Colorado River, Phoenix Water Supply and Demand Update - Citywide

This report presents the City Council with an update on the City of Phoenix’s water
resources planning efforts regarding current drought conditions. Staff seeks
authorization for the City Manager, or designee, to enter into Mutual Aid Agreements,
as well as any necessary amendments and associated agreements (collectively, “Aid
Agreements”), with the City of Tucson, the Town of Cave Creek, the Central Arizona
Water Conservation District (CAWCD), relevant Arizona and federal governmental
entities, and various on- and off-river Colorado River/Central Arizona Project water
entitlement holders in Arizona. These agreements will support participating parties
(“Parties”) in addressing water needs arising from future Colorado River shortages.

Further, approval is requested to authorize the City Manager, or designee, to execute
water transactional agreements (“Transactional Agreements”) designed to advance the
objectives of the Aid Agreements, pending subsequent Council approval of all
agreements. Additionally, staff requests that the City Council grant an exception
pursuant to Phoenix City Code 42-20, allowing the inclusion of indemnification and
assumption of liability clauses within transaction-related documents that would typically
be prohibited under Phoenix City Code 42-18.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Summary
The Colorado River is currently over-allocated and projected to be unable to meet
future demand. Water levels at both Lake Mead and Lake Powell have reached
critically low points. Notably, this winter’s snowfall was the lowest on record, which will
affect water availability in subsequent years. The City of Phoenix relies on Colorado
River water to meet approximately 40 percent of its annual customer demand.

The United States Bureau of Reclamation (“Reclamation”) is expected to implement
new Post-2026 Colorado River Operating Guidelines (“Post-2026 Guidelines”)
effective January 1, 2027. In early 2026, Reclamation released a Draft Environmental
Impact Statement outlining multiple decision alternatives, each resulting in significant
reductions to water supplies available to the Central Arizona Project (“CAP”) and the
State of Arizona. Some scenarios include annual CAP reductions of 1.1 million acre-



feet or more. Accordingly, Phoenix Water Services continues to prepare for a range of
possible reductions in water allocations from the Colorado River system.

Phoenix’s Preparedness
Phoenix has secured supplemental water sources from the Salt and Verde rivers to
offset potential shortages in areas typically served by Colorado River water.
Additionally, the City has stored surplus water underground in both the Phoenix and
Tucson regions.

Recent infrastructure projects have enhanced resiliency and reliability within the water
system. Notable initiatives include the construction of the drought pipeline, enabling
flexible distribution of various water sources to northern Phoenix, and the development
of new groundwater wells providing access to allocated and stored groundwater.

Beyond expanding water supplies, storing water, and infrastructure investments,
Phoenix has consistently promoted water conservation. The City offers multiple
conservation programs, including incentives for residential and commercial grass
removal, efficiency consultations, and rebates for high-efficiency toilets and irrigation
controllers. Moreover, Phoenix departments have developed drought management
plans to conserve water while maintaining exemplary municipal services.

Ongoing Preparations
Phoenix Water Services has established strategies to maintain water delivery
throughout the next decade, accounting for various potential reductions from the
Colorado River. These strategies involve renewable backup supplies from the Salt and
Verde river systems, underground water reserves, and groundwater allocations.
However, continued program development is required to ensure Phoenix’s long-term
sustainability.

New initiatives will include expanded partnerships, such as collaborations with Salt
River Project (SRP) and others, to construct the planned enhancement of storage
capacity on the Verde River through modifications to Bartlett Dam. Phoenix has also
initiated a project to integrate Advanced Purified Water via the Cave Creek Road
Water Reclamation Facility. Ongoing refinement of the Drought Management Plan will
further strengthen conservation efforts and public education regarding water use.

Collaboratively, Phoenix and other Arizona entities are developing Aid Agreements as
frameworks for collective action in response to anticipated reductions. These voluntary
arrangements may include regulatory agencies (e.g., Reclamation, Department of
Water Resources), water organizations (such as Central Arizona Water Conservation
District, Central Arizona Groundwater Replenishment District, SRP, and Arizona Water


Bank), tribal communities, municipal water providers, and agricultural entities holding
Colorado River and/or CAP entitlements. Some Aid Agreements may be
intergovernmental, while additional affiliated agreements may permit participation by
private sector stakeholders. Collectively, these agreements may be referred to as the
Secure Water Arizona Program.

It is anticipated that Transactional Agreements under the umbrella of the Aid
Agreements will enable voluntary movement of water resources among Parties. These
agreements aim to address emergency water needs, develop and store water supplies
to replace lost Colorado River and CAP water, and promote innovative solutions
suitable for the current era of limited CAP water resources.

Phoenix remains committed to ongoing planning, investment, and conservation to
ensure uninterrupted provision of safe, reliable water services for customers while
advancing sustainability goals. The City will continue proactive measures to address
deepening shortages on the Colorado River including planning, acquiring additional
water supplies, and constructing infrastructure to facilitate water supply distribution.

Contract Term
The Aid Agreements may have terms of up to 10 years, with authority to approve two
five-year extensions. Each Transactional Agreement may span up to 25 years, with
similar extension authorization.

Financial Impact
Funding is available from the Water Services Department Water Fund. Council
approval for Transactional Agreement expenditures will be sought on a case-by-case
basis as agreements are finalized.

Request for Action
Staff respectfully requests City Council approval to enter into water Aid Agreements
with partner agencies to further address water needs that may arise from future
Colorado River shortages.

Responsible Department
This item is submitted by Assistant City Manager Ginger Spencer and the Water
Services Department.