To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Utilities Director
Matt Benak, P.E., Water Resources Manager
Sheri Scott, P.E., Water Resources Program
Title
Update: Alternate Source of Water Supply Projects
Body
________________________________________________________________________________
Executive Summary
The purpose of this memorandum is to update Town Council on the status of the Town’s hybrid solution to the Alternate Source of Water Supply Projects, including the Water Infrastructure Supply Efficiency (WISE) project and the Box Elder project. When the Alternate Source of Water Supply projects were approved in 2012/2013, a balance was targeted between WISE, a relatively high cost but low risk alternative, and Box Elder, considered to be a relatively low cost but high risk alternative. Financial modeling was used to target future rates for existing and future customers deemed to be affordable given the significant investments required to meet the goals of the Town’s Long-Term Water Plan. Progress on each project is summarized below.
WISE
The WISE project continues to make progress and remain on budget and on schedule. Modifications to the core infrastructure are also on budget and on schedule. Various pieces of the local infrastructure are in the construction phase, bidding phase and design phase. Intergovernmental agreements with potential partners for the local infrastructure are also being negotiated. See Staff Report for a map of the infrastructure.
Total WISE project expenditures to date are $10.5 million. The expected expenditures in the next five years are $30.5 million. Key updates related to the project include:
• On August 18, 2015, Town Council approved Burns & McDonnell to design the final leg of the local infrastructure for $263,873.00, plus a 10% Town managed contingency, for a total authorization of $290,260. Burns & McDonnell completed 30% design in January 2016 and is working towards 60% design completion in May 2016. One change order has been issued for additional utility potholing to determine exact utility location, size, and depth. The topographical survey and cultural resource inventory (completed under a separate contract in the amount of $14,303) have been completed. The geotechnical and utility survey began in April 2016 and will conclude in May 2016. Western States, an appraiser, and Town legal staff have been working on property and easement acquisitions for the pipeline corridor. The US Army Corps of Engineers is evaluating documentation provided for wetlands and cultural resource permitting. The project is still on track to be issued for bid in August 2016.
• The Ridgegate design is complete and the project was bid for construction in March 2016. Town Council approved the cost sharing intergovernmental agreement for the project on April 19, 2016. PWSD awarded the project to the low bidder which was Layne Heavy Civil for $14.3 million. Additional costs that are included in the construction phase are cultural resource monitoring, design and construction management by PWSD staff, consulting engineer construction phase services, as well as a 10% construction contingency to help manage unforeseen changes. The total estimated construction phase cost for the Ridgegate infrastructure is approximately $18 million and the Town’s portion is $3.58 million.
• The developer of the Canyons Development reported they are committed to being a partner on a portion of the local infrastructure that would convey WISE water from Parker Water & Sanitation District’s (PWSD) existing infrastructure near Rueter-Hess Reservoir, around the southeast side of the reservoir, and to the Town of Castle Rock. The Canyons pipeline went out for bid as part of a design-build request for proposal package (see next line item) in March 2016 and proposals were received by PWSD on April 22, 2016. PWSD is working on an IGA for cost sharing for the Canyons Pipeline and a separate IGA for wheeling costs for the use of their infrastructure.
• PWSD issued a design-build request for proposal package in March 2016. This package included design work to upsize the Canyons Pipeline to 36”, construct the Canyons Pipeline work to design and construct chloramination conversion, iron and manganese removal system, a new pump station, as well as an expansion at an existing pump station. Proposals were received by PWSD on April 22, 2016 from five firms. PWSD has decided to interview four firms on May 10, 2016. As this is a design-build project using guaranteed maximum price (GMP) structure, firm project pricing will not be known until approximately September 30, 2016 as this is the milestone for 60 percent project design and when the GMP will be due.
• The Town and PWSD partnered 50/50 on a study of the hydraulics of the WISE water flow through PWSD’s system to identify bottlenecks and evaluate timing of expansion projects. AECOM completed the work in February 2016, and the information was provided to PWSD. Timing of proposed infrastructure expansions are currently being coordinated with PWSD to alleviate the identified bottlenecks.
• The construction of the Quebec Street Water Treatment Plant is going well. Site infrastructure has been installed and the masonry walls for the building are complete. The contractor is currently working on the steel joists and metal decking for the building.
• The Smoky Hill Tank, including site earthwork, is complete with the exception of aesthetic treatment. The tank facades will be added in Spring and Summer 2016.
• The South Metro WISE partners are working with Black and Veatch to develop draft rules and regulations for the western pipeline operations as well as develop a platform for the daily water accounting and tracking.
• The WISE Authority will be meeting with Aurora Water in the coming regarding the contractually required annual rate update for 2017. The change for 2016 was $5.50 per thousand gallons to $5.52 per thousand gallons.
Alternate Source of Supply: Box Elder Project
The Box Elder project includes the following three components: (1) the Box Elder Well Field, (2) water rights acquisition, and (3) treatment and transmission infrastructure. Items 1 and 2 were designed to progress in tandem. Item 3 is part of the longer term renewable water program, and infrastructure is planned as water rights come online. The purpose of the Box Elder Well Field is to serve as a point of diversion (the place where we get our wet water) for acquired water rights.
The ongoing discussions in Weld County related to the proposed creation of a 1041 Permit process for water projects by the Weld County Commissioners have caused staff to examine options that might avoid the need for a 1041 permit if one is put in place. The proposed 1041 Permit process could significantly increase the cost of the project and decrease the chances for successful completion of the project. Recent developments in Weld County indicate that the Commissioners are moving away from a 1041 permit process towards a Use by Special Review (UBSR) permit. This is good news as a UBSR permit is generally viewed as a less arduous process. The total expenditures to date for the project are $6.1 million. Of this amount, $630,000 has been associated with option payments and due diligence work on the Box Elder well field. Assuming resolution of the 1041 permitting issue, the expected expenditures in the next five years are $26.9 million. Key project updates are as follows:
• The Town paid the last Box Elder well field option agreement payment of $200,000 on October 1, 2015, which extended the option term to October 1, 2016.
• On August 18, 2015, Town Council approved a Surface Use Lease Agreement with Sublette, Inc. for the Rothe Property. This agreement allows Sublette to use the property for recreational activities (hunting) that already occur on adjacent property owned by Sublette.
• Staff has started working with Stillwater Resources on multiple water rights opportunities again to provide a total of 2,500 acre-feet of water pending outcomes on the Weld County 1041 permit process. Staff is evaluating one opportunity in the Lost Creek Basin that has the potential to provide up to 1,000 acre-feet of additional water rights. This opportunity is for water that is already approved for export from the basin and for municipal use. These, combined with our Rothe rights, could amount to approximately 71% of the water rights needed for the project.
• Town Council approved the water lease with the Town of Wiggins for our Rothe water rights that will be brought to Council for consideration in January 2016. The revenue from the lease will help to offset the overall cost of the project.
Budget Impact
While the near term costs have increased for the WISE Project from previously budgeted estimates, the long term total estimated costs are still within the originally forecasted level. Costs for the Box Elder project continue to be in line with previous budgeted amounts.
Staff Recommendation
Staff recommends continuing to move forward with modifications to the WISE core and local infrastructure to allow WISE water deliveries by 2017, continuing negotiations with South Metro WISE partners to share local infrastructure design and construction costs, continuing with due diligence activities on the Box Elder project while keeping a close eye on the permit process discussions in Weld County, and evaluating other options in case Box Elder becomes too risky or too costly.
Attachments
Staff Report