ORGANIZATION, OPERATION, AND DESCRIPTION
OF CAIDD, E.D. #4 AND E.D. #5

General Description of CAIDD

            The District is a political subdivision and municipal corporation of the State of Arizona.  It was formed in 1964 for the purpose of providing a supply of irrigation water for agricultural use by constructing and operating an irrigation system and related works.

            The center of the District is approximately 60 miles from the City of Phoenix and the District is located entirely within the boundaries of Pinal County (the “County”).  The District is rural in nature, but portions of it are within the City of Eloy and adjacent to the unincorporated communities of Arizona City, Picacho and Red Rock, which are not included in the District.

            Pinal County is located in south-central Arizona and encompasses 5,374 square miles with an estimated population of 246,660.  The County has two distinct regions; a mountainous eastern region where copper mining is established, and a western region (where the District is located) consisting of desert valley, irrigated agricultural lands and some mining activity.  The leading industry in the County is agriculture, copper mining, tourism, and manufacturing.

            The District estimates that approximately 12,000 people reside in the area encompassed by the outer boundary of the District, which encompasses certain suburban areas which have been excluded from the District (and are not subject to its taxes and assessments) generally because these areas are either not eligible by law, or otherwise not suitable for irrigated agriculture.  The District consists of a total area of approximately 87,600 acres of irrigated farmlands, of which approximately 13,272 acres are owned by the State of Arizona and are leased to farming operations.  The City of Mesa (“City”) acquired 5,152 acres within the District in 1985 in order to obtain the groundwater rights appurtenant to these acres.  The City and the District have entered into an intergovernmental agreement whereby the City lands will receive irrigation water from the District.  The City has agreed to pay all District assessments and taxes allocated to its land within the District.  In 1988 the United States purchased approximately 2,910 acres within the District as reservation trust land for the Tohono O’Odham Nation.  The land has been used for agricultural purposes thus far.  The Nation has entered into agreements with the District for annual water service.  Additionally, all District taxes and assessments on the Nation’s property have been paid directly by the Nation or through a credit on the District’s repayment obligation to the United States.

The District records reflect that the remaining 66,266 acres are owned by private individuals, family-owned and corporate entities as illustrated below.

            Elevation within the District ranges from 1,875 feet above sea level in the south to 1,450 feet in the north.  The climate is characterized by long, hot summers and short, mild winters and an average annual rainfall of approximately eight inches.  The average annual temperature is approximately 70 degrees Fahrenheit with an average annual frost-free period of approximately 275 days.

Organization and Powers

            The District was organized on May 11, 1964 by an order of the Board of Supervisors of the County, acting pursuant to Arizona statutes authorizing such entities (the “Act”).  The Board of Directors of the District is authorized by the Act to: acquire water rights, real estate and personal property; construct or acquire canals, water, water rights, rights-of-way and other irrigation works; provide for the construction, operation, leasing and control of electrical generation and distribution plants; establish charges for water or electricity; defend and prosecute legal proceedings; enter into construction contracts after solicitation of sealed bids; acquire by purchase or condemnation existing irrigation systems or rights-of-way necessary for irrigation works; levy taxes and assessments and generally enter into enterprises and occupations with the powers and privileges of municipalities under State law.  After obtaining the approval of the District’s voters in a duly held election, the District is authorized by the Act to issue bonds and to enter into obligations to, or contracts with, the United States Government for the purpose of constructing irrigation works or supplying water for the District.  Certain District property, including irrigation works and water rights, is exempt from State and municipal taxes; however, the District is liable to the State for the groundwater withdrawal fee imposed pursuant to the Arizona Groundwater Management Act.

            Under existing law, the only method by which the District may be dissolved is by the Board of Supervisors, with the approval of the voters of the District in a duly held election, and only if all indebtedness of the District has been satisfied.

Administration

            The powers of the District are vested in a nine member Board of Directors, elected by the registered voters to staggered three-year terms to represent one of three election divisions.  At an annual meeting in January of each year, the Board of Directors elects one of its members to serve as President and also elects a Vice President, Secretary and appoints an Assistant Secretary.  The Treasurer of Pinal County, who is elected to a four year term by the voters of the County, serves ex-officio as the Treasurer of the District, and is responsible for the collection, custody and disbursement of tax revenues collected for the District.

            The District’s manager is appointed by, and serves at the pleasure of, the Board of Directors.  He functions in a dual role as general manager of Electrical District No. 4, which provides electrical services to more than 200 irrigation wells in the District.

