Exhibit A - M&I Firming Intergovernmental Agreement

INTERGOVERNMENTAL AGREEMENT BETWEEN THE ARIZONA
WATER BANKING AUTHORITY AND CITY OF CHANDLER FOR
M&I FIRMING

This Intergovernmental Agreement (“M&l Firming IGA”) is made between the Arizona
Water Banking Authority, an agency of the State of Arizona (“AWBA’”) and City of
Chandler (“Chandler”), a municipal and industrial (“M&l”) subcontractor of the Central
Arizona Water Conservation District (“CAVWCD"). Chandler and AWBA are sometimes
each referred to in this IGA as a “Party” and collectively as the “Parties.”

RECITALS

A. Chandler has the authority to receive Central Arizona Project (“CAP”) M&I Priority
water pursuant to Subcontract No. 5-07-30-W0070 and 07-XX-30-W0482.

B. CAWCD’s diversions from the Colorado River are subject to reductions during the
Interim Period pursuant to Section 2.D of the Colorado River Interim Guidelines for
Lower Basin Shortages and Coordinated Operations for Lake Powell and Lake
Mead (73 Fed. Reg. 19873, 19886 (April 11, 2008)) (“2007 Guidelines”) and
pursuant to Section III.B.1 of the Lower Basin Drought Contingency Operations
(“LBOps”), Exhibit 1 to the Lower Basin Drought Contingency Plan Agreement
(‘LBDCP’).

C. The AWBA has accrued or acquired long-term storage credits (“Credits”) that are
intended to be distributed to CAWCD or to M&l subcontractors “to the extent
necessary to meet the demands of M&l subcontractors during times in which
CAWCD's diversions from the Colorado river have been or will be disrupted by
shortages on the Colorado river or by disruptions in operation of the [CAP],”
pursuant to Arizona Revised Statutes § 45-2457(B)(7).

D. On March 4, 2019, the AWBA adopted the AWBA Policy Regarding the Distribution
of Long-Term Storage Credits for Firming CAP Municipal and_ Industrial
Subcontractors (“M&l Firming Policy”) to assist with Arizona’s implementation of
the LBDCP. Through 2026, the AWBA will distribute Credits to meet all reductions
to CAP M&l subcontractors for scheduled M&l Priority water due to shortage
reductions or required Drought Contingency Plan (“DCP”) Contributions. The
AWBA will use the operating experience gained during this period to inform future
AWBA policies on Credit distribution.

E. M&l subcontractors may enter into a firming agreement with the AWBA to request
a direct distribution of AWBA Credits for firming purposes pursuant to A.R.S. §
45-2457(B)(7).

F. The Parties desire to enter into this M&l Firming IGA to establish an annual process
to implement the direct transfer of Credits for this purpose.

City of Chandler-A WBA M&I Firming IGA

DEFINITIONS

In this M&l Firming IGA, the definitions of terms set forth in Arizona Revised Statutes Title
45, in the 2007 Guidelines, in the LBDCP, and in the LBOps are hereby incorporated by
reference, unless such terms are defined otherwise herein. In addition to the terms
defined in context within this M&l Firming IGA, the following terms shall have the following
meanings:

1. “CAP:M&l Priority Water” means CAP water having municipal and industrial delivery
priority.

2. “Firming” shall have the same definition as that provided in the CAP System Use
Agreement, dated February 2, 2017.

3. “Firming Water’ shall have the same definition as that provided in the CAP System
Use Agreement dated February 2, 2017.

4. “Full Order’ means the M&l subcontractor’s initial CAP water delivery order that has
not been modified to account for the projected reduced CAP supply.

5. “Recovered Water” means the water resulting from the recovery of Credits from
wells pursuant to a valid recovery well permit issued by the Arizona Department of
Water Resources (“ADWR’) pursuant to A.R.S. § 45-834.01.

6. “Water Shortage” means available CAP water is insufficient to meet the Full Orders
of M&l subcontractors for CAP M&l Priority Water.

7. “Water Shortage Year’ means a year in which a Water Shortage is in effect.

8. “Year” means a calendar year beginning on January 1 and ending on December 31
of the same year.

AGREEMENT

NOW THEREFORE, the parties hereby agree as follows:

4. Term. This M&l Firming IGA shall commence on the date of execution by all
parties and continue in full force and effect until December 31, 2026, unless it is
terminated as set forth in Sections 8 or 9.

