SB1181 - 562R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 48-3771, Arizona Revised Statutes, is amended to read:

START_STATUTE48-3771. District replenishment obligations; replenishment location; source of replenishment; exception

A. For each active management area in which member lands or member service areas are or may be located, the district shall replenish groundwater in an amount equal to the groundwater replenishment obligation for that active management area. Except as provided in section 48-3781, subsection G, the district shall complete the replenishment of the groundwater replenishment obligation of that active management area applicable to a particular year within three full calendar years after the year that the district incurs the groundwater replenishment obligation. Replenishment of the groundwater replenishment obligation of an active management area applicable to a particular year is complete when the amount of water added to aquifers through water storage that has been credited directly to the district's conservation district account pursuant to title 45, chapter 3.1, plus long-term storage credits that have been transferred from the district's long-term storage account to its conservation district account pursuant to title 45, chapter 3.1, less the groundwater replenishment obligation of member lands and member service areas located in the active management area and applicable to previous years, less the contract replenishment obligations relative to municipal providers in the active management area for previous years and the year of the calculation, equals or exceeds the groundwater replenishment obligation of the active management area for that year.

B. With respect to the portion of the groundwater replenishment obligation attributable to a parcel of member land or a member service area, the district shall replenish groundwater in the active management area where the parcel of member land or the member service area is located in an amount equal to the groundwater replenishment obligation applicable to that parcel of member land or that member service area.

C. Except as provided by title 45, chapter 3.1, the district may replenish groundwater with central Arizona project water or water from any other lawfully available source except groundwater withdrawn from within an active management area.

D. Notwithstanding any other provision of this chapter, if a parcel of member land is included in the service area of a municipal provider that is not a member service area but that has been designated as having an assured water supply under section 45-576, the parcel of member land has no parcel replenishment obligation and the district has no groundwater replenishment obligation attributable to that parcel of member land for as long as the designation remains in effect.

E. Notwithstanding any other provision of this chapter and except as provided in subsection F of this section, if a parcel of member land is included in the service area of a municipal provider that is a member service area and that has been designated as having an assured water supply under section 45-576, the parcel of member land has no further parcel replenishment obligation.

F. After the effective date of this amendment to this section, a municipal provider that submits an application for a new designation of assured water supply pursuant to rules adopted by the department of water resources in the phoenix active management area that relies on a member service area agreement may elect for all parcels of member land in the municipal service area to retain a replenishment obligation. For parcels of member land that retain a replenishment obligation, the district shall replenish groundwater in an amount equal to the obligation applicable to that parcel of member land.

G. If, pursuant to subsection F of this SECTION, a municipal provider's service area contains member lands and the municipal provider applies to become designated as having an assured water supply, the municipal provider shall notify the district and the director of the department of water RESOURCES at the time of application whether it chooses to assume the member lands' replenishment obligation under the municipal provider's designation of assured water SUPPLY and member service area agreement. this section does not AUTHORIZE new member lands to be enrolled within the municipal provider's service area after the service area is DESIGNATED as having an ASSURED water supply.

H. If a municipal provider chooses to allow parcels of member land within its service area to retain the parcel replenishment obligation pursuant to this section, the designation of assured water supply and member service area agreement for the municipal provider shall provide that the parcels of member land retain the parcel replenishment obligation for the lesser of either of the following:

1. Ten years from the date of commencement of the first term of the designation.

2. The first term of the designation.

I. On the lesser of the conditions prescribed by subsection h of this section, the municipal provider shall begin to assume a percentage of the groundwater delivered to parcels of member land and any associated parcel replenishment obligation and provide the information to the district in the annual reports required by section 48-3775. In the first year of reporting pursuant to this subsection, the municipal provider may assume not less than ten percent of the total reported groundwater delivered to each parcel of member land. In each successive year the municipal provider shall assume at least an additional ten percent so that within ten years, all reported groundwater delivered and parcel replenishment obligation are assumed by the municipal provider and the parcels of member land have no further parcel replenishment obligation.

J. After a municipal provider assumes all groundwater deliveries from all parcels of member land as prescribed by subsection I of this section, the municipal provider shall cease submitting reports to the district for parcels of member land pursuant to section 48-3775 while the municipal provider's designation of assured water supply remains valid.

K. If a municipal provider assumes the parcel replenishment obligation of member lands pursuant to a designation of assured water supply that relies on a member service area agreement, any groundwater allowance or extinguishment credits, as provided in rules adopted by the department of water resources pursuant to section 45-576, associated with the member lands assumed by the municipal provider may be used as follows:

1. If the parcel replenishment obligation and reported groundwater delivered to the member lands are entirely assumed on the initial designation of an assured water supply, the remaining extinguishment credits or groundwater allowance associated with the member lands may be used by the municipal provider as authorized pursuant to a member service area agreement.

