Written Testimony of Attorney Maureen R. George - 10/05/2017

REMARKS OF MAUREEN GEORGE, REPRESENTATING THE MOHAVE COUNTY WATER AUTHORITY IN OPPOSITION TO AGENDA ITEM 5a, PURCHASE OF MVIDD LANDS

October 5, 2017

INTRODUCTION

Good afternoon President Atkins and Members of the Board. I am Maureen George and I serve as General Counsel for the Mohave County Water Authority (comprised of Board members representing Mohave County, the 3 largest municipalities in Mohave County and 3 water districts).
As raised with you at your June meeting, when considering the Quartzsite transaction as part of negotiations leading up to approval of what was to become the CAP, Arizona officially set aside 164,652 a/f of 4th priority Colorado River for rural communities along the mainstem of the River. MCWA, since its inception more than 20 years ago, has consistently objected to any movement of that set aside to Central Arizona and will continue to do so through all available administrative and judicial channels

ISSUES

A. Public Policy Issues

Governor Ducey in forming the Governor's Water Augmentation Committee (GWAC) recognized as one of its key goala making sure rural areas have the supplies they need in the future. (AZ Republic 9/14/17)
Rather than shareholders meeting to discuss how best to balance statewide needs, CAWCD is simply taking the water and the economic vitality of on river communities be damned.
As with our objection to the Quartzsite transaction, you are attempting to take water that was specifically set aside for the future of on river communities. This was done in recognition that on river communities had no other viable source of water. All groundwater pumped is Colorado River and there is no access to other surface water sources. In contrast, you have access to many other sources of water for CAGRD replenishment. Not to mention this replenishment obligation was recently reduced by 50% and there is an ongoing process to bring even more relief on this obligation. In a short 5 minutes it was confirmed there are hundreds of thousands of LTSCs available for purchase (e.g., from Vidler Water Company and GRIC, just to mention two). Admittedly, terms would be different and in the case of GRIC they would want to know that any agreement advanced the State's water management goals. The point, however, is there is no critical need here which justifies this all-out attack on rural Arizona's future. This is a $34 million bet with taxpayer money which would be better spent on certain in ground existing supplies and, in any event, should wait to see if regulatory relief is forthcoming this legislative session - every indication is yes.
It makes no sense to take water from the on river communities to then, at much greater cost, move it back or replace it - unless, of course, your intent is to totally and permanently destroy the viability of on river communities.
This proposed action, the previously approved Quartzsite transaction, and other similar transactions which are allegedly coming forward show a concerted effort to undermine years of cooperative efforts between rural Arizona and Central Arizona to address potential water conflicts, including e.g., Arizona Shortage Sharing, drought and shortage mitigation efforts and Arizona Water Banking Authority firming of on river credits.
The negative economic impacts to the on river communities will be addressed in more detail by Gary Watson, Chairman of the Mohave County Board of Supervisors.
This transaction is a double whammy for Mohave County's water needs. MVIDD was identified as an area which would fall short of M&l water before 2030 so, if successful, you are effectively taking agricultural water as well as a potential source for future M&l use.

B. Business Deal Issues

Your materials do not reflect a price you are paying per acre foot so how can you responsibly compare to other available options?
Nor do your materials reflect an estimated price of the component costs to establish acre foot cost, including, e.g., wheeling cost, carrying cost for land, farm expense outlay for O&M or available CU (high rate of return flow on these lands). You are paying far too much for ag land in Mohave County yet no guarantee you will get any water out of the deal. One need only point to Scottsdale's Planet Ranch debacle or SNWA operating in red every year on its farming operations to see the risks associated with government entities going into the farming business.
Reliance on the YMIDD Pilot Project as support for this transaction is disingenuous at best given its mixed results, the totally different hydrology and geology of the two areas and the relative scale of the projects - here almost 30% of the District's ag water is at risk.

Conclusion
Let me end with remarks from ADWR's recommendation letter to BoR on the original Quartzsite contract:
"...With regards to the comments expressing concern about the loss from the River of the uncontracted available supply, it should be pointed out that it is the Department's unequivocal position that this water is to be reserved for future M&l use along the River. It is not to be considered as supplies available for any other purpose.

The increased quantity being recommended is part of the 164,652 recognized in the Central Arizona Project Master Repayment Contract as being available for contracting along the River. Our recommended allocation will leave 4,927 acre-feet uncontracted as reserve M&l supply which will provide flexibility for future allocations when the needs are identified."

The 10% on river set aside was part of the tradeoff for Arizona's approval of the CAP. CAP got the benefit but now wants to renege on the price.
Who benefits from this transaction? Land/water speculators and, maybe, CAGRD though with all the uncertainties re: the proposed transaction that is not a given. The very clear losers are the on river P4 communities. No doubt the rest of rural Arizona's water supplies will be next in your sights.
A copy of my remarks, as well as Resolutions from the Mohave County Water Authority, Bullhead City and Lake Havasu City in opposition to this transaction will be provided to the Clerk of the Board.

Contact:
Maureen R.George
LAW OFFICES OF MAUREEN ROSE GEORGE, P.С.
mrglaw1@frontier.com
(928) 453-5150

Attachments:
MCWA Resolution No. 17-026
Lake Havasu City Resolution No. 17-3175
Bullhead City Resolution No. 2017R-52