2. M&l Firming Method. The AWBA may, in each Year of this M&l Firming IGA in
which there is a Water Shortage, distribute Credits for Firming CAP M&l Priority
Water directly to CAP M&l subcontractors in accordance with A.R.S. § 45-
2457(B)(7) and the M&l Firming Policy if requested by Chandler. This M&l
Firming IGA does not obligate the AWBA to offer any Credits for direct
distribution in any Year; nor does it obligate Chandler to accept any Credits
through direct distribution in any Year. Chandler may request delivery of Firming
Water from CAWCD in lieu of a direct distribution of Credits.

2

City of Chandler-A WBA M&] Firming IGA

3.

Firming Proposal

3.1.

3.2.

3.3.

3.4.

The AWBA shall evaluate the potential for a future Water Shortage in
coordination with the Bureau of Reclamation (“BOR”), the CAWCD, and
ADWR.

If BOR’s April five-year probabilistic projections indicate a greater than
fifteen percent probability of a Water Shortage in the third Year, the
Parties shall begin consultations on the potential for Firming and the
anticipated Firming method(s) that will be used (i.e., request for Firming
Water and/or direct distribution of AWBA Credits). See Exhibit A, attached
hereto and incorporated herein, for a graphical representation of activities
occurring during this time period.

If the BOR’s April 24-Month Study “Minimum Probable” forecast reflects a
Water Shortage in the second Year, the Parties will assume the following
activities, as further described in Exhibit A:

a) Within three (3) months following the April 24-Month Study, the
Parties, in consultation with CAWCD, shall estimate the volume of
CAP M&l Priority Water the AWBA shall firm for the potential Water
Shortage Year. Chandler shall indicate the estimated number of
Credits intended to be requested for direct distribution and/or the
estimated volume of Firming Water to be delivered through the
CAP.

b) If Chandler proposes to receive Credits directly from the AWBA,
the Parties shall begin development of a “Firming Proposal,”
including the estimated number of Credits for direct distribution
from the AWBA, whether Chandler intends to recover the Credits
during the Water Shortage Year, the estimated volume of Firming
Water to be delivered through the CAP (if applicable), and the
participation of any delivery partners, as described in Section 4 of
this M&l Firming IGA. Chandler may also identify preferred storage
locations of Credits to be provided to Chandler for AWBA
consideration.

C) In the month of December following the activities described in
Section 3.3.a, the AWBA shall report to its governing body the
Firming Proposal, including the estimated number of Credits
identified for direct distribution by the AWBA.

If BOR’s April 24-Month Study “Most Probable” forecast reflects a Water
Shortage in the following Year, the Parties shall confirm the Firming
Proposal according to the following schedule (See Exhibit A, for activities
occurring during this time period):

City of Chandler-AWBA M&I Firming IGA

a)

By May 1 of the Year prior to a projected Water Shortage Year, the
AWBA shall provide an estimate of the volume of CAP water likely
to be available to Chandler. This estimate shall be developed in
consultation with CAWCD, BOR and ADWR, but does not constitute
a determination by the United States or CAWCD.

By May 15 of the Year prior to a projected Water Shortage Year,
Chandler shall provide an estimate of the number of Credits for
direct distribution and the estimated volume of Firming Water for
delivery through the CAP in the projected Water Shortage Year. The
Firming Proposal shall be revised accordingly.

If the Firming Proposal includes the direct distribution of Credits to
Chandler, the AWBA shall identify the location(s) of Credits for direct
distribution to Chandler no later than August 1.

By September 1, the Parties shall confirm in writing the estimated
volume of CAP M&l Priority Water the AWBA shall firm based on
water availability estimates provided by CAWCD in response to the
findings of the BOR’s August 24-Month Study (“Firming Plan’).

The AWBA shall incorporate as a component of its preliminary draft
annual plan of operation (“APO”) that is adopted pursuant to A.R.S.
§ 45-2456 the Firming Plan that will be implemented in the Water
Shortage Year.

The AWBA shall provide its preliminary APO to Chandler at the
same time it provides its preliminary APO to the public for comment.

By October 1, or such date as required by CAWCD, of that same
Year, Chandler shall submit its Full Order for CAP Water to CAWCD
for the following Year and include in its submittal the confirmed
Firming method(s) identified in the Firming Plan.

The AWBA shall include in its final APO the final volume of CAP M&l
Priority Water the AWBA shall firm based on Chandler’s Full Order
submitted to CAWCD, the Firming Plan, and CAWCD’s final
accounting of M&I Priority supplies available for the Water Shortage
Year.

4. Credit Distribution

4.1.

4.2.

The AWBA shall distribute Credits to Chandler for Firming in a Water
Shortage Year pursuant to the Firming Plan and in accordance with State
regulations and policies.

