Additional materials were added to items 2b, 10, 11 and 16...2020/09/03 · Modifications at Red...

CENTRAL ARIZONA PROJECTBoard of Directors

September 3, 2020 10:00 AM

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

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

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

1. Pledge of Allegiance, Moment of Silence and Safety Minute Martin (10:00)2. Consideration of Action to Approve Items on the Consent Agenda** (10:05)

a. Minutes of the August 6, 2020 Regular Meeting Megdal

b. Water Storage Agreement for the City of Glendale Adams

c. Design Services Contract for Motor Exciter Replacement at Hassayampa Pumping Plant Francom

d. Construction Contract for Operation and Maintenance Road Repair at Pool 39 Francom

e. Contract for CISCO Licenses and Maintenance Hall

3. Consideration of Action to Approve Items Removed from the Consent Agenda4. Reports of Committees and Possible Consideration of Committee Recommendations (10:10)

a. Public Policy Committee Cesare

i. Possible Consideration of Action on Policy Issues that Could Impact CAP

b. Finance, Audit and Power Committee Goddard

i. Discussion and Consideration of Action to Approve a Voluntary Supplemental ShortageStabilization Program Dunlap

c. CAGRD and Underground Storage Committee Megdal

5. Discussion and Consideration of Action to Approve CAGRDCity of Peoria LongTerm Storage CreditAcquisition Craddock (10:50)

6. Report on Colorado River Conditions (Water Supply: Reliability of the CAP Water Supply^) Mahmoud (11:05)

a. Report on August 24Month Study Mahmoud

b. Report on 20202021 ICS Creation Efforts Cullom

7. Report on Proposed System Conservation Projects for 2021 Cullom (11:25)8. Report on Drought Contingency Plan Implementation Dent (11:35)9. Discussion and Consideration of Action Regarding Potential Availability of Excess Water in 2021

Crandall (11:45)10. Report on Water Operations (Project Reliability: Effectively Manage, Operate and Maintain CAP

Assets^) Crandall (11:55)a. Report on August 26, 2020 Annual Water User Briefing

11. Update on Water Quality Outreach and Technical Engagement Pagels/Lisa Jackson, Black &Veatch (12:10)

Additional materials were added to items 2b, 10, 11 and 16

12. Report on Legal Matters (Leadership & Public Trust: RelationshipsCustomers^) Johnson (12:25)13. Directors' Report on Current Events (12:35)14. Future Agenda Items (12:50)15. President's Report on Current Events Atkins (12:55)16. General Manager's Report on Current Events Cooke (1:05)17. Public Comment (1:15)18. Consideration of Action to go into Executive Session of the Board for the following purposes: (The discussions and minutes of the executive session shall be kept confidential. The executive

session of the Board is not open to the public.)***

a. Pursuant to A.R.S. §38431.03.A.3 to obtain legal advice from the District's attorneys on any matter listed on the agenda

19. Reconvene in Open Session 20. Consideration of Action Regarding Items Discussed in Executive Session 21. Adjourn

CAP Board members are elected by the voters in Maricopa, Pima and Pinal Counties. Visit capaz.com/board to learn more about the Board. Those interested in meeting with a Board member may contact the member directly to schedule an appointment. Space will be made available at CAP Headquarters.

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

** Items listed in the Consent Agenda may be acted on by the Board without discussion. Any item listed on the Consent Agenda may be removed from the Consent Agenda and acted on separately by the Board.

*** The Executive Session is expected to last approximately one hour and will not be open to the public.^ Linkage to 2016 CAWCD Board of Directors Strategic Plan. In accordance with the Americans with Disabilities Act (ADA), if you need reasonable accommodations due to a disability, please contact the CAP office at (623.869.2333) or TDD (623.869.2183) at least seventytwo (72) hours in advance of the meeting.

CENTRAL ARIZONA WATER CONSERVATION DISTRICT REGULAR MEETING OF THE BOARD OF DIRECTORS

August 6, 2020

The regular meeting of the Central Arizona Project ("CAWCD" or "CAP") Board of Directors was called to order by President Lisa A. Atkins on August 6, 2020, at 10:01 a.m. The meeting was held virtually and broadcast for the public via livestream.

Board Members present were: President Lisa A. Atkins, Maricopa County; Vice President Terry Goddard, Maricopa County; Secretary Sharon B. Megdal, Pima County; Alexandra Arboleda, Maricopa County; Jennifer Brown, Maricopa County; Karen Cesare, Pima County; Benjamin W. Graff, Maricopa County; Jim Hartdegen, Pinal County; Jim Holway, Maricopa County; Pat Jacobs, Pima County; Heather A. Macre, Maricopa County; Jennifer Martin, Maricopa County; April Pinger-Tornquist, Maricopa County; Mark Taylor, Pima County.

Board Member not present was: Mark Lewis, Maricopa County.

Staff members present were Ted Cooke, General Manager; Robert Moody, Assistant General Manager; Jay Johnson, General Counsel; Bridget Schwartz-Manock, Director of Public Affairs; Patrick Dent, Director of Water Policy; Darrin Francom, Director of Operations, Power and Engineering; Phil Rettinger, Director of Field Maintenance; Doug Dunlap, Manager, Finance and Accounting; Ken Seasholes, Manager, Resource Planning and Analysis; Laura Grignano, Manager, CAGRD; Chuck Cullom, Manager, Colorado River Programs; Jeff Gray, Manager, Legislative Affairs; Greg Adams, Senior Attorney; Angie Lohse, Senior Policy Analyst; Marcus Shapiro, Water Systems Supervisor; Andrew Craddock, Senior Policy Analyst; Megan Casey, Public Affairs Management Analyst; and Jennifer Miller, Board Support Specialist.

Bridget Schwartz-Manock, Director of Public Affairs, performed a roll call and confirmed a quorum was present. President Atkins reviewed the details of the virtual meetings, noting that she and a small number of staff were at CAP Headquarters, the rest of the Board Members and staff were on WebEx, and the meeting was livestreamed for the public.

1. PLEDGE OF ALLEGIANCE, MOMENT OF SILENCE AND SAFETY MINUTE - MACRE

Board Member Macre led the Board Members and public in reciting the Pledge of Allegiance andobserving a moment of silence, and gave a safety minute on how to properly put on and remove aface mask.

2. CONSIDERATION OF ACTION TO APPROVE ITEMS ON THE CONSENT AGENDA**

On a motion (Secretary Megdal) and a second (Board Member Brown), approved the minutesof the June 4. 2020 regular meeting; approved the Agreements for Water Storage at the AguaFria Recharge Project and Tonopah Desert Recharge Project between CAWCD and the Townof Gilbert; approved the Agreement for Water Storage at the Lower Santa CruzReplenishment Project between CAWCD and Flowing Wells Irrigation District; approved theAgreements for Water Storage at the Lower Santa Cruz Replenishment Project and Pima

CAWCD Board Meeting August 6, 2020 Page 2

Mine Road Recharge Project between CAWCD and the Town of Oro Valley; approved the Agreement for Water Storage at the Lower Santa Cruz Replenishment Project between CAWCD and the United States of America Department of the Interior Bureau of Reclamation; approved the award of a Construction Contract to Diamond Ridge Development Corp. in the amount of $243,030 plus an additional $24,303 (10%) for contingencies (totaling $267,333) for the Construction of the Bridge Crane and Office Modifications at Red Rock Pumping Plant Project, and authorized the General Manager, or his designee, to execute the contract and administer the contingency; approved the award of a Construction Contract to Willmeng Construction Inc. in the amount of $271,682 plus an additional $27,168 (10%) for contingencies (totaling $298,850) for the Construction of the Covered Vehicle Parking at Multiple Sites Project, and authorized the General Manager, or his designee, to execute the contract and administer the contingency; approved the award of the microwave communication system replacement to Aviat via a State of Arizona contract purchase and authorized the General Manager, or his designee, to execute the agreement for $2,064,000, plus $309,600 (15%) for contingencies, totaling $2,373,600. Motion passed.

Voting yes: Lisa A. Atkins, Terry Goddard, Sharon B. Megdal, Alexandra Arboleda, Jennifer Brown, Karen Cesare, Benjamin W. Graff, Jim Hartdegen, Jim Holway, Pat Jacobs, Heather A. Macre, Jennifer Martin, April Pinger-Tornquist, Mark Taylor

3. CONSIDERATION OF ACTION TO APPROVE ITEMS REMOVED FROM THE CONSENT AGENDA

4. REPORTS OF COMMITTEES AND POSSIBLE CONSIDERATION OF COMMITTEE RECOMMENDATIONS

4.a. PUBLIC POLICY COMMITTEE - CESARE

Board Member Cesare gave an update on the August 6, 2020 Public Policy Committee meeting. She reported the Committee heard an update on the state budget, as well as a report on preliminary primary election results. She noted the federal update included the status of COVID-19 economic recovery legislation, the federal budget, and infrastructure legislation. Board Member Cesare reported on the Committee's discussion on S. 4228, the Energy-Water Technology Demonstration Act, nothing that given some of the questions raised prior the meeting, staff modified the recommendation to monitor the bill, rather than support.

4.a.i. POSSIBLE CONSIDERATION OF ACTION ON POLICY ISSUES THAT COULD IMPACT CAP, INCLUDING BUT NOT LIMITED TO S. 4228

Jeff Gray, Legislative Affairs Manager, presented an overview of S. 4228, noting the goal of the bill and relevant provisions. He said the Lower Basin pilot project language allows for the option of an eligible desalination project that is either Yuma Desalting Plant (YDP) or another eligible desalination project. He noted that CAP's federal legislative agenda includes support for the operation of YDP or suitable alternatives, which led staff to initially recommend a position of support for the alternative project language on the bill. Mr. Gray reported that Senator McSally's office received feedback on the bill desalination provision and questions have been raised about whether the operation of YDP is mandated. In light of those issues, staff modified the recommendation to

monitor the bill and will continue to provide feedback to the Senator's staff as the bill move through the process. Secretary Megdal commented that she supports monitoring the bill and expressed interest in engaging in suggestions for what the desalination project could entail. Board Member Holway expressed support that the provision on desalination be as broad as possible, and requested the Board have a discussion on its position on YDP. Board Member Brown expressed support for monitoring the bill, noting that she hopes the language can be modified in a way that will allow CAP to support the effort. Board Member Macre expressed appreciation to the members of the public who emailed the Board on this topic. Board Member Jacobs requested a copy of the priorities identified for the federal infrastructure language and a paper on the different positions surrounding the YDP issue. Mr. Gray noted that specific language for the infrastructure bill will be presented to the Public Policy Committee next month. Board Member Holway requested that information on section 4 subsection C of the bill be provided to the Board. Two individuals submitted electronic public testimony: Haley Paul, National Audubon Society, submitted a comment in opposition to the efforts in S. 4228 to operate YDP but noted appreciation for the monitor position. The National Audubon Society would like to see support for YDP removed from the CAP legislative agenda. Chris Kuzdas, Water For Arizona Coalition, submitted a comment in opposition to the effort to operate YDP and requested the letter from Water for Arizona Coalition Chairman Moran dated August 5 be included in the record. Board Member Cesare thanked staff for their responsiveness to the concerns on this issue. She noted that the discussion centered on one section of the bill, but there are a lot of other good things in the bill. On a motion (Board Member Cesare) and a second (Board Member Jacobs), adopted a position on the following pending federal legislation of interest to CAP: S. 4228 (MONITOR). Motion passed.

Voting yes: Lisa A. Atkins, Terry Goddard, Sharon B. Megdal, Alexandra Arboleda, Jennifer Brown, Karen Cesare, Benjamin W. Graff, Jim Holway, Pat Jacobs, Heather A. Macre, Jennifer Martin, April Pinger-Tornquist, Mark Taylor

Voting no: Jim Hartdegen

4.b. FINANCE, AUDIT AND POWER COMMITTEE - GODDARD

Vice President Goddard reported that the Committee will meet on August 20 and noted the items on the agenda.

4.c. CAGRD AND UNDERGROUND STORAGE COMMITTEE - MEGDAL

Secretary Megdal reported that the Committee did not meet in June or July, and the next meeting will be August 20. She reviewed the items on the agenda.

5. REPORT ON JUNE 16, 2020 ARIZONA WATER PROTECTION FUND COMMISSION MEETING - JACOBS

Board Member Jacobs gave an update on the June 16, 2020 meeting of the Arizona Water Protection Fund Commission. He reported that the Commission voted to defer the FY21 grant cycle due to lack of available funds, and approved the 2020 Annual Report and a revised Grant Manual.

6. REPORT ON JUNE 17, 2020 ARIZONA WATER BANKING AUTHORITY MEETING - ARBOLEDA

Board Member Arboleda gave an update on the June 17, 2020 meeting of the Arizona Water Banking Authority (AWBA). She reported that the AWBA voted to approve legislative budget transfers, the 2020 plan of operation, the 2019 Annual Report and the 2021 administrative budget.

7. REPORT ON NIA REALLOCATION - DENT/LOHSE

Angie Lohse, Senior Policy Analyst, gave a presentation on Non-Indian Agricultural (NIA) priority water reallocation. She noted there has been progress by the Bureau of Reclamation (BOR) on the NIA reallocation process. She provided background on the NIA subcontracts and financial issues that led to the 2004 Arizona Water Rights Settlement Act. Ms. Lohse reviewed the Arizona Department of Water Resources (ADWR) reallocation process, as well as a timeline for the overall process. She provided an overview of the cost components of the NIA priority water. In response to a question from Board Member Taylor, Ms. Lohse noted that the amount of water that will be made available for outside the CAP service areas was determined by ADWR based on the population projection. In response to questions from Board Member Holway, Ms. Lohse said that the debt repayment obligation begins in 2026, and noted the reliability of the NIA supply will be shared with stakeholders later in the process. Patrick Dent, Director of Water Policy, reviewed next steps in the process. He said that once BOR publishes the final decision in the Federal Register, CAP will be able to move forward with preparation of water delivery contracts with NIA applications who have been allocated water, and stakeholder engagement will occur. He noted the Board and BOR will approve the contacts, which will require ratification by the courts. Mr. Dent said the intent is to accomplish those tasks ahead of the water orders in October 2021, making the water available in calendar year 2022. One individual submitted electronic public testimony: Carlos Ronstadt, on behalf of his law firm, asked if the NIA reallocations will be firmed under the Drought Contingency Plan (DCP), and asked about a financing option that CAWCD discussed for those who contract for NIA water. Mr. Dent said that the contract would be governed by the priority system, same as the NIA agreement under DCP. Doug Dunlap, Finance and Accounting Manager, said the financing option discussed between 2012-2014 was a five-year payment plan and staff has been planning that the Board would continue that payment plan at roughly the current interest rates.

8. DISCUSSION OF PROPOSED CAGRD-CITY OF PEORIA M&I SUBCONTRACT ASSIGNMENT AND TRANSFER AGREEMENT AND LONG-TERM STORAGE CREDIT ACQUISITION - CRADDOCK

President Atkins noted that the agreements in this agenda item represent the collaborative efforts between CAP and Peoria staff to address a long-standing issue regarding the CAP M&I allotment originally assigned to New River Utility Company. She expressed appreciation to both sides for their persistence to develop this resolution. Andrew Craddock, Senior Policy Analyst, reviewed the background of the M&I assignment and transfer and the key terms of the long-term storage credit (LTSC) purchase and sale agreement proposal. He noted the agreement will be considered by the Peoria City Council on August 18, followed by the CAWCD Board on September 3. In response to a question from Board Member Taylor, Mr. Craddock clarified the costs of the agreement and how projected growth will be addressed by the LTSC agreement. In response to a question from Board Member Jacobs, General Manager Ted Cooke and CAGRD Manager Laura Grignano said this type of situation is not likely to happen again, as this is a unique issue dealing with CAGRD's supplemental contract. Secretary Megdal added this is a very specific situation. Brett Fleck, City of Peoria, expressed appreciation for the work done to resolve the issue. He noted that, while the City has disagreed in the interpretation of the CAGRD contract, they believe this is a successful and mutually agreeable conclusion to the issue. President Atkins thanked Mr. Fleck and Cape Powers from the City of Peoria for attending the meeting.

9. REPORT ON DRAFT WATER QUALITY GUIDANCE DOCUMENT INCLUDING COMMENTS RECEIVED - SEASHOLES

Ken Seasholes, Resource Planning and Analysis Manager, provided an update on the feedback received on the draft water quality guidance document and the recent staff activities. He noted the document is a joint CAP and BOR effort to organize and add implementation detail to the water quality consensus framework that was approved the by the Board in 2018 and the expanded list of constituents approved in 2019. After a two-month comment period, ten parties submitted comments. He gave an overview of the comments received, which included feedback on the list of non-detect constituents and a desire for ongoing stakeholder input. Mr. Seasholes said the use of roundtables and briefings will be effective in continuing outreach to stakeholders, and noted outreach meetings that occurred with tribes. He said the hope is to share a revised document in the coming months, with an opportunity for additional review and comment. He noted that BOR has tribal trust responsibilities to fulfill as part of the process as well. One individual submitted electronic public testimony: Brian Biesemeyer, City of Scottsdale Water, expressed concern over details of sampling protocols and the arbitrary low threshold put on introduction standards for unregulated substances and would like to standards based on drinking water standards. Board Member Arboleda commended staff for the work done to create the document, but noted there seem to be significant issues that need to be resolved based on the comments received.

Board Member Pinger-Tornquist inquired about Board involvement in the rest of the process. Vice President Goddard commented that it might be appropriate to reconvene the Water Quality Standards Task Force. President Atkins said she will talk with General Manager Cooke and determine the best process.

The Board recessed from 12:08-12:16 p.m. Megan Casey, Management Analyst, performed a roll call and confirmed a quorum was present.

10. REPORT ON COLORADO RIVER CONDITIONS - CULLOM

Chuck Cullom, Colorado River Programs Manager, gave an update on the status of the reservoirs in the Colorado River System. He reviewed the 2020 Lake Powell inflows and the Lake Mead pool elevation. In response to a question from Board Member Jacobs, Mr. Cullom noted the charts show typical seasonal operation.

11. REPORT ON AUGMENTATION DISCUSSIONS - CULLOM

Mr. Cullom gave a report on the background of Colorado River augmentation and CAWCD's goals for augmentation efforts.

11.a. MWD REGIONAL RECYCLED WATER PROJECT

Mr. Cullom provided information on current augmentation discussions with the Metropolitan Water District of Southern California (MWD). He provided an overview of MWD's Regional Recycled Water Project, which seeks to recycle wastewater to offset reliance on imported supplies including the Colorado River. He noted that ADWR and CAWCD staff are working cooperatively with MWD to explore the augmentation opportunity, with the intent of developing a letter of interest to MWD. In response to a question from Board Member Taylor, Mr. Cullom said there have been no discussions on what Arizona's partnership might be in the project. He noted that Southern Nevada water has expressed interest, and in the long term the agencies will work to identify possible opportunities for Arizona and Nevada. Secretary Megdal clarified that MWD is doing this project as part of their water resources planning, regardless of involvement by other states. In response to a question from Board Member Pinger-Tornquist, Mr. Cullom said that injection wells will replenish the groundwater supply. Vice President Goddard asked why MWD would be interested in offering the supply to other states, and whether it could open the door for other interstate transfers. Mr. Cullom said that MWD is looking long term to use this as needed as an interruptible supply, which is not a permanent alienation of right, which is what has been the concern with interstate transfers.

11.b. MINUTE 323 BINATIONAL STUDY OF WATER DESALINATION OPPORTUNITIES IN THE SEA OF CORTEZ

Mr. Cullom gave an update on the Binational Study of Ocean Desalination Opportunities in the Sea of Cortez, which was authorized under Minute 323. The study, funded in part by CAWCD, was completed in May 2020 and identified three options with the potential to develop 200,000 acre feet per year to benefit US and Mexico water users. He said the next step is to explore the international water exchange concept. Secretary Megdal asked what information was presented to the International Boundary and Water Commission (IBWC), and Mr. Cullom replied that the summary of key findings were presented and the report is on the IBWC website. Secretary Megdal requested a detailed presentation on the

study. Board Member Cesare commented that there is a lot of concern over the Cienaga de Santa Clara and she hopes people recognize that consideration for the environmental concerns are part of these conversations.

