Peoria City Council Approves Water Exchange Deal With Cave Creek Through 2033

Peoria trades CAP water for storage credits in regional shortage response

The City of Peoria approved a water exchange agreement with the Town of Cave Creek on Tuesday, aiming to address ongoing Colorado River shortages and Central Arizona Project reductions.

Peoria officials described the Intergovernmental Agreement as "mutually beneficial" to both communities. The deal runs through the end of 2033.

How the exchange works

Under the agreement, Peoria will deliver a portion of its available Central Arizona Project (CAP) water to Cave Creek. In return, Cave Creek provides Peoria with recovered long-term storage credits.

According to city documents, the exchange ratio is:

• For every 1 acre-foot of CAP water delivered by Peoria, Cave Creek exchanges 1.1 acre-feet of recovered long-term storage credits
• Cave Creek pays a Water Recovery Fee starting at $460 per acre-foot with a 3 percent annual escalator
• The exchange volume is capped at 450 acre-feet of CAP water per year during declared shortages

"The agreement allows Cave Creek to fortify its supply during critical periods when CAP contract reductions occur, ensuring the town can consistently meet customer demand," Peoria city officials wrote in a statement.

The fee supports Peoria's well operations, maintenance, and replacement budget, according to the agreement terms published by AZ Business Magazine.

Why Peoria makes the deal

Peoria officials said the exchange supports the city's Assured Water Supply designation and its proven 100-year delivery plan based on a diversified water portfolio. That portfolio includes CAP water, SRP water, effluent, groundwater, and long-term storage credits.

The agreement also ensures Peoria has access to recovered water resources that do not negatively impact the city's groundwater supplies, according to ABC15.

A familiar model

Peoria has used this approach before. The city reached a similar water exchange agreement with the City of Tucson in 2023, according to 12 News.

Cave Creek approached Peoria last year to negotiate the water exchange, records show.

What comes next

The Cave Creek Town Council is scheduled to review the agreement at its meeting on June 23.

The Colorado River Basin was in a Tier 1 shortage for 2025, resulting in a 512,000 acre-foot reduction to Arizona's water supply from the river, according to 12 News. Valley communities continue to grapple with looming reductions in CAP allotments due to ongoing water shortages on the Colorado River.

An acre-foot roughly equates to the amount of water needed to flood a football field.