Title: Who Pays For The Water Supply? Water Rights Fees and Dedication Policies in New Mexico and Other Southwestern States
Full Citation
Permanent Link: http://ufdc.ufl.edu/WL00004666/00001
 Material Information
Title: Who Pays For The Water Supply? Water Rights Fees and Dedication Policies in New Mexico and Other Southwestern States
Physical Description: Book
Language: English
Spatial Coverage: North America -- United States of America -- Florida
Abstract: Jake Varn Collection - Who Pays For The Water Supply? Water Rights Fees and Dedication Policies in New Mexico and Other Southwestern States (JDV Box 70)
General Note: Box 24, Folder 5 ( Water Supply Work Group/Planning and Management - 1996/1997 ), Item 11
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
 Record Information
Bibliographic ID: WL00004666
Volume ID: VID00001
Source Institution: Levin College of Law, University of Florida
Holding Location: Levin College of Law, University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Full Text

date: 29 October 1996





Municipalities throughout the Southwest are finding it increasingly difficult and
expensive to expand water supplies to meet growing urban demands. A growing number are
adopting policies and enacting ordinances that require developers, residents of areas
requesting annexation, and other new water customers to pay some or all of the costs of
expanding the water supply and incorporating it into the municipal water system. A
comprehensive telephone survey was conducted to determine the frequency of such measures,
their terms and conditions, the types of municipalities adopting them, and the rate at which
such measures are being adopted, modified and terminated.

"Municipalities that lack such water development cost recovery mechanisms must
recoup the costs of expanding the water supply from the entire customer base, through such
means as: pay-as-you-go; financing through the sale of long-term bonds; and special local
property taxes. Those municipalities which recoup some or all of the costs of expanding the
water supply from new customers similarly have a number of options. These include:

demanding water rights;
demanding money so the municipality can buy water rights;
demanding water rights or money in lieu of rights; and
requiring new customers to join a water district or replenishment
district which will supply water to the municipality and levy
charges on the customers, usually in the form of property taxes.

Sometimes the requirements are imposed on all new water customers; sometimes new
customers located within corporate limits are exempted or owners of vacant land are excused
until such time as they seek a building permit. In other cases, only developments that exceed
a certain threshold size are targeted. In still other instances, only land owners with
appurtenant water rights are required to dedicate them to the municipality. Occasionally, the
land owner is required merely to offer any appurtenant water rights to the municipality at fair
market value.

Mechanisms for calculating the quantity of water rights to be dedicated range from
very simplistic rules (e.g., 3 af per acre of land) to highly complex formulas that take into
account land use, plumbing fixtures and landscaping type. In some instances, actual metered

usage is the basis. Typically, there are fixed amounts for certain types of new customers,
such as 1 af per new single family residence. Sometimes, where there are return flow
credits, the quantity to be dedicated is based on estimated consumptive demand. In other
cases, it is based on total demand. Many ordinances contain conservation incentives, with
the amount of water to be dedicated adjusted downward for low-flow fixtures and/or water-
efficient landscaping.

Similarly, methods of converting acre-feet to dollars to establish in lieu payments
range from simple to sophisticated. Sometimes the conversion factors are arbitrary round
numbers, such as $1,000 per acre-foot; other times, they are the result of complex
calculations. The frequency with which the conversion factors are updated ranges from
monthly to every few years. Some conversion factors are indexed for inflation, or reflect
current market prices for water rights.

The states with the most such mechanisms for recouping the costs of enhanced water
supplies are Colorado, New Mexico and Utah. The number of such requirements is growing
rapidly in Arizona and Colorado. New Mexico and Utah have seen short periods of time
during which several municipalities enacted similar ordinances; New Mexico appears to be
entering another such period.

As expected, areas where water supplies are scarce and rapid growth is occurring are
more likely to enact measures to recoup water supply costs. Beyond that, patterns and trends
are hard to find. There is no apparent relationship between a municipality's population and
the likelihood of it enacting such a measure. Nor are per capital water demand or average
income of residents apparent factors.

Specific features of the ordinances and policies of many municipalities in the
southwest were surveyed. This information is summarized below. Information identified as
dating from 1987 is adapted from a survey by T. Sargent conducted in September of that



Municipal requirements that new developers dedicate water rights and/or pay fees to
cover the cost of acquiring new water sources are relatively common in New Mexico. Some
base the required amount of water rights on acreage but most municipalities have a specific
schedule of water rights dedications based on estimated water use of the new development.
The municipal water providers also typically allow in lieu cash payments. These vary
significantly in terms of $/af.

Resistance to new development fees in general resulted in passage of New Mexico's
"Development Fees Act" that became effective on 1 July 1993 (New Mexico Statutes Title 5,
Municipalities and Counties, Article 8, Development Fees). Based on a bill introduced by
New Mexico Senator Christine Donisthorpe of San Juan County, the Act places limits on the
types'bf impact fees that can be imposed, how they are calculated, and for what purposes the
collected revenues can be spent.

