PHOENIX — A Senate panel voted Thursday to shut the public out of the key business of the state agency tasked with finding new water for Arizona.
House Bill 2014 authorizes the Water Infrastructure Finance Authority to enter agreements to facilitate construction of a project to bring water from outside the state into Arizona. It also empowers the agency to negotiate deals with others to agree to purchase the water once it becomes available.
And it exempts all communications and information gathered about water augmentation from being subject to the state’s Public Records Law. The only time anyone could get information would be “on the consent of the authority.’’
That secrecy is necessary for the authority to accomplish its goal of supplementing Arizona’s water supply, Chelsea McGuire, an assistant director of the agency, told the Senate Committee on Natural Resources, Energy and Water. The GOP-led committee approved the bill on a 4-3 party-line vote Thursday, sending it to the full Senate.
Arizona Sierra Club leader Sandy Bahr told lawmakers, “You should say ‘no’ to this’’ confidentiality.
“It will guarantee more sweetheart deals with no opportunity for public review until it is too late to stop the runaway train,’’ Bahr said. “And it can potentially encumber millions of taxpayer dollars.”
Lawmakers previously allocated $1 billion over three years for the water authority, known as WIFA. But Gov. Katie Hobbs, citing the state’s budget deficit, has proposed reducing this year’s allocation from $333 million to just $33 million.
McGuire acknowledged the fiscal issues.
“It’s not the best year for an ambitious appropriations act, as I’m sure everybody is aware,’’ she said. “And so what we were tasked with was giving the Legislature a non-monetary pathways for showing tangible support for the mission of bringing a new, sustainable water supply to a drought-stricken state that’s one of the fastest growing in the nation.’’
One form that could take is borrowing money for construction costs — which could run into the billions of dollars — with repayment pledged from future revenues. That financing structure could include “off takers,’’ essentially cities and water companies that would pledge to buy a certain amount of the water when it becomes available.
The agency wants to do that without having to disclose to the public what deals it is negotiating.
That alarms Bahr, president of the Grand Canyon Chapter of the Sierra Club. She reminded lawmakers of a mess left the last time WIFA tried to negotiate a behind-closed-doors deal.
“The Ducey administration tried to rush through a deal with IDE Technologies via WIFA,’’ Bahr said.
That refers to former Gov. Doug Ducey’s efforts to have a desalination plant built on the Sea of Cortez in Mexico in order to pump water north to Arizona. He had hoped to have a deal inked before he left office in January 2023.
After behind-the-scenes talks with Israel firm IDE about terms to build a $5.5 billion desalination plant in Mexico, the WIFA board agreed to begin negotiations — strictly with IDE.
Some of the people involved in those talks, including state lawmakers, signed non-disclosure agreements.
It all blew up when word got out.
McGuire told Capitol Media Services after the meeting that it is not the intent to shield the entire process from the public.
What needs secrecy, she said, are talks with those with whom WIFA is negotiating to buy future water. She compared it to the procurement process in which the state seeks sealed bids.
In those cases, the government wants the lowest cost. By contrast, any deal to sell water would be looking to bring in as much money as possible.
“When you’ve got a bunch of people bidding for a contract, their bid, their ability to pay, their needs, those aren’t subject to public record until the end of the process,’’ McGuire said. “That’s what we’re trying to do.’’
But she conceded that’s not what’s in the measure as approved Thursday.
“The language does not reflect that very well,’’ McGuire said, calling the wording “inartful.’’ She said there will be an effort to narrow its scope when the measure now goes to the full Senate.
That still raises the question of whether there could be a repeat of what happened with IDE. “It’s a fair question,’’ she said.
As for what happened previously with non-disclosure agreements, “That was IDE going out and asking … the people that they were talking to to sign those non-disclosure agreements,’’ McGuire said.
She said that’s part of the reason the board ultimately decided it didn’t have enough information about the company and its plan to “sign on the dotted line.’’
McGuire also said the board has since crafted a policy in response to what happened to “very clearly delineate that public process and very clearly state that there is no avenue for an IDE-like non-solicited proposal to come before us.”
“That wasn’t the way we wanted that to happen,’’ she said. “We not only want to make it clear to proposers what we’re asking for, but we want to make it clear to the public what we’re asking for. Because, otherwise, we’re just going to run into more problems than are worth solving.’’
Sen. Priya Sundareshan, D-Tucson, said she could not support the legislation with the current language that exempts various records from the Public Records Law.
“These are public funds,’’ she said. “It’s a public entity. We would like to keep open as much disclosure and public engagement as possible.’’
That includes “providing relevant information from the agency to legislators as well,” she said.
Public disclosure aside, Sundareshan said she appreciates WIFA for “trying to do more with what is available’’ given the current budget situation.
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