costs that need to be collected through the WRAF are $27,330,155.

The WRAF is calculated based on the cost to acquire and develop adequate water resources to meet the demand of an equivalent demand unit (EDU), and is then adjusted based on the capacity of the customer’s meter size. An EDU is the amount of water consumed annually by a new single-family residence. The City’s analysis of water usage throughout its service area concluded that approximately 0.33 AF of water is consumed per EDU. Since the water system is not entirely efficient, a portion of the water brought into the City’s system is lost before it is delivered to customers. These water system losses are estimated to be 10 percent. Accounting for system losses, the effective EDU conversion factor is 0.37 AF per EDU. Utilizing this EDU conversion factor and the capital cost per acre-foot of additional water resources, which is estimated to be $2,102, yields a cost per EDU of

(10,000)

(5,000)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Comparison of Projected Annual ASR Well Storage and Recovery VolumesOff-Project Moderate Shortage Scenario

ASR Deposits (AF) ASR Withdrawals (AF) Water in Storage (AF)


ES-6


$778. This is the amount of funding required on a per-EDU basis to provide a 100-year assured water supply for new Off-Project customers, assuming moderate demand and shortage conditions. The following table summarizes the updated WRAF fee calculation for an EDU.

Table ES-2. Summary of WRAF Fee Calculation Total Estimated Cost of 10-Year IIP $40,630,000 (Less) Current WRAF Fund Balance (as of Sept. 2014) ($13,299,845) Total Unfunded Capital Costs $27,330,155 Total Acre-Feet of Additional Water Resources1 Capital Cost per Acre-Foot of Water Resources

13,000 $2,102

EDU Conversion Factor (acre-feet per EDU) 0.37 Capital Cost per EDU $778

1Sum of 3,500 AF/yr WMAT Settlement and 9,500 AF/yr ASR well recovery capacity

The EDU factor used for the WRAF is based on the average amount of water used in FY 12-13 by single-family dwellings built between 2001 and 2008 that have 5/8”, 3/4" and 1” meters, grossed up by 10 percent to account for transmission and distribution system losses that occur between the treatment plants and water meters. The 2001-08 subset of homes (approximately 60,000 units) was used because units built prior to 2000 have significantly higher water demands than units built after that time, and the three types of meters were used because in the case of new single family units the meters are essentially interchangeable and water demand is not correlated to the meter size and type. For residential meters larger than 1”, the EDU factor is calculated on the basis of the relative safe maximum operating capacity ratio of the meter to the 3/4" meter. EDU factors for commercial, industrial, institutional and irrigation meters are calculated on the basis of the relative safe maximum operating capacity ratio of the meter to the 3/4” meter multiplied by an City-calculated adjustment factor of 2.12 to account for the much greater water use of those types of accounts as compared to single-family residential meters.

The EDU factor used for multifamily units (indoor/domestic use only) is 0.38 (or 38 percent) of the single family unit EDU and is based on estimated average water use during FY 2012-13 of a subset of multifamily units (approximately 6,700 units) built between 2001 and 2008, with landscape meters excluded. Water use by landscape meters was not included in this calculation because fees will be charged separately for landscape meters that serve multifamily and mixed-use developments.

The following tables present the updated WRAF calculation and proposed fee schedule.


ES-7


Table ES-4. Proposed Water Resources Acquisition Fee Schedule

Single Family and Multifamily Domestic Meters1 Off-Project On-Project

Single Family (3/4" and 1.0") $778 $0.00 Single Family 1.5" Displacement $2,590 $0.00 Single Family 2.0" Displacement $4,145 $0.00 Multifamily and Mobile Home Domestic $296 $0.00 (indoor use only)

Commercial, Industrial, Institutional and Dedicated-Irrigation Meters2,3 Off-Project On-Project

3/4" Displacement $1,649 $0.00 1.0" Displacement $2,754 $0.00 1.5" Displacement $5,491 $0.00 2.0" Displacement $8,788 $0.00 2.0" Turbine Class II $10,437 $0.00 3.0" Compound Class II $19,242 $0.00 3.0" Turbine Class II $23,908 $0.00 4.0" Compound Class II $32,976 $0.00 4.0" Turbine Class II $41,220 $0.00 6.0" Compound Class II $74,196 $0.00 6.0" Turbine Class II $87,931 $0.00 8.0" Compound Class II $87,931 $0.00 8.0" Turbine Class II $153,883 $0.00

1) The WRAF is assessed per living unit. 2) The WRAF is assessed per equivalent demand unit (EDU). 3) Purchase of a separate meter is required for landscape irrigation.

Single Family and Multifamily Domestic Meters1

Meter Capacity Ratio

EDU Adjustment Factor

Assessment EDUOff-ProjectFee / EDU

On-ProjectFee / EDU

Single Family (3/4" and 1.0") 1.00 1.00 1.00 $778 $0.00Single Family 1.5" Displacement 3.33 1.00 3.33 $778 $0.00Single Family 2.0" Displacement 5.33 1.00 5.33 $778 $0.00Multifamily and Mobile Home Domestic 1.00 0.38 0.38 $778 $0.00(indoor use only)

Commercial, Industrial, Institutional and Dedicated-Irrigation Meters2




On-ProjectFee / EDU

3/4" Displacement 1.00 2.12 2.12 $778 $0.001.0" Displacement 1.67 2.12 3.54 $778 $0.001.5" Displacement 3.33 2.12 7.06 $778 $0.002.0" Displacement 5.33 2.12 11.30 $778 $0.002.0" Turbine Class II 6.33 2.12 13.42 $778 $0.003.0" Compound Class II 11.67 2.12 24.74 $778 $0.003.0" Turbine Class II 14.50 2.12 30.74 $778 $0.004.0" Compound Class II 20.00 2.12 42.40 $778 $0.004.0" Turbine Class II 25.00 2.12 53.00 $778 $0.006.0" Compound Class II 45.00 2.12 95.40 $778 $0.006.0" Turbine Class II 53.33 2.12 113.06 $778 $0.008.0" Compound Class II 53.33 2.12 113.06 $778 $0.008.0" Turbine Class II 93.33 2.12 197.86 $778 $0.00

1) The WRAF is assessed per living unit.

2) The WRAF is assessed per equivalent demand unit (EDU).

Table ES-3. Water Resources Acquisition Fee Calculation

1-1


Section 1

Introduction 1.1 Purpose In September 2013, the City of Phoenix Water Services Department (WSD) retained Brown and Caldwell to assist with completing an update of the City’s Water Resources Acquisition Fee (WRAF). The last WRAF Update study was completed by Red Oak Consulting in 2008. Since that time, revisions have been made to the Arizona State Statute on impact fees (SB 1525) and changes have occurred to the City’s water supply and demand planning projections. The purpose of this WRAF Update is to revise the WRAF to conform to the revised Arizona State Statute and to incorporate WSD’s current water demand and supply planning projections.

1.2 Assumptions This section presents the documents and information relied upon and key assumptions made to complete the WRAF Update analysis.

Reference Documents 1.2.1The findings presented in this report are based on data provided by WSD, as well as meetings with staff from WSD, Central Arizona Project (CAP), and Salt River Project (SRP). In addition to this information, the following documents were reviewed by Brown and Caldwell in support of the WRAF Update: • Water Resources Acquisition Fee Update – Infrastructure Improvements Plan, Red Oak

Consulting, March 31, 2008 • Water Resources Acquisition Fee Update – Phase I: Technical and Cost Data, Red Oak

Consulting, March 31, 2008 • Water Resources Acquisition Fee Update – Phase II: Fee Determination and Assessment, Red

Oak Consulting, March 31, 2008 • Analysis of Potential Water Supply Shortages to the Lower Colorado River Basin and the Central

Arizona Water Supply, When and to What Degree Will Shortages Affect City of Phoenix CAP Water Supplies, Herb Dishlip, P.E., Herb Dishlip Consulting, October 24, 2006 (Revised October 30, 2006)

Selected Level of Service 1.2.2The level of service selected by the City for the WRAF update requires that the City have water supplies sufficient to provide a 100-year assured water supply to existing and new customers under moderate shortage and moderate demand conditions. As such, there could be circumstances for which existing and newly-acquired water resources would not be sufficient to meet all demands, such as a severe shortage or higher than anticipated demand.

