The Central Arizona Groundwater Replenishment District (CAGRD) is a special function of Central Arizona Project (CAP). In many ways, its operations are the same, yet it is designed to be separate, financially.   

The approach to managing CAGRD finances aligns closely with how CAP handles the rest of its operations:

• Financial activities conform to generally accepted accounting principles
• The CAGRD budget follows the same two-year timeline and protocols as other CAP divisions
• CAP’s standards on budget controls also apply to the CAGRD

Governance and purpose

Like CAP, CAGRD is governed by the 15 members of the Central Arizona Water Conservation District Board of Directors.  

In legalese, CAGRD executes the replenishment authority and responsibilities the state legislature granted to CAP as part of its role as a “Multi-County Water Conservation District” (Title 48, Chapter 22, Arizona Revised Statutes). This means that CAGRD is part of CAP, helping water providers and landowners comply with Arizona’s groundwater laws.

Revenues

CAP’s revenues come primarily from property taxes paid by property owners throughout Maricopa, Pinal and Pima Counties, and water rates paid by customers.

CAGRD is funded solely by its members – either property owners in a CAGRD Member Land or a water provider that has enrolled as a Member Service Area. Those in a Member Land pay CAGRD fee bills as part of their annual property taxes, while those in a Member Service area pay CAGRD fees on their monthly water utility bill. Developers and homebuilders also pay upfront fees when enrolling or building houses that may someday rely on the CAGRD for replenishment.

Rates for both CAP and CAGRD are set every two years by the CAWCD Board. During the rate-setting process, the Board establishes the fees, assessments and dues CAGRD will collect. These revenue streams include enrollment and activation fees, annual membership dues and the assessment rate, which is collected annually for each acre-foot of water the CAGRD replenishes on behalf of its members. 

Expenses

CAGRD has four categories of expenses:

• Administrative
  • Traditional administrative activities, such as salaries and related employee expenses, technical studies and support provided by CAWCD
  • Conservation activities, including partnering with Water Use It Wisely, are also funded through this account
  • Funded by the one-time fees collected when a Member Land or Member Service Area joins the CAGRD, as well as a portion of the Annual Assessment Rate
• Water and Replenishment
  • Annual costs incurred from replenishment, such as delivery of water supplies
  • Funds come from the water and replenishment component of the Annual Assessment Rate
• Infrastructure and Water Rights
  • Costs of acquiring water supplies for replenishment, developing any necessary infrastructure to allow access to water supplies and/or replenishment, and the employee expenses and outside support associated with acquiring future water supplies
  • Because this fund is focused primarily on future water supplies, it is supported by a number of revenue streams including Enrollment and Activation Fees, Annual Membership Dues and the Infrastructure and Water Rights component of the Assessment Rate.
• Replenishment Reserve
  • CAGRD is required by law to maintain a reserve of Long-Term Storage Credits in each Active Management Area (areas that ADWR has identified as having a heavy reliance on groundwater), to provide rate stability and ensure fulfillment of any replenishment obligation when its wet water supplies are reduced due to shortages.
  • This fund allows for the acquisition of water supplies needed to meet the Replenishment Reserve target established under CAGRD’s Plan of Operation and is supported through the replenishment reserve portion of the Annual Assessment Rate, as well as fees collected at the time of activation.

Timeline and process

CAP and CAGRD follow the same two-year financial planning process. This allows the CAWCD Board to primarily focus on water rates, strategic planning, reserves and financial strategy one year (during “even” years) and the budget in the subsequent year (“odd” years). One part of the process informs the next.  Each is then reviewed in its “off” year for any necessary changes.

This year – 2022 – means we’re in a rate-setting year. CAGRD rates will begin to be discussed at the April CAGRD Committee meeting, which will be livestreamed here on Thursday, April 21.