Prescott Valley, AZ – Investors and developers will place their bids on a one hundred year supply of about 27-hundred acre feet of water. Half an acre foot is enough water for a typical home in a year. The Department of Water Resources came up with that amount based on how much water the town was recharging at its waste water treatment plant.
The winning bidder can resell the rights to the water supply or use it to build a golf course, an industry or a subdivision in Prescott Valley. Auction organizers say it's enough water to support as many as 12-thousand homes. John Munderloh is Prescott Valley's water resource manager.
MUNDERLOH: By auctioning the water you can determine what the true market value of the water resource is. Water has never been dealt with in this fashion before. It's always been subsidized. It's been allocated through government programs through backdoor deals through political processes it hasn't been transparent.
Prescott Valley sits in what's called an Active Management Area. That means the town is under extra strict water regulations. Currently town leaders must find a new water source to help sustain the growing community. They have permission to pump water from the Big Chino Aquifer several miles away but that costs money. So town manager Larry Tarkowski says they came up with this auction idea to help pay for the pipeline project.
TARKOWSKI: Need is the mother of invention. Based on the town of Prescott Valley's need for money to go ahead and participate in a pipeline project with the city of Prescott we turned our effluent into an asset.
The opening bid price at auction will be at least 22-thousand-5-hundred dollars per acre foot.
If you divide that by 100 years you get 225 dollars per acre foot. Central Arizona Project customers currently pay less than half of that each year. Bob Barrett is C-A-P's spokesman.
BARRETT: We charge our customers whatever it costs to bring the water from the river to Phoenix for example is what we charge our customers. We charge on per acre foot basis. Right now our most expensive water goes to municipal and industrial customers. In 2007 our cost delivered per acre foot is $87 per acre foot. In 2008 our costs are going to go up to $91 per acre foot. And we are projecting that in 2012 we'll be charging $123 per acre foot.
Barrett says at a fixed rate 225 dollars per acre foot for a hundred years is not a bad deal considering the location. It's not easy to transport water over hills and mesas to Prescott Valley.
Sandy Fabritz-Whitney is the assistant director for water management at the Department of Water Resources.
WHITNEY: They have had to be more proactive in developing water supplies. A lot of these other Active Management Areas Phoenix, Tucson they have access to CAP supplies they have access to Salt and Verde river water through the Salt River Project in the Phoenix area. And they have access to a number of other water supplies so the cost isn't as great. So it's your basic economics supply and demand will drive the cost and the supply is limited in the Prescott area but the demand is still there so its obviously going to drive the cost up for water.
The town of Prescott Valley hopes to make at least 53 million dollars at the auction to help pay for their portion of the Big Chino pipeline project.
For Arizona Public Radio I'm Laurel Morales.