WRAF Update Timeframes 1.2.3This update to the City’s WRAF incorporates two overlapping time frames, as follows:

Water Resources Acquisition Fee Update Report and Infrastructure Improvements Plan Section 1

1-2


• Water Resources Infrastructure Improvements Plan (IIP) Period: 10-year period beginning with fiscal year (FY) 2014/2015 (i.e., July 1, 2014 through June 30, 2015) and ending with FY 2023/2024. This is the period of time for which the City will collect and spend WRAF funds to acquire and develop water resources adequate to meet the demands associated with new service connections that occur during this time frame. This time frame was limited to 10 years in accordance with revisions to ARS §9-463.05.

• Water Resources Planning Period: 110-year period beginning with FY 2014/2015 and ending with FY 2124-2125. This period encompasses the 10-year IIP period and the City’s requirement under the Arizona Department of Water Resources (ADWR) Assured Water Supply (AWS) program to demonstrate an assured water supply that will be physically, legally, and continuously available for the next 100 years.

An extended water resources planning period was utilized for this WRAF Update analysis because, although the City has adequate water supplies to meet demands under historically normal hydrologic conditions, its surface water supplies are susceptible to drought. The possibility of future shortages on the CAP and/or SRP delivery systems could necessitate that the City develop water resource reserves to maintain a 100-year assured water supply for existing and new customers.

Cost Estimates 1.2.4All costs presented in this WRAF Update are shown in 2014 dollars unless otherwise noted. Where appropriate, inflation adjustments were incorporated to reflect future costs using a 4 percent annual inflation rate. This annual escalation rate is based on a combination of the 20-City Average Construction Cost Index (CCI) published by Engineering News Record (ENR) and the City’s recent experience with well construction bids. Depicted below is the ENR 20-City Average CCI for 2008 through 2012, which is somewhat lower than the CCI’s long-term average due to the most recent economic recession.

Table 1-1. ENR 20-City Average Construction Cost Index Summary (2008-2012)

Year ENR Construction Cost Index (December) Annual Percent Change

2007 8089 2008 8551 5.7% 2009 8641 1.1% 2010 8952 3.6% 2011 9172 2.5% 2012 9412 2.6%

Average Annual % Change (2008-2012) 3.1%

To develop the WRAF project cost estimates, Brown and Caldwell referenced sources, including recent contractor bids and vendor quotes submitted to the City of Phoenix. The following table summarizes the sources of cost information.


1-3


Table 1-2. Cost Information Sources WRAF Cost Item Primary Source Secondary Source

ASR Well Costs (includes land acquisition, ASR well and monitor well installation, ASR well equipping, site civil infrastructure and security, and engineering/CM/legal/permitting)

Bids for Cave Creek WRF ASR Well and Replacement of Well #281 (2011)

Gary Gin, City of Phoenix Hydrologist

White Mountain Apache Tribe CAP Settlement Lease Agreement for CAP Water Among the City of Phoenix, the White Mountain Apache Tribe, and the United States (November 1, 2012)

Cliff Neal, City of Phoenix Water Resources Advisor

1.3 Selected Methodology Similar to the WRAF Update completed in 2008, the incremental cost method was selected and utilized to calculate the updated WRAF. This method assigns to new development the incremental cost of system expansion needed to serve new development and is most suited to communities that have limited existing capacity and have detailed growth-related capital project plans.

The steps employed to develop the updated WRAF using the incremental cost method are as follows: 1. Determine the planning period 2. Project changes in existing customer demand over the planning period 3. Evaluate the expected growth in On-Project and Off-Project customers (i.e., equivalent demand

units (EDUs)) and demand over the planning period based on a medium growth scenario 4. Develop a moderate shortage scenario and assess impacts to existing surface water supplies

(SRP and CAP supplies) 5. Evaluate excess capacity in the existing water system to meet the demands of new development

given the impacts of a moderate shortage scenario 6. Evaluate whether excess capacity is sufficient to meet new customer demands over the 100-

year assured water supply period, and if not, estimate the volumetric magnitude of annual and cumulative shortages

7. Prepare a capital project and water resources acquisition plan to mitigate estimated supply shortages

8. Calculate the WRAF per EDU 9. Prepare a 10-year cash flow projection of revenues and expenditures 10. Develop a uniform fee assessment structure applicable to all new customers

1.4 Definitions All capitalized words, abbreviations and acronyms used herein are presented in the List of Abbreviations, which follows the Table of Contents of this report.

2-1


Section 2

Evaluation of Water Resources 2.1 Current Water Resources

On-Project Areas 2.1.1A map of On-Project areas is provided in Appendix A. On-Project areas of the City are primarily supplied by water from the Salt and Verde river systems delivered through a series of reservoirs and canals managed by Salt River Project (SRP). Initial calculations indicate that water supplies for On-Project areas served by the SRP system are adequate to meet future development, even under a moderate shortage scenario, and that no additional water resources or associated infrastructure are needed for those areas over the 110-year water resources planning period. As a result, the WRAF is proposed to be adjusted to $0 per connection for On-Project areas.

Off-Project Areas 2.1.2A map of Off-Project areas is provided in Appendix A. Off-Project areas of the City are supplied by sources such as the Colorado River, delivered via the Central Arizona Project (CAP), and service area groundwater. The Off-Project areas were the focus of this WRAF Update.

2.1.2.1 Existing Water Supplies

The City of Phoenix has a portfolio of CAP allocations with differing priorities, including Municipal & Industrial (M&I), Indian, Non-Indian Agricultural (NIA), and Indian Community Leases. The City’s existing Off-Project water resources portfolio is summarized in the following table.

Table 2-1. Inventory of Existing Off-Project Water Supplies



Priority/Type

Roosevelt Water Conservation District (RWCD) Assignment (SRPMIC Agreement 1988)

1,136 P4/Agricultural

Hohokam (Cliff Dam) Water (AWSA/GRC Settlement)

36,144 P4/Agricultural* (*Agricultural through 2043, M&I starting 2044)

Colorado River Exchange – Welton-Mohawk (SRPMIC Agreement 1988) 4,750 P1-3

M& I Subcontract (1984) 122,204 M&I Salt River Pima Maricopa Lease (SRPMIC Agreement 1988)

3,023 P4/Indian Community Leases (Expires 12/31/2099)

Fort McDowell Lease (FMWRSA 1990) 4,300 P4/Indian Community Leases (Expires 1/1/2100)

Gila River Lease (AWRS 2005) 15,000 P4/Indian Community Leases (Expires 1/14/2108)

Total CAP Supplies 186,557 Service Area Groundwater 10,000 N/A

Total Off-Project Water Supplies 196,557


2-2


The following Indian Community Leases are set to expire within the time frame of the WRAF Update. It was assumed that these leases would be allowed to expire and would not be renewed.

Table 2-2. City of Phoenix CAP Water Indian Community Leases

Lease Expiration Date Amount of Water (AF/yr)

Salt River Pima Maricopa 12/31/2099 3,023

Fort McDowell 1/1/2100 4,300

Gila River 1/14/2108 15,000

Total Annual Supply from Indian Community Leases 22,323

White Mountain Apache Tribe* 2115 (assumed enforceability date of 2015) 3,500

*White Mountain Apache Tribe lease has not yet been effectuated

2.1.2.2 Arizona State Land Department CAP Allocation

As part of the original process to allocate Colorado River water for distribution through the CAP, the Arizona State Land Department (ASLD) received an allocation of CAP Municipal & Industrial (M&I) priority water from the Secretary of the Interior. Although ASLD is not a municipal water provider, the allocation was intended to benefit undeveloped State Trust lands that would eventually be annexed into adjacent municipalities who would provide water service to those lands upon future development.

The water service subcontract executed by the United States, CAP and ASLD in 1987 included an explanatory addendum that identified the volumes of the allocation anticipated to be transferred to each of eight municipalities adjacent to the State Trust lands for which the allocation was made. These eight municipalities are Phoenix, Scottsdale, Mesa, Peoria, Goodyear, Carefree, Apache Junction and Tucson. The volume identified for transfer to the City of Phoenix is 12,000 acre-feet to serve State Trust lands located north of Jomax Road. Transfers of ASLD CAP water have been successfully completed for Scottsdale, Mesa and Peoria, but no agreement has yet been reached on how and when a transfer of CAP water rights from ASLD to Phoenix will take place.

