To: Members of the Castle Rock Water Commission
From: Mark Marlowe, P.E., Director of Castle Rock Water
Matt Benak, P.E., Water Resources Manager
Lauren Moore, Water Resources Program Analyst
Title
A Resolution Approving a Water Rights Lease Agreement between the Town of Castle Rock and Dove Meadow Dairy Inc. [Weld County, Co]
Town Council Agenda Date: March 7, 2023
________________________________________________________________________________
Executive Summary
Castle Rock Water is seeking Town Council approval of a resolution (Attachment A) for a water rights lease with Dove Meadow Dairy Inc. (Dove Meadow Dairy). Dove Meadow Dairy is a farmer located in Weld County adjacent to the Lost Creek Basin wells we purchased in 2017 as part of our Alternate Source of Supply Project. As part of their 2022 lease, the farmer used 150 acre-feet (AF) of water from these wells for irrigation and has paid the Town $5,461.46. Dove Meadow Dairy is interested in an additional one-year lease of our Lost Creek Basin water rights. The Town of Castle Rock does not plan to export these water rights in 2023 as the infrastructure needed to move the water has not yet been designed or constructed. Dove Meadow Dairy wishes to lease up to 100 AF at a rate of $36.50 per AF, which could amount to $3,650.00 in revenue. The price is reasonable for agricultural leased water of this type at this location based on available data regarding other leases in the area. The agreement terminates on November 15, 2023. This lease agreement is consistent with Castle Rock Water’s strategic plan. A key tactic in that plan is to maximize leasing opportunities for idle water rights.
History of Past Town Council, Boards & Commissions, or Other Discussions
January 26, 2022, Castle Rock Water Commission recommended Town Council approve the
2022 water lease agreement.
February 15, 2022, Town Council unanimously approved the 2022 water lease agreement.
Discussion
As part of the Town’s hybrid renewable water solution, the Town purchased several Lost Creek Basin wells in 2017 and 2021. These wells came with approximately 1,492 AF (annually) of fully exportable water rights which could be used for municipal and other purposes. Eventually, the Town intends to use these water rights directly or as an augmentation source. However, until infrastructure is built to transport this water to a treatment plant or place of augmentation, leasing this water for other purposes helps to generate some revenue for Castle Rock Water. In 2022, Dove Meadow Dairy used 150 AF of water from these wells for irrigation and has paid the Town $5,461.46, with a lease rate of $36.50/AF. The farmers are also planning to use this water in 2023.
The key terms of the 2023 Water Rights Lease Agreement are summarized below:
• Agreement will terminate November 15, 2023.
• Dove Meadow Dairy will lease up to 100 AF of water at a rate of $36.50 per AF.
The following table outlines the wells (Attachment B) that will be used and the amount of water we will be leasing to Dove Meadow Dairy.
|
Well |
Maximum Water to be Leased**, AF |
Annual Water Rights, AF |
|
12123* |
0 |
163.1 |
|
12124 |
100 |
106.4 |
|
Total |
100 |
269.5 |
*Well not operational
**Maximum water to be leased may exceed annual water rights of an individual well if banked water is available
As noted in the Executive Summary, maximizing the leasing of idle water rights is part of Castle Rock Water’s strategic plan. Revenues from this leasing help to offset the costs for purchasing and developing long term renewable water supplies.
Budget Impact
If Council approves the agreement, Castle Rock Water would receive up to $3,650.00 in revenue in 2023. The revenue will be deposited into Water Resources Fund Capital Leases account 211-4375-393.70-00 <WRAWL>.
Staff Recommendation
Staff recommends approval of the 2023 Water Rights Lease Agreement with Dove Meadow Dairy for 100 AF of water which will generate a revenue of up to $3,650.00.
Proposed Motion
“I move to recommend to Town Council approval of the Resolution as presented”
Attachments
Attachment A: Resolution (Not Attached)
Exhibit 1: Agreement
Attachment B: Location Map