To: Members of the Castle Rock Water Commission
From: Mark Marlowe, P.E., Director of Castle Rock Water
Mark Henderson, Assistant Director of Castle Rock Water
Lauren Moore, Water Resources Manager
Title
Resolution Approving a Participation Agreement between the Town of Castle Rock and the Cherry Creek Project Water Authority for the Walker Reservoir Expansion Project [Douglas County near Franktown]
Town Council Agenda Date: November 17, 2026
Body
________________________________________________________________________________
Executive Summary
Castle Rock Water (CRW) seeks Town Council approval of a Resolution (Attachment A) for the Walker Reservoir Expansion Project Participation Agreement (Exhibit 1) with the Cherry Creek Project Water Authority (CCPWA) and its members. The agreement would expand Walker Reservoir from approximately 650 acre-feet (AF) to 1,000 AF. Inverness Water and Sanitation District, Denver Southeast Suburban Water and Sanitation District (Pinery), and Cottonwood Water and Sanitation District will be the participating members in the agreement and will fund their proportional share of the expansion project costs based on their proportional share of the 350 AF expanded volume. The Town is a non-participating member in the agreement and will not obtain additional capacity in the reservoir or share in the costs for the expansion project design and construction. The Town retains its 150 AF of storage capacity and it’s existing water rights and ownership vested in the CCPWA is unaffected by the agreement.
The agreement protects Castle Rock’s use of CCPWA water rights and shared facilities, provides compensation for calculated water volumes Castle Rock cannot divert and store during construction, and allows Castle Rock to lease all or part of that calculated volume to the Pinery. It also requires an amended operations agreement addressing storage allocations, operating responsibilities, and protection of each member’s rights.
History of Past Town Council Boards and Commissions or Other Discussions
The Castle Rock Water Commission supported the proposed purchase of Arapahoe County Water and Wastewater Authority’s (ACWWA) interest in CCPWA in June and October 2019 and reaffirmed its support in December 2019. Town Council approved the Purchase and Sale Agreement on January 21, 2020. The Town closed on the purchase on February 12, 2021.
On July 28, 2021, the Commission recommended participation in the original Walker Reservoir agreement for construction of the Walker Reservoir.
On September 21, 2021, Town Council approved a resolution approving the Project Participation Agreement with the CCPWA for the construction and capacity in Walker Reservoir.
On April 4, 2023, Town Council approved a resolution approving Castle Rock’s portion of the second phase of the Walker Reservoir project, which included well drilling and equipping; site improvements; pipelines; grading and erosion control; and professional services during construction.
Discussion
Town Council approved the original Walker Reservoir Project Participation Agreement to secure 150 AF, approximately 23 percent of the planned 650 AF reservoir, for Castle Rock. Located adjacent to Cherry Creek approximately one-half mile northwest of Franktown. The lined reservoir was intended to store tributary and non-tributary water for direct use, augmentation, and release and re-diversion downstream to Rueter-Hess Reservoir.
The proposed expansion agreement builds on the original participation agreement and the February 20, 2024, Agreement for the Operation of Shared Infrastructure concerning operation and maintenance of Walker Reservoir and the shared facilities. The proposed expansion agreement requires an amended and restated operations agreement to reflect the expansion of the reservoir.
The proposed expansion agreement outlines that CCPWA would contract for design and construction to add approximately 350 AF of lined storage. The existing pump station, wells and associated pumping capacity, and connecting raw water pipelines would not be enlarged. The CCPWA would own the expanded reservoir, with member capacity interests allocated under the agreement. The initial proposed allocations are summarized in the table below.
|
Member |
Existing AF |
Added AF |
Total AF |
|
Inverness |
125 |
100 |
225 |
|
Pinery |
300 |
230 |
530 |
|
Cottonwood |
75 |
20 |
95 |
|
Castle Rock |
150 |
0 |
150 |
|
Total |
650 |
350 |
1000 |
Castle Rock’s storage volume would remain 150 AF, representing approximately 15% of the expanded reservoir compared with 23% of the existing reservoir. The smaller percentage reflects the larger total reservoir; it does not reduce Castle Rock’s allocated storage volume or establish its share of shared-facility costs.