Since the execution of ASLD’s CAP M&I water service subcontract in 1987, the City of Phoenix has annexed all of the land in question. In fact, the City now encompasses so much State Trust land designated for future urban development north of Jomax Road that the 12,000 acre-foot CAP allocation would only serve a fraction of the projected demands associated with that land. Although development has already begun on several large parcels north of Jomax Road that were previously held in the State Trust, there is currently no agreement in place that would dictate the timing, method of transfer, or cost for the transfer of ASLD’s allocation to the City of Phoenix. Discussions regarding such a transfer have recently been reinitiated, but development and execution of an agreement will take time. Therefore, this report assumes that none of the ASLD CAP M&I subcontract entitlements will be transferred to Phoenix during the 2015-2024 period. Costs associated with the future ASLD transfer will be reflected in future updates to the WRAF.

2.2 Water Demand and Supply Projections The City has invested significant time and effort into better understanding and forecasting future water demands since the 2005 Water Resources Plan Update and the 2008 WRAF Update. Residential per capita demand has declined considerably in the last twenty years, and even though


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the City’s population has increased significantly over the same time period, aggregate water demand has marginally increased.

The Desert Southwest region has been experiencing a period of below-average precipitation for more than a decade. The years 2002 and 2012 produced the lowest streamflows in the Salt-Verde watershed in the 100-year record. A continuation of this type of climatic pattern will significantly impact storage volumes and likely result in progressive shortages on the Salt-Verde and Colorado River systems, the City’s two main sources of water supply. Extended drought and shortage conditions put the reliability and adequacy of the City’s water supplies at risk.

Land Use and Future Demand Projections 2.2.1Future demand projections were based on a combination of existing customer and new customer demand projections. Projections of changes in existing customer demand were prepared and provided by WSD staff. The WRAF Update analysis incorporates continued reductions in per-capita demand from existing units and the more water-efficient nature of new construction and appliances/fixtures. WSD’s projections anticipate that existing Off-Project customer demand could decline from 147,486 AF/yr in 2015 to 137,065 AF/yr in 2025; a reduction of more than 10,000 AF/yr over the 10-year IIP period (Appendix B and Figure 2-1).

The City’s Medium Growth Scenario was used for the new customer demand projections, which is based on new development projections and calculated EDU conversion factors for different types of development and Impact Fee Service Areas (see Appendix A). The City’s development and EDU projections are described in Chapters 1 and 2 of the City of Phoenix Infrastructure Financing Plan 2015. The following tables summarize the City’s On- and Off-Project new development and EDU projections for the 10-year IIP period.


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Based on these projections and the amount of water required to serve an EDU, the Medium Growth Scenario predicts approximately 19,668 AF/yr of new Off-Project demand. These new Off-Project demand projections include an adjustment for 10 percent water system losses to account for the full amount of supply that will be needed to meet end-use customer demands. When combined with existing customer demand reduction projections, the analysis predicts aggregate Off-Project water demands of 156,733 AF/yr in the year 2025. Results of existing and new Off-Project customer demand projections are illustrated in the following graph.

On and Off-Project Residential Unit and Commercial Space Projections 2015-24

Area and On-Project/Off-Project Designation* SF Unit MF UnitCommercial/

Retail (sf)Off ice (sf)

Industrial/ Warehouse

(sf)

Public/ Institutional

(sf)Total

Ahwatukee On-Project 0 0 0 0 0 0 0Estrella/Laveen On-Project 26,380 1,624 1,362,400 227,300 9,052,200 1,657,270 12,327,175Northwest On-Project 0 0 0 0 0 0 0Northeast - On-Project 0 0 0 0 0 0 0Rest of City On-Project 3,255 12,579 1,587,940 2,267,796 1,196,961 977,746 6,046,276City-Wide On Project Total 29,635 14,203 2,950,340 2,495,096 10,249,161 2,635,016 18,373,451Ahwatukee Off-Project 1,172 696 136,240 227,300 0 56,614 422,023Estrella/Laveen Off-Project 0 0 0 0 0 0 0Northwest Off-Project 8,793 3,480 681,200 681,900 754,350 329,752 2,459,476Northeast Off-Project 17,587 4,640 2,384,200 1,136,500 754,350 665,756 4,963,034Rest of City Off-Project 1,435 182 660,020 5,204 3,329,139 431,159 4,427,139City-Wide Off Project Total 28,988 8,999 3,861,660 2,050,904 4,837,839 1,483,282 12,271,672City-Wide Total 58,623 23,202 6,812,000 4,546,000 15,087,000 4,118,298 30,645,123*Development projections were initially prepared for areas associated with the calculation of regular impact fee areas (water, wastewater, streets, etc.).

On and Off-Project (City-Wide) Equivalent Demand Factors

SF Unit MF UnitCommercial/

RetailOff ice



EDU per Unit or '000 Square Feet 1.00 0.52 0.43 0.28 0.22 0.22

On and Off-Project Equivalent Demand Unit Projections 2015-24

Area and On-Project/Off-Project Designation* SF MFCommercial/

Retail Off ice



Total

Ahwatukee On-Project 0 0 0 0 0 0 0Estrella/Laveen On-Project 26,380 845 592 63 2,014 369 30,263Northwest On-Project 0 0 0 0 0 0 0Northeast - On-Project 0 0 0 0 0 0 0Rest of City On-Project 3,255 6,541 691 631 266 218 11,602City-Wide On Project Total 29,635 7,386 1,283 695 2,280 586 41,865Ahwatukee Off-Project 1,172 362 59 63 0 13 1,670Estrella/Laveen Off-Project 0 0 0 0 0 0 0Northwest Off-Project 8,793 1,810 296 190 168 73 11,330Northeast Off-Project 17,587 2,413 1,037 316 168 148 21,669Rest of City Off-Project 1,435 95 287 1 741 96 2,655City-Wide Off Project Total 28,988 4,679 1,679 571 1,076 330 37,324City-Wide Total 58,623 12,065 2,962 1,266 3,356 916 79,189*Development projections were initially prepared for areas associated with the calculation of regular impact fee areas (water, wastewater, streets, etc.).


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Figure 2-1. Off-Project Water Demand Projections (2015-2024)

Supply Projections 2.2.2In order to evaluate the adequacy of the City’s Off-Project water supplies to meet existing and projected new customer demands, an analysis was conducted to quantify the potential impacts of shortages on the City’s CAP supplies. For the water supply analysis, a Moderate Shortage Condition scenario was developed based on the following: • Meetings with, and information gathered from, CAP staff; • Analysis of historical streamflow measurements and reconstructed hydrology for the Colorado

River system; and • Review of research documents related to supply projects for the Colorado River system.

The following key assumptions associated with the Moderate Shortage Condition scenario form the basis of the WRAF Update analysis: • Normal supply conditions through 2015. • The City’s Non-Indian Agricultural (NIA) priority supplies are fully curtailed 1 out of every 4 years

beginning in 2020. In 2044, the City’s Hohokam Conversion allocation transitions to Municipal & Industrial (M&I) priority and is no longer subject to the same shortage criteria.

• The City’s M&I priority supplies, as well as its Indian lease supplies, will not be reduced due to shortage before 2030.

• For the period 2030 through 2043, the City’s M&I priority supplies and Indian lease supplies are reduced by 10 percent in 6 out of every 14 years. This reflects the more recent hydrologic record on the Colorado River system, which suggests that persistent below-average annual flow (15 million acre-feet (MAF)) periods occur at least 5 times per century and last between 5 and 10

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Off-P

roje

ct D

eman

d (A

F/yr

)

Existing Customer Demand

New Customer Demand

Aggregate Demand


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years; including interspersed average/wet years and time for the system to recover from drought episodes. The City assumes that the reductions in the M&I priority and “firmed” Indian lease supplies during this period will be offset through recovery of credits accrued by the Arizona Water Banking Authority (AWBA).

• After 2044 and through the end of the WRAF Update analysis period (2124), the City’s M&I priority supplies and Indian lease supplies are reduced by up to 20 percent for a period of 8 years out of every 20 years. This reflects the compounded effects of Upper Colorado River Basin development, full subscription of CAP supplies, and climate variability. The City understands that a portion of these reductions will be offset through recovery of credits accrued by AWBA.