12. DISCUSSION ON PROPOSED SYSTEM CONSERVATION PROJECTS FOR 2021 - CULLOM

Mr. Cullom provided an update on 2021 CAP system conservation projects. He reviewed the guidance adopted by the Board for system conservation, and shared projects that are being planned by the Fort McDowell Yavapai Nation, Colorado River Indian Tribes, and Mohave Valley Irrigation and Drainage District and reviewed next steps.

13. REPORT ON ARIZONA RECONSULTATION PROCESS – COOKE/DENT

Mr. Cooke reported that reconsultation in Arizona has begun, starting with interviews that he and ADWR Director Buschatzke conducted with the members of the DCP Steering Committee to discuss expectations on reconsultation. He reported the DCP Steering Committee has been reconstituted as the Arizona Reconsultation Committee (ARC), which held its first meeting on June 25, 2020. He noted it will be a years-long process and Arizona is proud to be first in line to get started.

13.a. JUNE 25, 2020 ARIZONA RECONSULTATION COMMITTEE MEETING (ARC)

Mr. Dent gave an update on the June 25, 2020 ARC meeting, including a presentation from BOR on the review of the 2007 Guidelines and a summary of the listening sessions conducted by Mr. Cooke and Mr. Buschatzke. He reviewed the reconsultation process and Arizona's timeline for reconsultation processes. He summarized the goals of the ARC, initial draft guiding principles and next steps. Board Member Taylor asked if decisions will need to be made at some point by the Arizona Legislature. Mr. Dent replied that, in addition to federal legislation to implement new guidelines, Arizona legislation may be needed for some components.

13.b. JULY 30, 2020 ARC MODELING AND ANALYSIS WORKGROUP MEETING

Mr. Dent gave an update on the July 30, 2020 Modeling and Analysis Work Group (MAWG) meeting, including the purpose and goals of the MAWG, the initial modeling proposal and the next steps.

14. DISCUSSION ON POTENTIAL AVAILABILITY OF EXCESS WATER IN 2021 - SHAPIRO

Marcus Shapiro, Water Systems Supervisor, provided a staff recommendation on excess water and creating the statutory and supplemental firming pools according to the Procedure to Distribute Excess Water and Turn-Back Water approved by the Board. He noted that there are two possible outcomes - to establish a supplemental firming pool or to leave the water in Lake Mead. He shared the timeline for the process, noting that the Board can take action at the September Board meeting. Mr. Shapiro reviewed the staff recommendation, which is to establish statutory and supplemental firming pools for 2021, noting there is likely to be little influence on 2022 operating conditions. He noted the Board will consider this issue at the September meeting.

15. REPORT ON LEGAL MATTERS - JOHNSON

Jay Johnson, General Counsel, provided a report on the status of the New Mexico unit of the Central Arizona Project, noting that a draft Environmental Impact Statement (EIS) was released in April that included four alternatives with no preferred option identified until funding is available. In

June, the New Mexico Interstate Stream Commission voted to deny further funding for the EIS. Mr. Johnson noted that, without the EIS, the project cannot more forward and for now, and possibly permanently, the New Mexico unit is not happening. Mr. Johnson also reported on the Lake Powell pipeline project, noting that two of the Utah counties involved removed themselves from the project, leaving one county remaining though the project capacity has not changed. In June, BOR published a draft EIS and is currently accepting comments. Mr. Johnson noted that CAWCD and ADWR will continue to explore areas of concern and may submit comments.

16. DIRECTORS' REPORT ON CURRENT EVENTS

Secretary Megdal and Board Members Arboleda, Brown, Graff, Holway, Macre, Martin, Pinger-Tornquist and Taylor shared updates on recent CAP activities.

17. FUTURE AGENDA ITEMS

Board Member Macre requested a future agenda item on alternatives to YDP. Board Member Holway concurred with that request and expressed his preference to hear more than just a staff presentation, and hear directly from BOR and the Mexico IBWC. Board Member Arboleda echoed the request to have more discussion on YDP and Secretary Megdal's earlier request to hear more about the study on desalination in the Sea of Cortez. Vice President Goddard concurred with the need to have a thorough examination of YDP.

18. PRESIDENT'S REPORT ON CURRENT EVENTS - ATKINS

President Atkins reviewed the calendar of Board and Committee meetings for 2021. She provided a strategic planning update, noting the work done by the Board to refine the draft framework developed at the June 3 Board retreat. Consultant Julia Novak conducted an additional round of stakeholder forums on July 29-30, and President Atkins noted the feedback will be presented at the September 2 Board retreat. That retreat will also include finalizing the vision statement, discussion of the mission and values statements developed with feedback from CAP employees earlier in the year, and additional discussion to finalize the Key Results Areas and strategic issues. She noted that the proposed plan will be brought to the Board in November and a final vote is anticipated in December. President Atkins reviewed the schedule of upcoming meetings.

19. GENERAL MANAGER'S REPORT ON CURRENT EVENTS - COOKE

Mr. Cooke reviewed items that will be on the September consent agenda, including a water storage agreement for the City of Glendale, a construction contract for operation and maintenance road repair at Pool 39, a contract for CISCO licenses and maintenance, and a design services contract for motor excitation replacement at Hassayampa Pumping Plant. He also provided an update on the Scottsdale water availability status contract water.

20. PUBLIC COMMENT

No additional public comment.

21. CONSIDERATION OF ACTION TO GO INTO EXECUTIVE SESSION OF THE BOARD FOR THE FOLLOWING PURPOSES: PURSUANT TO ARS 38-431.03.A.3 AND A.4, FOR DISCUSSION OR CONSULTATION WITH THE ATTORNEYS FOR THE DISTRICT FOR LEGAL ADVICE REGARDING INDIAN WATER RIGHTS SETTLEMENT NEGOTIATIONS, AND IN ORDER TO CONSIDER ITS POSITION AND INSTRUCT ITS ATTORNEYS REGARDING INDIAN WATER RIGHTS SETTLEMENTS NEGOTIATIONS; AND PURSUANT TO ARS 38-431.03.A.3 AND A.4., FOR DISCUSSION OR CONSULTATION WITH THE ATTORNEYS FOR THE DISTRICT FOR LEGAL ADVICE REGARDING THE MULTI-SPECIES CONSERVATION PROGRAM, AND IN ORDER TO CONSIDER ITS POSITION AND INSTRUCT ITS ATTORNEYS REGARDING NEGOTIATIONS RELATING TO THE MULTI-SPECIES CONSERVATION PROGRAM; AND PURSUANT TO A.R.S. §38-431.03.A.3 TO OBTAIN LEGAL ADVICE FROM THE DISTRICT'S ATTORNEYS ON ANY MATTER LISTED ON THE AGENDA

On a motion (Secretary Megdal) and a second (Board Member Brown), the Board convened in Executive Session at 2:22 p.m. for the purposes listed on the agenda. Motion passed.

Voting yes: Lisa A. Atkins, Terry Goddard, Sharon B. Megdal, Alexandra Arboleda, Jennifer Brown, Karen Cesare, Benjamin W. Graff, Jim Hartdegen, Jim Holway, Pat Jacobs, Heather A. Macre, Jennifer Martin, April Pinger-Tornquist, Mark Taylor

22. RECONVENE IN OPEN SESSION

The Board reconvened in open session at 3:10 p.m. Ms. Schwartz-Manock performed a roll call and confirmed a quorum was present.

23. CONSIDERATION OF ACTION REGARDING ITEMS DISCUSSED IN EXECUTIVE SESSION

24. ADJOURN

There being no further business to come before the Board, the meeting adjourned at 3:11 p.m. ___________________________ Sharon B. Megdal Board Secretary

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

Agenda Number 2.bCONTACT: Greg Adams

623-869-2124gadams@cap-az.com

MEETING DATE: Thursday, September 3, 2020

AGENDA ITEM: Water Storage Agreement for the City of Glendale - Adams

RECOMMENDATION: Staff recommends that the Board approve the Agreement for Water Storage at the Tonopah Desert Recharge Project between CAWCD and the City of Glendale.

FISCAL IMPLICATIONS: No

Impact on Budget: None.

Additional spending authority requested: None.

Impact on Reserves: None.

Impact on Rates: None.

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: CAWCD Board of Directors 2016 Strategic Plan

Water Supply: Reliability of the CAP Water Supply

PREVIOUS BOARD ACTION/ACTIVITY:None.

ISSUE SUMMARY/DESCRIPTION:The City of Glendale ("Glendale") has requested a Water Storage Agreement with CAWCD to store water at the Tonopah Desert Recharge Project. The water storage agreement includes CAWCD's standard requirements pertaining to scheduling storage capacity, water measurement and accounting; billing and payment. The water storage rate charged to the City of Glendale for recharge in any particular year is as established in CAWCD's Water Rate Schedule. The water storage agreement will be for a term of 10 years.

SUGGESTED MOTION:I move that the Board approve the Agreement for Water Storage at the Tonopah Desert Recharge Project between CAWCD and the City of Glendale.

ATTACHMENTS:1. Water Storage Agreement for the City of Glendale

AGREEMENT FOR STORAGE OF WATER

AT THE

TONOPAH DESERT RECHARGE PROJECT

1. PARTIES:

This Agreement is made and entered into the _______ day of ____________,

20 , by and between the CENTRAL ARIZONA WATER CONSERVATION

DISTRICT, hereinafter referred to as "CAWCD", and the CITY OF GLENDALE,

an Arizona municipal corporation, hereinafter referred to as “GLENDALE”.

2. RECITALS:

2.1 CAWCD has constructed and is responsible for operating the Tonopah

Desert Recharge Project (the “TDRP”), an underground storage facility

that is located in the Hassayampa Sub-basin of the Phoenix Active

Management Area in western Maricopa County.

2.2 ADWR has issued CAWCD a Constructed Underground Storage Facility

Permit (Permit No. 71-593305.0003) for the TDRP. The permit authorizes

the underground storage of a maximum of 150,000 acre-feet per annum

not to exceed 2,000,000 acre-feet in storage at any time. The TDRP is a

State Demonstration Recharge Project pursuant to A.R.S. § 45-891.01, et

2.3 GLENDALE desires to store CAP water at the TDRP and CAWCD agrees

to make available unused storage capacity at the TDRP for such storage,

in accordance with the provisions of this Agreement.

NOW THEREFORE, in consideration of the foregoing, the payments to be paid

by GLENDALE, and the covenants and agreements contained in this Agreement,

and other good and valuable consideration, CAWCD and GLENDALE agree as

follows:

3. DEFINITIONS:

As used in this Agreement, the following terms, when capitalized, have the

following meanings:

3.1 ADWR: The Arizona Department of Water Resources

3.2 CENTRAL ARIZONA PROJECT (CAP): The water delivery works of the

CAP including, but not limited to, the CAP canal, its turnout structures and

associated measuring devices.

3.3 GLENDALE WATER: CAP water scheduled by GLENDALE under the

terms of its CAP Water Service Subcontract and any other contractual

entitlement to CAP Water held by GLENDALE.

3.4 TDRP: The constructed underground storage facility, constructed and

operated by CAWCD pursuant to the Permit, which is located in portions

of Sections NW ¼ of the NE ¼; SW ¼ of the NE ¼ and the W ½ of

Section 33, T. 3N, R. 7W and the NW ¼ of Section 4, T. 2N, R. 7W,

GSRB&M, Maricopa County, Arizona.

3.5 TDRP TURNOUT STRUCTURE: The point at which GLENDALE water is

diverted from the CAP canal for delivery into the TDRP.

3.6 PARTY/PARTIES: Either one or both of the parties to this Agreement.

3.7 PERMIT: The Constructed Underground Storage Facility Permit issued by

the ADWR for the TDRP, Permit No. 71-593305.0003.

4. SCOPE:

This Agreement is limited to the diversion of water at the TDRP Turnout

Structure, and the storage of such water at the TDRP by CAWCD for the benefit

of GLENDALE. CAWCD shall deliver GLENDALE water, which is scheduled by

GLENDALE for storage at the TDRP in accordance with this Agreement, and

CAWCD shall store such water underground at the TDRP for the benefit of

GLENDALE.

5. TERM OF AGREEMENT:

This Agreement shall become effective when executed by both Parties and shall

remain in effect for ten (10) years unless the Parties agree in writing to extend

the term or unless it is sooner terminated or canceled in accordance with the

terms of this Agreement.

6. CONDITIONS RELATING TO STORAGE:

6.1 All storage of GLENDALE water at the TDRP shall be consistent with

Arizona law.

6.2 GLENDALE shall obtain a water storage permit from ADWR authorizing it

to store GLENDALE water at the Constructed TDRP.

6.3 CAWCD's storage of GLENDALE water at the TDRP shall, at all times,

comply with the Permit. CAWCD shall be responsible for filing annual

reports as required by the Permit. CAWCD shall promptly notify

GLENDALE of any changes or modifications to the Permit that would

affect rights under this Agreement. If the Permit is canceled or expires for

any reason, GLENDALE may terminate this Agreement.

7. PROCEDURE FOR SCHEDULING STORAGE CAPACITY:

7.1 As soon as practicable after the date of execution of this Agreement,

GLENDALE shall submit to CAWCD a proposed schedule indicating the

amount of TDRP storage capacity it desires to use during the year in

which this Agreement is executed. Thereafter, on or before October 1 of

each year during the term of this Agreement, GLENDALE shall submit to

CAWCD a proposed schedule indicating the amount of TDRP storage

capacity GLENDALE desires to use during the following year.

7.2 As soon as practicable after receipt of GLENDALE's proposed schedule

following the execution of this Agreement, CAWCD shall return to

GLENDALE the schedule, as adjusted by and acceptable to CAWCD,

indicating the amount of TDRP storage capacity that is available to

GLENDALE for the year in which this Agreement is executed. Thereafter,

on or before November 15 of each year during the term of this

Agreement, CAWCD shall return to GLENDALE the schedule, as adjusted

by and acceptable to CAWCD, indicating the amount of TDRP storage

capacity that is available to GLENDALE for the following year, if any.

8. WATER STORAGE RATE:

Each year under the term of this Agreement, CAWCD shall establish a per acre-

foot recharge rate (“Annual Recharge Rate”) for the use of TDRP storage

capacity for the following year, in accordance with CAWCD’s adopted Recharge

Rate Policy. GLENDALE shall be obligated to pay CAWCD this Annual

Recharge Rate for each acre-foot of storage capacity used by GLENDALE

during the year. Such payment shall be in accordance with the provisions of

Section 13 below.

9. OPERATING AGENT:

9.1 CAWCD shall be responsible for operating the TDRP.

9.2 CAWCD shall retain sole responsibility and authority for decisions relating

to the TDRP operating and maintenance practices, including maintenance

scheduling and the selection of periods when maintenance will be done.

9.3 Whenever practicable, CAWCD shall inform GLENDALE ninety (90) days

in advance of any matter which may substantially affect the TDRP or the

rights of GLENDALE.

10. DESTRUCTION/RECONSTRUCTION OF THE TDRP:

In the event of destruction of all or part of the TDRP, CAWCD may repair or

reconstruct the TDRP, but CAWCD shall not be obligated to do so.

11. WATER MEASUREMENT AND ACCOUNTING:

11.1 CAWCD shall base its accounting for water delivered to the TDRP on

actual measurements, methods required by the Permit and/or generally

accepted accounting and engineering practices.

11.2 CAWCD shall install and maintain a flow measurement system to

measure the amount of water diverted from the CAP into the TDRP.

CAWCD shall test and maintain the accuracy of this system within plus or

minus 5 percent of actual flows.

11.3 CAWCD shall determine evaporation losses representative of the

conditions at or near the TDRP using the method indicated in the Permits

or using actual measurements, when available. Any other losses in the

TDRP shall be calculated using generally accepted engineering practices.

11.4 All losses that occur at the TDRP, other than by evaporation, will be

calculated using generally accepted engineering practices and water-level

readings from the gages in the basins.

11.5 CAWCD shall prepare a monthly water accounting report of water stored

at the TDRP for GLENDALE. The report shall include the daily amount of

water stored and the losses calculated as described in this Section.

11.6 CAWCD shall provide the ADWR with water accounting reports for the

TDRP as required by the Permit.

11.7 The water accounting reports prepared pursuant to this Section shall be

sent to GLENDALE monthly and shall be retained by CAWCD for at least

three years.

11.8 CAWCD shall provide GLENDALE copies of TDRP annual reports

submitted to ADWR.

12. WATER QUALITY:

GLENDALE shall indemnify and hold harmless CAWCD against all losses to

third parties resulting from water quality degradation or harm to property caused

by use of the TDRP, due to the commingling of GLENDALE water with the

groundwater. Further, GLENDALE waives any claim on its own behalf against

CAWCD for water quality degradation or harm to property arising from such

commingling, unless such claim is intended to enforce the indemnification

provision of this Section; provided, however, that GLENDALE shall indemnify

and hold harmless CAWCD only to the extent that indemnification is not provided

to CAWCD by the State of Arizona pursuant to A.R.S. Section 45-898.01; and

provided, further, however, that GLENDALE indemnification shall only extend to

the percentage of degradation attributable to the water stored on behalf of

GLENDALE at the TDRP under the terms of this Agreement. GLENDALE

retains the right to claims over or against any other entity, including CAWCD,

storing water in the TDRP in the amount proportionate to such amount stored by

those other entities. In no event shall CAWCD assume liability for water quality

degradation resulting from the storage of water in the TDRP, solely due to its

performance of obligations as the operating agent under this Agreement.

13. BILLING AND PAYMENTS:

13.1 On or before the 15th day of each month, CAWCD will bill GLENDALE for

each acre-foot of storage capacity used by GLENDALE during the

previous month. The amount billed to GLENDALE shall be equal to the

Annual Recharge Rate multiplied by the number of acre-feet of

GLENDALE water delivered to the TDRP as measured at the TDRP

Turnout Structure. GLENDALE shall pay CAWCD within thirty (30) days

of receipt of such bill. Payment is not contingent upon and is not related to

GLENDALE's accrual of long-term storage credits from water stored at the

13.2 If payment due under this Agreement remains unpaid more than sixty (60)

days after its due date, CAWCD may terminate this Agreement effective

upon written notice to GLENDALE. In the event CAWCD terminates this

Agreement, GLENDALE shall remain obligated to pay any outstanding

balance.

14. AUTHORIZATIONS AND APPROVALS:

GLENDALE shall be responsible for obtaining, at its own expense, any permits,

authorizations and approvals required for the underground storage and recovery

of water in the TDRP or for GLENDALE's performance under this Agreement.

GLENDALE shall keep CAWCD informed of its applications for such permits and

authorizations. CAWCD will share information with GLENDALE to assist

GLENDALE in its permit application. GLENDALE shall also be responsible for

filing any annual reports or other documents necessary to maintain its right to

store water at the TDRP.

15. LIABILITY:

15.1 Each Party shall assume liability for its own negligence and shall

indemnify the other against any damages the non-negligent Party incurs

as a result of the negligent Party's action or inaction.

15.2 CAWCD shall assume no liability to GLENDALE for claims of damage

resulting from CAWCD's decision to curtail or stop water flows to the

TDRP site during storm or emergency conditions.

15.3 CAWCD shall assume no liability to GLENDALE for quantities of

recoverable or unrecoverable water stored underground or removed from

underground storage; nor to replace water lost, unintentionally misdirected

or otherwise failing to reach the underlying aquifer. CAWCD, GLENDALE

and any other entities storing water at the TDRP shall share in any

deficiency resulting from such lost, misdirected or otherwise unstored

water in proportion to the amount of the TDRP capacity it used at the time

the deficiency accrued.