The Act does not directly address requirements for dedication of water rights or fees
collected for the purpose of purchasing water rights. Impact fees are defined as "capital
improvements or facility expansions;" capital improvements include "water supply, treatment
and distribution facilities." Items not payable by fees (5-8-5) include "... acquisition or
expansion of public facilities or assets that are not capital improvements or facility
expansions identified in the capital improvements plan." While somewhat ambiguous, the
Act apparently does not affect existing water supply fees and dedication requirements, and
may not impact new ones. It does, however, signal apparent growing resistance to these
types of charges being levied on new development.

At this time, a large number of New Mexico municipalities are drafting or
considering water rights dedication ordinances and water supply development fees. Current
ordinances and policies of water providers are summarized below:

New Mexico State Engineers Office

Spoke with Paul Saavedra (505-827-6120). He does not know of any research on
dedication of water rights in New Mexico. No one there can speak about specific
communities or the general situation in the state. Must contact individual water


Was unable to reach anyone with knowledge of the current situation. Alamagordo
reported no water dedications requirements as of 1987.


The city currently does not require any dedication of water rights for either
subdivision developments or annexations. City officials in the late 1980s reportedly
were willing to consider the dedication of water rights as an in lieu payment during
negotiations of annexation fees.


Spoke with Gary Spickelmier, water treatment plant (505-334-8684). In 1978, the
city adopted a water dedication ordinance for new water service connections similar to
the one described for Taos, below. A faxed copy of the old ordinance indicates it last
"was amended on 15 January 1991. This version required all new users of municipal
water services, including new subdivisions, to "pay a money amount which shall be
determined by the city commission by resolution duly adopted from time to time."
The monetary amount was set according to an annual water allotment schedule based
upon average consumption for 10 different types of water users, as measured in acre-
feet of annual consumptive use.

No areas shall be annexed until water right fees have been paid to the city. There is
no provision for dedication of water rights in lieu of monetary payments, but one
provision urges owners of water rights within the city's service area to continue using
their rights rather than relying on city water service, or in the alternative, to transfer
unused rights to the city.

In spring of 1995, the town removed the ordinance that was in place. The motivation
apparently was to reduce an obstacle to development. Aztec does not have much of
an economic base, and developers of a proposed new motel in the town claimed they
would not build it unless the ordinance was removed. It would have required the
owners to pay approximately $15,000 for the acquisition of water rights (based on a
market value of approximately $1,000 to $1,500 per af and annual water demand by
the motel of approximately 12 af). City commissioners are considering a surcharge
tax to replace the old ordinance, but this is an election year and they do not want to
deal with the issue now. The city has a population of approximately 6,700; some
9,000-10,000 persons are served by city water.



Spoke with Melvin Martinez, Zoning Officer (505-867-3311). The town has drafted a
new subdivision ordinance (copy faxed) which includes requirements concerning the
dedication of water rights. The draft ordinance, which closely resembles that of Los
Lunas and several others, requires that not less than 0.336 af/year per dwelling unit
of water rights shall be turned over to the town, or that a fee be paid of $2,400 per
acre-foot, multiplied by an inflation factor. If an applicant transfers more water
rights than required, the applicant shall be given credit for the excess amount for
future subdivisions, or may receive $2,280 per acre-foot, times the inflation factor.

Fewer water rights need to be transferred for water-conserving developments.
Developers must demonstrate that a new subdivision will serve fewer people, require
less water, or have a higher return flow than a normal subdivision. Regardless of the
level of conservation, the required amount of water rights to be transferred cannot be
less than 0.2 acre-feet per dwelling unit.

Commercial developments that are estimated to require more than three af per acre
per year shall compensate or grant consumptive use rights to the town for the amount
"-in excess of three af/acre (if estimated consumption is three af per year or less, no
compensation is required).

Bernalillo hopes to have the ordinance in place by the end of 1995.


Spoke with Deborah Cummins, City Clerk (505-354-2247). Capitan currently has a
moratorium on annexation. Outside of the moratorium, which is due to water supply
issues, the town does not have any policy. A water rights dedication requirement was
discussed but not adopted as policy. Back in 1987, the city had no ordinance but did
have a general policy of requiring water rights dedications for new service hookups.


Spoke with Bill Canada, Water Superintendent (505-887-1191). The town is planning
to pass an ordinance that will require all new annexations to dedicate all water rights
to the town prior to receiving water service. The town may allow a fee to be charged
in lieu of water rights. The policy is being drafted with the hope it will be in place
by the end of 1995.


Spoke with unidentified town employee (505-769-7827). The town is served by a
private water company, the New Mexico American (505-763-5536).


Spoke with Alice Lucero, City Clerk (505-753-7384). The city has water dedication
requirements based on a type-of-use schedule for new service similar to Taos, Aztec,
and Las Vegas. However, the quantity of the water dedicated is somewhat less than
in the other towns. Future annexations also must dedicate water rights that can be
transferred under New Mexico law to underground withdrawal from city wells.

