GRIC enters deal with City of Chandler for CAP water

August 19, 2016

GRIN Staff

Gila River Indian News

The Gila River Indian Community and the City of Chandler have entered into a landmark water exchange agreement worth at least $43 million to the Community. The deal, approved by Community Council at a regular meeting July 7, 2016, will help the Community address the rising cost of non-drinkable Central Arizona Project (CAP) Colorado River water used for critical Community agriculture and irrigation projects.

The agreement with Chandler does not involve any of the Community’s drinking water, which comes from groundwater supplies not included in the exchange. Nor does the agreement involve any Gila River surface water. Instead, under the terms of the deal, the Community will sell to Chandler long-term water storage credits created when the Community’s non-drinkable CAP water supply is “banked,” as well as a very small amount – less than 1 percent – of the Community’s yearly non-drinkable CAP allotment.

At the same time, the Community will receive from Chandler a limited amount of low-cost water also to be used solely for irrigation. This less-expensive water replaces more expensive CAP irrigation water, allowing farmers to keep operating costs low while expanding the Community’s agricultural businesses.

The $43 million agreement furthers the Community’s goal of making sure agriculture – a leading component of the GRIC economy – can continue to grow and create jobs and revenue while not relying exclusively on costly CAP water. The Chandler agreement will also generate tens of millions of dollars to be used to relieve the strain the rising cost of CAP water creates on the Community’s overall operating budget.

Currently, the Community’s water budget alone runs about $20 million per year.

Details of the agreement were shared by Council members at district meetings across the Community. The exchange was negotiated through Gila River Water Storage LLC, or GRWS. GRWS, a partnership with Salt River Project created by Community Council in 2010, allows the Community to store non-drinkable CAP water that would otherwise go unused, creating long-term storage credits like the ones sold to Chandler. The Community’s current representative to GRWS is District 5 Councilman Brian Davis Sr.

The revenue generated by the Chandler agreement could be worth as much as $80 million over time, depending on the value of CAP water and the rising value of the long-term storage credits being acquired by the Community. The incoming revenue generated by the agreement will be used to build up the Community’s Permanent Water Fund, created in early 2016 to generate investment income to cover the Community’s growing water budget.

Ultimately, the Permanent Water Fund must be large enough to address the Community’s current $20 million annual water budget and the cost of water to supply future generations. The price of non-drinkable CAP water is expected to rise exponentially in the future, according to economists.

Finally, the Chandler agreement creates more protection for the Community’s precious groundwater supplies by providing neighbor cities like Chandler with water for irrigation and commercial uses. Growing the water supply for surrounding cities reduces the likelihood they will over-pump groundwater in situations of growing drought. In the past, such over-pumping by neighbor cities has damaged the Community’s drinking water.

The agreement also requires Chandler to pay the Community about $1.7 million to be used for well development on certain Community lands.