15.4 Liability, as described in Section 12 related to water stored in the TDRP

by GLENDALE prior to termination of this Agreement, shall remain with

GLENDALE after termination of this Agreement. This Section 15.4 shall

survive expiration or termination of this Agreement, and remain in full

force and effect.

15.5 In the event any third party institutes an action against CAWCD,

GLENDALE or other entities storing water at the TDRP for claims arising

from the activities undertaken pursuant to this Agreement, the parties

named in the action shall meet to determine the procurement of legal

counsel and the steps to take to defend against the action.

16. INSURANCE:

16.1 During the term of this Agreement, unless otherwise agreed in writing by

CAWCD, GLENDALE shall procure and maintain in force or cause to be

procured and maintained in force the following types of insurance:

16.1.1 Commercial General Liability Insurance naming CAWCD as an

additional insured, including bodily injury, personal injury, property

damage, wrongful death and contractual liability with a minimum

limit of $1,000,000 per occurrence.

16.1.2 Business Automobile Liability Insurance with a minimum limit of

$1,000,000.

16.1.3 Worker’s Compensation required by Arizona State law, and

Employer’s Liability Insurance with limits of $1,000,000 per

accident, $1,000,000 per employee per disease, and $1,000,000

aggregate for disease.

16.1.4 Commercial Umbrella – combined single limit of $4,000,000.

16.2 Any insurance carried by CAWCD shall be excess and not contributory

insurance to any insurance afforded hereunder. GLENDALE shall submit

satisfactory proof of insurance to CAWCD prior to use of the TDRP. Such

proof of insurance shall be in the form of a certificate stating the coverage

provided and that such insurance shall not be canceled until after thirty

(30) days prior written notice thereof shall have been given to CAWCD.

16.3 With written approval of CAWCD, GLENDALE may self-insure or combine

the coverages required by this Agreement with coverages outside the

scope of that required by this Agreement.

16.4 If GLENDALE fails to acquire, provide or continue the insurance

coverages required CAWCD may terminate this Agreement immediately

upon written notice to GLENDALE.

17. DEFAULT:

17.1 GLENDALE and CAWCD shall pay all monies and carry out all other

performances, duties and obligations agreed to be paid and/or performed

by them pursuant to this Agreement. A failure by GLENDALE or CAWCD

to adhere to the covenants and obligations to be kept and performed by it

shall be an act of default under this Agreement.

17.2 In the event of a default by GLENDALE or CAWCD, then, within thirty (30)

days following notice of such default either Party may cure the default

either by advancing the necessary funds and/or rendering the necessary

performance. Such notice shall specify the existence and nature of such

default. If such default is not remedied within the time specified, the non-

defaulting Party may terminate this Agreement upon 24 hours written

notice.

18. UNCONTROLLABLE FORCES:

Neither Party to this Agreement shall be considered in default in the performance

of any of its obligations under this Agreement (other than obligations of

GLENDALE to pay costs and expenses) when a failure of performance is due to

Uncontrollable Forces. The term "uncontrollable forces"; shall mean any cause

beyond the control of the Party unable to perform such obligation, including, but

not limited to, failure of or threat of failure of facilities, flood, earthquake, storm,

fire, lightning, and other natural catastrophes, epidemic, war, riot, civil

disturbance or disobedience, strike, labor dispute, labor or material shortage,

sabotage, government priorities and restraint by court order or public authority,

and action or non-action by, or failure to obtain the necessary authorizations or

approvals from any governmental agency or authority not a Party to this

Agreement, which by exercise of due diligence, it shall be unable to overcome.

19. RESOLUTION OF DISPUTES:

A Party having a dispute under this Agreement that cannot be resolved by the

Parties may submit the dispute to arbitration. Arbitration shall be subject to the

following provisions:

19.1.1 Arbitration shall be binding only upon the consent of the Parties.

19.1.2 A Party wishing to submit a dispute to arbitration shall provide

thirty (30) days written notice to the other Party of its intent to

pursue arbitration and shall name one arbitrator at that time.

Within fifteen (15) days of receiving this notice, the other Party to

the dispute shall name one arbitrator and give written notice to

the other Party of its selection. The two selected arbitrators shall,

within five (5) days of selection of the second arbitrator, jointly

select a third arbitrator.

19.1.3 Within thirty (30) days from the selection of the third arbitrator, the

arbitrators shall hold a hearing. Within thirty (30) days from the

conclusion of the hearing, the arbitrators shall render a decision

on the dispute.

19.1.4 Arbitration shall be subject to the Arizona Arbitration Act, Arizona

Revised Statutes, Title 12, Chapter 9, and Article 1. In the event

of a conflict between this Agreement and the Act, the provisions

of this Agreement shall prevail.

19.1.5 A Party that is dissatisfied with the results of non-binding

arbitration may pursue any other legal or equitable remedy not

expressly provided for in this Section 19 and available to resolve

the dispute.

20. ACTION PENDING RESOLUTION OF DISPUTES:

Pending the resolution of a dispute pursuant to Section 19, each Party shall

proceed, to the extent legally permissible, in a manner consistent with this

Agreement, and shall make payments required in accordance with the applicable

provisions of this Agreement. Any amount paid by a Party pursuant to this

Section 20 during the course of such dispute shall be subject to refund and

adjustment upon a final resolution of any dispute involving an amount due.

21. GOVERNING LAW:

The laws of the State of Arizona shall govern this Agreement.

22. BINDING OBLIGATIONS:

All of the obligations set forth in this Agreement shall bind CAWCD and its

successors and assigns. This Agreement shall not be assigned by GLENDALE

or accrue to GLENDALE's successor, nor shall the TDRP capacity use rights

hereunder of GLENDALE be used by another party. CAWCD retains the right to

sell, lease, assign or otherwise convey its ownership of the TDRP to a third party.

In such event, CAWCD may cancel this Agreement upon written notice to

GLENDALE.

23. NOTICES:

23.1 Notice, demand or request provided for in this Agreement shall be in

writing and shall be deemed properly served, given or made if delivered in

person or sent by registered or certified mail, postage prepaid, to the

persons specified below:

Central Arizona Water Conservation District c/o General Manager P.O. Box 43020 Phoenix, AZ 85080-3020

City of GLENDALE c/o Water Services Director 7070 W. Northern Avenue Glendale, AZ 85303

23.2 A party may, at any time, by notice to the other Party, designate different

or additional persons or different addresses for the giving of notices.

24. THIRD PARTY BENEFICIARIES:

This Agreement shall not be construed to create rights in, or to grant remedies

to, any third party as a beneficiary of this Agreement or of any duty, obligation or

undertaking established herein.

25. WAIVER:

The waiver by either Party of a breach of any term, covenant or condition in this

Agreement shall not be deemed a waiver of any other term, covenant or

condition or any subsequent breach of the same or any other term, covenant or

condition of this Agreement.

26. HEADINGS:

Title and paragraph headings are for reference only and are not part of this

Agreement.

27. ENTIRE AGREEMENT:

The terms, covenants and conditions of this Agreement constitute the entire

Agreement between the Parties relative to the leasing of TDRP storage capacity,

and no understandings or agreements not herein expressly set forth shall be

binding upon them. This Agreement may not be modified or amended in any

manner unless in writing and signed by the Parties.

28. CONFLICT OF INTEREST:

This Contract is subject to cancellation pursuant to the provisions of A.R.S. § 38-

511 relating to conflict of interest.

IN WITNESS WHEREOF, this Agreement is executed by the Parties hereto.

CENTRAL ARIZONA WATER CONSERVATION DISTRICT

Lisa A. Atkins, President

Attest: Sharon B. Megdal, Secretary

[REMAINDER OF PAGE IS INTENTIONALLY BLANK]

CITY OF GLENDALE,

an Arizona municipal corporation

ATTEST: By: Its: APPROVED AS TO FORM: City Attorney

Agenda Number 2.cCONTACT: Darrin Francom

623-869-2276dfrancom@cap-az.com

Ryan Johnson623-869-2223rjohnson@cap-az.com

AGENDA ITEM: Design Services Contract for Motor Exciter Replacement at Hassayampa Pumping Plant - Francom

RECOMMENDATION: Staff recommends that the Board approve the award of a Design Services Contract for Hassayampa Pumping Plant as part of the on-going West Plant Motor Exciter Replacement Project, and authorize the General Manager, or his designee, to execute an agreement up to $458,876 plus $45,888 (10%) for contingencies, totaling $504,764.

Impact on Budget: The West Plant Motor Exciter Replacement Project is a series of excitation system replacements at the four pumping plants, which includes Salt Gila, Bouse Hills, Little Harquahala, and Hassayampa. Hassayampa Pumping Plant will be the third plant to receive new exciters as a part of the exciter replacement program. This contract is for the design at Hassayampa, which is scheduled to begin in the third quarter of 2020. The proposed contract amount is within the 2020-2021 budget for this project.

The Project Steering Committee will continue to manage the project work and expenses within the current approved budget.

Additional spending authority requested: None required.

Impact on Reserves: No impact on Strategic Reserves.

Impact on Rates: No impact on water rates.

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: CAWCD Board of Directors 2016 Strategic Plan: Project Reliability: Effectively Manage, Operate and Maintain CAP Assets

ARS Title 34-603 Procurement of professional services and construction-manager-at-risk, design-build, and job-order-contracting construction services

CAP Purchasing Policy

PREVIOUS BOARD ACTION/ACTIVITY:April 2019 Board approved award of Construction Contract for Salt Gila Pumping Plant to ArcadisMay 2019 Board approved award of Design Contract for Bouse Hills Pumping Plant to Arcadis

April 2020 Board approved award of Construction Contract for Bouse Hills Pumping Plant to Cannon & Wendt

ISSUE SUMMARY/DESCRIPTION:The West Plant Exciter Replacement Project consists of 40 pump units that operate across the Bouse Hills, Little Harquahala, Hassayampa, and Salt Gila Pumping Plants. The pump units are currently operated and protected by our Siemens-Allis static exciters, which have been in operation for almost thirty years and have reached the end of their serviceable life. Since the system is out of date, it causes challenges for our maintenance personnel to find adequate replacement parts to make repairs when the system fails.

This project will implement an upgraded modern digital excitation system, controller, and rectifier bridge assembly for each pump unit. The new digital excitation system will provide voltage regulation, true alternating current voltage sensing, power factor control and additional features for diagnostics.

The replacement of the excitation system is required for pump motor efficiency, and the reliable delivery of CAP water.

E2 Power Systems, LLC was selected in accordance with CAP’s Purchasing Policy. E2 Power Systems is a subsidiary of the selected exciter manufacture (Basler Electric) and has extensive experience designing excitation systems for large motors and generators. E2 Power Systems’ experience and knowledge about the Basler product will benefit CAP in the design at Hassayampa as well as for future sites. By choosing E2 Power System, LLC through the direct select process, the need for multiple site visits is not necessary which reduces CAP employees' exposure with contractors due to COVID-19.

ARS Title 34-603 Procurement of professional services and construction-manager-at-risk, design-build, and job-order-contracting construction services allows entities to direct select architect and engineering services up to $500,000.

SUGGESTED MOTION:I move that the Board of Directors approve the award of a design services contract for Hassayampa Pumping Plant as part of the on-going West Plant Motor Replacement Project, and authorize the General Manager, or his designee, to execute and agreement up to $458,876 plus $45,888 (10%) for contingencies, totaling $504,764.

ATTACHMENTS:None

Agenda Number 2.dCONTACT: Darrin Francom

623-869-2276dfrancom@cap-az.com

Ryan Johnson623-869-2223rjohnson@cap-az.com

AGENDA ITEM: Construction Contract for Operation and Maintenance Road Repair at Pool 39 - Francom

RECOMMENDATION: Staff recommends that the Board approve the award of a Construction Contract to DBA Construction for the Pool 39 Operations & Maintenance Road Repair Project, and authorize the General Manager, or his designee, to execute an agreement up to $239,980 plus an additional $24,000 (10%) for contingencies totaling $263,980.

Impact on Budget: This project is included in the 2020 budget as a maintenance expense, and the proposed contract amount is within the 2020 budgeted amount.

The Project Steering Committee will continue to manage the project work and expenses within the current approved budget.

Additional spending authority requested: None required.

Impact on Reserves: No impact on Strategic Reserves.

Impact on Rates: No impact on water rates.

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: CAWCD Board of Directors 2016 Strategic Plan: Project Reliability: Effectively Manage, Operate and Maintain CAP Assets

ARS Title 34-603 Procurement of professional services and construction-manager-at-risk, design-build, and job-order-contracting construction services

CAP Purchasing Policy

PREVIOUS BOARD ACTION/ACTIVITY:November 2019 Board Approved the CAP 2020-2021 Biennial Budget

ISSUE SUMMARY/DESCRIPTION:Reliability Engineering has identified that the operations and maintenance (O&M) roads outside the security fence in Pool 39 have been eroded near the box siphons with crossing washes at various locations. The siphons maintain natural drainage paths across the canal system for existing washes to relieve storm water during rainfall events. Storm water drainage will continue to erode these areas if no action is taken, exposing buried utilities, creating difficult travel conditions, and limiting CAP forces to effectively monitor and maintain Pool 39.

This project will construct low water concrete crossings at four washes, providing an all-weather solution to access along the Pool 39 O&M road and preventing washout of the road or the communications lines in these low areas.

The contractor was selected pursuant to competitive principles described in Title 34 of the Arizona Revised Statutes under the Job Order Contracting method and in accordance with CAP’s Purchasing Policy. The Job Order Contracting method allows CAP to engage a qualified contractor that possesses the expertise and qualifications needed for this project, without the requirement to undertake a secondary bidding process.

DBA was selected because of their success on previous CAP projects. From first starting out in 1996 in Phoenix, DBA has grown as leader in civil roadway work throughout Arizona.

SUGGESTED MOTION:I move that the Board of Directors award a Construction Contract to DBA Construction for the Pool 39 Operations & Maintenance Road Repair Project, and authorize the General Manager, or his designee, to execute an agreement up to $239,980 plus an additional $24,000 (10%) for contingencies totaling $263,980.

ATTACHMENTS:None

Agenda Number 2.eCONTACT: Christopher Hall

623-869-2632chall@cap-az.com

AGENDA ITEM: Contract for CISCO Licenses and Maintenance - Hall

RECOMMENDATION: Staff recommends that the Board of Directors approve the award of a purchasing contract to World Wide Technologies Inc. for the CISCO Smartnet licenses/maintenance agreement in the amount of $430,944 plus $86,188 (20%) for contingencies, totaling $517,132, and authorize the General Manager, or his designee, to execute the agreement.

FISCAL IMPLICATIONS: Yes

Impact on Budget: 2020 2021

Funds Used / RequestedSmartnet License and Maintenance

$86,188 $430,944

Funds Included in Budget $86,188 $430,944(Over) / Under Budget $0 $0

Additional spending authority requested: None

Impact on Reserves: None

Impact on Rates: No impact on established rates

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: 2016 CAWCD Board Strategic Plan

Project Reliability: Effectively Manage, Operate and Maintain CAP Assets Finance: Managing AssetsCAWCD Purchasing Policy

PREVIOUS BOARD ACTION/ACTIVITY:November 7, 2019 Board approved 2020-2021 Biennial Budget

ISSUE SUMMARY/DESCRIPTION:The CISCO Smartnet licensing/maintenance contract is renewed annually to support hundreds of network devices used at CAP to move data across all facilities and access the Internet. The network devices are

critical infrastructure and require licensing/maintenance contracts. The Smartnet services include software updates, hardware replacement, and access to technical support 24x7x365 days a year for several different systems including network, servers, email filtering, web filtering, cyber security, and WebEx conferencing.

The contingency is requested for year-end reconciliation of hardware, licensing and user changes that occur during the year.

PROCUREMENT PROCESSWorld Wide Technologies Inc. is a direct reseller of CISCO products under the state of Arizona cooperative purchasing agreement. CAP is a cooperative member agency authorized to use the state’s cooperative purchasing agreement for this product.

SUGGESTED MOTION:I move that the Board of Directors approve the award of a purchasing contract to World Wide Technologies Inc. for the CISCO Smartnet licenses/maintenance agreement and authorize the General Manager, or his designee, to execute the agreement for $430,944 plus $86,188 (20%) for contingencies, totaling $517,132.

ATTACHMENTS:None

Financial Planning & Analysis www.CentralArizonaProject.com 623-869-2333

August 20, 2020 Meeting

Meeting called to order at 10:00 a.m. Committee Members present were: Chair Terry Goddard, Maricopa

County; Alexandra Arboleda, Maricopa County; Jennifer Brown, Maricopa County; Karen Cesare, Pima

County; Pat Jacobs, Pima County; Jennifer Martin, Maricopa County; and Mark Taylor, Pima County.

Report on Internal Audit Activities Ramon Ramirez, Internal Auditor, reported that the audit work on the Procurement of Construction Services

and Assets Disposal had been completed. Audits of Land Administration and Operation of Fleet

Vehicles/Heavy Equipment are in the survey phase.

The Construction Services Audit recommended considering Procurement as responsible for developing

and executing sourcing and award methodology for construction contracts and updating Procurement policy

language to reflect this change. The recommendation also includes establishing a process for tracking

panelist scoring and finding opportunities to mitigate impacts of significant outlier scoring.

The Asset Disposal Audit developed recommendations to establish and document Property Guideline

criteria for disposing of property via donation. CAP should formally document the process for wiping retired

computer assets of data and should develop a policy on whether staff are permitted to take items scheduled

for trash disposal.

Discussion and Consideration of Action to Recommend the Board Approve a Voluntary Supplemental Shortage Stabilization Program Doug Dunlap, Finance and Accounting Manager, recommended extending the 2014 Voluntary

Supplemental Shortage Stabilization Program into a 2020 Program. The 2014 program was scheduled to

expire if a shortage was not called by the end of CY 2020. Such a declaration has not been declared, and

under the old agreements, funds deposited by participants are to be refunded. Based on participant

feedback, there is a desire to extend this program, rather than return the funds. The 2020 Program will

allow participants to roll their existing funds into the new program, effectively extending it. Should a

participant desire the funding returned, they can opt out of the 2020 program and the associated CAWCD

contributed funds would be returned to CAWCD. A $3 million minimum threshold will still be required to

establish the new program. Parties must opt in by November 30, 2020.

Board Member Cesare asked about the advantages of this program and the composition of participants.

Mr. Dunlap indicated most Tribes and cities participate as well as several entities with smaller allocations

and that the timing of their budget years makes this a desirable program.

Board Member Taylor asked if there was an end date on this new program. Mr. Dunlap said there would

be no end date in the new program. It would end when funds were exhausted.

Four stakeholders, City of Glendale, AMWUA, Town of Gilbert, and City of Chandler submitted electronic

blue cards in support of this item.

The Finance, Audit, and Power Committed voted to recommend the Board approve the establishment of

the 2020 Voluntary Supplemental Shortage Stabilization Program. (Motion: J. Brown; Second: P. Jacobs)

Discussion of Navajo Generating Station (NGS) Darrell Funk, Business Financial Planning Supervisor, presented an update on the NGS decommissioning

costs. The current Net Present Value estimate is that CAP’s share of the remaining liability is $50.9 Milllion,

though due to delays relating to Covid-19, costs will increase but have not yet been quantified. The current

dedicated funding balance is $45.1 million, requiring an additional $5.8 million to be funded.

CAWCD has a SO2 credit reserve that was built up to $8 million from the sale of SO2 emission allowances

pursuant to a 2007 Bureau of Reclamation agreement. The Bureau of Reclamation has agreed this balance

is appropriate to utilize toward CAP’s share of the decommissioning cost. Staff will propose using the full

$8 million to offset current and unknown future liabilities related to the NGS closure.

Chairman Goddard asked how long CAP might be asked to contribute to a moving target. Mr. Funk and Mr.