• These shortage condition assumptions were selected to incorporate elements of the “Moderate & Occasional” and “Deep & Sustained” shortage scenarios, as well as the “Rapid Buildup” demand scenario; which are described in the PowerPoint presentation provided by CAP staff during a December 10th, 2012 meeting.

• In addition to supply reductions from shortages, it was assumed that the City’s Indian Community water leases would expire, as scheduled below, and not be renewed. − Salt River Pima Maricopa Lease (2099) − Fort McDowell Lease (2100) − Gila River Lease (2098) − White Mountain Apache Tribe Lease (2115)

The analysis enabled the quantification of impacts of potential CAP system shortages to the City’s Off-Project supply portfolio. The following graph illustrates the impacts of a Moderate Shortage Condition scenario on the City’s existing Off-Project water supplies.


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Figure 2-2. Impacts of Moderate Shortage on Off-Project Water Supplies

Water Supply Surplus/Deficit Analysis 2.2.3The water supply gap analysis compares the City’s existing Off-Project supply portfolio under a Moderate Shortage Condition scenario to both existing and future customer demands. The outcome of this comparison was used to determine if there is a projected shortage gap for existing and new customers or new customers only. This analysis also evaluated the timing, duration and intensity of shortage gaps as well as the water resources and infrastructure needed to mitigate the shortages.

Existing Customer Surplus/Deficit

The first step in the analysis was to compare anticipated water supplies available during a moderate shortage scenario over the next 110 years with the projected existing customer demands over the same period to estimate how much water might be available to meet demands associated with new development. This calculation yielded a surplus situation in all years, indicating that under the moderate shortage scenario the City’s current supplies can meet existing customer demands and surpluses are available to serve new customers. Results of the analysis are illustrated in the following graph.

0

50,000

100,000

150,000

200,000

250,000

Off-

Proj

ect S

uppl

ies

(AF/

yr)

Existing Supplies Moderate Shortage


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Figure 2-3. Supply Surpluses/Deficits Compared to Existing Customer Demands

New Customer Surplus/Deficit

The next step in the water supply surplus/deficit analysis was to compare demands associated with new customers added over the 10-year IIP period with surplus supplies available under the moderate shortage scenario during the 100-year assured water supply period. While the existing water supply portfolio is sufficient to meet new customer demands in many years, potential shortages were identified in 16 of the 110 years. Cumulative shortages over the 110-year period totaled approximately 84,240 AF, with the greatest annual shortage estimated to be approximately 9,500 AF. Results of the analysis are illustrated in the following graph.

0

50,000

100,000

150,000

200,000

250,000

Supp

ly o

r Dem

and

(AF/

yr)

Existing Supplies Moderate Shortage

Existing Customer Demand

Annual Surplus/Deficit


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Figure 2-4. Supply Surpluses/Deficits Compared to Projected New Customer Demands

A tabular summary of the water demand and supply analysis is provided in Appendix B.

2.3 Equivalent Demand Units Future water demands associated with new development during the 10-year IIP period were converted and expressed in terms of Equivalent Demand Units (EDUs) to present water demand and an updated WRAF using a common denominator. A 10-year forecast of projected Off-Project EDUs by customer category prepared by the City is presented in the following table.

(20,000)(10,000)

010,00020,00030,00040,00050,00060,00070,00080,00090,000

Supp

ly o

r Dem

and

(AF/

yr)

Annual Surplus/Deficit from Existing Demand New Customer Demand

Annual Surplus/Deficit after New Demand

Projected Shortages


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Table 2-3. Off-Project Equivalent Demand Units Summary

Customer Category 2015 to 2024 (EDUs)

Single Family Units 28,988 Multifamily Units 4,679 Commercial/Retail 1,679 Office 571 Industrial 1,076 Public/Institutional 330

Total EDUs 37,324

The EDU conversion factor was calculated by WSD staff based on analysis of historic water meter billing statistics for single-family (SF) residential customers. WSD’s analysis concluded that in December 2013 there were a total 367,999 SF EDUs served by the City, and based on total billings, each SF EDU consumed an average of 299 gallons per living unit per day (gpd). Thus, the average City-wide demand per SF EDU is currently 0.33 AF/yr (299 gpd x 0.00112).

Water Losses

Water loss is the difference between the amount of raw water diverted into the supply system (e.g., from wells and surface water intakes) and the amount of water used or sold to customers. Losses occur during source water delivery, treatment and within the distribution system. All water systems experience some loss as part of normal operations. An updated water loss analysis conducted by WSD staff concluded that total losses within the City’s water system are approximately 10 percent of diversions. Therefore, assuming a 10 percent adjustment for water losses, the effective conversion factor for all new connections, regardless of water service area, is 0.37 AF per EDU. This conversion factor was applied in the WRAF calculation described in Section 4 of this report.

Multifamily Analysis

As part of the EDU evaluation effort, WSD staff also conducted an analysis of water meter billing statistics for the multifamily residential category. The analysis concluded that the multifamily customer (per unit) uses approximately 52 percent of the water used by a single-family customer. However, based on an analysis of indoor usage only by WSD staff, the multifamily customer uses approximately 38 percent of the water used by a single-family customer. New multifamily customers will be required to purchase separate indoor and irrigation water meters, and will be assessed fees based on a 0.38 EDU per multifamily dwelling unit and the size of any irrigation meters purchased at the commercial rate.

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Section 3

Water Resources Acquisition Projects 3.1 Description of Water Resources Acquisition Projects The water supply and demand analysis indicates that, due to projected shortages on the CAP system, the City’s existing Off-Project water resources might not be adequate to provide a 100-year assured water supply for new customers added over the WRAF Update period. Based on a moderate shortage condition scenario, cumulative deficits over the 110-year period are estimated to be 84,240 AF; with the greatest annual shortage estimated to be approximately 9,500 AF. WSD staff and Brown and Caldwell identified water resources acquisition and development projects that, if implemented in a timely manner, could mitigate these projected shortages. This section describes these projects, their estimated cost to implement, and their anticipated yield.

White Mountain Apache Tribe CAP Settlement 3.1.1The City has reached an agreement with the White Mountain Apache Tribe (WMAT) to purchase their allocation of CAP water. The terms of the settlement agreement dictate that the City makes a one-time payment of $11 million and in return acquires the WMAT’s 3,500 AF/yr Indian-priority allocation of CAP water. If effectuated, this settlement would increase the City’s portfolio of CAP supplies to 190,057 AF/yr.

The WMAT CAP allocation was added to the City’s existing CAP portfolio and subjected to the same impacts of a moderate shortage condition to evaluate its incremental impact to mitigating projected shortages. The analysis concluded that, even with the addition of the WMAT’s CAP allocation, there are still projected shortages during 14 of the 110-year analysis period. The cumulative remaining shortages total approximately 43,700 AF, with the greatest annual shortage estimated to be 6,400 AF. Therefore, additional water resources are needed to meet the level of service.

Aquifer Storage and Recovery (ASR) Well Projects 3.1.2Aquifer storage and recovery (ASR) wells represent a means to deliver water to an aquifer for storage and subsequent recovery to the water system. The City already operates ASR wells, and they are a demonstrated conjunctive water management tool. Two projects involving ASR well system development were conceived to mitigate the projected water supply shortages remaining after the addition of the WMAT’s CAP allocation. These proposed projects are described below.

Potable Water ASR Wells

The City does not yet fully utilize its allocation of CAP water. Thus, if it chooses, the City can request delivery of CAP supplies beyond its current demands if it had a means to store the water. The development of additional ASR wells would enable the City to deliver and store surplus CAP supplies in the short-term and recover the water in the future to mitigate surface water supply shortages.

The Potable Water ASR Well project would consist of installing four (4) new ASR wells in the Northeast aquifer area of the City to store treated CAP water supplies delivered through the City’s distribution system. Water stored by this ASR well system would be recovered for direct potable use


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within Off-Project areas. Based on the City’s experience with operating ASR wells in the Northeast aquifer area, each ASR is assumed to have an injection capacity of 1,000 AF/yr and a recovery capacity of 2,240 AF/yr; and have a utilization rate of 85 percent. It is assumed that the Potable Water ASR wells would inject water year-round until 2025 and then be used for recovery, as needed, during the 100-year assured water supply period.