            The District employs a staff of thirty-six (36) persons including the District’s Manager.  Of the total, six (6) are office employees who provide recording keeping, billing, accounting, secretarial, and one (1) computer services employee and twenty-eight (28) are field and operations personnel, who maintain and operate the system.  Included in the above are those persons utilized by the District in the management of the Electrical District #4 and Electrical District #5.  In addition to regular staff, part time employees are also utilized seasonally, one in the dispatch office and one as a water operator.

The Farm Economy of the District

            Most of the approximately 87,600 acres in the District has at one time been utilized for farming.  Since the 1920’s and until CAP water became available throughout the District in 1989, the lands were irrigated with water pumped from wells.  Prior to CAP water availability the District experienced a severe reduction in the amount of land under cultivation.  This reduction was believed in part to be the result of the increased cost of pumping water due to the decline in the groundwater table.  It was the general consensus at the time that the availability of CAP water would significantly increase the acres cropped.

            Shortly after the introduction of CAP water to the District in 1990, the farm economy within the District, and in most other CAP irrigation districts, took a substantial downturn.  This was partially due to increasingly poor cotton crop yields resulting from insect infestation, and declining commodity prices coupled with the tightening of credit availability due to depreciation in land values.  From 1992 through 1994 the District experienced very low levels of cropping and water use.  Many District landowners were unable to pay the District’s taxes and assessments thereby making it difficult for the District to meet its repayment obligations to bondholders and the United States for the financing of the District’s water distribution system.  Consequently, in August of 1994, the District filed a petition under Chapter 9 of the Federal Bankruptcy Code for adjustment of its debts.  In settling the claims of its creditors in the Chapter 9 bankruptcy proceedings, the District entered into various contractual agreements with existing landowners, the United States, the Arizona State Land Department, Pinal County, and the Central Arizona Water Conservation District which require constant administration and oversight.  Nevertheless, the District’s restructured debt load, as reflected in the substantially lower water costs to water users, has resulted in substantial amount of increased cropped acres within the District over the last ten years and a substantial increase in water sales during this same time period.

The District emerged from this process in April of 1996 with a substantially lower per acre-foot water cost as reflected in the table below.

	Water Cost / AC FT			Assessment / GWR AC		Water Cost*	Water Cost*
Year	W-S	Summer	F-W	DA	TLM	(3.5 AC FT)	(5.5 AC FT)
	-	$42.00		-	$83.59	$230.59	$314.59
1993	-	$38.00		$40.07	$43.59	$176.59	$252.59
1994	$25.00	$38.00	$25.00	$40.09	$20.00	$153.00	$229.00
1995	$25.00	$39.00		$40.09	$20.00	$156.50	$234.50
1996		$38.00			$19.80	$152.80	$228.80
1997		$36.00			$19.80	$145.80	$217.80
1998		$36.00			$19.80	$145.80	$217.80
1999		$36.00	$25.00		$19.80	$145.80	$217.80
2000	$25.00	$38.00	$37.00		$19.80	$152.80	$228.80
2001		$37.00			$22.10	$151.60	$225.60
2002		$34.50			$22.10	$142.85	$211.85
2003		$34.50			$22.10	$142.85	$211.85
2004		$39.00			$22.10	$158.60	$236.60
2005		$42.00			$22.10	$169.10	$253.10
2006		$43.00			$25.00	$175.50	$261.50
2007		$45.00			$29.00	$186.50	$276.50
2008		$48.00
2009		$51.00
* Using the peak summer rate plus the annual assessment less any well lease payments.
** In settling their bankruptcy reorganization plan, both the Direct Assessment and
and the well lease payments have been waived.

            In 2004 the District finalized negotiations under the Gila River Indian Community Water Right Settlement Agreement which was approved by Congress in the Arizona Water Settlements Act of 2004 (Public Law 108-451).  This settlement eliminates certain claims of the United States and the Gila River Indian Community against the District for groundwater pumping and provides the District with affordable pricing available CAP water through 2030.  It also provides the District with relief from the onerous provisions of the Reclamation Reform Act of 1982.

Crops

            The principal crops grown in the District are cotton, grains, citrus, pecans, and certain specialty crops such as corn, lettuce, and melons.  The chart that follows illustrates the number of acres of each principal crop planted within the District since 1990.