Inverness, Pinery, and Cottonwood are the defined Participating Members in the agreement responsible for funding the expansion pro-rata based on their allocated capacity share in the added volume to the reservoir. Their shares of additional capacity and associated costs are approximately 28.6% for Inverness, 65.7% for Pinery, and 5.7% for Cottonwood. Participating Members would fund design and construction, including additional costs, in proportion to their allocations. Castle Rock is a party to the agreement to protect its existing interests but is not a Participating Member funding the expansion. Votes on expansion funding and cost allocation under Articles II and III of the agreement would be weighted by additional-capacity shares whereas other CCPWA business follows the CCPWA establishing agreement.
Participating Members may opt out after construction bids and award recommendations are received, subject to a 30-day opt-out period and an additional five-day notice provision. Prior design payments are generally nonrefundable. The CCPWA must provide all members at least 60 days’ written notice before issuing the construction notice to proceed so each member can remove its stored water.
Key provisions of the agreement and benefit for the Town:
• Article IX of the agreement requires cooperative operation that does not negatively affect another member’s ability to receive its appropriate share of CCPWA water rights or use its capacity in the shared facilities.
• Because reservoir construction will temporarily prevent storage, the agreement establishes a Calculated Missed Volume for Castle Rock. This includes the Town’s share of CCPWA renewable water rights, and reusable return flows accruing to Cherry Creek at the Pinery Wastewater Treatment Outfall.
• CCPWA will calculate missed volumes monthly during construction and continue weekly accounting of the water each member would have received if Walker Reservoir were operating subject to exchange availability and legal and physical operating limitations.
• Castle Rock will lease all or part of its Calculated Missed Volume to Pinery at an initial rate of $564 per AF, automatically adjusted each subsequent January 1 to Castle Rock’s then-current raw water lease rate.
• For any Calculated Missed Volume not leased by Pinery, the Participating Members will compensate Castle Rock proportionately at the same rate.
Within 180 days of the effective date, the parties must execute an amended and restated operations agreement, unless extended in writing. The February 20, 2024 agreement would govern in the interim. The amendment must address reservoir and shared-facility ownership allocations, cost sharing, capital improvements, maintenance responsibilities, and operations needed to protect all members’ diversion, storage, and release rights. It must also establish accounting and coordination procedures for the construction-period missed volumes.
Castle Rock could acquire additional capacity through an assignment from a Participating Member. As a non-selling CCPWA member, Castle Rock would also have a right of first refusal when a Participating Member proposes an eligible sale to a non-member, subject to the agreement’s procedures and the CCPWA establishing agreement. These provisions preserve an opportunity for future capacity purchases.
Budget Impact
Since the Town is non-participating member in the expansion, the Town will not incur any expenses related to the expansion project. The Town’s existing financial obligations remain governed by the existing operating agreement and CCPWA policies. Future reservoir and shared-facility operating and capital cost allocations must be addressed in the amended operations agreement.
Castle Rock would receive construction-period lease revenue from Pinery and/or compensation from the Participating Members for the accounted calculated missed volume. The calculated missed volume and lease revenue will depend on when in-priority renewable water rights, exchange availability, and legal and physical operating limitations. Construction is anticipated to take approximately 9 to 12 months. The Town’s reusable return flows accruing to Cherry Creek at the Pinery Wastewater Treatment Outfall generate approximately 0.5 AF per day and based on modeling up to 155AF of renewable water supply could be available to store in Walker Reservoir in a calendar year. Therefore, if construction lasted a full year, the calculated missed volume could be up to 337.5 AF resulting in total lease revenue of $190,350. However, actual revenue would depend on the timing and duration of the construction, when renewable water rights are in priority, and the availability of exchange potential in Walker Reservoir for the reuseable flows from the Pinery Wastewater Treatment Outfall.
Staff Recommendation
Staff recommends approval of the Walker Reservoir Expansion Project Participation Agreement to preserve Castle Rock’s existing storage and operational interests, establish compensation during construction, and allow the other CCPWA members to fund additional storage.
Proposed Motion
“I move to recommend to Town Council approval of the Resolution as presented”
Attachments
Attachment A: Resolution (Not Attached)
Exhibit 1: Agreement (Not Attached)
Attachment B: Walker Reservoir Expansion Proj Participation Agreement