The costs of the Potable Water ASR Well project would include the acquisition of land, installation and equipping of the ASR wells, site civil infrastructure and security, and costs associated with delivering the surplus CAP supplies to the City’s water system. The costs and anticipated yield of this project are summarized later in this section.

Deer Valley ASR Well

The City previously contributed to the costs of raising the dam at Lake Roosevelt (SRP system) and, in turn, received an allocation of New Conservation Space (NCS) water in the reservoir. The City’s NCS water is currently underutilized and a portion is lost to evaporation each year. Installation of an ASR well near the City’s Deer Valley Water Treatment Plant (WTP) would enable the City to deliver a portion of its NCS water through the SRP system, treat the water, store it in the local aquifer, and deliver it to an Off-Project pressure zone(s) during times of shortage.

The Deer Valley ASR Well project would install one (1) additional ASR well in vicinity of the Deer Valley WTP to serve this purpose. Based on the City’s experience with ASR well installation and testing at the Deer Valley WTP site, it is assumed the well would have an injection capacity of 1,000 AF/yr and a recovery capacity of 2,240 AF/yr; and have a utilization rate of 85 percent. It is assumed that the Deer Valley ASR well would inject water year-round until 2025 and then be used for recovery, as needed, during the 100-year assured water supply period.

The costs of the Deer Valley ASR Well project would include the acquisition of land, installation and equipping of the ASR wells, and site civil infrastructure and security. The costs and anticipated yield of this project are summarized later in this section.

ASR Well System Operations

Operation of the Potable Water and Deer Valley ASR well systems was simulated based on the established assumptions for combined injection capacity and duration, and combined recovery capacity. The systems were sized to have capacity to store enough water to meet the total projected remaining shortage of 43,700 AF and a combined recovery capacity adequate to meet the projected maximum annual shortage of 6,400 AF.

The ASR system simulation is cumulative in nature and utilizes a series of annual “deposits” and “withdrawals”. As remaining shortages are projected to occur on the CAP system, the stored water is withdrawn and delivered to the water system. Even though the timing, duration, and magnitude of year-specific CAP system shortages will inevitably vary from those projected in the WRAF analysis, the cumulative nature of ASR system operations tends to negate inherent short-term variability in the timing of annual shortages. The following graph depicts simulation of the two ASR well systems, including the timing and amounts of annual deposits and withdrawals, and the amount of water remaining in storage. A tabular summary of the water demand and supply analysis, including ASR well operations, is provided in Appendix B.


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Figure 3-1. Simulation of ASR Well System Operations

With the acquisition of the WMAT CAP allocation and the development and operation of five new ASR wells, it is projected that the City would be able to provide a 100-year water supply to new customers based on the selected level of service.

There are other initiatives and projects the City is pursuing to ensure it has adequate water resources for its customers. Proposals such as the storage of water behind Lake Mead, in Tucson area aquifers, or in cooperation with SRP, are focused on ensuring the City has enough water to accommodate existing customers in the event of an extreme shortage on the CAP. These initiatives are being undertaken to protect against the limited risk of Colorado River system supplies declining to a level that threatens deliveries to current customers, and there is no overlap with the WRAF projects proposed herein. Funding for these other projects will come from water rate revenues from current customers and not from WRAF funds, which are collected and used for the sole purpose of providing adequate water resources to meet new customer demands at the selected level of service.

3.2 Summary of Project Capital Costs The following table summarizes Brown and Caldwell’s estimated capital costs to acquire and develop adequate water resources and related infrastructure to provide the City’s selected level of service to new customers. The projects are grouped separately because the WMAT CAP settlement is a continuous annual water supply for the term of the lease; whereas, the ASR well systems store existing surplus water supplies for future recovery to mitigate temporary surface water shortages.

(10,000)

(5,000)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Comparison of Projected Annual ASR Well Storage and Recovery VolumesOff-Project Moderate Shortage Scenario

ASR Deposits (AF) ASR Withdrawals (AF) Water in Storage (AF)


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Table 3-1. Estimated Capital Costs and Yield of WRAF Projects

Project/Acquisition Estimated Capital Costs

Average Annual Additional Supply

(AF/yr)

Firming Supplies to Mitigate Temporary Shortages

(AF/yr) WMAT CAP Settlement $11,000,000 3,500 Potable Water ASR Wells $25,060,000* 7,600 Deer Valley ASR Well $4,570,000* 1,900

Totals $40,630,000 3,500 9,500 *Estimated capital cost escalated to mid-point of construction (base year 2014)

More detailed presentations of water resources project capacity additions and capital cost estimates are provided in Appendix C and Appendix F, respectively.

3.3 Water Resources Acquisition Project Implementation The WRAF projects implementation and financing plan are summarized in Appendices E through G. Due to the nature of engineering and construction, the implementation and scheduling of projects such as the ASR well systems could vary from what is assumed in the WRAF update analysis. As a result, those differences may have a material positive or negative effect on the City’s future financial plans.

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Section 4

Water Resources Acquisition Fee Development 4.1 Fee Determination The proposed WRAF projects and implementation plan are described in Section 3. The next step in the WRAF Update process is to calculate the proposed WRAF on a per EDU basis for application to all customer categories. The methodology for determining the proposed WRAF is a two-step process, as follows: 1. Determine the Capital Cost per Acre-Foot of Additional Water Resources – this step involves

calculating the cost per acre-foot to acquire and develop adequate water resources and related infrastructure to provide the selected level of service to new Off-Project customers. For the Off-Project WRAF projects described in Section 3, this calculation results in an average capital cost per acre-foot of $2,102, which includes the utilization of existing monies in the WRAF fund. The calculation of capital cost per acre-foot of Off-Project WRAF projects is presented in Appendix D.

2. Convert the Capital Cost per Acre-Foot to a Cost per EDU – this step includes the application of a conversion factor to the capital cost per acre-foot of additional water resources, as presented in Appendix D. This conversion factor was determined to be 0.37 acre-feet per EDU for all Off-Project areas based on WSD’s analysis of historical customer billing records, as described in Section 2. This conversion factor expresses the costs of acquiring and developing water resources on a per EDU basis. This calculation process is presented in Appendix E.

The following table summarizes the updated WRAF fee calculation for an EDU based on the capital cost per acre-foot of additional water resources and updated EDU conversion factor.

Table 5-1. Summary of WRAF Fee Calculation Total Estimated Cost of 10-Year IIP $40,630,000 (Less) Current WRAF Fund Balance (as of Sept. 2014) ($13,299,845) Total Unfunded Capital Costs $27,330,155 Total Acre-Feet of Additional Water Resources1 Capital Cost per Acre-Foot of Water Resources

13,000 $2,102

EDU Conversion Factor (acre-feet per EDU) 0.37 Capital Cost per EDU $778

1Sum of 3,500 AF/yr WMAT Settlement and 9,500 AF/yr ASR well recovery capacity

4.2 Cash Flow Analysis Revenue generated from WRAF fees is dedicated for the acquisition and development of new water resources and related infrastructure pursuant to Chapter 30 of the Phoenix City Code, Section 30-10, entitled “Administration of the Water Resources Acquisition Fee.” The primary sources of revenue in this fund are WRAF revenue and interest income. Positive ending balances are retained in the fund for future water resources expenditures; however, there are no transfers into or out of the WRAF Fund.


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A potential cash flow analysis of the proposed fees and projected average annual revenues and expenditures over the 10-year IIP period is presented in Appendix G. This cash flow analysis assumes a uniform annual level of new EDUs and WRAF revenues collected. The current balance of the WRAF fund reported by the City at the time of report preparation is $13,299,845. The analysis assumes utilization of these existing WRAF funds in the first two years of the study period to effectuate the WMAT CAP settlement agreement and to initiate ASR well development activities. Expenditures to construct the ASR well systems occur in the same years as indicated in Appendix F. These wells must be constructed early in the 10-year IIP period to enable these systems to store a sufficient volume of water by 2024 to offset potential shortages during the subsequent 100-year assured water supply period. This creates the potential for negative fund balances during years when expenditures outpace the collection of WRAF revenues. A financing plan will need to be developed to specifically address the matching of capital expenditures and WRAF revenues.