Dunlap indicated that the next few years will be the most uncertain as demolition/remediation assumptions

have been interrupted by the pandemic. After that, the lease payments are more certain. CAP is not party

to any other conversations (i.e. compensating for a major employer leaving the region).

Board Member Taylor asked what funds have actually been spent. Mr. Dunlap said we don’t make direct

payments. We send money to the Bureau and SRP will call on those funds as needed. We can’t indicate

how many funds have actually been spent, but track how much we have contributed. Mr. Taylor asked if

demolition had started. Staff indicated that demolition had begun on smaller infrastructure.

Report on Capital Improvement Portfolio and Impact from COVID-19 Darren Couturier, Engineering Project Management Supervisor, presented an overview of the Capital

Improvement Program, covering topics such as the CIP Budget and actions taken to date due to COVID-

19. Actions taken to mitigate the pandemic included job hazard analysis from each contractor, modified

work schedules, and contract suspended/delayed work if it was determined the project contained an

unacceptable COVID-19 risk. Mission Critical work was safely continued, but projects deemed not

immediately critical were delayed. As a result of these project suspensions, the current CIP expenditures

are projected to come in $14 million below budget in 2020. CAP will evaluate projects and reprioritize

resources, but will continue to focus on employee safety and mission criticality until the pandemic subsides.

Report on Power Programs Brian Young, Power Program Manager, gave updates on the 2020 power purchases and costs, as well as

the 2021/2022 energy purchases made to date. He also reviewed the Power Strategy, which includes low

cost energy, stable/predictable rates, and a reliable supply.

Current 2020 average energy cost to date is $25.50 vs a $27.00 estimate per MWh. This translates to $50-

$53 per AF vs $56 per AF budgeted. One recent development is that the current extraordinary market prices

are such that CAP is making sales of excess power it had previously acquired on the open market for

several million dollars during late August. These August energy sales, will potentially reduce the overall

CAP energy rate for 2020 by an additional $1-$2.

CAP energy expenditures are currently $2 million below its estimated energy cost to date. 2021 and 2022

energy purchases should be similar to CAP’s 2020 costs projections.

Board Member Taylor asked about existing high prices and where the “duck curve” may be going. Mr.

Young responded California has little spare generation capacity and other states help them get through

peak times. With a heatwave throughout the west, there is no excess capacity to assist California, which

spikes day-ahead pricing (into the thousands of dollars per MWh). The duck curve wont’ go away. As

entities keep adding solar generation out west, storage may mitigate to some degree and it is very

expensive to store.

Board Member Arboleda asked about the California rolling blackouts. In order to provide emergency power,

Glen Canyon Dam has been doing additional releases. Is there an impact on Hoover/Lake Mead

operations? Mr. Young indicated that there isn’t much more (if any) capacity at Hoover because the full

allotment of entitlements from Hoover are already been tapped during the peak hours.

Board Member Cesare commented is that the side benefit of our energy strategy is that we are being a

good corporate citizen and not being a burden on the grid during peak times. It also helps our customers

by keeping our energy rates lower. Board Member Jacobs seconded that this District is aiding in keeping

prices/water down.

Contact for more information: Chris Hall

Director, Finance and Administration

623-869-2632

chall@cap-az.com

Agenda Number 4.b.iCONTACT: Doug Dunlap

623-869-2360ddunlap@cap-az.com

AGENDA ITEM: Discussion and Consideration of Action to Approve a Voluntary Supplemental Shortage Stabilization Program - Dunlap

RECOMMENDATION: The Finance Audit and Power Committee recommends that the Board of Directors approve a 2020 Voluntary Supplemental Shortage Stabilization Program as an extension of the 2014 Voluntary Supplemental Shortage Stabilization Program pursuant to the terms as identified in this presentation and draft letter agreements.

Impact on Budget: None

Impact on Reserves: None if extended

Impact on Rates: None

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: 2016 CAWCD Strategic Plan

Finance: Maintaining CAP's Financial Health Leadership & Public Trust: Relationships-Customers

PREVIOUS BOARD ACTION/ACTIVITY:June 2, 2011 The Board established a Shortage/Stabilization Rate Component to

be included in the CAP Fixed OM&R Water Delivery RateJanuary 22, 2015 The Finance, Audit and Power Committee had a report and

discussion of the 2014 Rate ReconciliationFebruary 19, 2015 A customer workshop was held to discuss a one-year Voluntary

Supplemental Shortage Stabilization Program February 19, 2015 The Finance, Audit and Power Committee approved to recommend

that the Board approve a one-year Voluntary Supplemental Shortage Stabilization Program

March 5, 2015 The Board approved a one-year Voluntary Supplemental Shortage Stabilization Program

January 23,2020 Staff provided a status update to the Finance, Audit and Power Committee on the Voluntary Supplemental Shortage Stabilization Program and discussed options for the program

August 20, 2020 FAP recommended the Board approve to extend the Voluntary Supplemental Shortage Stabilization Program

ISSUE SUMMARY/DESCRIPTION:BACKGROUND: The 2014 Rate Reconciliation was completed, and there was approximately $10.5 million more collected from the published 2014 water delivery rates than the reconciled actual costs. Energy accounted for $9.8 million of the difference.

CAP M&I subcontracts (applicable to CAP M&I subcontractors) and the federal repayment stipulation (applicable to CAP tribal contractors) required a reconciliation and refund of the amount that was over collected and the amount to be settled by May 30, which was $6.8 million. The remaining $3.7 million was from excess contracts that do not have a reconciliation provision in their contracts.

With a shortage looming, a customer workshop was held to discuss the interest in a voluntary one-year supplemental shortage program to help mitigate immediate rate impacts and allow them to be "softened" or phased in over a longer time. This program is in addition to the existing rate stabilization account of which all customers are included. Customers supported offering a program.

Subsequently, the Finance, Audit and Power Committee recommended the Board offer the program. The Board of Directors approved the program subject to the following terms:

The program covered only 2014 rate reconciliation and settlement. Customers needed to sign a Letter of Understanding to "Opt-in" to the program. M&I subcontractors

could opt-in only for their current entitlement under contract and entitlements could not be split or partially opted-in, (e.g., the future rate discount benefits would not apply to reallocated CAP NIA water or to any future assignments of CAP entitlement).

CAP tribal contractors could opt-in only for their current entitlement under contract and entitlements could not be split or partially opted-in. CAP tribal contractors could opt-in for the rate components (Fixed OM&R and/or CAP Energy) that they pay on their own behalf. The decision of a CAP tribal contractor to opt in to the program covered any CAP water supplies of that contractor that have been leased to a third party. If the CAP tribal contractor elected not to participate, then reconciled amounts was refunded to the party that actually paid the rates in 2014.

The United States could opt-in for the rate components (Fixed OM&R and/or CAP Energy) that the United States pays on behalf of tribal contractors or its own behalf. The United States could opt-in differently for the portion the United States pays on behalf of tribal contractors than the respective tribal contractors choose for themselves on the portion the contractors paid.

The program would be managed as a pool, not at an individual customer level. The program met a threshold of $3 million, including amounts contributed by customers and CAWCD. CAP would contribute a proportionate share of unsettled amounts to the fund (e.g., if 50% of

customers opt-in to the program, CAP will contribute 50% of the unsettled amount to the program). Opt-in determination had to be made by April 30, 2015. Non-response was treated as a decision to not

participate in the Supplemental Shortage Stabilization Program and refunds were issued pursuant to contracts.

A minimum of $3 million was required to initiate the pool (combined customer amount and CAP

contribution).

Following the Board of Directors approval and terms, Letters of Understanding were sent to customers on March 16, 2015. The customer response was that 34 M&I and federal customers replied to the option selection letter. Of those, 26 opted-in to the program representing for a total customer contribution of $4,189,531 (62%). CAWCD matched 54.35% which equated to $2,277,010. The program total was $6,466,541, which exceeded the minimum $3 million threshold and as such the program was established. A separate state treasurer account was opened and funds were contributed by May 30, 2015.

STATUS UPDATE: As of the end of 2019, Tier 1 shortage was not declared and is not anticipated to be declared in 2020 for Water Year 2021. Per the Voluntary Supplemental Shortage Stabilization Program current agreement, if shortage was not declared, or program monies were not fully utilized, CAWCD will initiate a refund to the contributors, including proportionate interest by the first part of 2021. Interest earned on the account through June 30, 2020 is $669,645 or approximately $0.10 per $1.00 contributed. Staff previously provided the FAP Committee options for the program including refunding the contributions or extending the program.

Based on this feedback, staff proposed to establish a new program that would effectively extend the program. The FAP Committee recommended that the Board approve the new program. With this option, a $3 million minimum threshold must still be required to establish the new program. Draft agreements are attached to this brief for M&I and federal customers. They provide customers the option to opt-out and receive either a refund or a credit on account or choose to opt-in to the new program. CAWCD will be reimbursed its proportionate contribution (54.35%) for those that opt-out.

Pending Board approval, staff will send out the agreements to participating customers to obtain their decision in early September. Responses will be due back by November 30, 2020 and staff will provide a status at a subsequent FAP Committee meeting.

STAKEHOLDER PERSPECTIVES: At the January 23, 2020 Customer Briefing, staff provided a status update on the 2014 program and its potential ending without a shortage being declared. Participant feedback was solicited and a vast majority of the participants indicated a desire for the program to be extended.

SUGGESTED MOTION:I move that the Board of Directors approve a 2020 Voluntary Supplemental Shortage Stabilization Program as an extension of the 2014 Voluntary Supplemental Shortage Stabilization Program pursuant to the terms as identified in this brief and draft letter agreements.

ATTACHMENTS:1. S2 Fund MI Letter 2020 Revision-final draft2. S2 Fund Tribal Letter 2020 Revision-final draft

M&I Subcontractors March 12, Page 1

Month date, 2020

Dear _____ (This form should be sent to CAP M&I subcontractors.)

In 2015, the CAWCD Board of Directors established the Voluntary Supplemental Shortage Stabilization Program (the “2014 Program”). The 2014 Program was established as a result of a significant refund due to CAWCD customers from the rate reconciliation of 2014 rates. The refund was primarily the result of lower than projected operating costs at the Navajo Generating Station, when 2014 rates were established. As a probable shortage was projected in the near future and rates would increase significantly, CAWCD staff engaged customers in discussions about the establishment of a voluntary program to provide funds to smooth the transition to higher rates. This program was in addition to the separate Rate Stabilization program that had been established previously in 2012.

Customers were overwhelmingly supportive of establishing the voluntary program where individual entities could elect to opt-in to the 2014 Program or elect to opt-out and receive their refund or credit in 2015. Non-response to the letter agreement was a default opt-out election. To be established, the 2014 Program was required to reach a $3 million cumulative threshold. If those opting in met the $3 million threshold, CAWCD would contribute a proportionate share of the reconciliation amount from contracts that did not have a settlement clause (excess contracts). The use of the funds for stabilization would remain a pooled resource and, as such, be utilized at the same rate for all those participating in the program. Based on customer feedback and request, the following term was included in the 2014 Program:

• Based on stakeholder comments received at the Board meeting, CAWCD staff makes thefollowing clarification to the 2014 Program. CAWCD recognizes that a Colorado Rivershortage may not occur in the near-term. If a shortage is not declared, or the SupplementalFund Program monies are otherwise not fully utilized, by December 31, 2020, CAWCD willrefund the contributors’ reconciliation amounts, including interest, on a pro-rata basis andwill retain the remaining matching funds for redeposit into the General Fund StrategicReserves.

There were 34 M&I and federal customers (CAP tribes) that responded to the option selection letter. Of those, 26 chose to opt-in, representing a total customer contribution of $4,189,531 (62%). The CAWCD match was 54.35%, or $2,277,010, for a total of $6,466,541. A separate Arizona State Treasurer account was established for the funds and interest has accumulated in the account.

We have now reached the end of the term of the 2014 Program. On January 23, 2020, a Customer RoundTable was held on financial topics and staff solicited feedback on customers’ interest in

M&I Subcontractors Month date, 2020 Page 2

continuing the 2014 Program. There was overwhelming support to extend the 2014 Program. Staff reported this interest at the Finance Audit and Power Committee held that same afternoon and provided the committee on the background of the 2014 Program. By receipt of this new election form, your entity chose to opt in to the 2014 Program. To continue in the Supplemental Shortage Stabilization Program with the CAWCD contribution, you must opt-in to this revised program. All other parameters remain the same as the 2014 Program with the exception of removal of the termination date clause indicated above (“2020 Program”). We are including your original election and reconciliation amount. If you would like to enter into the 2020 Program, please indicate by selecting opt-in. If you do not wish to participate in the 2020 Program, please indicate by selecting opt-out. In the event you choose to opt out of the program, a credit of the original amount plus the associated accumulated interest will be credited to your account in March 2021 from the 2014 Program. That credit can either be refunded or applied against an outstanding invoice at that time. The CAWCD contribution for the 2014 Program and the associated interest will be returned to CAWCD and is not available as a credit. Voluntary Supplemental Rate Stabilization Program Terms Participation in the 2020 Program is voluntary; in lieu of participating, you may elect to request a credit for your 2014 reconciliation amount for future use at your discretion or you may request that a reimbursement be sent to you. Associated interest will also be credited to your account. CAWCD contributions will be returned to CAWCD with the associated interest. For those entities electing to participate in the 2020 Program, CAWCD will maintain its matching contribution of $0.54 for every $1 contributed, plus the associated interest. Participants that elect to opt-in to the 2020 Program will be eligible for water rate discounts during future shortage years. Please note the following terms:

• A CAP M&I subcontractor may opt-in for its current entitlement only (entitlements under long-term contracts existing as of December 31, 2014) and, if opt-in is elected, it must be for the full entitlement(s). For CAP M&I subcontractors, the full entitlement(s) includes: entitlements under CAP M&I water service subcontracts; entitlements under the Colorado River Exchange Contracts executed pursuant to the Salt River Pima Maricopa Indian Community Water Rights Settlement (aka "Wellton-Mohawk"); and entitlements under Contracts for Cliff Dam Replacement Water (aka "Hohokam CDR"). Specific entitlements are identified in the enclosed individual reconciliation statement.

• If a CAP M&I subcontractor had leased CAP tribal water pursuant to a long-term lease, the tribe holding the underlying entitlement to CAP water will be making the election for the lessee with respect to the Pumping Energy rates related to the delivery of leased water in 2014. And the United States will be making the election with respect to the Fixed OM&R rates related to the delivery of leased water in 2014. If the tribe elects to opt-out of the 2020 Program, then the lessee would receive a refund for the Pumping Energy rates it paid for its leased water. If the United States elects to opt-out, then the lessee would receive a credit for the Fixed OM&R rates it paid for its leased water. If a tribe elects to opt-in, then its 2014

settlement amounts will be retained in the 2020 Program, and any deliveries taken by lessees under that tribe’s entitlement will be eligible for the water rate discounts (related to the CAP Pumping Energy rate) offered under the 2020 Program during future shortage years. If the United States elects to opt-in (regarding Fixed OM&R rates only), then its 2014 settlement amounts will be retained in the 2020 Program, and any deliveries taken by lessees will be eligible for the water rate discounts (related to the CAP Fixed OM&R rate) offered under the Program during future shortage years.

• At this time, the CAWCD Board has not determined how the water rate discounts provided by the 2020 Program will be applied in the event of a shortage. While the Board may choose to use the Supplemental Fund simultaneously with the 2012 Fund to provide more significant single year discounts, the CAWCD board may also delay the use of the Supplemental Fund in order to phase-in rate increases over a longer time period. Regardless of how the Board uses the Supplemental Fund, the monies contributed to this 2020 Program shall be managed as a pool and not on an individual customer level. Note that the 2020 Program will only become effective if CAWCD receives notice that an aggregate customer contribution of $3 million is committed to the 2020 Program. This aggregate must be met through amounts contributed by customers and any CAWCD matching funds. If the aggregate contributions are less than $3 million, the feasibility of the 2020 Program will be re-evaluated and there is a possibility that the 2020 Program may be cancelled and contributions returned.

We ask that you notify us of your decision regarding participation in the Supplemental Fund Program by checking one of the boxes below and returning this letter in the enclosed, self-addressed envelope no later than November 30, 2020. You may also email a pdf of the signed letter to RateRecon@cap-az.com. If we do not receive your response by November 30, 2020, CAWCD will issue a credit to your account for your reconciliation amount by March 31, 2021. Please select your option from the following list. Check only one box.

� You elect to receive a refund of your reconciliation amount. You will not be eligible for participation in the 2020 Program, or matching funds from CAWCD. Should you choose this option, or not respond to this letter by November 30, 2020, (in which case CAWCD will assume that you have elected this option ), CAWCD shall refund your reconciliation amount to your CAWCD account by March 31, 2021 for future use at your discretion;

You elect to receive a refund of your reconciliation amount and wish a reimbursement issued. You will not be eligible for participation in the 2020 Program, or matching funds from CAWCD. CAWCD shall refund your reconciliation amount by March 31, 2021 and process a reimbursement;

You elect to opt-in to the 2020 Program in accordance with the terms of the 2020 Program as approved by the Board and this letter. You will be eligible for participation in the 2020 Program, which includes matching funds from CAWCD.

If you have any questions, please contact me at 623-869-2360.

Sincerely, Douglas A. Dunlap Finance and Accounting Manager Approved and accepted this ___ day of , 2020. By:______________________________________ Its:______________________________________

M&I Subcontractors March 12, Page 1

Month date, 2020

Dear _____ (This form should be sent to CAP M&I subcontractors.)

In 2015, the CAWCD Board of Directors established the Voluntary Supplemental Shortage Stabilization Program (the “2014 Program”). The 2014 Program was established as a result of a significant refund due to CAWCD customers from the rate reconciliation of 2014 rates. The refund was primarily the result of lower than projected operating costs at the Navajo Generating Station, when 2014 rates were established. As a probable shortage was projected in the near future and rates would increase significantly, CAWCD staff engaged customers in discussions about the establishment of a voluntary program to provide funds to smooth the transition to higher rates. This program was in addition to the separate Rate Stabilization program that had been established previously in 2012.

Customers were overwhelmingly supportive of establishing the voluntary program where individual entities could elect to opt-in to the 2014 Program or elect to opt-out and receive their refund or credit in 2015. Non-response to the letter agreement was a default opt-out election. To be established, the 2014 Program was required to reach a $3 million cumulative threshold. If those opting in met the $3 million threshold, CAWCD would contribute a proportionate share of the reconciliation amount from contracts that did not have a settlement clause (excess contracts). The use of the funds for stabilization would remain a pooled resource and, as such, be utilized at the same rate for all those participating in the program. Based on customer feedback and request, the following term was included in the 2014 Program:

• Based on stakeholder comments received at the Board meeting, CAWCD staff makes thefollowing clarification to the 2014 Program. CAWCD recognizes that a Colorado Rivershortage may not occur in the near-term. If a shortage is not declared, or the SupplementalFund Program monies are otherwise not fully utilized, by December 31, 2020, CAWCD willrefund the contributors’ reconciliation amounts, including interest, on a pro-rata basis andwill retain the remaining matching funds for redeposit into the General Fund StrategicReserves.

There were 34 M&I and federal customers (CAP tribes) that responded to the option selection letter. Of those, 26 chose to opt-in, representing a total customer contribution of $4,189,531 (62%). The CAWCD match was 54.35%, or $2,277,010, for a total of $6,466,541. A separate Arizona State Treasurer account was established for the funds and interest has accumulated in the account.