Areas outside of city limits must turn over their water rights prior to receiving
service. New service customers within city limits dedicate rights according to a
schedule (Alice was to fax this). Also, in 1990, the town adopted an ordinance that
sets aside '/s of one percent of the water utility's gross receipts for water acquisition,
operations and maintenance. The city is having to replace wells due to contamination
-problems (only three out of 11 wells currently are in use).


Spoke with Paul Martin and Mike Sullivan, Planning Department (505-599-1311).
Farmington is in the process of changing its policy. It has been working on
developing a water policy for the past two years. The plan is for the City Council to
adopt a policy by July 1996 requiring areas that are outside of city limits (areas to be
annexed) to dedicate water rights. The town already has required one developer of an
area that is now annexed to hand over his water rights. They mentioned a new state
law, the New Mexico Development Fees Act, which strictly regulated how
communities impose development fees (check with Attorney General's Office).


Spoke with Danny Barrows in the Utilities Administration Department (505-863-
1289). Gallup has no water dedication requirements or any water development fee.
It has more water rights than water. Gallup sits atop a confined aquifer and has to
drill very deep wells to get the water.


Ted Aguilar, Engineering Department (505-287-7927, ext. 267) failed to return phone
calls. The city seriously considered adopting a water dedication ordinance, including


the allowance of water rights dedications in lieu of development fees, in the late
1980s. It is not clear what, if anything, happened.


Spoke with Chris in the Water Department (505-397-9216). The city has no
formal ordinance, but does enforce a policy requiring dedication of water rights
appurtenant to annexed land. There is no such requirement for areas within city
limits nor is there any type of water development fee. Population within the
metropolitan area is approximately 30,000.

Las Cruces

Spoke with Jerry Linedecker, Engineering (505-527-7822). Landowners who petition
for annexation generally must provide 0.82 af of water rights for each acre annexed.
Other landowners within the annexed area are not required to dedicate any rights,
although if they later request city water service, they (as well as any other new users)
-must convey 0.2 af/residential unit. In lieu cash payments of $1,000/af are allowed
for land with no appurtenant water rights.

Las Vegas

Spoke with Steve Sanchez (505-454-1401, ext. 266). In 1987, this city in northern
New Mexico passed an ordinance that requires water dedications for both new service
connections and annexations. Water dedication requirements for specific commercial
and residential developments are the same as those in Taos (below). If water rights
cannot be transferred and the city has sufficient existing rights, the developer may
make an in lieu cash payment. Originally, the payment was $600/af; it last was
raised in July 1995 to $1,500/af. (With the recent U.S. Supreme Court ruling
adverse to New Mexico users in the Pecos River basin, the fee probably will continue
to rise.)

There are separate ordinances for outside the city limits. He promised to look up
these ordinances and fax them. The city no longer extends water service unless the
development meets specific criteria (he was to fax these, too); new subdivisions are
not accepted unless they have adjudicated water rights.

Los Lunas

Spoke with Art Mondragon, Community Development (505-865-1377). Subdivision
approval is contingent upon dedication of 0.336 af of water rights per dwelling unit,
or an in lieu payment of $3,500/af. Upon showing that a particular subdivision will


use less water than 0.336 af/unit, the developer may be allowed to dedicate less water
rights, but in no instance less than 0.2 af/unit. The in lieu fee is adjusted from time
to time by an inflation factor. The ordinance last was amended on 9 February 1995.
The amount of the in lieu cash payment has risen from $2,400 in 1987 to $3,500 in
1995. Water dedication requirements have not changed over time (see fax of
ordinance for details). The population of the incorporated area is 7,500; there is a
large amount of unincorporated area surrounding the town.


Spoke with John Miscavage, Construction (505-624-6711). Miscavage believes the
town has plenty of water with some even given to agriculture. Also spoke to Charlie
Sparnen, Utilities. He indicated that there is no water development fee or dedication
policy in Roswell.


"Spoke with Darrell Bremner, Planning and Zoning .(505-258-4014) (promised to fax
material). In 1988 the town adopted a policy of requiring the dedication of water
rights prior to any annexation. Land owners in the area to be annexed must hand
over adequate water rights based on projected development. A fee based on the
market value of water may be paid in lieu of water rights (the price changes

Santa Fe

Spoke with Mike Hamman and Joe Gonzalez (505-986-6970). In 1979, an ordinance
was enacted giving the Public Service Company of New Mexico the right to serve
Santa Fe residents. As part of this, the city agreed to adopt a program requiring
water rights within areas to be annexed by the city to be deeded to the city, which
then would make the rights available to the Company at no cost.

This policy was developed as part of the agreement between the municipality and the
independent, for-profit company (a franchised ordinance). At the time, the parties
assumed this policy would bring in irrigated agriculture water rights; in reality, the
city has annexed very little agricultural land with associated water rights. There is
not much of this type of land left in the areas surrounding the city, and the
adjudication process is ongoing. The utility acquired over time new areas which had
their own water systems and water rights, the assets of which, including water rights,
were turned over to the utility.