4.3 Alternative Revenue Offsets Impact fee case law and the State's impact fee statute require that alternative revenue sources that partially fund infrastructure and water resource projects be taken into account when impact fees are calculated and charged. Alternative revenue sources, or 'offsets', are usually derived from water rates, secondary property taxes, or sales/fuel taxes that directly or indirectly fund capital projects that are mostly or partially funded by impact fees. Generally, the alternative revenue sources are used to construct new projects, fund existing deficiencies in capital facilities, and/or pay down outstanding debt on existing growth-related projects. For example, the City of Phoenix's water impact fees are reduced by an offset associated with a portion of future water rate revenue that will be used to pay down existing bonds issued to fund certain growth-related projects.

In the case of the WRAF, as calculated in this report and infrastructure improvements plan, no other funding sources will be used to reduce the cost of the identified projects. The projects funded by WRAF revenues will be used solely to provide additional water resources for new development occurring in the 2015-2024 period. As a result, no offset is calculated or provided for the WRAF.

4.4 Credit for Private Water Resources Developers and other private parties sometimes have the ability to provide water resources to meet the water demand, in whole or in part, of the proposed commercial or residential development. In these instances, it is appropriate to provide a credit for the applicable WRAF. The amount of said credit would depend upon the provision of a firm, long-term water supply of adequate quantity and quality that can be readily integrated into the City’s water treatment and delivery system. In order to receive full credit for the WRAF, the water resource must be capable of providing at least 0.37 AF of water annually for each EDU on an on-going basis.

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Section 5

Conclusions and Recommendations 5.1 Recommended Fee Schedule The equivalent demand unit (EDU) factor used for the WRAF is based on the average amount of water used in FY 12-13 by single-family dwellings built between 2001 and 2008 that have 5/8”, 3/4" and 1” meters, grossed up by 10 percent to account for transmission and distribution system losses that occur between the treatment plants and water meters. The 2001-08 subset of homes (approximately 60,000 units) was used because units built prior to 2000 have significantly higher water demands than units built after that time, and the three types of meters were used because in the case of new single family units the meters are essentially interchangeable and water demand is not correlated to the meter size and type. For residential meters larger than 1”, the EDU factor is calculated on the basis of the relative safe maximum operating capacity ratio of the meter to the 3/4" meter. EDU factors for commercial, industrial, institutional and irrigation meters are calculated on the basis of the relative safe maximum operating capacity ratio of the meter to the 3/4” meter multiplied by an City-calculated adjustment factor of 2.12 to account for the much greater water use of those types of accounts as compared to single-family residential meters.

The EDU factor used for multifamily units (indoor/domestic use only) is 0.38 (or 38 percent) of the single family unit EDU and is based on estimated average water use during FY 2012-13 of a subset of multifamily units (approximately 6,700 units) built between 2001 and 2008, with landscape meters excluded. Water use by landscape meters was not included in this calculation because fees will be charged separately for landscape meters that serve multifamily and mixed-use developments.

The following tables present the updated WRAF calculation and proposed fee schedule.


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Table 5-2. Proposed Water Resources Acquisition Fee Schedule

Single Family and Multifamily Domestic Meters1 Off-Project On-Project

Single Family (3/4" and 1.0") $778 $0.00 Single Family 1.5" Displacement $2,590 $0.00 Single Family 2.0" Displacement $4,145 $0.00 Multifamily and Mobile Home Domestic $296 $0.00 (indoor use only)

Commercial, Industrial, Institutional and Dedicated-Irrigation Meters2,3 Off-Project On-Project

3/4" Displacement $1,649 $0.00 1.0" Displacement $2,754 $0.00 1.5" Displacement $5,491 $0.00 2.0" Displacement $8,788 $0.00 2.0" Turbine Class II $10,437 $0.00 3.0" Compound Class II $19,242 $0.00 3.0" Turbine Class II $23,908 $0.00 4.0" Compound Class II $32,976 $0.00 4.0" Turbine Class II $41,220 $0.00 6.0" Compound Class II $74,196 $0.00 6.0" Turbine Class II $87,931 $0.00 8.0" Compound Class II $87,931 $0.00 8.0" Turbine Class II $153,883 $0.00

1) The WRAF is assessed per living unit. 2) The WRAF is assessed per equivalent demand unit (EDU). 3) Purchase of a separate meter is required for landscape irrigation.

Single Family and Multifamily Domestic Meters1




On-ProjectFee / EDU

Single Family (3/4" and 1.0") 1.00 1.00 1.00 $778 $0.00Single Family 1.5" Displacement 3.33 1.00 3.33 $778 $0.00Single Family 2.0" Displacement 5.33 1.00 5.33 $778 $0.00Multifamily and Mobile Home Domestic 1.00 0.38 0.38 $778 $0.00(indoor use only)

Commercial, Industrial, Institutional and Dedicated-Irrigation Meters2




On-ProjectFee / EDU

3/4" Displacement 1.00 2.12 2.12 $778 $0.001.0" Displacement 1.67 2.12 3.54 $778 $0.001.5" Displacement 3.33 2.12 7.06 $778 $0.002.0" Displacement 5.33 2.12 11.30 $778 $0.002.0" Turbine Class II 6.33 2.12 13.42 $778 $0.003.0" Compound Class II 11.67 2.12 24.74 $778 $0.003.0" Turbine Class II 14.50 2.12 30.74 $778 $0.004.0" Compound Class II 20.00 2.12 42.40 $778 $0.004.0" Turbine Class II 25.00 2.12 53.00 $778 $0.006.0" Compound Class II 45.00 2.12 95.40 $778 $0.006.0" Turbine Class II 53.33 2.12 113.06 $778 $0.008.0" Compound Class II 53.33 2.12 113.06 $778 $0.008.0" Turbine Class II 93.33 2.12 197.86 $778 $0.00

1) The WRAF is assessed per living unit.

2) The WRAF is assessed per equivalent demand unit (EDU).

Table 5-1. Water Resources Acquisition Fee Calculation


5-3


This assessment methodology satisfies the requirements of ARS §9-463.05 by providing a non-discriminatory schedule of fees based on a reasonably proportionate relationship between the WRAF fee amount and the growth-related water resources capital improvements.

It is important to note that the WRAF update analysis is highly influenced by ongoing anticipated reductions in existing customer demand. The projected reductions in existing customer demand effectively free up existing water resources for use to meet new customer demand. A preliminary sensitivity analysis was conducted by Brown and Caldwell to estimate the impact to the cost of providing adequate water resources if no further reductions in existing customer demand occurred after the year 2024. The analysis suggests that the costs of additional water resources and related infrastructure could be as much as five times that estimated herein, which would significantly increase the proposed WRAF.

6-1


Section 6

Limitations This document was prepared solely for the City of Phoenix in accordance with professional standards at the time the services were performed and in accordance with the contract between the City of Phoenix and Brown and Caldwell dated September 10, 2013. This document is governed by the specific scope of work authorized by the City of Phoenix; it is not intended to be relied upon by any other party except for regulatory authorities contemplated by the scope of work. We have relied on information or instructions provided by the City of Phoenix and other parties and, unless otherwise expressly indicated, have made no independent investigation as to the validity, completeness, or accuracy of such information. Further, Brown and Caldwell makes no warranties, express or implied, with respect to this document, except for those, if any, contained in the agreement pursuant to which the document was prepared.