We have now reached the end of the term of the 2014 Program. On January 23, 2020, a Customer RoundTable was held on financial topics and staff solicited feedback on customers’ interest in

CAP Tribal Contract Month date, 2020 Page 2

continuing the 2014 Program. There was overwhelming support to extend the 2014 Program. Staff reported this interest at the Finance Audit and Power Committee held that same afternoon and provided the committee on the background of the 2014 Program. By receipt of this new election form, your entity chose to opt in to the 2014 Program. To continue in the Supplemental Shortage Stabilization Program with the CAWCD contribution, you must opt-in to this revised program. All other parameters remain the same as the 2014 Program with the exception of removal of the termination date clause indicated above (“2020 Program”). We are including your original election and reconciliation amount. If you would like to enter into the 2020 Program, please indicate by selecting opt-in. If you do not wish to participate in the 2020 Program, please indicate by selecting opt-out. In the event you choose to opt out of the program, a credit of the original amount plus the associated accumulated interest will be credited to your account in March 2021 from the 2014 Program. That credit can either be refunded or applied against an outstanding invoice at that time. The CAWCD contribution for the 2014 Program and the associated interest will be returned to CAWCD and is not available as a credit. Voluntary Supplemental Rate Stabilization Program Terms Participation in the 2020 Program is voluntary; in lieu of participating, you may elect to request a credit for your 2014 reconciliation amount for future use at your discretion or you may request that a reimbursement be sent to you. Associated interest will also be credited to your account. CAWCD contributions will be returned to CAWCD with the associated interest. For those entities electing to participate in the 2020 Program, CAWCD will maintain its matching contribution of $0.54 for every $1 contributed, plus the associated interest. Participants that elect to opt-in to the 2020 Program will be eligible for water rate discounts during future shortage years. Please note the following terms:

• You may opt-in for your current entitlement only (entitlements under long-term contracts existing as of December 31, 2014) and, if opt-in is elected, it must be for the full entitlement(s), including any volumes of CAP water that have been leased pursuant to a lease approved by the United States. .

• You will be making the election for water leased to a CAP M&I subcontractor with respect to the Pumping Energy rates related to the delivery of leased water in 2014. The United States will be making the election with respect to the Fixed OM&R rates related to the delivery of leased water in 2014. If you elect to opt-out of the 2020 Program, then the lessee would receive a refund for the Pumping Energy rates it paid for its leased water. If the United States elects to opt-out, then the lessee would receive a credit for the Fixed OM&R rates it paid for its leased water. If you elect to opt-in, then your 2014 settlement amounts will be retained in the 2020 Program, and any deliveries taken by lessees under your entitlement will be eligible for the water rate discounts (related to the CAP Pumping Energy rate) offered under the 2020 Program during future shortage years. If the United States elects to opt-in (regarding Fixed OM&R rates only), then its 2014 settlement amounts will be retained in the 2020 Program, and any deliveries taken by lessees will be eligible for the water rate discounts

(related to the CAP Fixed OM&R rate) offered under the Program during future shortage years.

• At this time, the CAWCD Board has not determined how the water rate discounts provided by the 2020 Program will be applied in the event of a shortage. While the Board may choose to use the Supplemental Fund simultaneously with the 2012 Fund to provide more significant single year discounts, the CAWCD board may also delay the use of the Supplemental Fund in order to phase-in rate increases over a longer time period. Regardless of how the Board uses the Supplemental Fund, the monies contributed to this 2020 Program shall be managed as a pool and not on an individual customer level. Note that the 2020 Program will only become effective if CAWCD receives notice that an aggregate customer contribution of $3 million is committed to the 2020 Program. This aggregate must be met through amounts contributed by customers and any CAWCD matching funds. If the aggregate contributions are less than $3 million, the feasibility of the 2020 Program will be re-evaluated and there is a possibility that the 2020 Program may be cancelled and contributions returned.

We ask that you notify us of your decision regarding participation in the Supplemental Fund Program by checking one of the boxes below and returning this letter in the enclosed, self-addressed envelope no later than November 30, 2020. You may also email a pdf of the signed letter to RateRecon@cap-az.com. If we do not receive your response by November 30, 2020, CAWCD will issue a credit to your account for your reconciliation amount by March 31, 2021. Please select your option from the following list. Check only one box.

� You elect to receive a refund of your reconciliation amount. You will not be eligible for participation in the 2020 Program, or matching funds from CAWCD. Should you choose this option, or not respond to this letter by November 30, 2020, (in which case CAWCD will assume that you have elected this option ), CAWCD shall refund your reconciliation amount to your CAWCD account by March 31, 2021 for future use at your discretion;

You elect to receive a refund of your reconciliation amount and wish a reimbursement issued. You will not be eligible for participation in the 2020 Program, or matching funds from CAWCD. CAWCD shall refund your reconciliation amount by March 31, 2021 and process a reimbursement;

You elect to opt-in to the 2020 Program in accordance with the terms of the 2020 Program as approved by the Board and this letter. You will be eligible for participation in the 2020 Program, which includes matching funds from CAWCD.

If you have any questions, please contact me at 623-869-2360.

Sincerely,

Douglas A. Dunlap Finance and Accounting Manager Approved and accepted this ___ day of , 2020. By:______________________________________ Its:______________________________________

CAGRD www.CentralArizonaProject.com 623-869-2333

August 20, 2020 Meeting Meeting was held remotely due to social distancing guidelines in place during COVID-19 pandemic; all

participating Committee members attended remotely. Board Members present were Chair Sharon Megdal,

Karen Cesare, Pat Jacobs, Heather Macre and Jennifer Martin. Committee member Jim Hartdegen was

absent.

Consideration of Action to Approve the May 21, 2020 Minutes of CAGRD and Underground Storage Committee The minutes for the previous Committee meeting were approved as written

Report on CAGRD Conservation Program Efforts Laura Grignano, CAGRD Manager, introduced CAGRD staff member David Dunaway, CAGRD Policy

Analyst to provide an update on the CAGRD conservation program. Mr. Dunaway began with an overview

of the conservation program’s inception dating back to 2004 and highlighted a series of 16 grants awarded

by CAGRD from 2007 to 2009 totaling nearly $65,000. For perspective, state-wide conservation regulations

were briefly described along with the differing roles of a water provider versus the CAGRD. CAGRD

conservation efforts may focus more on its potential to save its members money through lowering the water

bill directly, lowering replenishment obligation fees and also preventing an increase in CAGRD rates by

limiting the amount of additional water supplies needing to be purchased.

Conservation activities completed so far in 2020 include analysis of the annual reports provided to CAGRD

by the water providers of its Member Lands, leading to detecting leaks and water-saving infrastructure

improvements; the completion of a study on the water use of CAGRD members that was presented to the

Committee in April 2020; a pledge of financial support and in-kind contributions to audits of water use at

HOA common areas; and upgrading CAP and CAGRD’s sponsorship of Water Use It Wisely.

Future CAGRD conservation activities will be informed by information gained through surveying CAGRD’s

water providers for partnership opportunities and existing expertise in conservation activities. Identified

partnership opportunities, in turn, then inform the development of a sustainable spending plan for the

program, allowing for the program to operate through 2029 and beyond.

Feedback from the Committee following the presentation included support for focusing on new

development, identifying the timing of the conservation program as beneficial given a continued influx of

residents to Arizona and a desire to support innovation and competition through the conservation program.

Report on 2020 Member Land and Member Service Area Enrollment and Activation Activity through Q2 Mr. Dunaway then presented an update on enrollment and activation activity through second quarter 2020.

Four additional Member Lands with a total of 717 lots enrolled in the second quarter of 2020. All enrollments

to date this year are in the West Valley – West Phoenix AMA. At the same time last year, 3,963 lots were

enrolled showing an 82% drop from the end of last year. Housing unit activation for both Member Lands

and Member Service Areas totaled 3,700 for the second quarter of 2020, down from the first quarter’s 4,517

activations. This represents a roughly 30% drop from this time last year.

While activity through the second quarter indicates a trend towards a decrease for the year compared to

the previous few years, early activity in the third quarter show activations and enrollment picking up to

match 2019. A projected rebound in the third and fourth quarters of the year matches comments made by

participants in a recent webinar on post-COVID homebuilding in the Phoenix metro area indicating a

housing boom.

Report on Recovery Planning and Recovery Implementation Angie Lohse, Senior Planning Analyst in Resource Planning and Analysis, presented a report on Recovery

Planning and Implementation focusing on continued work with the Recovery Planning Advisory Group

(RPAG) in order to update the 2014 Joint Recovery Plan. Ms. Lohse began with a timeline of recent (2014-

2020) actions and activity around recovery planning and implementation in light of increased likelihood of

water shortage on the Colorado River and the implementation of the Lower Basin Drought Contingency

Staff from the Arizona Department of Water Resources (ADWR), Arizona Water Banking Authority (AWBA)

and Central Arizona Project have been working collaboratively to draft an update to the 2014 plan. To date,

Sections One through Four, out of eight sections, have been distributed to RPAG with feedback already

incorporated and subsequently posted on the ADWR website. Sections five and six are in the process of

being drafted and released to RPAG.

Less reliance on CAP recovery is expected in the near future due to the System Use Agreement defining

Firming Water as a category of water separate from Project water and defining Exchanges as AWBA

recovered LTSCs exchanged for CAP water. Instead, stakeholders have relayed a preference for

“Independent Recovery” using their own infrastructure, requiring coordination between M&I subcontractors,

AWBA and CAP. A graphical representation reflecting recovery scenarios has been created to aid in

understanding recovery options and associated agreements and permits that may be necessary.

Results from the Joint Recovery Model, evaluating a variety of different recovery assumptions and

scenarios will be used to inform the remaining sections of the update, particularly Section Six: Credit

Requests, Distribution and Recovery Opportunities. M&I stakeholders would like to ensure implementation

plans cover the greatest level of impact to the M&I pool and to that end, Section Six will include evaluation

of the portion of recovery that may require new agreements or infrastructure. The finalized update to the

2014 Joint Recovery Plan is expected in the near-term.

Future Agenda Items The next Committee meeting on September 24, 2020 will feature a presentation on the Kyl Center’s report

“The Elusive Concept of an Assured Water Supply: The Role of CAGRD and Replenishment” by Sarah

Porter and Kathleen Ferris. Additional topics to be covered include: a report on public processes with

potential impact to CAGRD and a report on the results of the annual Member Land water provider audit.

Public Comment No comments were submitted.

Contact for more information: Laura Grignano

CAGRD Manager

623-869-2113

lgrignano@cap-az.com

Agenda Number 5CONTACT: Andrew Craddock

623-869-2418acraddock@cap-az.com

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

AGENDA ITEM: Discussion and Consideration of Action to Approve CAGRD-City of Peoria Long-Term Storage Credit Acquisition - Craddock

RECOMMENDATION: Staff recommends that the CAWCD Board of Directors approve the Long-Term Storage Credit Purchase and Sale Agreement between CAWCD and the City of Peoria.

Impact on Budget: None

Additional spending authority requested: Not Applicable

Impact on Reserves: CAGRD Infrastructure and Water Rights Fund: Estimates based on Final 2021-2026 Water Rate Schedule

2021: $1,726,784 (Firm Rate) 2022: $1,742,066 (Provisional) 2023: $1,933,081 (Advisory) 2024: $2,032,410 (Advisory) 2025: $2,062,972 (Advisory)

Total (5-years): $9,497,313

Impact on Rates: None

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

Replenishment: Obtain Sufficient Water Supplies to Meet Long-Term Replenishment Obligations

PREVIOUS BOARD ACTION/ACTIVITY:August 6, 2020 Information Brief to CAWCD Board of Directors

ISSUE SUMMARY/DESCRIPTION:In early August 2020, CAGRD and the City of Peoria (Peoria) completed a draft LTSC Purchase and Sale

Agreement (LTSC Agreement) under which CAWCD will acquire from Peoria a maximum of 35,911 LTSCs over a five-year term (2021 through 2025). The LTSC Agreement (attached) was approved by Peoria's City Council on August 18, 2020. The LTSC Agreement is the result of negotiations between CAGRD and Peoria associated with the proposed CAP M&I Priority Water Transfer and Assignment of up to 1,885 acre-feet from CAWCD to Peoria. The M&I Transfer and Assignment is a contractual condition under Section 5.5 of CAGRD's Supplemental Contract (attached) and a result of Peoria's acquisition of New River Utility Company in 2016. The LTSC Agreement is contingent upon the approval of the proposed M&I transfer by ADWR and Reclamation.

Under the LTSC Agreement, CAWCD will acquire, for use by CAGRD to fulfill its replenishment obligation, a maximum of 35,911 LTSCs purchased over a five-year term for the estimated total of $9,497.313. The cost for a LTSC will be the "standard formula" utilized by CAGRD in prior LTSC acquisitions and equals the cost CAGRD would pay to create a LTSC in a given year based off CAP water rates. A minimum of 25,000 LTSCs will be from water stored (CAP water, effluent or both) in the West Salt River Valley (WSRV) sub-basin of the Phoenix AMA and the remaining 10,911 LTSCs may be from water stored in the WSRV and/or Tonopah Desert Recharge Facility.

The CAWCD General Manager will authorize entry into an Assignment & Transfer Agreement (attached) of up to 1,885 acre-feet of CAP M&I Priority Water from CAGRD to Peoria. The Peoria City Council approved the Assignment & Transfer Agreement at its August 18, 2020 meeting.

SUGGESTED MOTION:I move that the CAWCD Board of Directors approve the Long-Term Storage Credit Purchase and Sale Agreement between CAWCD and the City of Peoria.

ATTACHMENTS:1. Presentation2. Peoria CAWCD LTSC Purchase and Sale Agreement (Final)3. Peoria CAWCD M&I Assignment and Transfer Agreement (Final)4. Supplemental CAWCD Contract No 14-06-W-245 8-14-2007

YOUR WATER. YOUR FUTURE.

CAGRD – City of PeoriaProposed M&I Subcontract Assignment & Transfer Agreement

and Long-Term Storage Credit Acquisition

ANDREW CRADDOCK -

M&I Assignment and Transfer

Long-Term Storage Credit Purchase & Sale Agreement

Next Steps

CAGRD – CITY OF PEORIA: M&I TRANSFER & LTSC AGREEMENTS| 08.06.202

M&I Assignment & Transfer

|CAGRD – CITY OF PEORIA: M&I TRANSFER & LTSC AGREEMENTS| 08.06.20

M&I Assignment & Transfer: Background

• U.S./CAWCD Supplemental Contract executed on 8/14/07 for fulfillment of CAGRD replenishment obligations

• CAGRD acquired four M&I entitlements in 2007• New River Utility Company (NRUC) - 1,885 AF • West End, Sunrise and LPSCO water companies also

• 2016: ACC approved Peoria’s acquisition of all water utility assets of NRUC, whereby the CC&N of NRUC ceased to exist

• Peoria’s DAWS has assumed all water service obligations of NRUC and has relieved CAGRD of all current and future replenishment obligations for former NRUC Member Lands (MLs) since January 1, 2016

M&I Assignment & Transfer: CAGRD Contract Section 5.5 Language

“To the extent that another entity (City of Peoria) relieves CAWCD, acting in its capacity as CAGRD, of its current and future replenishment

obligation for MLs and MSAs located within the services areas identified in Exhibit A (NRUC, LPSCO, etc.), CAWCD will transfer to that entity an

equal amount of its entitlement to CAP M&I Water up to the amount (1,885 AF) specified in Exhibit A for each service area.”

• M&I subcontract authorizes CAGRD staff to proceed with M&I transfer

• CAWCD GM signature will authorize staff to enter into M&I Assignment and Transfer Agreement with Peoria

• M&I transfer would be contingent on LTSC Purchase & Sale Agreement (PSA) approval by CAWCD Board (September 2020)

M&I Assignment & Transfer: Annual Water Use Data Verification

• 2017-2019: Peoria provided and CAGRD staff verified parcel level water delivery data on all eight NRUC Member Lands formerly enrolled in CAGRD

• 2017: Maximum annual water delivery of 1,456.84 AF

• Parties have held extensive discussions, data analyses and collaborative negotiations around contract language meaning of “current and future replenishment obligation” in determining a mutually-agreeable M&I transfer volume.

• LTSC Agreement “bridges the gap”- 1,885 AF vs. 1,456.84 AF

M&I Assignment & Transfer: Bridging Current vs. Future Replenishment “Gap”• CAGRD and Peoria are proposing to “bridge the gap” via a LTSC PSA and subsequent M&I Transfer

based on the following:

• 1,885 AF: full former NRUC entitlement held by CAGRD• 1,456.84 AF: Peoria maximum one-year water delivery (2017)• 428.16 AF – “Gap”

• CAGRD receives a 100-year equivalent “gap” volume of LTSCs (42,816 AF) minus the water deliveries to former NRUC MLs (6,905 AF) by Peoria in years 2016 through 2020.

• Peoria would sell CAGRD 35,911 LTSCs from 2021-2025• (42,816 AF – 6,905 AF = 35,911 AF of LTSCs)

• CAGRD would transfer 1,885 AF of CAP M&I entitlement to Peoria

• CAGRD’s new M&I volume reduced to 6,426 AF/YR (currently 8,311 AF/YR.)

Long-Term Storage CreditPurchase & Sale AgreementProposal

LTSC Purchase & Sale Agreement: Key Terms

• 35,911 LTSCs acquired over 5 year term• 7,182.20 LTSCs in 2021 through 2025

• Location of LTSCs• Minimum of 25,000 LTSCs from West Salt River Valley (WSRV) ‐

Phoenix AMA recharge facilities• WSRV Facilities include Agua Fria Constructed & Managed USFs,

Hieroglyphic Mtns., Peoria Beardsley Road (effluent) and SRP Agua Fria (effluent)

• Remaining 10,911 LTSCs at Peoria’s discretion from either WSRV facilities listed and/or Tonopah Desert Recharge Project

LTSC Purchase & Sale Agreement: Key Terms

• Initial LTSC acquisition (expected in 4Q 2021) completed approximately one month after amended CAP M&I Priority Water contracts finalized with BOR and issued to CAWCD (for CAGRD) and Peoria

• LTSC acquisition price based on “standard formula” equal to CAGRD’s cost to create an acre‐foot of LTSC in a given year

| PRESENTATION TITLE | DD.MM.YY11

LTSC Purchase and Sale Agreement: Acquisition Costs

Year* M&I Capital Fixed OM&R Energy RateUWS O&M

(PHX AMA)LTSC Cost Annual Cost

2021 53.00$ 104.00$ 56.00$ 13.00$ 240.43$ 1,726,784$

2022 50.00$ 109.00$ 56.00$ 13.00$ 242.55$ 1,742,066$

2023 69.00$ 114.00$ 57.00$ 13.00$ 269.15$ 1,933,081$

2024 70.00$ 121.00$ 61.00$ 14.00$ 282.98$ 2,032,410$

2025 68.00$ 127.00$ 61.00$ 14.00$ 287.23$ 2,062,972$

9,497,313$ Total Cost: 35,911 LTSCs/ 5 Years

* Rates: 2021 Firm, 2022 Provisional, 2023‐2025 Advisory

Next Steps• August 18, 2020 Peoria City Council Meeting

• Seek approval of LTSC Purchase & Sale Agreement and • M&I Assignment and Transfer Agreement

• September 3, 2020 CAWCD Board Meeting• Seek Board approval of LTSC Purchase & Sale Agreement• CAWCD GM signs M&I Assignment and Transfer Agreement with Peoria

• September 2020 – CY 2021• Initiate required actions to complete M&I Transfer• Adhere to CAWCD Policy and ADWR Substantive Policy on CAP M&I Transfers• Adhere to BOR Review Procedures and Requirements• Initial year (2021) of LTSC purchase; M&I Amended Contracts by 10/1/21

YOUR WATER. YOUR FUTURE.Questions?acraddock@cap-az.com; Office: (623) 869-2418

PURCHASE AND SALE AGREEMENT FOR LONG TERM STORAGE CREDITS

This Purchase and Sale Agreement for Long-Term Storage Credits (“Agreement”) is made this ______day of ________________, 2020, (the "Effective Date"), between and among the City of Peoria ("Peoria"), an Arizona municipal corporation, and the Central Arizona Water Conservation District (“CAWCD”), a multi-county water conservation district organized and existing under the laws of the State of Arizona (together “Party” or “Parties”).

