By Howard Fischer
Capitol Media Services
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.
HB 2014 authorizes the Water Infrastructure Finance Authority to enter into agreements to facilitate the construction of a project that would 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.
But what HB 2014 also would do is exempt all communications and information gathered related to water augmentation from all provisions of the state's Public Records Law. And the only time anyone could get information would be "on the consent of the authority.''
Chelsea McGuire, an assistant director of the agency, told members of the Senate Committee on Natural Resources, Energy and Water that the secrecy is necessary for WIFA to accomplish its goal of supplementing the state's water supply.
Lawmakers allocated $1 billion over three years. But Gov. Katie Hobbs, citing the current 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-striken 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 being pledged from future revenues. And that could include "offtakers,'' essentially cities and water companies who would pledge to buy a certain amount of that water when it becomes available.
And the agency wants to do that without having to disclose to the public what deals it is negotiating.
All that alarmed Sandy Bahr, presidents of the Grand Canyon Chapter of the Sierra Club. She reminded lawmakers of the mess that was left in the wake of the last time WIFA was trying to negotiate a behind-closed-doors deal.
"The Ducey administration tried to rush through a deal with IDE Technologies via WIFA,'' Bahr said.
All that relates to efforts by the former governor to build a desalination plant on the Sea of Cortez in Mexico, with the water being pumped north to Arizona. He had hoped to have a deal inked before he left office in January 2023.
That led to behind-the-scenes talks with an Israel firm to negotiate terms to build a $5.5 billion water desalination plant in Mexico. In fact, the WIFA board agreed to begin negotiations -- strictly with IDE.
Of particular note is that some of the people involved in those talks, including state lawmakers, signed non-disclosure agreements.
It all blew up when word got out.
"You should say 'no' to this,'' Bahr told lawmakers of the confidentiality language.
"It will guarantee more sweetheart deals with no opportunity for public review until it is too late to stop the runaway train,'' she said. "And it can potentially encumber millions of taxpayer dollars.''
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 that future water. She compared it to the procurement process where 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.''
Still, she conceded, that's not what is in the measure as approved Thursday.
"The language does not reflect that very well,'' McGuire said, calling the verbiage "inartful.'' She said there would be an effort to narrow its scope when the measure now goes to the full Senate.
That, however, still raises the question of whether there could be a repeat of what happened with IDE.
"It's a fair question,'' she conceded. But she said that is generally precluded because WIFA is a public agency.
And what about what happened with those 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 that 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 told Capitol Media Services.
"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,'' McGuire continued. "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,'' Sundareshan said. "We would like to keep open as much disclosure and public engagement as possible.''
And that, she said, includes "providing relevant information from the agency to legislators as well.''
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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