In determining the Credits that shall be distributed for a Water Shortage
Year, the AWBA will take into consideration Chandler's location, recovery

4

City of Chandler-A WBA M&I Firming IGA

4.3.

4.4.

partnership agreements, recharge facilities where Chandler has stored
water, annual operational issues/needs, and any other relevant concerns,
including provisions in this M&l Firming IGA that may be applicable.

By accepting AWBA Credits in lieu of a Firming Water delivery from CAP,
Chandler agrees that:

The Credits received satisfy the Firming Plan for that Water
Shortage Year, and

The Credits received shall not be sold, and

Chandler is responsible for all costs associated with the recovery of
those Credits.

The AWBA shall distribute Credits as follows:

a)

b)

Credits shall be assigned using ADWR’s procedures for assigning
Credits in effect at the time of the assignment.

The AWBA may distribute Credits through the course of the Year
with preference given to Credits that will be recovered by Chandler
during the Water Shortage Year.

The AWBA shall assign Credits in accordance with the Firming
Plan for that Water Shortage Year. The Parties shall coordinate
regarding completion and submittal to ADWR of any forms
necessary for assignment of Credits.

Chandler shall pay any administrative fees established by ADWR to
effectuate the assignment of AWBA Credits to Chandler’s Long-
Term Storage Credit Account.

All Credits to be distributed directly to Chandler pursuant to the
Firming Plan shall be assigned by December 31 of the Water
Shortage Year.

5. Amendments to a Firming Plan

5.1.

Chandler and AWBA shall amend the Firming Plan included in the APO
during a Water Shortage Year if any of the following apply:

a)

b)

There are substantive changes to the volume of the Water Shortage
as applicable to Chandler that affect the Firming Plan included in the
APO.

The Firming Plan included in the APO cannot be implemented as
anticipated during the Water Shortage Year.

City of Chandler-AWBA M&I Firming IGA

10.

5.2. Any amendments to the Firming Plan included in the AWBA’s APO
resulting from Section 5.1 shall be through mutual agreement between
Chandler and the AWBA.

5.3. If necessary, the AWBA shall amend its APO for the Year to identify any
substantive changes to the Firming Plan.

Water Quality. The AWBA does not warrant the quality of Recovered Water from
Credits distributed by the AWBA pursuant to this M&l Firming IGA and the AWBA
is under no obligation to construct or furnish water treatment facilities to maintain
or better the quality of any Recovered Water by Chandler. Chandler assumes all
responsibility for meeting applicable water quality standards established by
federal, state or local authorities. Chandler waives its rights to make a claim
against the AWBA for the quality of Chandler's Recovered Water.

Default. Unless otherwise provided, the failure of either Party to perform any
material term, covenant, or condition of this M&l Firming IGA results in default of
that Party if that failure continues for thirty days following the receipt of written
notice from the other Party.

Remedies. If an event of default occurs, the non-defaulting Party may immediately
terminate this M&I Firming IGA by written notice to the defaulting Party and/or may
pursue specific performance.

Termination of Contract. In addition to other rights set forth elsewhere in this M&l
Firming IGA, each Party reserves the right to terminate this M&l Firming IGA,
without cause, effective thirty (30) calendar days after receipt of written notice of
termination to the other Party. If this M&l Firming IGA is terminated during a
Shortage Year, such termination shall not terminate any commitments, obligations
or benefits of either Party for the current Shortage Year.

Miscellaneous Provisions.

10.1. Interpretation. This M&I Firming IGA is governed by and must be construed
and interpreted in accordance with and in reference to the laws of the State
of Arizona.

10.2. No Third-Party Beneficiaries. This M&l Firming IGA is solely for the benefit
of the Parties and does not create, nor shall it be construed to create, rights
in any third party unless expressly provided herein. No third party may
enforce the terms and conditions of this M&l Firming IGA.

10.3. Conflict of Interest. This agreement is subject to cancellation by any Party
pursuant to A.R.S. § 38-511 if any person significantly involved in the
agreement on behalf of the State of Arizona or the Water Bank is an
employee or consultant of Chandler at any time while the agreement or any
extension of the agreement is in effect.

City of Chandler-AWBA M&I Firming IGA

10.4.

10.5.

10.6.

10.7.

10.8.

10.9.

Permits. The Parties shall obtain and maintain all licenses, permits and
authority necessary to perform their obligations pursuant to this M&l
Firming IGA, and shall comply with all applicable state, federal and local
laws, including but not limited to those regarding employment insurance,
disability insurance and worker's compensation. This M&l Firming IGA
does not relieve either party from any obligation or responsibility imposed
upon it by law.

