$67M in loans sought for Queen Creek water credits, Encanterra agreement

By Richard Dyer
Twitter: @RHDyer
Posted 1/15/20

The Town of Queen Creek has applied for a $57 million drinking water state revolving fund loan and is seeking an additional $10 million from the clean water state revolving fund.One loan is to save …

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$67M in loans sought for Queen Creek water credits, Encanterra agreement

Posted

The Town of Queen Creek has applied for a $57 million drinking water state revolving fund loan and is seeking an additional $10 million from the clean water state revolving fund.

One loan is to save individual Queen Creek water customers $170 to $215 in Central Arizona Groundwater Replenishment District related water replenishment costs, a town official said.

Resolutions authorizing the applications to the Water Infrastructure Finance Authority of Arizona were recently approved by the Queen Creek Town Council. The applications are to be considered at WIFA’s Feb. 19 board meeting.

$57 million from WIFA

The drinking water state revolving fund loan is not to exceed $57 million.

“In August 2018, town staff initiated a discussion with WIFA regarding the ability to finance water resources, which previously were not eligible under the program guidelines. As a result, in January, WIFA submitted a deviation request to the EPA on our behalf to allow for our intended use,” Scott McCarty, the town’s finance director, said in a memo to the council.

WIFA notified the town that the federal program has been changed and water resources would become eligible for WIFA funding, he said.

“This is an incredible accomplishment and everyone involved should be congratulated including: WIFA staff, town staff, the town’s bond counsel and the town’s financial advisor,” Mr. McCarty said.

The loan will be used to permanently finance the purchase of groundwater extinguishable credits. Previously, the town used temporary financing. The credits are used to offset annual groundwater usage for the town’s pre-2004 water customers, reducing or eliminating their Central Arizona Groundwater Replenishment District related water replenishment costs, he said.

“Depending on water use, it is estimated that the average water customer will save $170-215 in annual CAGRD charges,” Mr. McCarty said.

Upon approval, WIFA and the town will enter into a loan agreement regarding the actual financing, which will require approval by the Town Council. By partnering with WIFA, the town is expected to save an estimate $16 million, he said.

$10 million from WIFA

The application for a clean water state revolving fund from the Water Infrastructure Finance Authority of Arizona is not to exceed $10 million.

The loan will be used to permanently finance the Encanterra Reclaimed Water Exchange Agreement between the town and Encanterra, Mr. McCarty said in a separate memo to the council.

Encanterra officials wish to secure a water source in order to improve the condition and efficiency of its irrigation system, reduce the frequency of repairs and improve the health and aesthetics of the communities’ landscaping, he said.

“Under the Encanterra Reclaimed Water Exchange Agreement, Encanterra will deliver all the reclaimed water it has first priority rights to the town of Queen Creek and, in exchange, the town will provide Trilogy with recovered effluent that meets or exceeds Class A+ quality standards to be used for irrigation purposes,” Mr. McCarty said.

“Additionally, under the agreement, Encanterra will cooperate with the town when staff moves forward with the construction of a surface water recharge facility. This will retain the treated effluent within its area of impact thereby ensuring its maximum beneficial use,” he said.

Upon approval, WIFA and the town will enter into a loan agreement regarding the actual financing, which will require approval by the Town Council. “As a result of paying off the reclaimed water exchange agreement early, the town is expected to save approximately $400,000. Additionally, by partnering with WIFA, the town will save approximately $4 million compared to other financing options,” Mr. McCarty said.

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