To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Mark Marlowe, P.E. Director of Castle Rock Water
Matt Benak, P.E., Water Resources Manager
Lauren Moore, Water Resources Program Analyst
Title
Resolution Approving the 2021 Water Lease Agreement Between the Town of Castle Rock and Colorado Parks & Wildlife
Body
________________________________________________________________________________
Executive Summary
Castle Rock Water is seeking Town Council approval of a resolution (Attachment A) for a spot water lease with Colorado Parks & Wildlife (CPW). In anticipation of drought conditions this summer, CPW wishes to lease some of the Town’s surplus water stored in Chatfield Reservoir to fill the hatchery settling ponds as well as the Dog Off Leash Area ponds located with Chatfield’s recreation area. Completion of the Chatfield Storage Reallocation Project in 2020 prompted the Colorado Water Conservation Board (CWCB) to allow shareholders access to full storage amounts for the first year of storage. While the Town currently owns 590 acre feet (AF) of storage in Chatfield, storage of up to 2,000 AF was permitted until May 2021. After May, the Town will rent storage in excess of 590 AF. The Town currently has upwards of 1,250 AF of water stored in the reservoir with additional reusable supplies coming in each day.
If Council approves this lease, up to 100 AF of water would be released from the Town’s Chatfield Reservoir storage account directly into the fish hatchery pond gate. This release would occur between April 7, 2021 to December 31, 2021. The Town will assess a $340 per AF price for the water, with payment due upon total quantity released. The potential revenue for this lease is up to $34,000. The agreement will terminate at the end of 2021.
History of Past Town Council, Boards & Commissions, or Other Discussions
Castle Rock Water Commission reviewed this lease at their March 28, 2021 meeting. The Commission voted 6 to 0 approved
Discussion
Castle Rock Water has a strategic goal to strive to maintain sustainable rates and fees, and demonstrate fiscal responsibility, accountability, and transparency. One of the tactics to achieve this goal is to maximize leasing opportunities for idle water rights. Over the past three years the Town has generated over $130,000 by leasing idle water rights to downstream users (see Table 1 below). Until these water rights can be fully utilized by the Town, Staff will continue to seek out users that can put these rights to beneficial use.
Table 1. Revenue generated from leasing idle water rights to downstream users over the past three years.
|
2018 |
2019 |
2020 |
|
$29,019.13 |
$30,606.65 |
$70,699.75 |
The Town currently owns 590 AF of storage space in Chatfield Reservoir and plans to eventually reach 2,000 AF of storage by 2031. As part of the option agreement the Town has with CWCB, the Town will purchase blocks of storage over the next 10 years. Currently, the Town is planning to take a deferral in 2021 and purchase 129 AF in 2022. This will provide 719 AF of total storage by the end of 2022. The Town will then have two deferrals remaining until the full storage space is realized within the 10-year period.
As mentioned in the Executive Summary, the Town has been able to store excess supplies in Chatfield Reservoir over the past year, which have exceeded the purchased storage amounts (590 AF). Since the Town does not physically have a way to utilize these excess storage supplies at this point in time, CWCB is developing a lease agreement with the Town to lease the option amount for $50/AF. This lease with CWCB should be in place by May 2021, with a current annual lease rate for 1,410 AF (2,000 AF-590 AF) of $70,500. The spot lease with CPW would allow the Town to further maximize storage space within the reservoir and will supplement the annual lease option of storage space with CWCB.
Budget Impact
If Council approves the agreement, Castle Rock Water would receive up to $34,000 of additional revenue in 2021. The revenue will be deposited into the Water Resources Fund Capital Leases account 211-4375-393.70-00.
Staff Recommendation
Staff recommends approval of the resolution as presented.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Agreement