CAGRD I&WR Funding Proposal

Transcription

1 CAGRD I&WR Funding Proposal CAGRD & Underground Storage Committee August 15, 2013 Dennis Rule CAGRD Manager

2 CAWCD Board Directives Reduce risk - Address implications of increasing enrollment without sufficient long-term water supplies or the financial means to acquire supplies in advance of replenishment obligation Catch up and keep up - Acquire sufficient long-term water supplies to meet current replenishment obligation by Continue acquisitions to keep up with anticipated growth in replenishment obligation over time Collect more sooner - Reconfigure funding methodology for Infrastructure and Water Rights to collect more of the cost of long-term supplies earlier in the member lifecycle (Activation Fee) - Reduce reliance on I&WR rate component (after replenishment obligation is already being incurred) 8/15/2013 2

3 To be paid annually regardless of gw use Paid annually based on excess groundwater use Paid prior to sale of home Paid with appl. to enroll CAGRD Revenue Streams 2013/14 Rates and Fees Enrollment Fees MSAs ($5,000) MLs ($198/unit) Activation Fees MSAs & MLs ($196/unit) ADMIN. Used to pay the administrative costs of CAGRD (including salaries, benefits, overhead, equipment, special services, implementation of CAGRD conservation program) Repl. Reserve Fees MSAs & MLs ($54-$69/AF) WATER & REPL. Used to pay the annual cost of water and replenishment to meet annual replenishment obligations Rates (MSAs & MLs) Admin ($45/AF) Water & Repl. ($140-$183/AF) Infr. & Water Rts ($245/AF) Repl. Reserve ($58-$75/AF) INFR. & WATER RIGHTS Used to pay the cost to acquire rights to water and develop infrastructure necessary for CAGRD to perform its replenishment obligations Membership Dues MSAs ($20.08/AF) MLs ($1.74-$13.19/lot) REPL. RESERVE Used to pay the cost of establishing and maintaining a replenishment reserve of longterm storage credits MSA = Member Service Area ML = Member Land 8/15/2013 3

4 CAWCD Board Directives Additional Considerations Conditions on Enrollment alone will not address financial concerns Level of future enrollment is uncertain Much of the risk with respect to unfunded long-term water supply lies with the ~100,000 acre-feet/year of current enrollment that has not yet built out Enrollment Fee has already been paid by enrolled lots, so it is not possible to collect more from these lots via Enrollment Fee Revised Activation Fee concept would apply to both currently-enrolled-but-unconstructed lots as well as by newlyenrolled lots Activation Fees MUST be paid before lots can be sold and replenishment obligation incurred 8/15/2013 4

5 Member Lands 2010 Constructed Units Unconstructed Units 99, ,900 8/15/2013 5

6 Existing I&WR Funding $1,800 CAGRD Historical Member Lands Parcel I&WR Funding Example (Cumulative) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $ Year.... Enrollment Fee Activation Fee I&WR Rate Component Membership Dues 8/15/2013 6

7 Goals for New I&WR Funding Single rate schedule for all members (e.g., enrollment fee, activation fee, I&WR rate, AMD by AMA) Reasonable inter-period equity between members who joined earlier vs. members who joined later Sufficient funding resources available when needed to acquire long-term supplies prior to replenishment obligation - Cash - Bonds - Pay as you go Work within existing structure as much as possible without additional legislation unless absolutely necessary 8/15/2013 7

8 New I&WR Funding Concept $1,800 CAGRD Member Lands Parcel "New I&WR Funding Example (Cumulative) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $ Year.... Enrollment Fee Activation Fee I&WR Rate Component Membership Dues 8/15/2013 8

9 Shift from Existing to New I&WR Funding $2,000 $1,500 $1,000 $500 CAGRD Historical Member Lands Parcel Existing I&WR Funding Example (Cumulative) $ Year Enrollment Fee I&WR Rate Component Activation Fee Membership Dues $2,000 $1,500 $1,000 $500 $0 CAGRD Member Lands Parcel "New I&WR Funding Example (Cumulative) Year Enrollment Fee I&WR Rate Component Activation Fee Membership Dues 8/15/2013 9

10 Discussion with Stakeholders CAGRD has developed a conceptual model Historical acquisition cost would form the basis of the Activation Fee Newly activating members would catch up with members who have already activated and paid significant amounts for water rights acquisition (inter-period equity) Future water acquisition costs would be shared equally among all activated members through rates 8/15/