2. If the parcel replenishment obligation and reported groundwater delivered to the member lands are assumed in stages as provided in subsection I of this section, the municipal provider may use the groundwater allowance and extinguishment credits for the member lands in the same manner as authorized in the applicable agreement and notice of municipal reporting requirements if the groundwater is being reported as delivered to member lands. Thereafter, any remaining extinguishment credits or groundwater allowance may be used by the municipal provider as authorized under the member service area agreement. END_STATUTE

Sec. 2. Section 48-3775, Arizona Revised Statutes, is amended to read:

START_STATUTE48-3775. Reports

A. Except as provided in subsection H of this section, on or before March 31 of each year after the recordation of the instrument described in section 48-3774, subsection C, each municipal provider delivering water to member land shall file a report with the district and with the director of water resources a report that contains the following information for the preceding calendar year, which is the reporting year:

1. The amount of groundwater delivered by the municipal provider to each parcel of member land, identified by the applicable tax parcel number, and the basis for the calculation of the amount of groundwater delivered.

2. The amount of groundwater delivered by the municipal provider to the member land and the basis for the calculation of the amount of groundwater delivered.

3. The amount of excess groundwater delivered by the municipal provider to the member land and the basis for the calculation of the amount of excess groundwater delivered.

4. The parcel replenishment obligation of each parcel of the member land, identified by the applicable tax parcel number.

5. Such other information as the district may reasonably require.

B. On or before March 31 of each year after the qualification of a municipal provider's service area as a member service area, the municipal provider shall file a report with the district and with the director of water resources a report that contains the following information for the preceding calendar year, which is the reporting year:

1. The amount of groundwater delivered by the municipal provider to all customers within the member service area and the basis for the calculation of the amount of groundwater delivered and, if the municipal provider has entered into a member service area agreement pursuant to section 48-3771, subsections H and I, the amount of groundwater delivered to member lands and the percentage of those groundwater deliveries assumed by the municipal provider.

2. The amount of excess groundwater delivered by the municipal provider to all customers within the member service area and the basis for the calculation of the amount of excess groundwater delivered.

3. Such other information as the district may require.

C. The district shall confirm the calculation of the parcel replenishment obligation of each parcel of the member land and the service area replenishment obligation of each member service area, using the information provided in subsections A and B of this section.

D. To the extent allowed by the assured water supply rules adopted by the department of water resources pursuant to section 45-576, subsection H, in calculating the excess groundwater of a member land or a member service area, the municipal provider shall reduce the amount of groundwater that may be used, consistent with such rules, at a member land or delivered for use within the member service area and that is not derived from credits on a straight line basis over the applicable period of years prescribed in such rules. The municipal provider may apply any credits applicable to the member land or the member service area as permitted allowed under such rules.

E. The district shall prepare and file with the director of water resources on or before August 31 of each year for the prior calendar year, which is the reporting year, an annual report that includes the following information:

1. The total amount of water that was stored by the district during the reporting year pursuant to each water storage permit issued to it under title 45, chapter 3.1.

2. The amount of water stored by the district during the reporting year to be credited to the district's conservation district account pursuant to title 45, chapter 3.1.

3. The amount of water stored by the district during the reporting year to be credited to the district's replenishment reserve subaccount pursuant to title 45, chapter 3.1.

4. The groundwater replenishment obligations for the reporting year and for the two calendar years preceding the reporting year, and the extent to which the district has completed the groundwater replenishment obligations applicable to each of those years.

5. The information required under section 45-877.01.

6. The amount of water stored by the district during the reporting year to be credited to the district's long-term storage account pursuant to title 45, chapter 3.1.

7. The amount of long-term storage credits the district has transferred and credited to its conservation district account pursuant to title 45, chapter 3.1 during the reporting year.

F. The district and the municipal providers required to file reports under this section shall maintain current, accurate records of the information required to be included in the reports.

G. If a municipal provider fails to file a report as required by the district, the district may assess a penalty of up to one thousand dollars $1,000 per day that the report is overdue.

