Components of the Chandler, CAP Water Deal
September 19, 2016
Communications & Public Affairs Office
Gila River Indian Community
In light of the media coverage regarding the recent water deal between the Gila River Indian Community and the City of Chandler, it is understandable that questions are being raised.
The coverage largely has focused on the tens of millions of dollars Chandler paid to lease a small amount of the Community’s Central Arizona Project water and to purchase 150,000 long-term storage credits the Community has created through Gila River Water Storage, LLC, (GRWS). The media coverage has virtually ignored the non-monetary benefits the Community will receive from this agreement in the form of less expensive sources of water to be used for on-reservation farms.
Each year, the Community is entitled to 311,800 acre-feet of Central Arizona Project (CAP) water. However, the Community only uses 30,000 to 70,000 acre-feet of CAP water per year for farming. Why? Because CAP water is vastly more expensive than the Community’ s other water sources.
Prior to 2010, approximately two-thirds of the Community’s yearly CAP water entitlement was not being used by the Community. Because this water went unused by our people, it was being used by other CAP customers with absolutely no benefit to the Community.
In 2010, the Community Council formed GRWS to take full advantage of the Community’s yearly entitlement of CAP water by storing the water supply the Community does need for irrigation. This stored water becomes a paper water right called a long-term storage credit. One long-term storage credit equals one acre-foot of water, or 325,851 gallons. Since 2010, the Community has created over 1 million long-term storage credits. GRWS has been tasked with marketing and selling these long-term storage credits for the benefit of the Community.
There are a number of components to the Chandler deal: a sale of long-term storage credits from GRWS to Chandler; a lease of Community CAP water; an exchange of Community CAP water for high quality reclaimed water, and a financial contribution from Chandler to pay to develop wells on Community lands. The specifics of each component and how they help farming within the Community can be summarized as follows:
- GRWS is selling Chandler 150,000 long-term storage credits for approximately $36.5 million. The proceeds from this sale will be saved in the Community’s Permanent Water Fund, an endowment meant to subsidize water costs today, and in the future, to ensure an affordable water supply for Community member farmers.
- The Community will lease 245,000 acre-feet of CAP water to Chandler over 100 years – an amount that is less than 1 percent of the Community’s overall CAP water supply. Under the lease, the Community will receive monetary compensation and 125,000 acre-feet of long-term storage credits. The Community can use these credits as a low-cost water supply or sell them to benefit the Permanent Water Fund. The market value of these long-term storage credits is conservatively estimated to be $30 million. To help the Community pay for the infrastructure necessary to recover this stored water, Chandler is contributing $1.75 million for well development on Community lands.
- The final component of the Chandler deal is an exchange of 352,000 acre-feet of Community CAP water for 440,000 acre-feet of Chandler reclaimed water that must be delivered at an A+ reclaimed water quality standard. This will allow the Community to increase its agricultural water supply with water that is delivered at no cost in exchange for a lesser amount of very expensive CAP water. The potential savings under this agreement could exceed $33 million over the next 100 years, which will help the Community supply its farmers with low-cost water.
Overall, the Community has agreed to sell to Chandler 622,000 acre-feet of water rights in exchange for cash payments to help build up the Permanent Water fund and 565,000 acre-feet of water rights that have zero or little cost to deliver to the Community in comparison to CAP water.
Overall, Community farmers and members will benefit from the massive cost savings of this agreement, the revenue to be placed into the Permanent Water Fund and the less-expensive water supply to be used to grow our economy and to create jobs.