Legislative Affairs

Bill Summary

Purpose & Summary

Now and into the foreseeable future many regions in this state lack access to sustainable water supplies to meet their current and long-term water demands and need financial assistance to develop water supply and conservation projects. The legislature intends that the fund established by this legislation be used to provide financial assistance for projects protecting current and future residents, the economy and the environment of this state.  This is best achieved through a comprehensive water strategy that conserves water, improves the efficiency and reuse of existing water resources and augments existing water resources with new renewable supplies of water. The authority will accomplish its purposes of helping to meet existing and future water needs of this state by developing or facilitating water conservation, reuse and augmentation projects; the measure also allows the Authority to partner with public or private entities. 

The bill transfers, from the Arizona Finance Authority (AFA) Board of Directors to the Water Infrastructure Finance Authority (WIFA) Board of Directors, governance of WIFA. Expands current powers and duties of WIFA and outlines requirements of other agencies in relation to the expansion. Restructures state funded WIFA funds and expands: 

1.  fund eligibility to specified entities other than water providers; and 
2.  fund purposes, including for water importation projects and public-private partnerships. 
3. Appropriates $3,500,000 from the state General Fund (state GF) in FY 2023 to the Arizona Department of Water Resources (ADWR) and $1 Billion to WIFA and specified WIFA funds. 

Background 

WIFA

Statute requires the AFA Board of Directors (AFA Board) to serve as the WIFA Board of Directors (WIFA Board), which governs WIFA, and grants the AFA Board all powers and authority to take action on water infrastructure financing. The WIFA Advisory Board advises the AFA Board (A.R.S. §§ 41-5356 and 49-1202). 

WIFA issues loans and bonds and administers the Clean Water Revolving Fund, Drinking Water Revolving Fund, Hardship Grant Fund and Water Supply Development Revolving (WSDRF). 

Fiscal Impact 

S.B. 1740 appropriates $3,500,000 from the state GF in FY 2023 to ADWR and $1B from the state GF in FY 2023 to the WSDRF, the Long-Term Water Augmentation Fund (LTWAF) and WIFA. Additionally $200m American Rescue Plan Act dollars are placed in a Water Conservation Grant Fund (WCGF).

WIFA Powers and Duties

The newly formed WIFA board has additional powers and duties to help meet existing and future water needs of Arizona by developing or facilitating water conservation, reuse and augmentation projects.  Powers and duties included to carry out the purposes of the several funds:

• Provide various financial instruments including loans, grants and bonds 
• purchase or refinance debt obligations of water providers at or below market rate if the debt obligation was issued for a water supply development purpose 
• provide financial assistance to water providers with bonding authority to purchase insurance for local bond obligations incurred for water supply development purposes. 
• negotiate and enter into intergovernmental agreements and agreements with private and public entities within and outside of Arizona, including the United States and other nations
• contract for or perform feasibility studies of water storage, storage facilities and recovery wells
• Enter into public and private partnerships
• Allows for the procurement of services for the development, design, acquisition, construction, improvement or equipment of water-related facilities

   

Other Important Provisions

• Requires a Water Supply and Demand Assessment to be prepared by the Arizona Department of Water Resources (ADWR) and issued for at least 6 of the 46 groundwater basins not included within initial active management areas yearly. 
• Prescribes requirements for WIFA to notify entities in Arizona with Colorado River water entitlements of water supply development projects to import water, rather than requiring any entity with an entitlement with reduced deliveries to be provided an opportunity to participate in the project. 
• For any water supply development project to import water that is proposed to be funded by the authority, the authority must provide written notice of the proposed project to all entities in this state with an entitlement to water from the colorado river, including water delivered through the central arizona project.
• Requires WIFA to cooperate with established and existing state agencies and political subdivisions of the state and with the United States and other states in the acquisition, construction or development of water-related facilities. 
• Prohibits WIFA from purchasing or providing loans/grants with LTWAF or WSDF dollars for any mainstream Colorado River water rights to water.  (does not apply to water held by a tribe)
• The board is subject to significant conflict of interest provisions beyond ordinary conflicts provisions under state law, and the board is subject to open meeting law.