RECITALS

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

B. WHEREAS, CAWCD desires to purchase Long-Term Storage Credits developed by Peoriapursuant to A.R.S. §§ 45-801 et seq., for the benefit of CAGRD member lands and memberservice areas.

C. WHEREAS, Peoria is willing to sell and transfer certain Long-Term Storage Credits toCAWCD upon the price, terms and conditions set forth herein.

D. WHEREAS, Peoria is authorized to sell Long-Term Storage Credits and enter into this Agreementpursuant to, inter alia, Arizona Revised Statutes Title 9, Chapter 5, Article 2 and Title 45, Chapter3.1, Article 4.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, and intending to be legally bound, the Parties hereby agree as follows:

ARTICLE 1 DEFINITIONS

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

1.1 "ADWR" means the Arizona Department of Water Resources.

1.2 "Agreement" means this Purchase and Sale Agreement for Long-Term Storage Credits.

1.3 "CAGRD" means the Central Arizona Groundwater Replenishment District, A.R.S. § 48-3771 et seq., the replenishment authority operated by CAWCD.

1.4 “CAGRD’s Account(s)” means (i) the long-term storage account established pursuant to Arizona Revised Statutes § 45-859.01 for the Phoenix Active Management Area, Account No. 70-441120.0001; (ii) the conservation district account established pursuant to Arizona Revised Statutes § 45-859.01 for Phoenix Active Management Area, Account No. 75-441120.0000 and/or

the (iii) the conservation district replenishment reserve subaccount for the Phoenix Active Management Area, Account No. 70-441120.0002.

1.5 “CAWCD” means the Central Arizona Water Conservation District. 1.6 "Long-Term Storage Credit" is as defined in A.R.S. § 45-802.01(11). 1.7 "Long-Term Storage Credit Transfer Form" is a form, approved by ADWR, to effectuate the

assignment of Long-Term Storage Credits, as defined in A.R.S. § 45-854.01(B), and more specifically described in Article 3 below.

1.8 "Peoria" means the City of Peoria, Arizona. 1.9 "Peoria's Long-Term Storage Account" means the Long-Term Storage account established

pursuant to A.R.S. § 45-852.01 in Peoria's name, ADWR Account No. 70-441146.0000.

ARTICLE 2 PURCHASE OF LONG-TERM STORAGE CREDITS

2.1 Sale and Purchase. Subject to the terms and conditions of this Agreement, Peoria agrees to sell, transfer and assign, and CAWCD agrees to purchase, acquire, and pay for a total of [35,911] acre-feet of Long-Term Storage Credits. The actual amount of Long-Term Storage Credits to be sold by Peoria and to be bought by CAWCD may be altered consistent with the provisions of subsection 2.1(a). The total volume of Long-Term Storage Credits that Peoria agrees to sell and CAWCD agrees to purchase during the term of this Agreement shall be accrued, sold and purchased in annual installments as provided in Section 3.1.

a) Should the timing of the transfer of the former New River Utility Company (NRUC) subcontract [Subcontract No. 5-07-30-W0082] from CAWCD to Peoria preclude Peoria from taking delivery of the entire subcontract allotment, [1,885 acre-feet], in calendar year 2021, the Parties agree to reduce the total volume of this Agreement from [35,911] acre-feet of Long-Term Storage Credits in a mutually agreeable manner. Such a reduction will be based on the difference between Peoria’s 2021 total water delivery volume made to former NRUC CAGRD Member Lands and the total volume of the subcontract allotment delivered to Peoria in 2021. For example, if Peoria’s 2021 total water delivery volume made to former NRUC CAGRD Member Lands is [1,500 acre-feet] and the total subcontract volume delivered to Peoria in 2021 is [1,000 acre-feet] then the Long-Term Storage Credit volume of the Agreement will be reduced by [500 acre-feet] from [35,911 acre-feet] to [35,411 acre-feet]. Any reduction will be applied to the last of the five annual installments described in Article 3.1.

2.2 Long-Term Storage Credits. The Long-Term Storage Credits to be sold by Peoria shall have

been stored under the ADWR Facility and Water Storage Permit(s) set forth in Exhibit A hereto. The Parties acknowledge that Exhibit A may be amended from time to time during the term of this Agreement to reflect amendments to existing underground storage facility permits or to add new permitted underground storage facilities.

2.3 Annual Purchase Price. The annual purchase price for the Long-Term Storage Credits to be

transferred pursuant to this Agreement will vary from year to year and shall be based on components of the Central Arizona Project ("CAP") published annual rate schedule. The

purchase price for each annual installment of Long-Term Storage Credits to be sold by Peoria to CAWCD under this Agreement shall be calculated using the formula described in Section 2.4 below.

2.4 Purchase Price Formula. The per-credit purchase price for the applicable year is calculated as

follows: [(CAP Long Term M&I Subcontract Capital Charge + CAP Fixed OM&R Charge + CAP Pumping Energy Rate Charge + CAP Underground Water Storage O&M Charge for the Phoenix AMA) ÷ 0.94]. For example, as expressed in numbers reflecting 2020 Firm CAP rates, the formula is as follows: [($56 + $99 + $56 + $13) ÷ 0.94 = $238.30 Per-credit price].

ARTICLE 3 TIME AND MANNER OF TRANSFER

3.1 Annual Installments. The Long-Term Storage Credits to be transferred under this Agreement shall

be transferred in annual installments, commencing in accordance with Article 3.2 below and continuing until the entire amount of [35,911] acre feet of Long-Term Storage Credits have been transferred from Peoria to CAWCD, except as otherwise expressly provided in this Agreement. Each annual installment shall be in the quantity of [7,182.20] acre-feet, or as modified consistent with Section 2.1(a) above, contemplating five (5) annual installments to complete the total transfer.

3.2 Long-Term Storage Credit Transfer Form. To evidence the transfer of Long-Term Storage

Credits in the initial year of the Agreement, Peoria and CAWCD shall complete, sign and deliver the Long-Term Storage Credit Transfer Form within 30 days of delivery of the amended CAP M&I Priority Water contracts from Reclamation. In all other subsequent years, Peoria and CAWCD shall complete, sign and deliver the Long-term Storage Credit Transfer Form on or before July 1 of each year of this Agreement. A copy of the current Long-Term Storage Credit Transfer Form is attached as Exhibit B to this Agreement, but may be updated by ADWR during the term of this Agreement. After Peoria has executed and delivered the Long-Term Storage Credit Transfer Form to CAWCD, CAWC D shall promptly deliver the fully executed Long-Term Storage Credit Transfer Form to ADWR as required by statute. CAWCD shall pay any necessary administrative transfer fees established by ADWR at the time of filing to effectuate the transfer of Peoria’s Long-Term Storage Credits into CAGRD’s Account(s).

3.3 Additional Actions and Documentation. The Parties shall cooperate to take such further

actions and execute such further documents as may be determined by either party to be necessary or advisable in order to complete the transfer of the Long-Term Storage Credits contemplated by this Agreement.

ARTICLE 4

COMPLETION OF DELIVERY AND PAYMENT 4.1. Completion of Delivery. Delivery of the Long-Term Storage Credits to be transferred pursuant

to this Agreement shall be deemed complete when ADWR notifies CAWCD in writing that it has received and accepted the Long-Term Storage Credit Transfer Form and intends to transfer Long-Term Storage Credits from Peoria's Long-Term Storage Account to CAWCD's Account ("ADWR Acceptance"). CAWCD and Peoria shall cooperate with ADWR to facilitate and expedite ADWR acceptance. CAWCD will promptly forward to Peoria copies of any notifications it receives from ADWR.

4.2. Payment. Upon ADWR Acceptance, Peoria shall invoice CAWCD the full annual purchase price as calculated in Article 2.4 above and allow thirty (30) days for CAWCD to remit payment.

ARTICLE 5

REJECTION OR INVALIDATION OF TRANSFER 5.1 Rejection or Invalidation. If ADWR, pursuant to A.R.S. § 45-854.01(C), rejects or invalidates

any transfer or assignment of Long-Term Storage Credits made hereunder before CAWCD has paid for such Long-Term Storage Credits, CAWCD shall not be obligated to pay for the number of Long-Term Storage Credits affected by such rejection or invalidation. If such rejection or invalidation occurs after payment has been made by CAWCD, Peoria shall refund an amount equal to the number of Long-Term Storage Credits affected by such rejection or invalidation times the price per acre-foot for the affected Long-Term Storage Credits, as such price is established in Article 2.4 above, for the year in which the Long-Term Storage Credits would have been transferred. Peoria shall refund such amount within thirty (30) business days after either CAWCD or Peoria receives any notice of rejection or invalidation from ADWR. CAWCD shall transfer and assign back to Peoria the number of credits affected by any such rejection or invalidation, if necessary. Peoria's obligation to refund any payments under this Article 5 shall expire thirty (30) calendar days after ADWR has issued a non-appealable final agency decision approving the transfer and assignment of the Long-Term Storage Credits into the CAGRD’s Account(s).

5.2 Obligation to Contest Rejection. In the event of any rejection of transfer by ADWR, the Parties

shall forthwith meet and confer on the reason for such rejection and shall cooperate in good faith and with due diligence to resolve the reason for rejection with ADWR with the intent to overcome any such rejection on commercially reasonable terms consistent with the intent of this Agreement.

5.3 Continuing Obligation. The Parties' rights and obligations under this Article 5 shall remain in

full force and effect, and shall survive termination of this Agreement for purposes of addressing a circumstance where ADWR rejects or invalidates any transfer of Long-Term Storage Credits made hereunder after termination of this Agreement.

ARTICLE 6

EFFECTIVE DATE AND TERM 6.1 Effective Date and Term. This Agreement shall be effective as of the date set forth in the

introductory paragraph of this Agreement (the "Effective Date") and shall stay in effect until the earlier of six (6) years from the effective date of this agreement, unless the Parties agree to extend this Agreement, or until all provisions under the Agreement have been met, provided that this Agreement has not been earlier terminated according to its terms.

ARTICLE 7

DEFAULT AND REMEDIES 7.1 Default. The occurrence of any of the following events constitutes an event of default by a

party to this Agreement.

a) The failure of either party to perform any term, covenant, or condition of this Agreement, if that failure continues for thirty (30) days following the receipt of written notice from the other party. b) (i) The filing by or against either party of a petition to have the party adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against a party, the same is dismissed within sixty (60) days); (ii) the making by a party of any general assignment for the benefit of creditors; (iii) the appointment of a trustee or receiver to take possession of substantially all of the party's assets, when possession is not restored to the party within sixty (60) days; or (iv) the attachment, execution, or other judicial seizure of substantially all of a party's assets, where such seizure is not discharged within sixty (60) days.

7.2. Remedies. If the event default occurs, the non-defaulting party may immediately terminate

this Agreement by written notice to the defaulting party and/or may pursue any other rights available in law or equity. The obligation of the defaulting party to pay any amounts due but unpaid or refund any credits previously transferred but unpaid of the date of termination under this provision shall survive such termination.

ARTICLE 8

MISCELLANEOUS PROVISIONS 8.1. Interpretation. This Agreement is governed by and must be construed and interpreted in

accordance with and in reference to the laws of the State of Arizona, without regard to its conflicts of laws provisions. Any action to resolve any dispute regarding this Agreement shall be taken in a state court of competent jurisdiction located in Maricopa County, Arizona.

8.2. No Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties and does

not create, nor shall it be construed to create, rights in any third party unless expressly provided herein. No third patty may enforce the terms and conditions of this Agreement.

8.3. Non-Discrimination. The Parties shall comply with State Executive Order No. 75-5, as

amended by State Executive Order No. 2009-09, and all other applicable federal and state laws, rules and regulations relating to equal opportunity and non-discrimination, including the American with Disabilities Act.

8.4. Conflict of Interest. The Parties to this Agreement are hereby notified of A.R.S. § 38- 511. 8.5. Permits. The Parties shall obtain and maintain all licenses, permits and authority necessary to

perform their obligations pursuant to this Agreement, and shall comply with all applicable state, federal and local laws, including but not limited to those regarding employment insurance, disability insurance and worker's compensation. This Agreement does not relieve either Party from any obligation or responsibility imposed upon it by law.

8.6. No Employment. Neither Party shall be considered an officer, employee, or agent of the other.

No monitoring or supervisory responsibility over the other Party's activities arises on the part of the other arises or as a result of, or pursuant to, this Agreement other than as expressly provided herein.

8.7. Severability. The provisions of this Agreement are severable to the extent that if any provision

is held unenforceable under applicable law, the remaining provisions of the Agreement shall remain in effect, if the intent of the Agreement can be accomplished.

8.8. Books, Records and Inspections. All books, accounts, reports, files and other records relating

to this Agreement shall be subject at all reasonable times to inspection and audit by the State of Arizona, CAWCD, and Peoria for three (3) years after the completion of the Agreement. Such records shall be produced at such offices as are designated by the State of Arizona, CAWCD, or Peoria.

8.9. Indemnification. Each party to this Agreement is independently responsible in the event of its own negligence and willful conduct. Neither party agrees to indemnify the other party.

8.10. Resolution of Disputes. The Parties shall attempt to resolve all claims, disputes, controversies,

or other matters in question between the Parties arising out of, or relating to, this Agreement ("Dispute") promptly, equitably, and in a good faith manner.

8.11. Amendments. This Agreement may be modified, amended or revoked only by the express

written agreement of the Parties hereto. 8.12. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and

no understandings or obligations not expressly set forth in this Agreement are binding upon the Parties.

8.13. Waiver. No delay in exercising any right or remedy shall constitute a waiver unless such right

or remedy is waived in writing signed by the waiving Party. A waiver by any Party of any right or remedy hereunder shall not be construed as a waiver of any other right or remedy, whether pursuant to the same or a different term, condition or covenant.

8.14. Captions. All captions, titles, or headings in this Agreement are used for the purpose of

reference and convenience only and do not limit, modify, or otherwise affect any of the provisions of this Agreement.

8.15. Rules, Regulations and Amendment of Successor Statutes. All references in this Agreement

to the Arizona Revised Statutes include all rules and regulations promulgated by ADWR under such statutes and all amendment statutes and successor statutes, rules, and regulations to such statutes, rules, and regulations existing as of the date of this Agreement.

8.16. Notices. Except as otherwise required by law, any notice given in connection with this

Agreement must be in writing and must be given by personal delivery, overnight delivery, facsimile, or United States mail. Any such notice must be addressed to the appropriate party at the following address and/or email (or at any other address as a party may hereafter designate by written notice given as required by this paragraph):

CAWCD:

For delivery use: Central Arizona Water Conservation District

Attn: General Manager 23636 N. 7th Street Phoenix, AZ 85024

For U.S. Mail use: Central Arizona Water Conservation District Attn: General Manager P.O. Box 43020 Phoenix, AZ 85080-3020

Peoria:

City of Peoria Attn: City Manager 8401 W Monroe Peoria, Arizona 85345

Peoria Water Services Director 9875 N. 85th Avenue Peoria, Arizona 85345

Notice is deemed to have been given on the date on which notice is personally delivered, delivered to an overnight delivery service, or mailed postage prepaid. Notice is deemed to have been received on the date on which the notice is actually received or delivery is refused.

IN WITNESS WHEREOF, the Parties to this Agreement have executed this Agreement as of the date first set forth above.

By:_______________________________ Lisa A. Atkins

Its: President

Attest:

By:_______________________________ Sharon B. Megdal

Its: Secretary

CITY OF PEORIA, an Arizona municipal corporation By: _______________________________ Its: Mayor Approved as to form: _______________________________ Vanessa Hickman, City Attorney Attest: ________________________________ City Clerk

EXHIBIT A to

Purchase and Sale Agreement for Long Term Storage Credits As set forth in Article 2 of the Agreement, Peoria will sell long-term storage credits (LTSC) accrued at the facilities listed in the table below from ADWR Long Term Storage Account No. 70-441146.0000. A minimum of 25,000 LTSCs of the total Agreement volume will come from only those facilities located within the West Salt River Valley Sub-Basin (West SRV) as denoted in the table below. The remaining volume will come from any combination of the facilities listed below.

Facility Name USF Permit No.

Water Storage Permit No.

Source Water

Phoenix AMA Sub-Basin

CAWCD Agua Fria Constructed USF 71-569776 73-569776.0401 CAP West SRV CAWCD Agua Fria Managed USF 71-569775 73-569775.0401 CAP West SRV CAWCD Hieroglyphic Mtns Recharge Project USF 71-584466 73-584466.0300 CAP West SRV CAWCD Tonopah Desert Recharge Project USF 71-593305 73-593305.2300 CAP Hassayampa Peoria Beardsley Road Water Reclamation Facility USF 71-552497 73-552498.0001 Effluent West SRV SRP New River Agua Fria Underground Storage Project USF 71-588558 73-588558.0500 Effluent West SRV

EXHIBIT B

Purchase and Sale Agreement for Long Term Storage Credits

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

ASSIGNMENT AND TRANSFER AGREEMENT BETWEEN

CENTRAL ARIZONA WATER CONSERVATION DISTRICT AND

CITY OF PEORIA

This Assignment and Transfer Agreement (“Agreement”) is between the Central Arizona Water Conservation District, an Arizona public improvement district, as assignor/transferor (“CAWCD”) and City of Peoria, Arizona, a municipal corporation in Arizona, as assignee/transferee (“City”).

1. RECITALS

1.1 CAWCD is a Multi-County Water Conservation District operating under Title 48, Ch. 22, Arizona Revised Statutes. CAWCD operates the Central Arizona Groundwater Replenishment District (“CAGRD”) pursuant to Title 48, Ch. 22, Art. 4. City is an Arizona municipal corporation, operating under Title 9, Arizona Revised Statutes.

1.2 New River Utility Company (“NRUC”) was an investor owned private water company operating as a public service corporation. NRUC held a “Subcontract Among the United States, The Central Arizona Water Conservation District, and New River Utility Company, Providing for Water Service, Central Arizona Project” being Subcontract No. 5-07-30-W0082 (“NRUC M&I Subcontract”). By agreement dated July 12, 2007, NRUC assigned its NRUC M&I Subcontract to CAWCD in exchange for CAWCD’s assumption of NRUC’s replenishment obligations by CAGRD. The capacity of the NRUC M&I Subcontract was for 1,885 acre feet.

1.3 CAWCD entered into that certain “Supplemental Contract Between the United States and the Central Arizona Water Conservation District for Delivery of Central Arizona Project Water” dated August 14, 2007 (“CAWCD Supplemental Contract”) wherein CAWCD acquired the right to delivery of Central Arizona Project water from certain transferring entities, including NRUC.

1.4 City is a municipal water provider, providing water utility service to its customers within its service area. City holds a “Subcontract Among the United States, The Central Arizona Water Conservation District, and City of Peoria, Providing for Water Service, Central Arizona Project” originally dated May 25, 2007 and as amended, being Subcontract No. 07-XX-30-W0480 (“City M&I Subcontract”). The City M&I Subcontract is currently in theamount of 25,236 acre-feet per year of Central Arizona Project Municipal & IndustrialPriority Water (“CAP M&I Priority Water“).

1.5 City obtained a Designation of Assured Water Supply (“DAWS”) from the ArizonaDepartment of Water Resources (“ADWR”) in 1998. As part of the DAWS, City wasrequired to enter into a Member Service Area Agreement with CAGRD for replenishmentof “excess groundwater” used within the City service area.

1.6 By 2008, City had constructed infrastructure necessary to take sufficient delivery ofCentral Arizona Project water and other non-groundwater supplies to allow City to applyfor modification of its DAWS and termination of its CAGRD Member Service AreaAgreement. City entered into that certain “Revocation of Member Service AreaAgreement Between Central Arizona Water Conservation District and City of Peoria”dated May 5, 2011. Upon that termination, City no longer was obligated to CAGRD for

groundwater replenishment obligations within the City service area. ADWR issued a new DAWS to City on September 29, 2010 (ADWR No. 86-400679.0001) allowing City to operate as a designated assured water supply provider without Member Service Area replenishment through CAGRD.