No Employment. Neither Party shall be considered an officer, employee or
agent of the other. No monitoring or supervisory responsibility over the other
Party’s activities arises as a result of, or pursuant to, this M&l Firming IGA
other than as expressly provided herein.

Severability. The provisions of this M&l Firming IGA are severable to the
extent that if any provision is held unenforceable under applicable law, the
remaining provisions of the M&l Firming IGA shall remain in effect.

No Indemnification. Each Party to this M&l Firming IGA is independently
responsible in the event of its own negligence. Neither Party agrees to
indemnify the other Party.

Resolution of Disputes. The Parties shall attempt to resolve all claims,
disputes, controversies, or other matters in question between the Parties
arising out of, or relating to, this M&l Firming IGA (“Dispute”) promptly,
equitably, and in a good faith manner. Any Dispute arising out of this M&l
Firming IGA is subject to arbitration to the extent required by A.R.S. §§ 12-
133 and 12-1518.

Amendments. This M&l Firming IGA may be modified, amended, or revoked
only by the express written agreement of the Parties.

10.10. Entire Agreement. This M&l Firming IGA constitutes the entire agreement

between the Parties as to the subject matter described herein and no
understandings or obligations not expressly set forth in this M&l Firming IGA
are binding upon the Parties. Nothing in this M&l Firming IGA shall amend
or otherwise modify any other existing written contracts between or amongst
the Parties.

10.11. Waiver. No delay in exercising any right or remedy shall constitute a waiver

unless such right or remedy is waived in writing signed by the waiving party.
A waiver by any Party of any right or remedy hereunder shall not be
construed as a waiver of any other right or remedy, whether pursuant to the
same or a different term, condition or covenant.

10.12. Captions. All captions, titles, or headings in this M&l Firming IGA are used

for the purpose of reference and convenience only and do not limit, modify,
or otherwise affect any of the provisions of this M&l Firming IGA.

City of Chandler-A WBA M&] Firming IGA

10.13.

10.14.

10.15.

10.16.

Rules, Requlations and Amendment or Successor Statutes. All references
in this M&l Firming IGA to the Arizona Revised Statutes include all rules and
regulations promulgated by ADWR under such statutes and all amendment
statutes and successor statutes, rules, and regulations to such statutes,
rules, and regulations existing as of the date of this M&l Firming IGA.

Notices. Any notice, demand, or request authorized or required by this M&l
Firming IGA shall be in writing and shall be deemed to have been duly
delivered by email to a valid email address designated by the Parties, or if
mailed, first-class or delivered, to the following address:

For the AWBA: Manager
Arizona Water Banking Authority
1802 W Jackson St, Box #79
Phoenix, AZ 85007
awba@azwater.gov

For Chandler: City of Chandler
Attn: Water Resource Manager
PO Box 4008, Mail Stop 905
Chandler, AZ 85244-4008
skjolsrud@chandleraz.gov

With a copy to: Chandler City Attorney
PO Box 4008, MS 602
Chandler, AZ 85225

The designation of the address or addressee, including email addresses,
may be changed by notice given as provided in this Section.

Notice is deemed to have been given on the date on which notice is
personally delivered, delivered to an overnight delivery service, mailed, or
emailed. Notice is deemed to have been received on the date on which the
notice is actually received, or delivery is refused.

Equal Opportunity. The Parties shall comply with State Executive Order No.
75-5, as amended by State Executive Order No. 2009-9, and all other
applicable Federal and State laws, rules and regulations relating to equal
opportunity and non-discrimination, including the Americans with
Disabilities Act.

Records and Inspections. All books, accounts, reports, files and other
records in relation to this M&l Firming IGA shall be subject at all reasonable
times to inspection and audit by the Parties throughout the term of this M&l
Firming IGA and for a period of five years after the completion of this M&l
Firming IGA. Upon request, a Party must produce the original of any or all
such records for inspection.

City of Chandler-AWBA M&] Firming IGA

10.17.

Uncontrollable Forces. No Party will be considered to be in default in the
performance of any of its obligations hereunder (other than obligations to
make payments) when a failure of performance is due to Uncontrollable
Forces. The term "Uncontrollable Forces" shall mean any cause beyond
the control of the Party unable to perform such obligation, including, but not
limited to, failure of or threat of failure of facilities, flood, earthquake, storm,
fire, lightning and other natural catastrophes, epidemic, pandemic, war, riot,
civil disturbance or disobedience, strike, labor dispute, labor or material
shortage, sabotage, terrorism, or restraint by court order or public authority,
and action or nonaction by, or failure to obtain the necessary authorizations
or approvals from, any governmental agency or authority, which by exercise
of due diligence such Party could not reasonably have been expected to
avoid and which by exercise of due diligence it shall be unable to overcome.
Drought is not an Uncontrollable Force for the purposes of this M&l Firming
IGA. Nothing contained herein shall be construed to require a Party to settle
any strike or labor dispute in which it is involved.