H. A municipal provider shall not file the report required by subsection A of this section for a parcel of member land that is included in the service area of a municipal provider that is a member service area that has been designated as having an assured water supply under section 45-576 unless the parcel of member land is subject to a member service area agreement as prescribed in section 48-3771, subsections H and I. END_STATUTE

Sec. 3. Section 48-3778, Arizona Revised Statutes, is amended to read:

START_STATUTE48-3778. Annual assessment; general revenue law

A. On or before the third Monday of August of each year after the qualification of any real property as member land, the district shall charge an annual replenishment assessment against each parcel of member land that is subject to a parcel replenishment obligation. This charge becomes a lien on the parcel and shall be collected in the same manner as an ad valorem tax. The assessments shall be calculated by the district pursuant to this article and shall be sufficient to produce the amount of money estimated as needed to pay the costs and expenses to replenish groundwater established under section 48-3772, subsection A and taking into account any annual replenishment tax levied against municipal providers under section 48-3781 and any member service area agreement pursuant to section 48-3771, subsections H and I.

B. The district shall promptly certify the assessments to the board of supervisors of each county in which member lands are located, and these boards of supervisors at the time of levying general county taxes shall take the necessary steps for collection of replenishment assessments against the parcels of member land within such county.

C. The assessment when collected shall be deposited, pursuant to sections 35-146 and 35-147, in the special fund established under section 48-3773, subsection A, paragraph 3 to be spent by the district only for the purposes authorized by this article.

D. All provisions of the general revenue laws for the collection of taxes on real estate for county purposes apply to the collection of the replenishment assessment imposed by this article, including all remedies of the revenue laws for collecting delinquent taxes and provisions relating to sales of real property for delinquent taxes. The exemptions applicable to ad valorem taxes do not apply to assessments charged pursuant to this section. END_STATUTE

Sec. 4. Section 48-3780, Arizona Revised Statutes, is amended to read:

START_STATUTE48-3780. Qualification as a member service area; termination

A. The service area of a municipal provider qualifies as a member service area only if all of the following apply:

1. The service area is located in an active management area in which a part of the central Arizona project aqueduct is located.

2. The municipal provider is not a member of a groundwater replenishment district established pursuant to chapter 27 of this title.

3. The service area of the municipal provider is not a water district member service area under chapter 28 of this title.

4. If the municipal provider or its predecessor previously terminated member service area status pursuant to subsection B of this section, the service area or any portion of the service area has not been a member service area for at least ten years. The district may waive this requirement if the district and the director of water resources determine that previously unforeseen circumstances necessitate requalification of the service area.

5. If the municipal provider or its predecessor previously terminated member service area status pursuant to subsection B of this section, the municipal provider agrees to pay to the district all charges that would have otherwise been imposed by the district had the member service area status remained in effect during the period since termination became effective.

6. If all or a portion of the service area has previously qualified as a member service area, the municipal provider agrees to pay an amount equal to the amount of the replenishment taxes assessed against its predecessor that were not paid, plus interest calculated in accordance with section 48-3782, subsection A.

7. The conditions stated in section 45-576.01, subsection B, paragraphs 2 and 3 are satisfied with respect to the district at the time of the qualification.

8. The municipal provider publishes a resolution once each week for two consecutive weeks in a newspaper of general circulation in the county or counties where the service area is located that:

(a) Has attached to it a current map of the municipal provider's service area.

(b) Declares the intent of the municipal provider that the service area qualify as a member service area under this chapter.

(c) Declares that, for the privilege of withdrawing and delivering excess groundwater within its service area and to ensure the continued exercise of that privilege, the municipal provider shall pay an annual replenishment tax to be determined by the district.

(d) Contains a covenant, binding against the municipal provider, to pay to the district an annual replenishment tax based on the service area replenishment obligation in an amount determined by the district as necessary to allow the district to perform the groundwater replenishment obligations.

(e) Authorizes the municipal provider to enter into a written commitment with the district in the form and substance satisfactory to the district regarding payment of the annual replenishment tax.

(f) Declares that the resolution applies to the service area of the municipal provider as it currently exists and to all additions to and extensions of the service area.

(g) Declares that the resolution is irrevocable for as long as the district is obligated to perform the groundwater replenishment obligations.

(h) if applicable, declares that the MUNICIPAL PROVIDER has elected to have parcels of member land within the member service area of the MUNICIPAL provider retain the REPLENISHMENT obligations as authorized PURSUANT to SECTION 48-3771, subsections H and I.

B. A service area previously accepted as a member service area pursuant to subsection A of this section terminates its member service area status only if all of the following apply:

1. The municipal provider for the member service area has submitted an application to the district requesting termination of member service area status.

2. The municipal provider for the member service area has submitted an application to the director of water resources requesting modification of the municipal provider's assured water supply designation under section 45-576 that eliminates the municipal provider's reliance on member service area status.