Santa Fe purchased the Water Company in July 1995, and the policy is no more. The
city believes that some sort of progressive surcharge will become part of city policy

in the near future. This seems to be the most reasonable means for Santa Fe to cover
supply acquisition needs.

Santa Rosa

Spoke with the City Administrator (505-472-3331). The city has no water
development fee or dedication policy.

Silver City

Spoke with Carol Farley in the Planning Department (505-527-7822). Large-scale
developers, both inside and outside the city, are required to deed their water rights to
the town. They do not annex areas very often. This requirement does not apply to
smaller, individual users; however, a one-time water acquisition fee is charged to all
new customers. The rate is $500 for customers inside the city, and $1,250 for those
outside of the city. A different rate structure also applies to areas outside the city.
The town is working on a new plan, under which these policies will be turned into


Spoke with Pat Salomne, City Clerk (505-835-0240). Developers are required to
dedicate 0.5 af per dwelling unit as a precondition to subdivision approval. If no
water rights are associated with the land, the developer may pay $250 per lot to the
city for water acquisition efforts. Population is approximately 8,200.


Spoke with Gus Cordova, Town Manager (505-751-2006), who faxed relevant
ordinances. On 12 October 1978, the Town Council enacted a resolution requiring
the dedication of water rights to the Town prior to any new water service connection.
The resolution set forth a detailed schedule of requirements for 20 various user types
ranging from 0.2 af for each apartment unit to 40 gallons per person per day for retail
store employees to 5.0 af per car wash stall. A single-family dwelling must dedicate
0.4 af of rights.

Following the town's purchase of San Juan-Champ project water in 1982, the council
gave itself the discretion to charge cash payments in lieu of water rights, at an amount
of $3,500/af. This amount has been adjusted from time to time, most recently in
1992 when it was set at $4,500/af.

The ordinance itself last was amended on 18 July 1989. A moratorium against new
commercial customers has been in place since spring of 1994. The current plan is to
lift the moratorium in the summer of 1996, after it has been in place for two years.
At that time, the town anticipates that the fee will go up to $5,500/af. The fee is set
by amendment to the original resolution and is based on market value.


Spoke with Patrick Martinez, Planning Director (505-461-2143). The town has no
water development fee or dedication policy. Wells provide ample water and the town
has some reservoir rights as well.


October 1995

Water Development
Community Water Rights Dedication or In Lieu Fees Notes

Alamagordo Apparently no policy. No(?) An unable to verify the current situation.

Albuquerque No policy. No.

Aztec No policy. No. Previous ordinance was removed in spring 1995
to lessen impact on development.

Bernalillo No policy. No. Comprehensive ordinance has been drafted, to be
enacted by the end of 1995.

Capitan No policy. No. There currently is a moratorium on annexations.
The city once had dedication policy.

Carlsbad No policy. No. Dedication policy w/in lieu option being drafted.

Clovis No policy. No. Town is served by a private water company.

Espafiola Dedication requirements based on No(?) 0.125% of utility revenues are set aside to
type of use. replace contaminated wells.

Farmington Tentative new policy. No. A formal policy is expected by July 1996.

Gallup No policy. No. There is a shortage of water, not rights.

Grants Not clear. Not clear. An ordinance was considered in the late 1980s.

Hobbs Policy requires dedication for No.

Las Cruces Policy of 0.82 af/acre annexed for In lieu fee is Landowners not requesting the annexation pay
petitioning landowner. $1,000/af. 0.2 af/dwelling unit at time of development.

Las Vegas Ordinance requires dedication acc- In lieu fee at city's Separate ordinance exists for outside city limits.
ording to a schedule for annexation. option is $1,500/af.

Los Lunas Dedication of 0.336 af/dwelling In lieu fee currently Proof of conservation can reduce dedication to as
unit. S3,500. little as 0.2 af per unit.

Roswell No policy. No. Town has ample water.

Ruidoso Dedication of sufficient rights to In lieu fee based on
cover projected development. current market value.

Santa Fe No policy. No. Dedications ended in July 1995 when city pur-
chased water company. A surcharge is planned.

Santa Rosa No policy. No.

Silver City Developers must deed water rights. Separate water acqui- Town is working on turning policies into
sition fee is $500 in ordinances.
city, $1,250 outside.

Socorro Dedication of 0.5 af/dwelling unit. In lieu fee is $250/lot.

Taos Ordinance requires rights dedication In lieu fee is There currently is a moratorium on new
according to type of user. S4,500/af. commercial customers.

Tucumcari No policy. No. Town has ample water.



Some rural water providers in Arizona have required dedication of water supplies
and/or in lieu water development fees as a condition to annexation or water service for more
than a decade. In the last several years, larger urban water providers have begun to enact
water development fees. Some of these were triggered by the need to pay off "water farms"
purchased in the mid- to late-1980s. Prior to that time, the ability to overdraft high-quality
groundwater aquifers and the promise of the Central Arizona Project obviated the need for
purchasing additional water rights.