1.7 By Docket Entry dated August 5, 2016, the Arizona Corporation Commission approved the acquisition of all of the water utility assets of NRUC by City, being Docket No. W-01737A-15-0380, Decision No. 75690. As recited therein, City purchased all of the stock of NRUC in October, 2015. City took possession of the NRUC water delivery system on November 5, 2015 and has been continuously operating the system since that date as part of the larger City service area. The Certificate of Convenience & Necessity describing the service area of NRUC (and incorporated into the NRUC M&I Subcontract and the CAWCD Supplemental Contract) ceased to exist, and City assumed all obligations for water utility service within that former water service area, including any groundwater replenishment obligation.

1.8 By City assuming all water service obligations of NRUC in 2015 under its Designation of Assured Water Supply (DWR No. 86-400679.0001), CAGRD was relieved, commencing in calendar year 2016, of any and all current and future obligations for the Member Lands located within the service area identified under Exhibit A, Map 4 (NRUC) of the CAWCD Supplemental Contract. Since January 1, 2016, City has served the NRUC service area with renewable supplies from its own prior portfolio.

2. AGREEMENT FOR ASSIGNMENT AND TRANSFER

2.1 CAWCD and City incorporate the Recitals above as part of this Agreement and agree that they represent true statements of fact. All Exhibits to this Agreement are incorporated herein by reference.

2.2 Pursuant to the CAWCD Supplemental Contract, Subsection 5.5, CAWCD agrees to transfer to City 1,885 acre-feet per annum of CAP M&I Priority Water. The transfer will be accomplished through an amendatory CAP M&I water service subcontract among CAWCD, the United States and City of Peoria, amending the City M&I Subcontract by increasing allowable diversion by 1,885 acre-feet, and an amendment to the CAWCD Supplemental Contract reducing the allowed CAWCD diversions by 1,885 acre-feet.

2.3 City agrees to pay CAWCD the estimated sum of $1,221,652.47, representing the costs associated with the transfer of the CAP M&I Priority Water through December 31, 2021, pursuant to the CAWCD Policy Regarding the Relinquishment and Transfer of CAP M&I Subcontract Allocations, as amended November 7, 2002..

a) Should notification by Reclamation that the amendatory contracts are fully executed per Subparagraph 3.7 occur before December 31, 2021, the transfer fee shall be reduced by $2,100.00 per month from $1,221,652.47 for each month from the notification to December 31, 2021. For example, if notification from Reclamation is received on July 14, 2021, then the transfer fee is reduced by $12,600.00 (6 months x $2,100.00).

b) Should notification by Reclamation that the amendatory contracts are fully executed per Subparagraph 3.7 occur after December 31, 2021, the Parties agree to consult in a timely manner on a mutually acceptable inclusion of additional interest in the transfer fee consistent with the CAWCD Board Policy regarding transfers of CAP M&I subcontract allocations amended November 7, 2002.

2.4 CAWCD and City shall enter into an Agreement for Purchase and Sale of Long-Term Storage Credits in the form attached hereto as Exhibit A.

2.5 CAWCD and City shall cooperate in good faith and with all reasonable diligence with ADWR and the United States Bureau of Reclamation (“Reclamation”) to process the transfer through these respective entities toward final conclusion and execution of the amended City M&I Subcontract.

2.6 Should Peoria receive delivery of any M&I Priority Subcontract water pursuant to this Agreement for which CAWCD has previously paid the CAP capital charge, Peoria agrees to reimburse CAWCD on a per acre-foot basis at the capital charge rate paid by CAWCD for the water Peoria received. For example, if CAWCD pays the CAP capital charge associated with the 1,885 acre-feet for calendar year 2021 as assessed in December 2020 and June 2021, but the completion of this agreement allows Peoria to take delivery of 1,700 acre-feet within calendar year 2021, Peoria will reimburse CAWCD at the 2021 CAP capital charge rate multiplied by 1,700.

3. REQUIRED ACTIONS AND CONDITIONS PRECEDENT TO TRANSFER

3.1 CAWCD and City agree that the following actions, taken in the order set forth below, are

required to effect the transfer of the CAP M&I Priority Water to City as contemplated here.

3.2 Upon the Effective Date of this Agreement (see signature page below), CAWCD and City shall compile a Request for Review for submission to ADWR pursuant to A.R.S. § 45-107(D) and ADWR’s CR6 Policy Statement “Revised Policy Regarding Central Arizona Project Municipal and Industrial Subcontract Entitlements.” CAWCD and City shall cooperate on the preparation of the Request for Review, including the water management plan aspects thereof, and shall meet with ADWR as necessary before and after submission of same to expedite and facilitate ADWR’s review. Condition Precedent: Final letter from ADWR to Reclamation recommending approval of the proposed transfer (“ADWR Recommendation”).

3.3 Upon filing the Request for Review with ADWR, CAWCD and City shall advise Reclamation of the pending Request for Review and shall meet or confer with Reclamation, as necessary, to advise or answer questions regarding the proposed transfer while the Request for Review is pending with ADWR. The consultation shall include a discussion of what form the ultimate amendatory contracts between Reclamation and CAWCD/City may take, and the necessity for judicial validation of same, if any. Condition Precedent: Initial consultation with Reclamation regarding proposed transfer.

3.4 Upon receiving the ADWR Recommendation, CAWCD and City shall cooperate with Reclamation to commence review of the proposed transfer under applicable federal law, including any review required pursuant to the National Environmental Policy Act (“NEPA”). City shall timely pay to Reclamation any required funding for federal review, including NEPA, by Reclamation, including any deposit and publishing costs required by Reclamation, and shall enter into a standard form of required letter agreement with Reclamation to effect that payment if necessary. Condition Precedent: Notification from Reclamation to Publish Public Notice of Proposed Transfer and Proof of Completion of Publication by the City.

3.5 Upon notification by Reclamation that draft forms of amendments to the City M&I Subcontract and the CAWCD Supplemental Contract are available, CAWCD and City shall timely review same, understanding and agreeing that such contracts are standard forms

prepared by Reclamation with standard terms and provisions that are not subject to negotiation. CAWCD and City shall approve such drafts if they are accurate and state terms and conditions that are standard among similarly situated parties contracting with Reclamation. CAWCD and City shall work with Reclamation to prepare the amended contracts in final form. Condition Precedent: Approval of draft forms of amendatory contracts by CAWCD and City and Preparation of final forms.

3.6 Upon approval of the draft forms of amendatory contracts and presentation of final forms by Reclamation, CAWCD and City shall execute same, taking all necessary actions, including CAWCD Board and City Council resolutions and approvals. Condition Precedent: Formal Approval by Resolution and Execution of Amendatory Contracts by CAWCD and City.

3.7 Upon approval and execution of the amendatory contracts, CAWCD and City shall jointly submit the original documents to Reclamation, Lower Colorado River Region, for formal approval by the Reclamation Regional Director. CAWCD and City shall request that Reclamation execute the amendatory contracts and notify CAWCD and City of completion, but hold the contracts until CAWCD and City notify Reclamation that all conditions precedent have been met. Condition Precedent: Joint letter from CAWCD and City transmitting executed amendatory contracts as required by this subparagraph.

3.8 Upon notification by Reclamation that the amendatory contracts are fully executed, City shall, within thirty (30) calendar days, pay to CAWCD in good and immediate funds, by commercially reasonable payment method as specified by CAWCD, the amount required by Subparagraph 2.3 above. Condition Precedent: City payment to CAWCD of the required amount of transfer fee.

3.9 Upon notification by Reclamation that the amendatory contracts are fully executed, CAWCD and City shall execute and deliver to each other a fully executed copy of the Agreement for Purchase and Sale of Long-Term Storage Credits in substantially the form attached hereto as Exhibit A. Condition Precedent: Execution and Delivery of Agreement for Purchase and Sale of Long-Term Storage Credits.

3.10 Upon completion and fulfillment of all conditions precedent described above, City and CAWCD shall jointly request delivery of the amended contracts from Reclamation and this Agreement shall be deemed complete and the transfer effective, subject only to judicial validation as described below.

4. Judicial Validation

4.1 To the extent required by law or by Reclamation, City shall process the judicial validation

of any amendatory contract with Reclamation and shall pursue same to completion with diligence.

4.2 If judicial validation is not required by law or by Reclamation, City, CAWCD and Reclamation shall so agree and this Agreement shall be deemed complete.

5. Termination Upon Failure of Transfer

5.1 This Agreement shall endure until all of the conditions precedent actions have been met

and the transfer completed, including judicial validation if necessary. 5.2 In the event that either ADWR or Reclamation provides notice that either or both will not

approve the transfer as contemplated, CAWCD and City shall meet and confer regarding

the appropriate course of action. If the reason for denial of the transfer is due to matters that can be resolved by commercially reasonable action either by CAWCD or City, or both, the party or parties being required to take action shall do so in good faith to allow the transfer to proceed.

5.3 In the event that there is a refusal to process the transfer as contemplated due to requirements or impediments imposed by either ADWR or Reclamation that cannot be overcome, despite reasonable diligence and accommodation by one party or both parties, either party may serve written notice to the other to declare that the intent of this Agreement is not feasible. Unless contested by the other party with thirty (30) calendar days, this Agreement shall terminate. If contested, the contesting Party may seek to resolve the impasse and re-instate the transfer process within six (6) months from the declaration of non-feasibility. If not resolved within that time, this Agreement shall terminate.

5.4 CAWCD and City agree to use best efforts to overcome any requirement or impediment imposed by ADWR or Reclamation consistent with the intent of this Agreement and shall only seek termination of the Agreement prior to completion in circumstances where the intent of this transfer is not rationally feasible.

6. MISCELLANEOUS

6.1 Further Acts. The Parties agrees to perform any additional acts and execute any

additional documents reasonably necessary to effectuate the purposes of this Agreement.

6.2 Controlling Law and Venue. This Agreement and all questions relating to its validity,

interpretation, performance and enforcement shall be governed by applicable Arizona and federal law. Any action to resolve any dispute regarding this Agreement shall be taken in a state court of competent jurisdiction located in Maricopa County, Arizona.

6.3 Interpretation. The Parties agree that neither Party shall be deemed the drafter of this

Agreement and, in the event this Agreement is ever construed by a court of law or equity, such court shall not construe this Agreement or any provision hereof against either Party as drafter of this Agreement.

6.4 Captions. All captions, titles, or headings in this Agreement are used for the purpose of

reference and convenience only and are not intended to define, limit or describe the scope or intent of any provision of this Lease.

6.5 Non-Business Days. If the date for any action under this Agreement falls on a Saturday,

Sunday or a day that is a legal holiday, then the relevant date shall be extended automatically until the next day that is not a Saturday, Sunday or holiday.

6.6 Amendments. This Agreement may be modified, amended or revoked only by the express

written agreement of both Parties hereto. 6.7 Entire Agreement. This Agreement constitutes the entire agreement between the parties

and no understandings or obligations not expressly set forth in this Agreement are binding upon the parties.

6.8 Severability. If any provision or clause of this Agreement or application thereof to any

person or circumstance is held invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions, clauses or applications of this Agreement which can be given effect without the invalid or unenforceable provision, clause or application, and to this end, the provisions and clauses of this Agreement are severable; provided, however, that no provision or clause shall be severed if the severance would deprive any party of its material benefits under this Agreement.

6.9 Attorneys’ Fees. Except as otherwise set forth in this Agreement, the Parties shall bear

their own attorneys’ fees and costs incurred in the preparation and implementation of this Agreement. In the event that any Party commences an action to enforce or interpret this Agreement, or for any other remedy based on or arising from this Agreement, the prevailing party therein shall be entitled to recover its reasonable and necessary attorneys’ fees and costs incurred. For the purposes of this provision the “prevailing party” shall be that party which has been successful with regard to the main issue, even if that Party did not prevail on all issues; however, the court shall retain discretion to limit the award of fees and costs to those reasonably and necessarily incurred on those issues on which the prevailing party was successful.

6.10 Right to Enter into Agreement. Each party hereby warrants and represents that it has the

full right and lawful authority to enter into this Agreement. 6.11 Waiver. No delay in exercising any right or remedy shall constitute a waiver unless such

right or remedy is waived in writing signed by the waiving party. A waiver by any party of any right or remedy hereunder shall not be construed as a waiver of any other right or remedy, whether pursuant to the same or a different term, condition or covenant.

6.12 Conflicts of Interest. The parties to this Agreement are hereby notified of A.R.S. § 38-

511. 6.13 Notices. Except as otherwise required by law, any notice given in connection with this

Agreement must be in writing and must be given by personal delivery, overnight delivery, or United States certified or registered mail. Any such notice must be addressed to the appropriate party at the following address (or at any other address as a party may hereafter designate by written notice given as required by this paragraph):

CAWCD: For delivery use: Central Arizona Water Conservation District Attn: General Manager 23636 N. 7th Street Phoenix, AZ 85024 For U.S. Mail use: Central Arizona Water Conservation District Attn: General Manager P.O. Box 43020 Phoenix, AZ 85080-3020

City of Peoria:

Ted Mariscal Assistant City Attorney Office of the City Attorney City of Peoria 8401 West Monroe Street Peoria, AZ 85345

Arizona Department of Water Resources:

Arizona Department of Water Resources Colorado River Management 1100 West Washington, Suite 310 Phoenix, Arizona 85007

United States Bureau of Reclamation:

United States Bureau of Reclamation Contracts and Repayment Lower Colorado Regional Office PO Box 61470 Boulder City, NV 89006-1470

Notice is deemed to have been given on the date on which notice is personally delivered, delivered to an overnight delivery service, or mailed. Notice is deemed to have been received on the date on which the notice is actually received or delivery is refused. The Parties may designate a new contact person under this provision for notices or invoices or change the address identified above by notifying the other Party in writing. 6.14 Binding Effect. This Agreement and the rights and obligations created hereby shall be

binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, if any.

6.15 No Third Party Beneficiaries. This Agreement is not intended to create any right or benefit

to anyone other than CAWCD and City. This Agreement does not create any third party beneficiary rights or causes of action.

6.16 Force Majeure. Each party shall be excused from performance under this Agreement

while and to the extent that it is unable to perform, for any cause beyond its reasonable control. Such causes shall include, but not be restricted to, fire, drought, storm, flood, earthquake, explosion, war, labor disputes, total or partial failure of transportation or delivery facilities, shortage of labor, raw materials or supplies, interruption of utilities or power, and any act of government or military authority. In the event either party is rendered unable wholly or in part by force majeure to carry out its obligations under this Agreement then the other party not affected by force majeure shall be excused from its performance during the pendency of the force majeure.

Wherefore, CAWCD and City Execute this Agreement to be Effective this ____ day of ______________, 2020:

By:_______________________________ Theodore Cooke

Its: General Manager

Approved as to form:

_______________________________ Jay Johnson, CAP General Counsel

CITY OF PEORIA, an Arizona municipal corporation By: _______________________________ Its: Mayor Approved as to form: _______________________________ Vanessa Hickman, City Attorney Attest: ________________________________ City Clerk

EXHIBIT A

AGREEMENT FOR PUCHASE AND SALE OF LONG-TERM STORAGE CREDITS

|1 PRESENTATION TITLE | DD.MM.YY

System Contents: 27.61 MAFAs of August 24, 2020

Colorado River Water Supply Report

Lake Mead

Lake Powell

49%, 11.87 MAF

40%, 10.33 MAF

1,220’

3,700’

Current Elevation 3,601’

Tier 1 Shortage 1,075’

Current Elevation 1,084’

Mid-Elevation Release 3,575’

59%Crystal Reservoir

*With respect to previous month

Reservoir Current Change* MaximumLake Mead 10.33 - 0.10 25.90Lake Powell 11.87 - 0.55 24.30Flaming Gorge Reservoir 3.25 - 0.05 3.75Navajo Reservoir 1.22 - 0.07 1.70Blue Mesa Reservoir 0.51 - 0.05 0.83Fontenelle Reservoir 0.30 - 0.03 0.34Morrow Point Reservoir 0.11 0.00 0.12Crystal Reservoir 0.01 0.00 0.03

Reservoir Capacities (MAF)

12/31/2019 12/30/2020 12/31/2021 12/31/2022

)Powell Pool Elevations - August 2020 24-Month Study

MAX MOST MIN

EOY 2020MAX = 3,593.2'MOST = 3,591.6'MIN = 3,590.8'

EOY 2021 MAX = 3,656'MOST = 3,581' MIN = 3,561.6'

2021 Equalization Line = 3,659'

Upper Elevation Balancing Tier

Mid Elevation Release Tier

Lower Elevation Balancing Tier

Bottom of Lower Elevation Balancing = 3,370'

3,575'

3,525'

12/31/2019 12/30/2020 12/31/2021

)Mead Pool Elevations - August 2020 24-Month Study

MAX MOST MIN

EOY 2020MAX = 1,086.3'MOST = 1,085.3'MIN = 1,085'

EOY 2021 MAX = 1,083.1'MOST = 1,087' MIN = 1,067.3'

1,090'

1,075'

1,050'

1,025'

Tier 0

Tier 1

Tier 2

Tier 3

2020 Southwest Monsoon Season (Non-Soon Again?)

2019 MonsoonTucson: 5.06”Phoenix: 0.66”Yuma: 0.53”Las Vegas: 0.28”

The current ENSO (El Niño Southern Oscillation)probabilistic forecast indicates a slightly greaterthan 50% probability of an El Niño signal forearly Fall 2020 that will shift towards a higherprobability of a neutral ENSO signal in Winter2020-2021 and Spring 2021.

The three month outlook for precipitation forSeptember 2020 through November 2020 showsthat the Colorado River Basin (especially theUpper Basin) will experience below normalprecipitation. Temperatures for the next threemonths are forecasted to be above normal forthe entire United States (with a greaterprobability of above normal temperatures in theColorado River Basin).