11 Discussion with Stakeholders CAGRD has developed a conceptual model Activation Fee would include a keep up component to account for any lag between activation and commencement of replenishment Activation Fee would be tailored to each subdivision (or MSA) based on expected replenishment obligation 8/15/

12 Discussion with Stakeholders CAGRD has developed a conceptual model The initial catch up was illustrated by a hypothetical point of equilibrium in Water supplies caught up to existing replenishment obligation - All monies collected up to that point exhausted - Activation Fee Basis of $2,700/acre-foot Revised Activation Fee would be phased in I&WR rate component could theoretically be reduced from what it might otherwise have been at some point in the future 8/15/

13 New I&WR Funding Concept Example: - At the hypothetical moment of being caught up - Total cost of acquisition $1,800/acre-foot ($62 million 35,000 acre/feet) - 3 years of forward I&WR rate component $900 - Total Activation Fee = $2,700/acre-foot - Total Activation Fee = $900/unit (assuming 1/3 acre-foot) As additional acquisitions are made, the Activation Fee will be modified I&WR rate component will be updated through the usual rate process 8/15/

14 Some Concerns Expressed Magnitude of increase in Activation Fee Period of time over which the Activation Fee would be phased in Actual amount of Activation Fee Basis at the time of calculation vs. the example Lumpiness, volatility, steepness of future Activation Fees after the initial catch up Administrative difficulty and consistency of tailoring Activation Fees to individual subdivisions Adequacy of funding under New concept 8/15/

15 Refined I&WR Funding Concept The underlying concept of the proposed I&WR funding methodology will remain the same - Activation Fee based on historical cost - After Activation, future costs shared through rates For the initial catch up transition, the annual calculation of an Activation Fee Basis will be replaced with a target projection and phased in over a number of years using fixed amounts Activation Fee will be based on a replenishment factor per-ama rather than a per-subdivision basis Other fees, rates and assessments will continue to be set biennially/annually as they are today 8/15/

16 Refined I&WR Funding Concept After the initial phase-in period of the transition Activation Fee, an approach for the second keep up phase will be developed - The overall concept will continue to be based on the historical water cost model - It is anticipated that the slope of the second phase will be less steep and that CAGRD will be able to set some boundaries on the rate of future increases, but cannot commit to that now - During the initial transition period, CAGRD will continue to calculate the historical cost periodically to monitor how much the fixed target might deviate from actual cost and give some indication of what might need to be done in the next phase 8/15/

17 Refined I&WR Funding Concept CAGRD Activation Fee Pre-set Activation Fee rampup based on "target" over a fixed period of time with fixed annual amounts Initial "Catch Up" Transition Phase Activation Fee set biennially/ annually based on actual historical costs within certain boundaries (TBD) Second "Keep Up" Phase 8/15/

18 Refined I&WR Funding Concept Calculation of the Replenishment Factor - CAGRD will use actual usage/obligation information from existing, fully built-out subdivisions - Factors will be re-evaluated during Mid-Plan Review - In addition, CAGRD will: Look at impacts of commitment of effluent or other renewable supplies to meet water demands Adjust for the use of the groundwater account balance Provide an appropriate adjustment for multi-provider subdivisions 8/15/

19 Refined I&WR Funding Concept Calculation of the Replenishment Factor - CAGRD will develop separate factors for pre-2007 and post-2007 subdivisions in Pinal County - CAGRD will use the same factors for MSA lots in each AMA, as well as use the tipping point to determine payment of minimum vs. full fee CAGRD will establish a Minimum Activation Fee for both pre-2007 Pinal County subdivisions and MSAs to the left of the tipping point, most likely based on the current rate schedule, at least until the Mid- Plan Review 8/15/

20 Refined I&WR Funding Concept Initial Activation Fee Basis Target $2,700/acre-foot Initial Activation Fee transition timing year transition to coincide with CAGRD mid-plan review AMA replenishment factors - Phoenix 0.4 acre-feet/yr - Tucson 0.3 acre-feet/yr - Pinal (pre-2007) minimum - Pinal (post-2007) 0.4 acre-feet/yr 8/15/

21 Refined I&WR Funding Concept Phoenix AMA Pinal AMA Pre /15/ Activation Fee Basis $2700/ acre-foot Pinal AMA Post-2007 Tucson AMA Acre-feet/unit 0.4 min* Activation Fee Target $ 1,080 min* $ 1,080 $ 810 Firm Activation Fee Transition Schedule $ Per Housing Unit , , * = Existing Rate Schedule = Minimum Activation Fee for pre-2007 Pinal AMA and pre-tipping point MSAs

22 Questions?