Scottsdale will pursue an agreement with Motorola Solutions to remove a hazardous chemical from a local well and deliver the treated water to Scottsdale, reducing the city’s pumping of groundwater, a non-renewable resource.

The City Council on Tuesday night unanimously supported the plan, which would divert millions of gallons being dumped into the Arizona Canal to the taps of Scottsdale water customers.

Motorola, Siemens and GlaxoSmithKline would build a new facility to treat the well, known as PCX-1. The treated water would flow via a pipeline to the city’s Chaparral Water Treatment Plant.

After an incident in January 2008 allowed untreated water contaminated with the chemical trichloroethylene, or TCE, to flow into the water supply, Arizona American Water Co. disconnected the Salt River Project-owned well from its drinking-water system.

TCE, a widespread groundwater contaminant, is commonly used as an industrial solvent. In September, the U.S. Environmental Protection Agency released a final health assessment for TCE, which characterizes the chemical as carcinogenic and a health hazard to humans.

The assessment could affect the cleanup methods of the nation’s 761 Superfund sites identified with TCE.

Arizona American Water, which serves 5,000 customers in Paradise Valley and Scottsdale, has declined to reconnect the well because its customers don’t want it as part of their drinking water. Instead, the treated water is sent into the canal.

The SRP well still must be pumped and the water treated to prevent a plume containing TCE from migrating northward in the North Indian Bend Wash aquifer.

“Multiple options” were explored to deal with the loss of this water supply, said Marshall Brown, Scottsdale water resources executive director.

Motorola, Siemens and GlaxoSmithKline, which are responsible for the cleanup of the contaminated groundwater known as the North Indian Bend Wash Superfund site, would pay for the pipeline and facility near Arizona American Water’s Miller Road treatment plant south of McDonald Drive.

Scottsdale would operate the new facility, which would use activated carbon to remove TCE.

“There will be no net cost increases to the city,” Brown said.

Under the plan, Scottsdale would reduce or eliminate groundwater pumping of at least one other well. Scottsdale and SRP would share the costs of operating PCX-1, Brown said.

“It results in a net decrease of groundwater pumping compared to today,” he said.

The staff will come back with an agreement subject to council approval.

“I believe this is a very satisfactory result,” Mayor Jim Lane said.

Councilman Bob Littlefield said a previous proposal known as treat-and-transport would have raised the rates of Arizona American Water and Scottsdale water customers.

“This does neither,” Littlefield said.

Scottsdale rejected a treat-and-transport agreement with Arizona American Water, which would have treated the utility’s allotment of Central Arizona Project water equal to about 3 million gallons per day.

Later, separate negotiations fell through between Motorola and Arizona American Water to reconnect the water well. Motorola, one of the sources of the groundwater contamination decades ago, agreed to pay for new treatment of the well water for use in Arizona American Water’s system.

Richard Alt, president of Scottsdale Citizens for Sustainable Water, said the new solution “is in everyone’s best interest.” At the same time, he said it does not address water issues for all Scottsdale citizens.

Alt urged Scottsdale to gain control of Arizona American’s Paradise Valley Water District, which serves portions of Paradise Valley and Scottsdale. The company has maintained it is not for sale.

“All city water customers are paying for the treatment and recharge that (the city’s) water resources takes care of,” Alt said. “Arizona American just drains them.”

In other action Tuesday, the council discussed ways to use a $4 million windfall from the city’s 2010-11 budget, a result of revenue increases and cost savings. The fiscal year ended June 30.

One of the options that City Manager David Richert proposed is a one-time stipend to reward staff.

“I call it a ‘thank you,’ ” he said.

Other options included a property-tax decrease and a larger contribution to the city’s capital-improvement program.

The $4 million is part of the city’s unreserved fund balance, an accumulation of previous savings. The council will decide how to allocate the money.