The 1980 Groundwater Management Act, with its 100 years assured water supply
requirements, and more recent groundwater replenishment legislation have contributed to the
current situation in Arizona where more municipalities are enacting or investigating water
supply development fees.


Spoke with (520-432-5446). Water is supplied by a private water company,
Arizona Water (432-5321).

Bullhead City

Spoke with Janice Paul in the Planning Department (520-763-0123). She handles the
city's Colorado River water contract with the Bureau of Reclamation. The city
controls the allocation of the Colorado River water within its contract service area.
Any developer/landowner must go through an allocation process that is administered
by the city. She does not believe there are any water rights associated with land
outside of the service area.

Casa Grande

Spoke with Bob Jackson, Public Works Director (520-421-8600). Casa Grande
currently has no policy requiring the dedication of water rights. Jackson indicated
that this is becoming a more important issue, however, and he would not be surprised
if the city did adopt a policy addressing this sometime in the near future.


Central Arizona Project Counties

The counties of Maricopa, Pima and Pinal in central Arizona comprise the Central
Arizona Project and, with minor exceptions, lie within state-mandated Active
Management Areas. Within these AMAs, new development is contingent upon proof
of 100 years of assured water supply, which cannot be based on dewatering local
aquifers. If the land to be developed does not lie within the service area of a
municipal water provider that is determined to have secured 100 years of supply, then
the developer must secure renewable water himself, or enter into an agreement with a
groundwater replenishment district.

Under such an agreement, the developer may pump groundwater which is replaced by
the replenishment district via recharge or offset by equivalent reductions in
groundwater pumping elsewhere in the same AMA. The replenishment district
therefore serves as a wholesale provider of water, which it may acquire through
different sources, such as surplus Colorado River water, tribal water allocations, or
treated effluent. The replenishment district may be compensated for the water and the
services it provides through a special property tax levied against the new


Spoke with Dee First in the Water Resources and Conservation Division of Public
Works (602-786-2798). She believes Chandler has no water rights dedications
requirement or any sort of water development fee. Chandler includes Salt River
Project and Roosevelt Water Conservation District lands, and it also has some wells
and a small Central Arizona Project allotment, which is recharged. Chandler usually
funds water acquisition efforts through bonding. During October 1995, the Arizona
Republic reported that Chandler was the third-fastest growing city in the US.

Chino Valley

Spoke with Dolores Sliger(sp?) (520-636-2646). Chino Valley does not have any
municipal water service. Most of the community is served by private wells. One
small private water company does serve part of the town. The Town of Prescott
serves some small areas.


Spoke with David Hook, Director of the Water Resources Division (520-364-7501).
Douglas has no policy, and does not have much new development.



Spoke with Lynn Kartchner, Town Engineer (520-466-2578). Eloy has an ordinance
requiring the dedication of water rights for areas that are to be annexed and
developed. Owners of retired agricultural land within irrigation districts get only 1.5
af per acre in water rights for non-agricultural purposes, so Eloy demands all of these
rights. Currently, Eloy has water hook-up fees and is considering a water
development fee, but it appears that neither is for securing additional water supply.


Spoke with Ron Doba, Utilities Director (520-779-76885, ext. 245). Flagstaff has no
policy concerning dedication of water rights. It gets its water from both surface
supplies (70 percent) and groundwater (30 percent). The city has not annexed much
land in recent years (current city limits extend well beyond developed areas). Doba
believes the issue of turning over water rights would be addressed on a case-by-case
basis the town may ask for these rights if a proposed annexation would tax the


Spoke with Rick Alread (602-545-6841). There is no ordinance regarding dedication
of water rights or in lieu payments, but the town has a general policy requiring
developers to supply water rights prior to approval of annexation and water service.
The policy applies primarily to areas outside of the city. Approximately three-
quarters of the town is on Salt River Project lands and some other areas are in the
Roosevelt Water Conservancy District. These areas are governed by a different
policy. For land outside these areas and outside the city, water rights must be
dedicated to the city.


Called 602-930-3190; awaiting return call.

Lake Havasu City

Spoke with Todd Dougdale in Community Development (520-453-4148). Basically,
the policy prohibits providing water service outside the city's corporate boundary
unless the developer dedicates water rights to the city. There is only one case of the
city extending its distribution lines outside of the city limits, and that development
was required to hand over its water rights. In general, the city does not extend its
distribution lines.


This policy of not providing water service outside the city soon will change. Lake
Havasu City just received a new Colorado River water allocation (which is not
Central Arizona Project water). In order to get this allocation, the city had to agree
to expand its service area. Under the agreement, the city is required to allocate water
to users regardless of where they are located within a larger service area.