 

Crop	1990	1991	1992	1993	1994	1995	1996
Upland Cotton	14,796	18,060	13,433	13,772	16,483	16,483	27,865
Pima Cotton	22,193	15,607	12,251	4,307	4,032	4,032	2,802
Wheat	1,500	1,158	2,128	3,009	4,914	7,427	16,022
Barley	500	425	781	1,447	2,300	2,300	2,457
Pecans	1,100	1,100	1,100	1,100	1,100	960	950
Citrus	1,400	1,400	1,400	1,400	1,400	1,400	1,205
TOTAL	41,489	37,750	31,093	25,035	30,229	32,602	51,301

Crop	1997	1998	1999	2000	2001	2002	2003
Upland Cotton	29,233	23,572	30,302	33,552	37,233	42,425	31,630
Pima Cotton	1,450	420	999	110	140	0	175
Wheat	12,564	16,521	2,753	3,552	3,117	4,430	8,441
Barley	4175	2562	7412	2,612	2,812	3,601	2,549
Pecans	1,062	1,062	1,030	980	986	912	906
Citrus	1,205	1,207	1,214	1,214	1,214	700	861
Alfalfa	2,515	4,233	4,131	4,418	4,522	5,269	5,443
Other	4,148	8,335	8,438	6,905	8,001	4,466	5,019
TOTAL	56,352	57,912	56,279	53,343	58,025	61,803	55,024

Crop	2004	2005	2006	2007	2008	2009	2010
Upland Cotton	29,233	37,672	35,218	30,995	26,270
Pima Cotton	1,450	0	1,130	0	200
Wheat	12,564	5,566	2,933	5,302	17,466
Barley	4175	3163	1185	1,020	1,576
Pecans	1,062	1,056	1,056	991	968
Citrus	1,205	820	820	670	508
Alfalfa	2,515	4,994	7,133	7,906	10,502
Other	4,148	5,253	2,308	10,883	15,643
TOTAL	56,352	58,524	51,783	57,767	73,133	0	0

Water Supply

            The District has two principle sources of water, Central Arizona Project (“CAP”) water and groundwater pumped from the approximately 350 wells located within the District which are operated and maintained by the District under long term lease agreements with the District’s landowners.  Since 1997 the District has also been receiving water from the Arizona Water Banking Authority in lieu of pumping a certain amount of the District’s groundwater supply.  The District’s current CAP Excess Water Contract with CAWCD runs through 2030 and the Water Banking Program is a twenty-year program which is allocated and funded on an annual basis.

            Since CAP water has become available the District has delivered the following amount of water to its inhabitants.

General Description of Electrical District No. 4 and Electrical District No. 5 of Pinal County

            The electrical districts are also political subdivisions and municipal corporations of the State of Arizona and they overlap most of the irrigation District’s boundaries.  Electrical District No. 4 was formed in 1928 for the purpose of providing a power supply for commercial agricultural purposes for pumping groundwater within its boundaries and Electrical District No. 5 was formed in 1946 for the same purpose.

            Electrical District No. 4 has no employees as it is managed entirely by CAIDD through a management services agreement.  However, of the nineteen (19) field and operations personnel for CAIDD five (5) are principally utilized in operating the electrical services for Electrical District No. 4 and No. 5.  Electrical District No. 5 has its own manager but also contracts much of its management and operations responsibilities to CAIDD under a similar management services agreement.

            Electrical District No 4 has approximately 230 miles of electrical lines and approximately 1375 service locations.  Electrical District No. 5 has approximately 140 miles of electrical lines and approximately 314 service locations.  Electrical District No. 4 owns one (1) substation and also receives power at another substation owned by Western Area Power Administration.  Electrical District No. 5 does not own their substation; they lease it from the Arizona Power Authority.

Administration

            The powers of both Electrical District No. 4 and Electrical District No. 5 are vested in five member Board of Directors, all of whom are landowners and farmers, elected by their fellow District landowners.  

ELECTRICAL DISTRICT NO. 4 OF PINAL COUNTY

            Electrical District No. 4 (“ED4” or “the District”) is an electrical district established in 1928 by the Board of Supervisors of Pinal County pursuant to the provisions of Chapter 3 of Title 30 of the Arizona Revised Statutes.  ED4 was organized to provide, and has provided since 1930, electrical power and energy primarily for producing water for irrigation.  ED4 obtained its original power purchase certificate from the Arizona Power Authority in 1960.

            ED4 is located in Pinal County, Arizona, with a service area of approximately 108,000 acres.  ED4 owns two distribution substations that are centrally located within its service territory.  ED4 provides electrical service to agricultural irrigation pumping, industrial, commercial and residential consumers.

            ED4 is governed by a five-member Board of Directors elected annually by freeholders of property within ED4’s boundaries.  The District is operated by the Central Arizona Irrigation and Drainage District through a Management Services Agreement.

DISTRICT GOALS and OBJECTIVES

• Provide Water and Reliable Electric Power at Lowest Practicable Cost,  Consistent With Sound Business Principles
• Enhance Customer Financial Stability by Providing Services which Enhance Property Values and Provide Long-Term Stability in Water and Electric Power Rates