3. The applications provide evidence satisfactory to the director of water resources that the municipal provider has obtained a substitute supply of water, other than groundwater, that is determined by the director of water resources to be consistent with assured water supply requirements pursuant to section 45-576 and that is sufficient to eliminate the municipal provider's reliance on member service area status.

4. The director of water resources has approved the municipal provider's application to modify its assured water supply designation based on the addition of the substitute water supply.

5. The municipal provider publishes a resolution once each week for two consecutive weeks in a newspaper of general circulation in the county or counties where the service area is located that:

(a) Has attached to it a current map of the municipal provider's service area.

(b) Declares the intent of the municipal provider to terminate the service area’s member service area status.

(c) Declares that the district is no longer obligated to perform the groundwater replenishment obligations on behalf of the service area.

(d) Revokes the resolution for the member service area provided for in subsection A, paragraph 7 of this section.

6. All amounts owed by the water provider on behalf of the member service area to the district have been paid.

7. The municipal provider has paid or made arrangements suitable to the district for repayment of any capital costs incurred by the district specifically on behalf of the member service area. END_STATUTE

Sec. 5. Section 48-3781, Arizona Revised Statutes, is amended to read:

START_STATUTE48-3781. Annual replenishment tax; contract replenishment tax

A. On or before the third Monday of August of each year after the qualification of the member service area of any municipal provider, the district shall levy a replenishment tax against each municipal provider having a qualified member service area for the privilege of withdrawing and delivering excess groundwater within the member service area. The replenishment tax shall be calculated by the district in accordance with this article and shall be sufficient to produce the amount of money estimated as needed to pay the costs and expenses to replenish groundwater established under section 48-3772, subsection A, and taking into account any annual replenishment assessment levied under section 48-3778 and any member service area AGREEMENTS entered PURSUANT to section 48-3771, subsections H and I.

B. The district shall promptly transmit a statement to each municipal provider having a member service area stating the amount of the annual replenishment tax and any replenishment reserve fee due under section 48-3780.01.

C. On or before the third Monday of August of each year after the district enters into any contract to replenish water pursuant to section 48-3772, subsection B, paragraph 9, the district shall levy a tax against each municipal provider that is a party to a contract to replenish groundwater at the assessment rate provided in the applicable contract. The district shall promptly transmit a statement to each municipal provider that is a party to a contract to replenish groundwater stating the amount of the replenishment tax due under the contract.

D. On or before October 15 of each year, each municipal provider that has a member service area shall pay to the district an amount equal to the annual replenishment tax levied by the district and any replenishment reserve fee due under section 48-3780.01.

E. On or before October 15 of each year, each municipal provider that is a party to a contract to replenish groundwater under section 48-3772, subsection B, paragraph 9 shall pay to the district the contract replenishment tax levied by the district pursuant to the contract.

F. Annual replenishment taxes and contract replenishment taxes collected by the district shall be deposited, pursuant to sections 35-146 and 35-147, in the special fund established pursuant to section 48-3773, subsection A, paragraph 3 and shall be expended by the district only for the purposes authorized by this article.

G. If a municipal provider is delinquent for more than ninety days in the payment of its replenishment tax, the district shall promptly notify the director of water resources of the delinquency. Except as provided in subsection H of this section, for any municipal provider that is delinquent for more than ninety days in the payment of its replenishment tax, the district shall complete the replenishment of the service area replenishment obligation. The district shall complete that obligation within three full calendar years after the year that the district is paid an amount equal to the delinquent replenishment tax, plus interest calculated in accordance with section 48-3782, subsection A, or within ten full calendar years after the year that the district incurs the service area replenishment obligation, whichever is sooner.

H. The district is not required to complete the replenishment of the service area obligation of a municipal provider that is delinquent for more than ninety days in the payment of its replenishment tax if both of the following apply:

1. The district is not paid an amount equal to the delinquent replenishment tax, plus interest calculated in accordance with section 48-3782, subsection A, within ten full calendar years after the year that the district incurs the service area replenishment obligation.

2. The municipal provider or its successor has violated section 45-492, subsection D or section 45-493, subsection D and the director of water resources has not commenced an enforcement action against the municipal provider or its successor for the violation within ten full calendar years after the year that the district incurs the service area replenishment obligation. END_STATUTE

Sec. 6. Rules; department of water resources; extinguishment credits; groundwater allowance; member land

On or before January 1, 2025, the department of water resources shall amend rules adopted pursuant to section 45-576, Arizona Revised Statutes, for the incorporation of extinguishment credits and groundwater allowance associated with member lands in a designation of assured water supply consistent with section 48-3771, Arizona Revised Statutes, as amended by this act.