Spoke with Beth Miller (602-644-2947). Mesa requires that subdividers of
historically irrigated land within the Roosevelt Water Conservancy District sign over
their district water entitlements. This policy has remained unchanged for several

The city charges water and sewer development fees of $1,053 for water service and
$990 for sewer service per single family dwelling unit, $1,000 to $90,000 water fee
and $990-$85,000 sewer fee for commercial. It is not clear if these are for
infrastructure alone, or if they include funds to pay off Mesa's purchase of water
farms in the 1980s. Ms. Miller states that the fees fund infrastructure only, but the
"need for revenues to pay for water supply was discussed when the fees were adopted.
The purpose may have been redefined to avoid litigation (see Scottsdale, below).


Ken Horton (520-287-6571, 520-287-7245) was to call. As of the late 1980s,
Nogales had no water dedication ordinance but enforced a policy requiring water
rights be dedicated to the city as a condition of annexation. The city recently
purchased a ranch for its water supply, and may require new development to help
retire the associated debt. Need additional details.


Spoke with Buzz Walker (520-474-5242). Payson's policy is to require developers of
one to 120 lots to provide to the city, at no cost, a fully developed well capable of
producing at least one gallon per minute per lot. For developments of more than 120
lots, the city still requires a well, but with a lower per-lot production requirement.
At its option, the city may instead levy an in lieu Water Development Fee of $500 per
lot. The town is planning to consider raising the fee in 1996.


Spoke with Keith Larsen (602-495-3669), who faxed an ordinance with original,
current and proposed fees. The Phoenix ordinance, which was passed 30 August


1990, requires the payment of a Water Resources Acquisition Fee to be used for
acquiring new water supplies and incorporating them into the distribution system.
Paying the fee is a necessary prerequisite to the issuing of a building permit and water
meter connection.

The fee varies across three distinct areas in Phoenix: Salt River Project lands; non-
SRP areas with a Central Arizona Project allocation (south of Jomax Road), and non-
SRP areas with no CAP water rights (north of Jomax Road). If a landowner has
some water rights, they may be exchanged in lieu of some or all of the fee. Also, the
fee may be reduced if the new development makes extensive use of water conserving
plumbing fixtures.

The Phoenix Water and Wastewater Department is required to submit to the City
Council once every three years revised recommended fee levels based on meter size.
Current fees are double the original fees; current fees and fees proposed to take effect
1 January 1996 are listed below:


Meter size (") SRP areas ($) Non-SRP w/CAP ($) Non-SRP w/o CAP ($)
5/8 & 3/4 26/ 37 214/ 300 316/ 446
1 66/ 92 532/ 750 792/ 114
1.5 130/ 183 1,066/ 1,500 1,582/ 2,228
2 208/ 293 1,704/ 2,394 2,532/ 3,565
3 compound 390/ 549 3,196/ 4,499 4,748/ 6,684
3 turbine 456/ 641 3,728/ 5,248 5,538/ 7,799
4 compound 650/ 915 5,326/ 7,498 7,912/11,141
6 compound 1,300/1,830 10,650/14,995 15,826/23,282
6 turbine 1,626/2,288 13,312/18,744 19,782/27,752


Spoke with Brad Huza, Environmental Services Director (520-776-6247). Prescott
has no policy concerning dedication of water rights. Huza believes that in the next
year, Prescott probably will adopt some sort of policy for commercial and industrial
customers. The town does charge a $0.30 per gallon water accession and
development fee which goes to augmenting water supply.


Received fax from Karen Fleming, City of Scottsdale (602-391-5674). Scottsdale
adopted a Water Resources Development Fee on 5 October 1987. The fee reflected a
desire among Scottsdale residents to "make growth pay its own way." The money is


to be used primarily for water development, acquisition, and reclamation. The
amount of the fee is $1,000 per new single family dwelling, $600 per multiple family
unit, and $2,000 per af of projected annual use for non-residential purposes.

The fees were challenged by the Central Arizona Home Builders Association
(CAHBA) and, in a ruling that surprised legal scholars, were declared
unconstitutional. Scottsdale appealed, with fees continuing to be collected and placed
in a court account, pending final disposition of the lawsuit. The city threatened a
moratorium on new building permits in spring of 1995, stating that its inability to tap
the fees left it unable to provide the state-mandated 100 years assured water supply
for new development. Negotiations with CAHBA produced an agreement under
which Scottsdale can spend the $29 million in fees collected up through 11 July 1995
on water supply enhancements.


Spoke with Cathy Bowles (520-537-5724), and then to Liz Berk, City Clerk. Liz
indicated that Showlow does not have any policy concerning water rights dedications
-and does not charge water development fees.


Spoke with George Fletcher, Water Conservation (602-350-8207, 602-350-2602).
Tempe has two different kinds of lands, Salt River Project lands and nonmember
lands. When SRP lands (within the district) are to be urbanized: 1) SRP takes the
water allocated to the lands (not a formal transfer of rights); 2) the city acts as an
agent, treating the water and delivering to the customer; 3) if the land owner would
like to use the water directly for nonpotable purposes or would like to self-treat it, he
can take the water back.

Nonmember lands that are undeveloped are found primarily in the Rio Salado area.
New developers on these lands must bring their own water supply (e.g., acquire a
Type 2 groundwater right, or a Central Arizona Project allocation). Steve Nielson is
the person to speak with about these arrangements (602-350-8432). Most other
nonmember lands are developed. Customer service would know about water
development fees.