10.18.This M&l Firming IGA may be executed in counterparts, each of which

shall be an original and all of which, together, shall constitute only one
M&l Firming IGA.

IN WITNESS WHEREOF, both Chandler and the AWBA have executed this M&l

Firming IGA.

[Signature pages follow]

City of Chandler-AWBA M&I Firming IGA

ARIZONA WATER BANKING AUTHORITY

By:

Thomas Buschatzke, Chair

Date:

Attest:

By:
Alexandra Arboleda, Secretary
Date:

Approved as to Form:

By:
[Name], Counsel
Date:

10

City of Chandler-AWBA M&I Firming IGA

CITY OF CHANDLER

By:
John Knudson, Director Public Works & Utilities
Date:

Attest:

By:
City Clerk
Date:

Approved as to Form:

By:
Jenny Winkler, Assistant City Attorney

Date:

11

uejd]

opnguasip ypezo pue sauinjon|
Bunny ozjeuy siojsexucoqns|
TRW PE GoMvD ‘YVEMy

Apms iquow-b7
Sny saseqj0 OR suopoafoid
aayem sepinaid aoMv>
suonanpas oBeuoys
J0U022/ORoU Suysug YuOH-+z dy
bsp aezeya jenuUY GOMVD \ 9589/0408
1399 Aq uopeunyuo> \\\ sedan Aq resodasd
‘Asaovaidyopue __ \\ gta eupnoa! Apmis ynuon-yz
ainpayes Aonop AnauoW ~~) \ sigjonrqoonqns Sny seseajsuog
aya ‘suapio soyem3uIqNS ‘i Pen dvo a vEMV |
siopequorqns Pen d¥D ‘ ! E90 4q
\ aiqeyene ‘Aran054 dv9 40} 4s9nbad
Supunoase jeuy 5.491A¥> vo \ ppew urd: Saya suapio aqem yuugns
pasta syuounsn{pejeauaiod \ . 409 4-U91 youd suoppenuorgns TENd¥D \

‘suop>afoid zoyem

sapinod goMv3,
ADHYS YUOH FZ,
indyseseojiuos\

uopnquasip|
ypoud pue spoyjow Aiercce, ‘Bupuy|

40} fenuayod oyenveas 0} sio}ae2}uCoqns|
TEIN IM SynsUCD YaMy|

suoprafasd
aayem sopiaoid aay

Apnas yuoW~bT
ludy soseojiyog
Apnas uyuoy-bz_

25 eUOYS 03 40H JAA T.

wer! 99a AON PO das | Sny* mc {unc | AeW | ady |4eN qed er | 290 AON. >

| INO suBa, Z ObeyoYs:
S| Gny | inc | une

Rew idy Jew gad wer!

| Snysasejuyog | ae Aymqeqoug
3,5

Tf ff ano sia, £ ebeuoys: TT
AON} PO ides! Gny| inc une AeW Ady eM |qed: uer

| (iesodaxd
ig as idwo: / loewereoay | Suyuasyy “Secuoue
(rena saan vay  Areunuaag | | seyesodsoouy) =| espn
: VOY uri 1004-091 sadope. beet?
yuer sydope vam vemy som 000
sui6ag 4294 Tadas ued | Ueid) tenmay come
at Bu juo2 OR
BeyoYS 4932 sopequoomne TEN | 2B04-U0L VEN
(werd Gunma s9prouy) seunou vane so yuouidoyoneg} ioouibe Suan
oo pad
logy meeps von B(s)poujaut (s)ouinjon
wa (Oey) von orm ‘Gunuuy jequazed podes
fenuuy yeniy joywoudojon0q]| GOMYD PUC YEMY

I se

Asan02920 |
Aseununs yap
Uueig 409 4-U9,
sidope vam

V HqIYXS

0,-U0L VEMY|

joqwoudojonog|

ody _/ peayexoo)09h / /
dope

womeent | sete
vamy Suyoua—! srandzas jo
49572 Areuuns IRM
FeauuyGIMVD urjgueaA-udL
sqdope vEMy

Je0,-U0L VEMY|

Joyuaudojonag|

auyou, Guwuty Pe dv