90 Day Precipitation and Temperature Outlook

ENSO Outlook

2020-2021 ICS Creation EffortsDEANNA IKEYA

September 3, 2020

| 2020-2021 ICS 09.03.202

Total ICS Accumulation for LB Entities• ICS an important tool

created under 2007Guidelines to encourageconservation in LakeMead

• ICS creates mechanism toconserve, but also forfuture delivery of thecredits

• Includes all ICS createdbetween 2008-2019,including SystemEfficiency ICS

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Annual Total ICS Accumulation

CRIT GRIC CAP

SNWA IID MWD

| 2020-2021 ICS 09.03.203

Arizona Nevada California

Lower Basin States EC ICS, BICS, and DCP ICS Accumulation Planned EOY 2021

As of September 2020

2019 2020 Planned 2021 Planned

Accumulation Limit • DCP (Exhibit 1 LBOps) and a capacity sharing agreement set these limits:

• AZ – 600 KAF• NV – 450 KAF• CA – 1,650 KAF

• Planned ICS through 2021 fills the AZ and NV capacity

• CA could reach limit in 2022

• Approaches are being explored to address these potential limitations

ICS and Accumulation Limits

| 2020-2021 ICS 09.03.204

AZ ICS - 2020

Arizona ICS Accumulation for DCP – Planned EOY 2020

600 KAFArizona EC ICS/BICS

300 KAF 300 KAFNon‐Federal Federal

System Efficiency ICS 103,050 AF

BICS23,750 AF

2015‐2016 EC‐ICS171,590 AF

2018 EC ICS42,312 AF

2019 EC ICS21,855 AF

Arizona Non‐Federal Total EOY 2020328,571 AF

2020 EC ICS54,421 AF(planned)

2019 GRIC105,300 AF

2020 GRIC74,700 AF(planned)

2019 CRIT5,647 AF

2020 CRIT3,362 AF(planned)

2020 MVIDD EC ICS5,523 AF(planned)

Arizona Federal Total EOY 2020189,009 AF

Available Capacity82,419 AF

CAWCD EC ICS and BICS Total = 323,048 AF

2020 BICS9,120 AF(planned)

• Federal and Non-Federal coordination benefitting AZ ICS

• 82 KAF available capacity after 2020

| 2020-2021 ICS 09.03.205

622,847 KAFArizona EC ICS/BICS

System Efficiency ICS 103,050 AF

BICS23,750 AF

2015‐2016 EC‐ICS171,590 AF

2018 EC ICS42,312 AF

2019 EC ICS21,855 AF

Arizona Non‐Federal Total EOY 2021389,122 AF

2019 GRIC105,300 AF

2019 CRIT5,647 AF

Arizona Federal Total EOY 2021233,726 AF

CAWCD EC ICS and BICS Total = 377,498 AF

2020 BICS9,120 AF(planned)

Arizona ICS Accumulation for DCP – Planned EOY 2021

AZ ICS - 2021• Arizona projected to

exceed 600 KAF accumulation capacity

• Exploring options to address limitations

• CAWCD may need to evacuate capacity in 2022

Agenda Number 7CONTACT: Chuck Cullom

623-869-2665ccullom@cap-az.com

Greg Adams623-869-2124gadams@cap-az.com

AGENDA ITEM: Report on Proposed System Conservation Projects for 2021 - Cullom

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE:Optimize reliability and sustainability of the CAP water supply

PREVIOUS BOARD ACTION/ACTIVITY:June 4, 2020 Request for interest in 2021 CAP System Conservation ProjectsAugust 6, 2020 Report on 2021 CAP System Conservation Project Concepts

ISSUE SUMMARY/DESCRIPTION: At the March 5, 2020 CAWCD Board Meeting, the Board adopted supplemental guidance to the CAWCD Rate Setting Policy Regarding the Collection of Fixed OM&R for CAP System Conservation Projects. The policy outlined the process for the CAWCD Board to consider forgoing collection of Fixed OM&R for CAP system conservation projects. In addition, the supplemental guidance noted that CAWCD's commitments to forgo remarketing of CAP water for Reclamation system conservation projects as part of their effort to meet their Lower Basin Drought Contingency Plan (LBDCP) conservation commitments is governed by LBDCP agreements including the Agreement Regarding Lower Basin Drought Contingency Plan Commitments between Reclamation and CAWCD.

Consistent with the supplemental guidance, at the June CAWCD Board meeting, stakeholders were requested to inform CAWCD staff of CAP system conservation projects being considered for 2021. The Fort McDowell Yavapai Nation (FMYN) with Reclamation, met with CAWCD staff to outline their 2021 CAP system conservation project. At the August CAWCD Board meeting, CAWCD staff provided a report to the Board regarding the FMYN - Reclamation project. Staff noted that the project was consistent with CAWCD's criteria for system conservation, meaning that the project would reduce FMYN existing beneficial uses, and the supply being reduced has a recent history of use, lease or conservation. In addition, staff committed to sharing any rate or water supply impacts from the proposed conservation project with CAP stakeholders at the August 26th CAP Water Users Briefing. At that briefing, staff provided a summary of the potential increase of approximately $0.75/af stemming from CAWCD's forgoing collection of Fixed O&M for the proposed FMYN - Reclamation project, and noted there were no discernable water supply impacts related to the system conservation project to CAP supplies.

The 2021 FMYN - Reclamation CAP system conservation project is part of Reclamation's effort to conserve up to 100,000 af/yr as part of the LBDCP. Therefore the concurrence from CAWCD is provided through the LBDCP and related agreements. Therefore, CAWCD will provide a letter of concurrence to Reclamation once FMYN and Reclamation provide the final system conservation agreement and the FMYN water order.

The 2021 FMYN - Reclamation CAP system conservation project is the only CAP system conservation project identified for 2021 operations.

STAKEHOLDER PERSPECTIVES At the January 23rd Stakeholder Roundtable, the consensus from participants was to support the concept of forgoing collection of Fixed O&M for CAP System Conservation projects and for potential rate and financial impacts to be outlined and discussed at the annual CAP Water Users Briefing. There were no comments regarding the 2021 FMYN - Reclamation CAP System Conservation project at the CAP Water Users Briefing.

ATTACHMENTS: None

YOUR WATER. YOUR FUTURE.Report on 2020 Drought

Contingency Plans ImplementationPatrick Dent, Director of Water Policy

9/03/20

|2 REPORT ON DROUGHT CONTINGENCY PLANS | 08.03.20

• Upper- Lower Basin linked by“Companion” Agreement

• Upper Basin has 3 programs• Lower Basin has 2

agreements• Arizona and California have

individual agreements• Mexico – Minute 323 linked by

“Triggering” Agreement

DCP Overview – Multiple Components

• Weather Modification implementation underway

• Demand Management local/state discussions + UCRC initiated investigations

• Drought Operations TBD

Upper Basin Components Status

REPORT ON DROUGHT CONTINGENCY PLANS | 08.03.20

• Tier Zero reductions being made in 2020

• ICS flexibility and capacity underway

• Arizona Offset components underway

Lower Basin & Mexico Components Status

2020 Tier Zero Lower Basin and Mexico DCP Contributions

Source Type Volume (KAF)Arizona

CAWCD DCP Contribution ICS and Non‐ICS 192

Other AZ Offset, ICS, and US

ICS and System

Conservation 153

California

MWD ICS 241

IID ICS 2

Nevada

SNWA DCP Contribution ICS 8

SNWA ICS ICS 40

Mexico

Binational Water Scarcity

Contingency Plan

Contribution

Water Reserve 67

Total 703

• 192 kaf CAWCD reductions

• 8 kaf SNWA reductions • 41 kaf reductions for

Mexico• 1/3rd of 2020 contributions

related to DCP

20192 20203, 4

Tier 0

2021 4

Tier 0

(ac‐ft) (ac‐ft) (ac‐ft)

Ag Forbearance 3 Program EC‐ICS 24,283 56,968 57,000

CAWCD Compensated Conservation EC‐ICS 3,500 3,500

CAWCD Excess Water5 119,942 131,532 131,500

Total 144,225 192,000 192,000

GRIC ‐ Reclamation EC‐ICS 100,000

GRIC ‐ AWBA EC‐ICS 17,000 33,000

GRIC6 EC‐ICS 50,000 45,000

CRIT System Conservation 50,000 50,000

Total 117,000 133,000 95,000

FMYN System Conservation 10,000 13,683

Total 0 10,000 13,683

CRIT EC‐ICS 6,274 3,736 4,685

MVIDD EC‐ICS 6,137 6,778

Total 6,274 9,873 11,463

Bullhead City 306 400 400

CRIT 26,805

FMYN 13,683

Total 40,794 400 400

308,293 345,273 312,546

Additional Arizona

ICS Creation

Pilot System

Conservation

Program (PSCP)

Total Arizona Lake Mead Contributions

Reclamation DCP

Arizona Lake Mead Contribution Volumes ICS1

DCP Implementation & Related Actions

Arizona LBDCP

(Tier 0: 192k ac‐ft)

Arizona DCP

Mitigation Offset

(400k ac‐ft total)

Notes1 ICS Volumes reflect creation volumes contributed to Lake Mead and do not reflect account balances after losses and assessments.2 2019 reflects proactive actions prior to DCP execution and full implementation in 2020.3 2020 reflects the first full year of DCP implementation of Lake Mead contributions and related actions.4 Values reflect estimated volumes, subject to final accounting.5 Volume will vary based on available Colorado River water, on-river use forecast, and CAP operations.6 Efforts by GRIC to fully utilize the Arizona ICS Accumulation Capacity in 2021

‘20 – ’21 Mitigation Update

- Arizona Tier Zero Contributions = 192 kaf/yr from CAWCD- Offset Contributions being made- Mitigation Resources available

2020 2021 2022 2023 2024 2025 2026

105 KAF ‐ Tier 1

70 KAF ‐ Tiers 2a/2b

No CAP Wet Water Mitigation

Groundwater Infrastructure Program

70 KAF / Yr

Tiers 1/2a/2b

75%* ‐ Tiers 1/2a

50%* ‐ Tier 2b

Mitigation

2026 or

Tier 3

• Upper Basin DCP demand management discussions and investigations are underway in the Upper Basin

• DCP reductions are being implemented in the Lower Basin and Mexico

• Arizona Offset Component is on schedule for completion

• CAWCD continues to have sufficient mitigation resources to meet NIA and Ag Pool mitigation requirements

DCP Implementation Summary

Agenda Number 9CONTACT: Don Crandall

623-869-2457dcrandall@cap-az.com

Darrin Francom623-869-2276dfrancom@cap-az.com

AGENDA ITEM: Discussion and Consideration of Action Regarding Potential Availability of Excess Water in 2021 - Crandall

RECOMMENDATION: Staff recommends that the Board of Directors approve the establishment of Statutory Firming Pools for Excess Water in 2021 should excess water become available.

Impact on Budget: Total power expense would increase with additional deliveries as it is a variable cost

Impact on Reserves: Negligible Impact on Reserves

Impact on Rates: Fixed O&M Rate decreases if additional excess water is delivered

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: Reliability of the CAP Water Supply: Optimize reliability and sustainability of the CAP water supply.

PREVIOUS BOARD ACTION/ACTIVITY:January 31, 2018 Recommendation that the Board Approve the Excess Water Task Force

Recommendations February 1, 2018 Board Approval of Excess Water Task Force Recommendations August 1, 2019 Discussion on Excess Water in 2020 September 5, 2019 Discussion and Consideration of Action to Approve Excess Water Policy August 6, 2020 Discussion on Potential Availability of Excess Water in 2021

ISSUE SUMMARY/DESCRIPTION:At the August 06, 2020 Board Meeting CAP staff presented a recommendation that the Board of Directors decide to establish a Statutory Firming Pool in 2021. The Board Policy “CAWCD Procedure to Distribute Excess Water and Turn-Back Water in 2020 through 2024” outlines an annual process where Staff provide a preliminary recommendation to the Board at the August Board Meeting, and the Board considers making Other Excess water available to the Statutory and Supplemental Firming Pools at the September Board Meeting. Reclamations recently released August 24-month Study shows Tier Zero conditions for 2021. Tier Zero conditions require CAWCD to make a DCP contribution of 192,000 AF.

Given water orders from long-term contracts in recent years, it is unlikely that there will be excess water available beyond satisfaction of the Ag Pool. However, if long-term contract orders are significantly lower than recent years, staff recommends establishing the Statutory Firming Pool for 2021. The decision will provide operational planning guidance to address anticipated shifts in CAP water orders and use behaviors in 2020 and 2021.

The Staff recommendation is based on two factors. First, analysis of current and projected conditions show limited influence on operating conditions for 2022 from any additional increase in Arizona’s Lake Mead contributions. The key variables driving Tier One risk for 2022 are Powell releases, intervening flows and interstate water demands. Second, the creation of the Statutory Firming Pool allows participants in the Statutory Firming pools to continue progress on their goals.

SUGGESTED MOTION:I move the Board of Directors approve the staff proposal to establish a Statutory Firming Pool for Excess Water in 2021 should excess water become available.

ATTACHMENTS:None

Agenda Number 10CONTACT: Don Crandall

623-869-2457dcrandall@cap-az.com

Darrin Francom623-869-2276dfrancom@cap-az.com

AGENDA ITEM: Report on Water Operations (Project Reliability: Effectively Manage, Operate and Maintain CAP Assets^) - Crandall

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE:2016 CAWCD Board Strategic Plan

Water Supply: Optimize Reliability and Sustainability of CAP Water Supply Project Reliability: Effectively Manage, Operate and Maintain CAP Assets

PREVIOUS BOARD ACTION/ACTIVITY:January 9, 2020 Report on 2019 Water Operations Update and 2020 Water Operations Plan March 5, 2020 Report on Water OperationsJune 4, 2020 Report on Water Operations

ISSUE SUMMARY/DESCRIPTION: Operations update regarding CAP's Colorado River diversions, customer deliveries, Lake Pleasant operations through July 2020. Report on August 26, 2020 Annual Water Users Briefing

Through July, CAP Operations has diverted 744,771 acre-feet of the planned 1,385,000 acre-feet of diversions for CY 2020. Water deliveries through July totaled 904,916 acre-feet and full year plan includes the 75,000 acre-feet of unexpected water supply. Lake Pleasant is nearing it's low point for the calendar year, following high seasonal customer demands and our western plant Summer Outage. Operations will begin filling Lake Pleasant through the end of the year.

The 2020 Annual Water Users Briefing included approximately 200 viewers and 10 presenters from CAWCD, addressing a broad range of operational topics.

ATTACHMENTS: 1. Presentation2. Report

YOUR WATER. YOUR FUTURE.Report on Water Operations and

Annual Water Users BriefingSeptember 2021 CAP Board Meeting

DON CRANDALL – WATER CONTROL MANAGER

| REPORT ON WATER OPERATIONS AND ANNUAL USERS BRIEFING | 09.03.202

• Operations Key Performance Indicators Overview• Colorado River Diversions

• Customer Deliveries

• Lake Pleasant Elevations

• Recharge Operations

• Annual Water Users Briefing

• 2021 CAP Delivery Supply

Report on Water Operations

|4 REPORT ON WATER OPERATIONS AND ANNUAL USERS BRIEFING | 09.03.20

|5 REPORT ON WATER OPERATIONS AND ANNUAL USERS BRIEFING | 09.03.20

Recharge Operations

• August 26, 2020

• Online Delivery ~200 Viewers

• 10 Presenters

Annual Water Users Briefing

• 1. Welcome • 2. 2021 Colorado River Outlook – August 24-month study • 3. Outlook for the 2021 CAP Delivery Supply • 4. System Use Agreement Status • 5. 2020/2021 Recharge Capacity • 6. 2021 CAP Energy Resources • 7. Capital Program Update • 8. 2020 Water Quality/Biology Report • 9. Maintenance Operations • 10. Questions/Discussion

Annual Water Users Briefing Agenda

CAP Rate Letter Schedule Request Jun 18, 2020

Annual Water Users Briefing Aug 26, 2020

Water Delivery Requests Oct 1, 2020

Final Water Schedules Nov 15, 2020

CAP Annual Operating Plan Timeline

REPORT ON WATER OPERATIONS AND ANNUAL USERS BRIEFING | 09.03.20

2021 CAP Delivery Supply Outlook

Notes1. CAP Excess water contributed to Mead to satisfy AZ DCP Reductions.2. AG Forbearance 3 Program 3. Metropolitan Domestic Water Improvement District Conservation Agreement4. Volume to be finalized with CAP AOP.5. GRIC ICS and FMYN Reclamation DCP Contribution.

Colorado River Supply 1,670,000 Long Term Contracts 1,210,000

DCP Reductions -192,000

CAP Excess -131,5001

ICS - AG Forbearance 3 -57,0002

Ag Pool

Ag Pool 243,000

300,000-AG Forbearance 3 57,0002

ICS – Conservation Agreement -3,5003

CAP System Losses -75,000

Lake Pleasant 50,0004

CAP Delivery Supply 1,453,000 CAP Water Orders 1,453,000

CAP Contractor -58,6935

CAP Deliveries 1,394,307

Conservation Agreement - 3,5003

Long Term Contracts 1,213,500

Lake Mead Contributions

KNOW YOUR WATER

DCRANDALL@CAP‐AZ.COM

Thank You

DATE: 3 Sep 2020

TO: CAWCD Board of Directors

FROM: Don Crandall, Water Control Manager

SUBJECT: Report on Water Operations and Distribution of Unexpected Supply

Colorado River Diversions

On December 26, 2019, the US Bureau of Reclamation approved CAWCD’s diversion of up to 1,448,629 acre-feet from the Colorado River in 2020. The approved diversion already accounts for the 192,000 acre-foot DCP contribution and other known contributions to Lake Mead totaling 70,273 acre-feet. Reclamation also acknowledged that CAWCD is contractually entitled to divert the balance of Arizona’s 2.8 million acre-feet basic apportionment not consumed by higher priority users or contributions to Lake Mead.

The table below compares CAWCD’s actual diversions through July and forecasted diversions for the remainder of the year to the 2020 Annual Operating Plan (AOP). CAWCD and Reclamation’s Boulder Canyon Operations Office consult on a monthly and real-time basis to coordinate releases from Lake Mead and to forecast CAWCD diversions for the remainder of the year.

March diversions were significantly lower than planned due to wet local hydrology and high lake water levels limiting the ability to pump water into Lake Pleasant for storage. May through July diversions exceeded the original plan as favorable energy rates permitted additional pumping. There remains 36,229 acre-feet of additional diversions over the Annual Operating Plan to recover for the March curtailments and complete all planed CY 2020 diversions.

Overall, the 2020 Colorado River diversions have been reduced in accordance with CAWCD’s commitments per the DCP and related agreements, CAWCD and GRIC ICS plans, as well as other Lake Mead contribution plans for 2020; Arizona’s Lake Mead contributions are outlined in the next section.

2020 CAWCD Colorado River Planned and Actual Diversions

Scheduled Diversion from

AOP (AF)

Actual Diversion (AF)

Updated Forecasted

Diversion (AF)January 74,000 75,318

February 78,000 74,716March 163,000 94,056

April 156,000 148,297May 161,000 179,746

June 97,000 103,316July 52,000 69,322

August 52,000 54,000September 131,000 140,000

October 164,000 169,500November 159,000 168,940December 98,000 107,789

Total 1,385,000 1,385,000

2019 & 2020 Lake Mead Contributions - Arizona

The table below shows actual Lake Mead contributions by Arizona for 2019 as reported in the 2019 Colorado River Accounting and Water Use Report: Arizona, California, and Nevada. All 2020 planned contributions to Lake Mead for Arizona are also tabulated in the table. As noted, the volume identified for CAWCD Excess Water in 2020 is an estimate; the final volume will depend on actual uses by higher priority users in Arizona in 2020.

20192 20203, 4

Tier 0

(ac-ft) (ac-ft)

Ag Forbearance 3 Program EC-ICS 24,283 56,968CAWCD Compensated Conservation EC-ICS 3,500CAWCD Excess Water5 119,942 131,532

Total 144,225 192,000GRIC - Reclamation EC-ICS 100,000GRIC - AWBA EC-ICS 17,000 33,000GRIC EC-ICS 50,000CRIT System Conservation 50,000

Total 117,000 133,000FMYN System Conservation 10,000

Total 0 10,000CRIT EC-ICS 6,274 3,736MVIDD EC-ICS 6,137

Total 6,274 9,873Bullhead City 306 400CRIT 26,805FMYN 13,683

Total 40,794 400308,293 345,273

Additional Arizona ICS Creation

Pilot System Conservation

Program (PSCP)

Total Arizona Lake Mead Contributions

Notes:1 ICS Volumes reflect creation volumes contributed to Lake Mead and do not reflect account balances after losses and assessments.2 2019 reflects proactive actions prior to DCP execution and full implementation in 2020.3 2020 reflects the first full year of DCP implemenation of Lake Mead contributions and related actions.4 2020 values reflect estimated volumes, subject to final accounting.5 Volume will vary based on available Colorado River water, on-river use forecast, and CAP operations.

Arizona Lake Mead Contribution Volumes ICS1

DCP Implementation & Related Actions

Arizona LBDCP(Tier 0: 192k ac-ft)

Arizona DCP Mitigation Offset(400k ac-ft total)

Reclamation DCP

2020 CAWCD Water Deliveries

The table below compares CAWCD’s actual deliveries through April to the approved water delivery schedules included in the 2020 AOP. CAWCD is coordinating with eligible Agricultural Settlement Pool districts, the City of Scottsdale, and the Statutory

Firming Pool (Arizona Water Banking Authority, Bureau of Reclamation, and CAGRD) to distribute the 75,000 acre-feet of unexpected water supply available in 2020, as reported in the May 5th CAWCD Board Meeting. To date 75,000 acre-feet of the unexpected water supply has been re-distributed within the excess water pool according to the Boards Excess Water Policy.

CAWCD Deliveries

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