Tucson currently does not collect any fees for the price of the water supply itself.
Tucson historically has overdrafted the local groundwater aquifer and now has a large
Central Arizona Project allocation secured by subcontract with the Central Arizona
Water Conservation District; therefore, the city has not had to purchase any water


rights. The city has collected fees from new development on the northwest side of
the metropolitan area for many years to help pay for the costs of building a treatment
plant for Central Arizona Project water and for infrastructure to deliver it to that area.
This Northwest Area Agreement covers an area served by four water providers,
including Tucson Water itself. Recently, the Tucson City Council has scheduled a
discussion on adopting fees on new development to defray the costs of maintaining an
assured water supply, as required by state law.


Spoke with Ron Stillwell, Water Superintendent (520-635-9257) and Ray Good,
Buildings Department (520-635-4451); they faxed relevant ordinances. Williams
enacted both a "Water Buy-in Fee" and a "Sewer Buy-in Fee" on 17 June 1993. The
water buy-in fee originally was intended to fund water supply acquisition efforts and
upgrades to the water treatment plant. The current water buy-in fees are as follows:

Meter size Fee
5/8" & 3/4" $1,170.
1" $1,520
1.5" $1,880
2" $3,050
3" $11,720
4" $15,240
> 4" case-by-case determination

This money, however, has been going into the general fund and has not been used for
the stated purposes. The new city manager is planning to change this situation and
direct the funds to the originally intended purposes.


Spoke with Dan Taylor in Engineering (520-783-1276). Yuma City Water Depart-
ment supplies people located within city limits and outside (within Yuma County).
Development located outside of the city must go through a water allocation approval
process and if approved, the development is obliged to annex to the town as soon as
possible (residents become water customers). All new city water customers must pay
a water development charge, a meter hookup charge, and a water capacity charge, but
these all pay for infrastructure, not supply.


October 1995

Community Water Right Dedications Development Fees Notes

Bullhead City No policy but has water allocation process No policy Community is served by Colorado River

Casa Grande No policy No policy

Chandler No No

Chino Valley No No Area served mostly by private wells.

Douglas No policy No policy Not much development is occurring.

Eloy For areas to be annexed or developed. No policy Town gets only 1.5 af per acre.

Flagstaff No policy No policy

Gilbert No ordinance but developers outside of city
are required to turn over water rights.


Lake HavasdtCity Development outside city must acquire and No policy City has extended distribution lines outside
dedicate water rights. city limits on one occasion only.

Mesa Irrigators in Roosevelt Water Conservancy Unclear The city has an agreement that they will get
District must sign over water entitlements. all of the surface water rights from the

Nogales Policy

Payson Developments must provide a 1 gpm well. Instead of the well Payson may raise fee next year.
the city may levy a
fee of $500/lot.

Phoenix Yes in certain area Yes, in certain area

Prescott No policy The town is likely to adopt a water
dedication policy in the next year.

Scottsdale No policy Water Resources Fee Schedule: S1,000/SFR unit, S600/MFR
Development Fees unit, $2,000/af for non-residential use.
Fees declared illegal; decision appealed.

Showlow No policy No policy

Tempe No policy, but has SRP allocation for some No policy
areas. Areas not covered by SRP allocation
must bring water supply.

Tucson No No The city is considering fees.

Williams No Yes Fees recently were enacted.

Yuma No policy but has water allocation process. No policy




Calls to Laura Vesquez, California State Water Resources Control Board (916-657-
2170), produced little information. Apparently, few if any water providers in California
have water dedication requirements or supply-related fees. This is due in large part to
California's unique blend of riparian rights and prior appropriation rights, and the
predominance of water supplies based on contractual rights to water from large projects.
Urban water supplies consisting of small, transferable water rights based upon prior
appropriation simply are not the norm.


Spoke with Barry Cress, Colorado Department of Local Affairs, Division of Local
Government (303-866-2156), who directed us to summary information on water supply fees
(but not water rights dedication ordinances). The Colorado Municipal League (303-831-
6411) published in December 1994 Water and Sewer Utility Charges and Practices in
Colorado. The information contained within is based on survey responses from 141
municipalities out of 256 surveyed in August and September 1994 (55 percent return rate).
The survey, which also was administered in 1990, 1986, 1982 and 1979, covers a very wide
array of information on the operation of municipal water departments.

One survey question asked about what is included in "tap fees" or connection charges
for new customers. Of 113 municipalities with tap fees, 39 of them (35 percent) indicated
that the fees included funds for future water acquisitions; 53 respondents (47 percent)
indicated that part of the fees were for future system development costs. The report noted a
major increase in the number of municipalities requiring new customers to provide water
rights or money in lieu of rights, from four in 1979 to 11 in 1990 and 39 in 1994. A 37
percent increase in average tap fees from 1990 to 1994 was partially attributed to "attempts
to require growth to pay its own way." The average tap fee for a residential customer inside
the city limits as of 1994 was $2,173. The survey also revealed higher tap fees outside
corporate limits for 62 percent of responding municipalities, with the fee typically 50 to 100
percent higher.

