water resources development commission finance working group report of findings september 9, 2011
TRANSCRIPT
WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORKING GROUP
REPORT OF FINDINGS
September 9, 2011
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Focus of Finance Work Group
Identification of Needed Infrastructure Projects
Development of Cost Estimates for Identified Infrastructure
Identify Funding and Financing Mechanisms and Sources
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
9 Examples of Infrastructure Projects Identified
Colorado River Water to serve the Coconino Plateau Colorado River Water to serve the Verde Watershed
Communities Colorado River Water to serve the Sierra Vista Subwatershed Additional groundwater development and associated pipelines to
serve Flagstaff, Prescott, Prescott Valley areas Development of groundwater from a mine to serve the Sierra
Vista Subwatershed Surface water from C.C. Craigin reservoir to serve the Payson
area Expanding capacity of CAP canal
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Estimated Cost of Projects and the Volume of Water Identified for Each Project Ranged from:
$34 million to more than $1 Billion
3,000 AFY to 300,000 AFY
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Traditional Funding Sources such as: Revenue Bonds GO Bonds Impact Fees Appropriations Etc.Should be adequate for communities that are
able to develop local groundwater to meet projected demands
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
For Communities that will be unable at sometime in the future to develop local groundwater due to the unavailability of groundwater or because continued development of t groundwater will result in unacceptable impacts, an alternative solution will be needed and most likely will involve the importation of a long-term renewable water supply
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Options for Funding/Financing Pursue traditional forms of funding if possible,
i.e. bonds, impact fees, Federal loans, appropriations, etc
Establish a fund designed specifically to provide low interest loans
Pursue creative means of financing such as private public partnerships.
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Water Supply Development Revolving fund established in 2007, specifically to fund water supply development projects, but has yet to be funded
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Problem Statement/Questions How Can the Water Supply Development
Fund be Funded? Appropriations, Federal Grants, Gifts
How Much Money is Necessary for an Adequate Revolving Loan Fund? Will Statutory Provisions Be Enough?
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Considerations The Sources of Revenue must be:
Matched to the Size of the Fund Matched to the Timing of Loans
If a large number of projects are expected over a long period, the revenue should be permanent, dependable and sufficient for a long period.
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Conceptual Principles For Revenue Sources
Dependability and Predictability
Adequate Funding
Mix of Sources
Beneficiaries Need to Contribute
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Potential Revenue Sources Ad Valorem Taxes Water Withdrawal Fee Transaction Privilege Tax Bottle Water Tax Impact Fees
Building Permits New and Existing Well Fees
General Fund Appropriations Revenue Bonds Federal Grants and Loans Other
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Potential Conceptual Funding Sources Transaction Privilege Tax
5 to 10 Cents per Thousand Gallons (Estimate: $24 to $48 million per year)
Impact Fees $250 to $500 per new Building Permit (Estimate:
$1.5 to $3 million per year) Well Impact Fee (New Wells $150K & Existing
Wells $1.5M)
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Conceptual Funding Sources General Fund Appropriation
$10,000,000 Annually?? Bottle Water Tax
2¢ and 5¢ per bottle (Estimate: $20 Million to $50 Million annually)
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Projected Revenue Assuming 3% ReturnLow Projections
Revenue Source
10 years
(2021)
25 years
(2036)
50 years
(2061)
100 years
(2111)
*Well Impact Fee $ 19 M $ 62 M $ 192 M $ 1.0 B
Transaction Privilege Tax
(5¢ per 1kgal)$ 285 M $ 907 M $ 2.8 B $ 15 B
Impact Fee($250 per lot & 6K lots)
$18 M $ 56 M $ 174 M $ 938 M
Bottle Water Tax 2¢ per bottle
$239 M $ 759 M $ 2.3 B $ 12.6 B
*$50 per new well & $10 per well annually
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Projected Revenue Assuming 3% ReturnLow Projections
Revenue Source
10 years
(2021)
25 years
(2036)
50 years
(2061)
100 years
(2111)
General Fund* $ 118 M $ 376 M $ 1.2 B $ 6.3 B
Total $ 679 M $ 2.2 B $ 6.7 B $ 35.8 B
*assumes a $10 million annual appropriation
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Projected Revenue Assuming 3% ReturnHigh Projections
Revenue Source
10 years
(2021)
25 years
(2036)
50 years
(2061)
100 years
(2111)
Well Impact Fee $ 39 M $ 124 M $ 383 M $ 2.1 B
Transaction Privilege Tax
(10¢ per 1kgal)$ 570 M $ 1.8 B $ 5.6 B $ 30.2 B
Impact Fee($500 per lot & 6K lots)
$35 M $ 113 M $ 349 M $ 1.9 B
Bottle Water Tax
(5¢ per bottle)
$596 M $ 1.9 B $ 5.9 B $ 31.6 B
*$100 per new well & $20 per well annually
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Projected Revenue Assuming 3% ReturnHigh Projections
Revenue Source
10 years
(2021)
25 years
(2036)
50 years
(2061)
100 years
(2111)
General Fund* $ 118 M $ 375.5 M $ 1.2 B $ 6.3 B
Total $1.4 B $ 4.3 B $ 13.4 B $ 72.1 B
*assumes $10 million annual appropriation
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
Another Option is the Private Public Partnership
Combines project elements into a single purpose entity whose cash flows will repay the principal and interest required to build and operate the project,
Clearly defines the separate roles of the public and private sector by means of a joint venture contract that is specific to the project and its special requirements,
Assigns appropriate risks to each group, Predominantly uses private funds and companies to
finance, build and often operate projects, but with some public sector assets at risk,
September 9, 2011
WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP
RECOMMENDATION
Arizona’s current leaders must begin identifying solutions and allocating funds to plan, acquire and develop additional water resources to ensure a sufficient supply of water is available for Arizona’s future.
Further examination of these funding sources and financing mechanisms, including the water supply development fund, be conducted to determine what options will best enable water users throughout the State to meet their future water needs taking into consideration the political, fiscal, legal, and hydrological ramifications for the State and for the individual water users.