Payson's Water Saga: 30 Years Deep

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Some say the fount of Payson's water shortage began 12 years ago, when the Town sold its water rights to the Valley.

But it didn't happen that way -- Payson never had water rights to sell, Cliff Potts, former mayor and council member said.

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The flow of CAP water is contingent upon availability: If the Colorado River is low one year, subordinate recipients, such as Payson, might not get any water at all.

The story of Payson's flirtation with groundwater begins in 1968, the year Congress authorized the construction of the Central Arizona Project (CAP), a 336-mile canal that stretches from Lake Havasu City to Tucson.

CAP was the federal government's antidote to the region's reliance on groundwater -- the canal would transport surface water from the Colorado River to Arizona's growing inland communities.

The legislation that created CAP allowed municipalities to hold allocations -- not water rights -- to the water it used from the river.

The Arizona Department of Water Resources defines a water right as ownership priority: First in time of use is first in right.

For instance, if your family purchased property next to a river generations ago, your right to have title to a portion of that water would supercede the claims of others.

A water allocation, however, according to Arizona Department of Water Resources, permits an entity to "lease" water as long as it's available.

In the early 1970s, the Town of Payson benefited from CAP legislation and received a 500-acre-foot allocation of Colorado River water.

To fund the canal, municipalities using its water would pay a property tax for the infrastructure.

But allocations aren't guaranteed and in Payson's case, unlikely, especially when 3,000 other entities from three other states, according to a University of Arizona study, are vying for the same water.

"You can stand in line for water from the Colorado River that may or may not be there," said Buzz Walker, Payson's long-time public works director.

In the event of a CAP boon, however, Walker applied for a larger allocation to sustain Payson's growth, and in 1984, CAP granted the town 4,995 acre-feet of Colorado River water.

The history of the regional battle for Colorado River water dates back to 1922 when Congress enacted the Colorado River Compact to resolve bickering among the seven Western states along the river.

Lee's Ferry, the Grand Canyon gateway between Arizona and Utah, separates two regions of the river defined by the legislation.

The upper basin, north of Lee's Ferry, is comprised of four states: Wyoming, Utah, Colorado and New Mexico. The lower basin to the south comprises Arizona, California and Nevada. Each basin claimed 7.5 million acre-feet a year. Of the lower-basin states, California had first dibs on 4.4 million acre-feet of the Colorado River Compact.

This means all parties in California with a right to Colorado River water take their share before Arizona routes its 2.8 million acre-feet through CAP.

As the hope of CAP water sank, the town, according to Potts, sought to exchange its 4,995 acre-feet allocation with the Salt River Project, and take water out of the East Verde River, fed by the Blue Ridge Reservoir.

But the Department of Game and Fish, concerned about the effects of diminished water flow on the river's riparian environment, dashed that plan.

In 1990, reality set in.

"There were so many parties claiming water out of the Colorado, especially Indian nations," Walker said.

And even if Payson did receive the CAP allocation, other issues sprang up.

The flow of CAP water is contingent upon availability: If the Colorado River is low one year, subordinate recipients, such as Payson, might not get any water at all.

"We were sitting there 70 miles away from the canal and no way to touch that water," Potts said.

To compound matters, the state imposed a deadline on the execution of the CAP allocation, and once that passed, the town was charged a $250,000 annual maintenance fee, Walker said.

"We didn't have the money either; we were a small town," Potts added.

And then a Scottsdale developer in search of a water supply approached the town.

"We couldn't find an exchange, so we sold our allocation," said Walker. "We didn't pay anything for it, and we got $4.3 million."

The developer paid $5.2 million to the Town of Payson in 1994 for its water allocation. Upon that transfer, CAP required Payson to pay a $1.1 million equalization fee to reimburse the state for what would have been its share of the canal.

The U.S. Department of the Interior invested the remaining $4.3 million in the town's Central Arizona Project trust fund, specifically designated for developing new-water sources.

"We still would not have any water from that allocation and we wouldn't have the money to explore the sources of water the town has been exploring," Potts said. "The knowledge we have about our water supplies has been a direct result of that money."

Simultaneously, things were heating up around the Blue Ridge Reservoir, also known as the C.C. Cragin Reservoir -- built in 1965 by Phelps Dodge mining company.

Walker said the company dammed the water on the Mogollon Rim to exchange with the Salt River Project.

Phelps Dodge purchased nearby water sources from SRP for its mining operations, and in return, Phelps Dodge paid for the SRP water through the sale of Blue Ridge water.

In 2005, the Arizona Water Rights Settlement Act pacified disputes among Arizona's American Indian nations over their shares of CAP water.

Meanwhile, Phelps Dodge discovered an alternative water source, freeing up the water rights it held on Blue Ridge.

"So SRP said, ‘If you don't need it, we'll take it,' so they stepped into Phelps Dodge's place," Walker said.

Now SRP has the water and the U.S. Bureau of Reclamation owns the dam. Legislation allows municipalities and entities of northern Gila County, that apply, to receive water rights --ownership -- of Blue Ridge water.

And though Payson won't pay directly for its annual 3,000 acre-feet of water, the town will encumber the accompanying legal fees and the cost of constructing infrastructure and moving the water -- still nearly a decade away from fruition.

"It was the only reasonable solution and up to this point it hasn't been proven to me (to be) the wrong decision," Potts said.

-- To reach Felicia Megdal call 474-5251 ext. 116 or e-mail fmegdal@payson.com.

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