Denver has no water dedication requirements or separate supply development fees,
but its tap fee includes "the incremental cost of raw water collection, storage, transmission,
treatment facilities, and water rights needed to serve new growth," (emphasis added).


Denver also has a policy of recouping site-specific costs (e.g., higher costs associated with
serving remote areas, low densities, or higher elevations).

Although not specifically asked, some respondents indicated that they accept water
rights in lieu of system development fees. Brighton reduces connection fees by 30 percent if
adjudicated water rights are deeded to the city. Firestone requires dedication of a one af
share of Colorado-Big Thompson water for each dwelling unit, or 110 percent of the current
market price ($1,650 per af in 1994). Commercial and industrial development must dedicate
three af per acre. Gilcrest requires owners of real property located outside the town limits
who request water service to transfer to the town two af units of Colorado-Big Thompson
water for a 3/4" tap, three af for a 1" or 1.5" tap, and six af for a 3" tap. Windsor levies a
water resource fee of three af per acre for single family residential development, and a fee
based on estimated annual usage for other types of development.

Water dedication requirements and supply development fees are particularly common
among smaller towns in the Rocky Mountain resort areas and the Front Range corridor just
east of the Rockies. Some Front Range communities have dedication requirements for non-
tributary (deep aquifer) groundwater only. The following communities are among those
having some sort of water rights dedication requirement:

Castle Rock
Colorado Springs
Fort Collins



There are few instances of water rights dedication or water supply fees being enacted
in Nevada outside of the Reno-Sparks area, which is served by a private utility. Ordinances
were considered in the late 1980s in Carlin, Carson City, and Elko, but it is not known if
any were enacted.

Clark County

The Las Vegas Valley Water District currently has no water rights dedication
requirement for new development. A dearth of non-Colorado River water surface
rights makes such a requirement impractical. The District does not have a fee for
"new water supply acquisitions, either. Currently, LVVWD is investigating several
billion-dollar supply enhancement options.


Water is provided by Sierra Pacific Power Company (702-689-4381). Spoke with
Tammy (702-689-4116); in addition, Cindy Castleman, Water Resource Technician
(702-689-3140) faxed "Rule 17 Water Rights Policy." A water dedication
requirement has existed for new developments since 1981. Those providing water
rights to Sierra Pacific are connected immediately; those unable to provide water
rights are put on a waiting list. Once Sierra Pacific acquires the necessary rights,
service is extended, but the new customer is charged for all expenses of acquiring the
water rights.

A schedule of water rights dedication amounts first was established in February 1987
and has been modified since. Annual water demand for new service applicants is
estimated in acre-feet, divided by a drought factor (currently 0.58 or previously 0.58
and currently 0.90 received conflicting information), and a charge levied based on
the current price of water rights. Estimated demand for a single family residence on
a lot of 20,000 square feet or more is 1.0 acre-foot; for mobile home pads, it is 0.25;
and for apartment, duplex, condominium and townhouse units with separate irrigation
meters, it is 0.19 af. Demand for commercial and industrial applicants is based on
actual metered demand, a fixture count, or a flat rate of 1,000 gallons per acre per


Sierra Pacific is unusual in the frequency with which it computes the price of water
rights. Posted prices change the first of each month; the October 1995 price was
$2,340/af. Prices increased from $1,000/af in 1982 to a high of $2,500 in 1989 and
1990. Prices then dropped to $1,950 in 1993 before rebounding to current levels.



Spoke with Ron Freeman, Utilities Division (806-378-3035). Amarillo reportedly
considered adopting subdivision dedication requirements in the mid-1980s, but did not
do so and currently has no policy. It does not serve areas outside the city. No water
rights are exchanged for service within the city.


Spoke with Terry Ellerbrook, City of Lubbuck (806-767-2585). Lubbock has no
policy on water rights dedications or development fees. The city is served primarily
by water from Lake Meridith, 150 miles away. It has additional groundwater rights
for peak demand periods. No one is required to dedicate rights or pay any kind of
fee for supply development.

El Paso

Called Mike Fahay, Water Rights (915-594-5505); he was to call back. El Paso's
Public Service Board requires owners of land being annexed into the service area to
either transfer their appurtenant water rights to the Board or use the rights for
landscape irrigation. There do not appear to be any dedications requirements or
supply-related fees.



Most larger cities in Utah, including Salt Lake City and Ogden, have no water
dedication or development fee requirements. Such requirements are relatively common,
however, in smaller towns in rural Utah. Typically, developers are required to dedicate
specific shares of irrigation stock or to make cash payments to cover water development
costs. Communities with such requirements include:

American Fork
Alpine City
Emory County towns:
Castle Dale
Fruit Heights
Park City
St. George
Sandy City
Spanish Fork


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