A-1


Appendix A: Proposed WRA Fee Areas

§̈¦17

£¤60

§̈¦10

§̈¦10

Highline Canal

Arizona Canal

High

line C

anal

Arizona Canal

§̈¦17

rx101

rx74

rx303

rx51

rx143rx202

£¤60

Copyright:© 2014 Esri

WATER RESOURCEACQUISITION FEE MAP

City of PhoenixWater Services Department ILe

gend

WRA FEE AREA

ADOT FREEWAYS

CANALS

CITY LIMIT

OFF PROJECT

ON PROJECT

B-1


Appendix B: Water Supply and Demand Analysis Summary (Off-Project Only)

Appendix BWater Supply and Demand Analysis Summary (Off-Project Only)

The City of Phoenix, ArizonaWater Resources Acquisition Fee Update

1 of 5

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037(acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet)

Off-Project Existing Demand 147,486 148,491 147,158 145,841 144,541 143,257 141,988 140,735 139,497 138,274 137,065 135,872 134,693 133,528 132,378 131,241 130,118 129,008 127,912 126,829 125,759 124,702 123,658

Off-Project New Demand 1,943 4,056 6,169 8,282 10,396 12,509 14,299 16,088 17,878 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668

Total Off-Project Demand 149,429 152,546 153,327 154,124 154,937 155,766 156,287 156,823 157,375 157,941 156,733 155,540 154,361 153,196 152,045 150,909 149,786 148,676 147,580 146,497 145,427 144,370 143,325

Off-Project Current Water Supplies (Moderate Shortage) 196,557 161,277 198,557 198,557 198,557 161,277 198,557 198,557 198,557 161,277 198,557 198,557 198,557 161,277 198,557 141,421 141,421 141,421 141,421 141,421 141,421 141,421 141,421

Annual Surplus / (Deficit) 47,128 8,731 45,230 44,433 43,620 5,511 42,270 41,734 41,182 3,336 41,824 43,017 44,196 8,081 46,512 (9,487) (8,364) (7,255) (6,159) (5,076) (4,006) (2,949) (1,904)

Cumulative (Deficits) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (9,487) (17,852) (25,107) (31,265) (36,341) (40,347) (43,295) (45,199)

Addition of New Supplies

White Mountain Apache Tribe CAP Settlement 0 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,150 3,150 3,150 3,150 3,150 3,150 3,150 3,150

Annual Surplus / (Deficit) without ASR Wells 47,128 12,231 48,730 47,933 47,120 9,011 45,770 45,234 44,682 6,836 45,324 46,517 47,696 11,581 50,012 (6,337) (5,214) (4,105) (3,009) (1,926) (856) 201 1,246

Cumulative (Deficits) without ASR Wells 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (6,337) (11,552) (15,657) (18,665) (20,591) (21,447) (21,447) (21,447)

ASR Wells

Annual Stored Volume 0 2,000 3,000 4,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 0 0 0 0 0 0 0 0 0 0 0 0

Cumulative Stored Volume 0 2,000 5,000 9,000 14,000 19,000 24,000 29,000 34,000 39,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000

Annual Recovered Volume 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (6,337) (5,214) (4,105) (3,009) (1,926) (856) 0 0

Cumulative Recovered Volume 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (6,337) (11,552) (15,657) (18,665) (20,591) (21,447) (21,447) (21,447)Net Water in Storage / (Unmitigated Shortage) 0 2,000 5,000 9,000 14,000 19,000 24,000 29,000 34,000 39,000 44,000 44,000 44,000 44,000 44,000 37,663 32,448 28,343 25,335 23,409 22,553 22,553 22,553



2 of 5

Off-Project Existing Demand

Off-Project New Demand

Total Off-Project Demand

Off-Project Current Water Supplies (Moderate Shortage)

Annual Surplus / (Deficit)

Cumulative (Deficits)


White Mountain Apache Tribe CAP Settlement

Annual Surplus / (Deficit) without ASR Wells

Cumulative (Deficits) without ASR Wells

ASR Wells

Annual Stored Volume

Cumulative Stored Volume

Annual Recovered Volume

Cumulative Recovered VolumeNet Water in Storage / (Unmitigated Shortage)


122,626 121,606 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599

19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668

142,293 141,274 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266

198,557 198,557 198,557 161,277 198,557 198,557 198,557 198,557 198,557 198,557 198,557 198,557 157,710 157,710 157,710 157,710 157,710 157,710 157,710 157,710 198,557 198,557 198,557

56,264 57,283 58,291 21,011 58,291 58,291 58,291 58,291 58,291 58,291 58,291 58,291 17,443 17,443 17,443 17,443 17,443 17,443 17,443 17,443 58,291 58,291 58,291

(45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199)

3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 3,500 3,500 3,500

59,764 60,783 61,791 24,511 61,791 61,791 61,791 61,791 61,791 61,791 61,791 61,791 20,243 20,243 20,243 20,243 20,243 20,243 20,243 20,243 61,791 61,791 61,791

(21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

(21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447)

22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553



3 of 5











ASR Wells






120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599

19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668

140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266

198,557 198,557 198,557 198,557 198,557 198,557 198,557 198,557 198,557 157,710 157,710 157,710 157,710 157,710 157,710 157,710 157,710 198,557 198,557 198,557 198,557 198,557 198,557

58,291 58,291 58,291 58,291 58,291 58,291 58,291 58,291 58,291 17,443 17,443 17,443 17,443 17,443 17,443 17,443 17,443 58,291 58,291 58,291 58,291 58,291 58,291

(45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199)

3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 3,500 3,500 3,500 3,500 3,500 3,500

61,791 61,791 61,791 61,791 61,791 61,791 61,791 61,791 61,791 20,243 20,243 20,243 20,243 20,243 20,243 20,243 20,243 61,791 61,791 61,791 61,791 61,791 61,791

(21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

(21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447)

22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553



4 of 5











ASR Wells






120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599

19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668

140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266

198,557 198,557 198,557 198,557 198,557 198,557 157,710 157,710 157,710 157,710 157,710 157,710 157,710 157,710 198,557 195,534 191,234 191,234 191,234 191,234 191,234 191,234 191,234

58,291 58,291 58,291 58,291 58,291 58,291 17,443 17,443 17,443 17,443 17,443 17,443 17,443 17,443 58,291 55,268 50,968 50,968 50,968 50,968 50,968 50,968 50,968

(45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199) (45,199)

3,500 3,500 3,500 3,500 3,500 3,500 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500

61,791 61,791 61,791 61,791 61,791 61,791 20,243 20,243 20,243 20,243 20,243 20,243 20,243 20,243 61,791 58,768 54,468 54,468 54,468 54,468 54,468 54,468 54,468

(21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

(21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447) (21,447)

22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553 22,553



5 of 5











ASR Wells





2107 2108 2109 2110 2111 2112 2113 2114 2115 2116 2117 2118 2119 2120 2121 2122 2123 2124(acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet)

120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599 120,599

19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668 19,668

140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266 140,266

191,234 176,234 176,234 135,387 135,387 135,387 135,387 135,387 135,387 135,387 135,387 176,234 176,234 176,234 176,234 176,234 176,234 176,234

50,968 35,968 35,968 (4,880) (4,880) (4,880) (4,880) (4,880) (4,880) (4,880) (4,880) 35,968 35,968 35,968 35,968 35,968 35,968 35,968

(45,199) (45,199) (45,199) (50,079) (54,959) (59,839) (64,719) (69,599) (74,478) (79,358) (84,238) (84,238) (84,238) (84,238) (84,238) (84,238) (84,238) (84,238)

3,500 3,500 3,500 2,800 2,800 2,800 2,800 2,800 2,800 0 0 0 0 0 0 0 0 0

54,468 39,468 39,468 (2,080) (2,080) (2,080) (2,080) (2,080) (2,080) (4,880) (4,880) 35,968 35,968 35,968 35,968 35,968 35,968 35,968

(21,447) (21,447) (21,447) (23,526) (25,606) (27,686) (29,766) (31,846) (33,926) (38,805) (43,685) (43,685) (43,685) (43,685) (43,685) (43,685) (43,685) (43,685)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000

0 0 0 (2,080) (2,080) (2,080) (2,080) (2,080) (2,080) (4,880) (4,880) 0 0 0 0 0 0 0

(21,447) (21,447) (21,447) (23,526) (25,606) (27,686) (29,766) (31,846) (33,926) (38,805) (43,685) (43,685) (43,685) (43,685) (43,685) (43,685) (43,685) (43,685)

22,553 22,553 22,553 20,474 18,394 16,314 14,234 12,154 10,074 5,195 315 315 315 315 315 315 315 315

C-1


Appendix C: Water Resources Acquisition Projects New Supply Capacity Projection

Appendix CWater Resources Acquisition Projects New Supply Capacity Projection


1 2 3 4 5 6 7 8 9 10

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25(acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet) (acre-feet)

