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City explains two water-right purchases, PID bond planned to fund larger block

Hurricane Water Board · January 27, 2026

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Summary

City staff described two recent water-right acquisitions: ~75 acre-feet obtained via impact-fee vouchers and a larger nearly 1,700-acre-foot block to be financed by a gateway PID borrowing from Western Mortgage; the PID will fund about $5 million in infrastructure and the deal includes a state-engineer change application contingency.

City staff told the Hurricane Water Board that the city has moved to acquire two separate blocks of water rights and related assets, one through an impact-fee voucher trade and another through a public improvement district (PID) bond arrangement. Dayton, the city presenter, said the smaller purchase involved roughly 75 acre-feet from a private landowner in the Apple Valley area in exchange for secondary-water impact-fee vouchers so the city would not have to pay cash up front. "I'll walk through the different water rights," Dayton said as he described the contract and reimbursement structure approved by the city council.

The larger transaction involves a block of nearly 1,700 acre-feet currently used for a sod farm and other uses north of Sand Hollow Reservoir. Dayton described a financing plan under which the gateway PID "would actually bond and borrow the money to pay for the water from Western Mortgage," with Western Mortgage deeding the water to the city and the PID using secondary water impact fees from that service area to pay bondholders. Speaker 2 summarized the infrastructure commitment, saying, "The pit's gonna spend about $5,000,000 of infrastructure getting us set up to use that we need." Dayton added the PID must successfully arrange financing before the city closes the purchase and that the PID had a 2026 closing deadline.

Dayton also described a condition protecting the city: the city will file a change application with the state engineer to move points of diversion to the city's wells, and the city retains the option to back out if the state imposes unacceptable limits. "If the state engineer has any issues or puts any limits or conditions on that that the city is not happy with, then the city has the option to back out of that deal," Dayton said.

Why it matters: the two acquisitions increase the city's available water portfolio and create a financing path that shifts upfront cash needs to PID bonds, but they rely on successful PID borrowing, state-engineer approvals and later infrastructure work to bring the water into municipal service. The board discussed metering and a transition plan so existing PID wells can continue operating until new wells are drilled and tested. The board directed staff to monitor PID financing and the state change application; no final city action on the larger block was recorded at this meeting.