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Arizona Communities Preparing to Tap Private Sector for Major Water Project

Leonard Gilroy
August 13, 2009, 5:31pm

One of the more interesting recent projects on the water privatization front comes from central Arizona.

The City of Prescott, the Town of Prescott Valley and the Town of Chino Valley all sit within a water management area (called the Prescott Active Management Area, or AMA), and the state Department of Water Resources declared several years ago that the AMA was no longer at safe-yield, triggering state rules requiring that only renewable or imported water supplies from outside the Prescott AMA be used for new subdivisions within the AMA. What that meant for Prescott, Prescott Valley and Chino Valley is pretty simple: either you bring in water, or you don't grow. The economic implications of such a roadblock to growth sent these communities looking for solutions.

Long story short, Prescott and Prescott Valley acquired 6,300 acres of property north of the AMA—named the Big Chino Water Ranch after its groundwater supplies— and plan to meet the area's future growth needs by transmitting water from the Ranch to the communities. The challenge is that the Ranch is 30 miles away, and these relatively small communities would be facing a price tag in excess of $130 million to develop such a large-scale water transmission project. Their solution: turn to the private sector through a public-private partnership (PPP).

To that end, the City of Prescott has issued a Request for Qualifications to procure professional advisory services for the city and its partner Prescott Valley (Chino Valley is engaged in discussions to join the intergovernmental agreement) to provide financial, legal and technical advisory services related to a PPP for the proposed Big Chino Water Delivery System. Responses are due at the end of the month. Here's more from Prescott's RFQ:

The tentative scope of engagement includes an evaluation of alternative Project delivery options utilizing multiple criteria analysis. Additionally, a complete range of advisory services are required, including valuation, financial, contract, legal and technical in the solicitation, identification, negotiation and contract administration of private partner(s) for the financing, design and/or design review, permitting, construction, operation, maintenance, management, and possible ownership of Project facilities.

The Project will produce, transport, import and deliver up to 12,000 acre-feet of water annually from the Big Chino Sub-basin to the Prescott Active Management Area. The facilities that might be included as part of the Project may consist of the following components:

1. Well field – multiple wells, connecting pipes and storage reservoirs on the City's Big Chino Water Ranch property
2. Big Chino Water Delivery Pipeline – approximately 30 miles of pipeline varying from 30 to 36 inches in diameter, with a planned maximum delivery capacity of 27.5 cubic feet per second
3. Pumping Facilities – Highway 89 Pump Station and Chino Valley Water Production Facility.
4. Prescott Valley Pipeline – approximately 15 miles of 24-inch diameter pipe to serve the Town of Prescott Valley

The purpose of this project is to produce and transport groundwater from the Big Chino Water Ranch, located approximately 18 miles northwest of Paulden, Arizona, to the City’s Chino Valley Water Production Facility located in Chino Valley, Arizona. The Project will then convey water to the City utilizing existing infrastructure, and to its partner, the Town of Prescott Valley, via the Prescott Valley Pipeline described above, and to other users who may participate.

According to the RFQ, the public partners plan to issue a request for statements of qualifications for private partners for the project in January 2010, with submissions due back in March.

Many communities across the country should be watching this project, as it may ultimately offer a model for how to address major infrastructure, growth and environmental challenges through win-win partnerships with the private sector.

For more on recent developments in water privatization, see Reason Foundation's Annual Privatization Report 2009. We discuss the continuing trend of government satisfaction with water partnerships, Milwaukee's proposed water works lease, the U.S. Conference of Mayors' recognition of an innovative Phoenix water partnership and other news.

» Reason Foundation's Annual Privatization Report 2009
» Reason Foundation's Privatization Research and Commentary


Leonard Gilroy is Director of Government Reform


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