   

• Prohibits WIFA from entering into any agreements to convey or deliver water to a water user within the incorporated boundaries of a city or town or within the boundaries of a certificate of convenience and necessity of a private water company without the written consent of the city, town or private water company. 
• Prohibits WIFA from selling or leasing imported water or long-term storage credits acquired in its own name for amounts greater than necessary for the repayment of LTWAF monies.
• Requires ADWR to provide technical assistance to the WIFA Board

   

Governance

The newly formed WIFA board consists of 9 members.  The bill also establishes several committees to provide recommendations to the board.  

WIFA Board

• four persons from a county with a population of four hundred thousand persons or more.
• four persons from a county with a population of less than four hundred thousand persons. 
• one person who specializes in finance or statewide water needs 

   

The following as advisory members without the power to vote but who may attend executive sessions of the board:

• the president of the senate or the president's designee
• the speaker of the house of representatives or the speaker's designee
• the minority leader of the senate or the minority leader's designee
• the minority leader of the house of representatives or the minority leader's designee 
• the director of water resources or the director's designee

   

Water Supply Development Committee

The Committee consists of seven members of the WIFA board to make recommendations on monies in the water supply development fund.  

• Four members who are from counties with populations of less than 400k persons
• Two members who are from counties with populations over 400k persons
• The member of the board appointed by the Governor specializing in finance or state wide water needs

   

Federal Water programs Committee

Consists of the following voting members who are appointed by the Board.  The federal water programs committee reviews applications for financial or other assistance from the clean water revolving fund program, the safe drinking water revolving fund program and the hardship grant fund program and makes recommendations to the board regarding those applications for assistance.

• one member who represents a public water system that serves five hundred or more connections.
• one member who represents a public water system that serves less than five hundred connections.
• one member who represents a domestic water improvement district or sanitary district in a county with a population of less than five hundred thousand persons. 
• one member who represents a domestic wastewater improvement district or sanitary district in a county with a population of five hundred thousand or more persons. 
• one member who represents a city or town with a population of less than fifty thousand persons. 
• one member who represents a city or town with a population of fifty thousand or more persons. 
• one member who represents a county with a population of five hundred thousand or more persons. 
•  the director of environmental quality or the director's designee. 
• the director of water resources or the director's designee. 
• the executive director of the corporation commission or the executive director's designee. 
• the chief executive officer of the arizona commerce authority or the chief executive officer's designee.
• the federal water programs committee shall review applications for financial or other assistance from the clean water revolving fund program, the safe drinking water revolving fund program and the hardship grant fund program and shall make recommendations to the board regarding those applications for assistance.

   

Funds

S.B. 1740 establishes three funds to effectuate the legislation.  

The Long Term Water Augmentation Fund

• 75% of initial deposits to the fund would be allocated for projects that import water into the state
• the fund can also be used to acquire or construct water related facilities in the state to facilitate importation.
• monies in the fund can be used to finance or refinance water supply development projects within the state, including projects for conservation through reducing existing water use or more efficient use of water supplies. 
• Of note any entity that has a colorado river entitlement including water delivered through CAP is to be provided notice whenever the Authority is considering a proposal that imports water into the state
• lastly loans are required to be repaid

   

Water Supply Development Revolving Fund

• The fund is Intended to be accessed by rural community water providers including those in portions of Pinal, Maricopa and Pima counties outside of an AMA.
• Caps on water supply development grants at $2m
• Allows for loans up to $3m
• Funds may also be used for conducting water supply studies and for other purposes

   

Water Conservation Grant Fund

• Purpose of the fund is to improve water reliability, efficiency, groundwater recharge and aquifer health, the fund can also be used for programs that include education, turf removal and drought resistant landscaping.  
• $200m initial grant program funded by American Rescue Plan Act dollars

   

Effective Date and Severability

• The bill becomes effective on the general effective date (September 24, 2022)
• Contains a severability clause

   

Disposition: 7/6 signed by governor. Chap. 366, Laws 2022