On-Project

1 Total Available New Capacity 0 0 0 0 0 0 0 0 0 0

2 Total New Demand 1,068 2,140 3,212 4,283 5,355 6,426 7,532 8,637 9,742 10,847

3 On-Project Surplus (Deficiency) (1,068) (2,140) (3,212) (4,283) (5,355) (6,426) (7,532) (8,637) (9,742) (10,847)

4 Surplus Carry-Over from Existing Supplies (Moderate Shortage) 31,307 32,436 35,773 39,152 42,447 45,846 49,284 52,703 56,104 59,487

5 Combined Net Surplus (Deficiency) 30,239 30,296 32,562 34,869 37,092 39,419 41,752 44,067 46,362 48,640

Off-Project

6 Deer Valley ASR Well (Recovery Capacity) 0 0 0 0 0 1,900 1,900 1,900 1,900 1,900

7 Potable ASR Program (Recovery Capacity) 0 3,800 5,700 7,600 7,600 7,600 7,600 7,600 7,600 7,600

8 White Mountain Apache Tribe CAP Settlement 0 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500

9 Total Available New Capacity 0 7,300 9,200 11,100 11,100 13,000 13,000 13,000 13,000 13,000

10 Total New Demand 1,943 4,056 6,169 8,282 10,396 12,509 14,299 16,088 17,878 19,668

11 Off-Project Surplus (Deficiency) (1,943) 3,244 3,031 2,818 704 491 (1,299) (3,088) (4,878) (6,668)

12 Surplus Carry-Over from Existing Supplies (Moderate Shortage) 47,128 8,731 45,230 44,433 43,620 5,511 42,270 41,734 41,182 3,336

13 Combined Net Surplus (Deficiency) 45,185 11,975 48,261 47,251 44,325 6,003 40,972 38,646 36,304 (3,332)

Line No.

D-1


Appendix D: Water Resources Acquisition Projects Capital Cost per Acre-Foot

Appendix DWater Resources Acquisition Projects Capital Cost per Acre-Foot


Max. Annual Supply

Capital Cost Capital CostTotal Cost per Acre-

Foot

(acre-feet) (2014 dollars)(Mid-Point of Construction)

(2014 dollars)

- - - -- - - -- - - -

1,900 3,900,000$ 4,570,000$ 2,405$

Wells 7,600 15,600,000$ 17,550,000$ 2,309$

Water Delivery - 7,510,000$ 7,510,000$ -

3,500 11,000,000$ 11,000,000$ 3,143$

13,000 38,010,000$ 40,630,000$ 7,857$

(Less) Current WRAF Fund Balance (13,299,845)$

Total Unfunded Capital Costs 27,330,155$

2,102$

Potable Water ASR Program(CAP Water)


Capital Cost Per Acre-Foot

Totals

Off-Project

Average Capital Cost Per Acre-FootTotals

On-Project

Water Resources Acquisition Project

Deer Valley ASR Well (NCS Water)

E-1


Appendix E: Water Resources Acquisition Projects Implementation and Financing Plan

Appendix EWater Resources Acquisition Projects Implementation and Financing Plan


Annual Supply Capital Cost Financing Cost Cost Per Acre-Foot

(acre-feet)(Mid-Point of Construction)

(2014 Dollars) (2014 Dollars)

- - - - - -

- - - - - -

2017-2020 Cash 1,900 4,570,000$ - 2,405$

Wells 2015-2019 Cash 7,600 17,550,000$ - 3,297$

Water Delivery 2016-2024 Cash - 7,510,000$ - -$

2015 Cash 3,500 11,000,000$ - 3,143$

Totals 13,000 40,630,000$ -

Current WRAF Fund Balance (13,299,845)$

Total Unfunded Capital Costs 27,330,155$

2,102$

Cost per Acre-FootEDU Conversion

FactorCost Per EDU

(acre-feet per EDU)

On-Project - 0.370

Off-Project 2,102$ 0.370 778$

Notes:Estimates assume all capital expenditures are paid for in cash (no financing costs).

Water Service Area

Deer Valley ASR Well

Potable Water ASR Program


Water Resources Acquisition Project

Average Cost Per Acre-Foot

Off-Project

Average Cost Per Acre-Foot

On-Project

Funding SourceConstruction/

Acquisition Year

F-1


Appendix F: Water Resources Acquisition Projects Capital Costs (Escalated to Mid-Point of Construction)

Appendix FWater Resources Acquisition Projects Capital Costs (Escalated to Mid-Point of Construction)


1 2 3 4 5 6 7 8 9 10

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

On-Project1 Total -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Off-Project2 Deer Valley ASR Well -$ -$ 914,000$ 3,199,000$ 457,000$ -$ -$ -$ -$ -$

3 Potable Water ASR Wells (Well Facilities) 3,510,000$ 5,265,000$ 5,265,000$ 3,510,000$ -$ -$ -$ -$ -$ -$

4 Potable Water ASR Wells (Water Deliveries) 364,600$ 555,900$ 785,000$ 797,000$ 809,000$ 821,000$ 833,000$ 845,000$ 845,000$ 845,000$

5 White Mountain Apache Tribe CAP Settlement 11,000,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$

6 Total 14,874,600$ 5,820,900$ 6,964,000$ 7,506,000$ 1,266,000$ 821,000$ 833,000$ 845,000$ 845,000$ 845,000$

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G-1


Appendix G: Water Resources Acquisition Fee Fund Potential Cash Flow Analysis (Excluding Financing)

Appendix GWater Resources Acquisition Fee Fund Potential Cash Flow Analysis (Excluding Financing)


1 2 3 4 5 6 7 8 9 102015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25

1 Beginning Fund Balance $13,299,845 $1,528,021 ($1,366,681) ($5,359,068) ($9,693,837) ($7,571,867) ($5,110,995) ($2,785,167) ($587,631) $1,500,029

Revenues

2 On-Project

3 On-Project EDUs 4,187 4,187 4,187 4,187 4,187 4,187 4,187 4,187 4,187 4,1874 WRAF per EDU -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

5 On-Project WRAF Revenue -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

6 Off-Project

7 Off-Project EDUs 3,732 3,732 3,732 3,732 3,732 3,732 3,732 3,732 3,732 3,7328 WRAF per EDU 778$ 778$ 778$ 778$ 778$ 778$ 778$ 778$ 778$ 778$

9 Off-Project WRAF Revenue 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$

37,324$

10 Other Revenue

11 Interest Earnings 199,498$ 22,920$ -$ -$ -$ -$ -$ -$ -$ 22,500$ 12 Transfers To (From) WRAF Fund -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

13 Total Revenue 3,102,776$ 2,926,198$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,903,278$ 2,925,779$

Expenditures

14 On-Project15 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

16 Off-Project

17 White Mtn Apache CAP Settlement 11,000,000$ -$ -$ -$ -$ -$ -$ -$ -$ -$

18 Potable Water ASR Wells 3,510,000$ 5,265,000$ 5,265,000$ 3,510,000$ -$ -$ -$ -$ -$ -$

19 CAP Water Delivery Costs 364,600$ 555,900$ 785,000$ 797,000$ 809,000$ 821,000$ 833,000$ 845,000$ 845,000$ 845,000$ 20 Deer Valley ASR Well -$ -$ 914,000$ 3,199,000$ 457,000$ -$ -$ -$ -$ -$

21 Short-Term Finance Charges -$ -$ (68,334)$ (267,953)$ (484,692)$ (378,593)$ (255,550)$ (139,258)$ (29,382)$ -$

22 Total Expenditures 14,874,600$ 5,820,900$ 6,895,666$ 7,238,047$ 781,308$ 442,407$ 577,450$ 705,742$ 815,618$ 845,000$ 23 Annual Surplus (Deficit) (11,771,824)$ (2,894,702)$ (3,992,388)$ (4,334,768)$ 2,121,970$ 2,460,872$ 2,325,828$ 2,197,537$ 2,087,660$ 2,080,779$

24 Ending Fund Balance 1,528,021 (1,366,681) (5,359,068) (9,693,837) (7,571,867) (5,110,995) (2,785,167) (587,631) 1,500,029 3,580,807

Notes:Beginning WRAF fund balance provided by City.Assumes a uniform annual level of new EDUs.Interest Earnings assume an annual interest rate 1.5%.Short-Term Financing Charges assume an annual interest rate of 5%.Negative balances demonstrate the need for additional evaluation of capital funding sources.

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