To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, Director of Castle Rock Water
Matt Benak, Water Resources Program Manager
Sheri Scott, Water Resources Program Analyst
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. Figure 1 and 2 below shows the initial plan for increasing rates and fees slowly over time to pay for these projects and the current plan and status of rates and fees relative to the original plan. Total costs to date and the long-term budgets for each project are shown in Table 1. A high level schedule is provided in Attachment A to the Staff Report. Progress on each project is summarized below.
Figure 1: Combined Monthly Water & Water Resources Rate Projection
Figure 2: Water Resources System Development Fee Projection
WISE
The WISE project continues to make progress with the goal of having WISE water deliveries by the end of 2017 or early 2018. Significant infrastructure progress was made in 2016 and so far in 2017 and includes the following:
• Substantial completion of the WISE modification work occurred in December 2016 by Western Summit (Kiewit). Final completion is anticipated by June 2017. This work included construction of a two million gallon water storage tank at Smoky Hill Road and E-470; a new greensand water treatment plant at Quebec Street and C-470; a chloramination disinfection facility; well modifications (the PA3 well); a pump station by-pass, and Supervisory Control and Data Acquisition Systems (SCADA). The initial contract for this work was $13.56 million with a contingency of $720,000. The final contract amount will be $13.83 million, or within 2% of the original contract amount, and well within the project contingency.
• The WISE Ridgegate line construction is well underway and on schedule and budget. Tunneling of the pipeline in several sections has occurred and the construction project is around 85% complete. This 42-inch pipeline through Parker Water and Sanitation District’s (PWSD) service area is slated to be complete by the end of June 2017, with work inside of PWSD’s Rueter-Hess Reservoir Water Purification Facility (RHRWPF) scheduled to be done around the same time. PWSD will also be conducting their conversion to chloramines in the Fall of 2017. The Town will own 19.9% of the Ridgegate system capacity and has authorized $3.58 million for the project (out of $17.998 million total).
• The WISE Outter Marker Road, a 36-inch, 5.1-mile waterline is being constructed presently by Garney Construction for a total project authorization of $14.07 million (which includes a 5% staff-managed contingency). Construction work for this section of the pipeline system is scheduled to be completed by late summer 2017.
• The last remaining section of the WISE delivery infrastructure is the 36-inch, 3.7-mile Canyons pipeline and pump station. The Town will be partnering with PWSD and Dominion on this section of infrastructure. The Town had originally entered into an intergovernmental agreement (IGA) with PWSD for this work in August 2016, however, PWSD was not able to come to an agreeable negotiated price with the Western Summit led design-build team. PWSD is now working with Layne Heavy Civil on a re-negotiated price for constructing the pipeline and a seven million gallon per day pump station (however, the pump station will not be initially required for delivery of WISE water to the Town). PWSD is expected to receive a guaranteed maximum price from Layne in late April 2017 and will be taking this to their Board in May 2017. Staff will be bringing the IGA back to Town Council for consideration in May 2017, since the pricing will have likely changed from August 2016. PWSD has indicated that this section of pipeline can be completed by the end of 2017.
• As of the writing of this memo, it is anticipated that we will receive drafts of the Wheeling and Purchased Capacity Agreements from PWSD in late April 2017. These IGAs will describe how we will be billed for our water flowing through PWSD’s system and what amounts we will owe PWSD for usage of some of their infrastructure capacity. These documents will be brought to Town Council for consideration likely in the early summer 2017 timeframe.
See Staff Report for a map of the infrastructure.
Total WISE project expenditures and encumbrances to date are $39.9 million. The expected expenditures in the next five years are approximately $10.9 million to design and construct expanded infrastructure through PWSD’s system. The most current WISE rate is $5.53 per thousand gallons plus a $0.31 temporary conveyance charge until the Binney Connection is built in 2021.
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 total expenditures to date for the project are $27.2 million. This amount includes property purchases, water rights purchases, infrastructure purchases, and due diligence costs. The expected expenditures in the next five years are approximately $8.3 million to cover water rights purchases and due diligence efforts on the Box Elder well field in preparation for the augmentation plan submittal to Water Court. Key project updates are as follows:
• The Town closed on the Box Elder property on December 30, 2016 for $8.3 million, which saved approximately $1.1 million from our originally scheduled purchasing plan. Thus, the Town now owns 850 acres of land, non-renewable water rights, 300 acre-feet (AF) of consumptive use Henrylyn Irrigation District (HID) water rights, and 5 shares of FRICO-Barr water rights.
• On March 28, 2017, Town Council approved an Agricultural Lease with Rupple Farms, LLC to help manage the Box Elder property. The Rupples will be farming 560 acres of the land over the next three years and will be assisting with managing the land.
• On March 31, 2017, the Town closed on 1,035.8 acre-feet of water rights in the Lost Creek Basin, which is approximately 6 miles east of the Box Elder property. This water is already approved for export from the basin and for municipal use. These, combined with our Rothe rights, amount to approximately 72% of the water rights needed for the project.
• On March 31, 2017, the Town closed on the Keenesburg pipeline for 67% capacity. The Keenesburg pipeline has been identified as a potential key piece of existing infrastructure that can be used to make Box Elder project work. This pipeline will give us the ability to move water (800 gpm) that we will have rights to in Weld County (the PV, LLC water) and will be an additional asset that can be leased to other entities during times when we may not be using it. An additional benefit of this pipeline is that it provides the ability to deliver augmentation water close to into Box Elder Creek at a reasonable price.
• On April 4, 2017, Town Council approved a revision to the water lease with the Town of Wiggins for our Rothe water rights for up to 600 acre-feet over the next three years at $100 per acre-foot. This lease revenue 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. Table 1 shows the project expenditures to date and long-term expected budget.
Table 1: Project Budget
|
Project |
Expenditures to Date (4/19/2017) |
Remaining Committed / Encumbered 2017 Costs |
Remaining 2017 Budget |
Budget for 2018-2022 |
Budget for 2023-2027 |
Budget for 2028-2032 |
Budget for 2038-2055 |
|
ASOS |
$27,211,010 |
$0 |
$106,473 |
$8,330,000 |
$55,868,800 |
$39,707,800 |
$20,000,000 |
|
WISE |
$14,287,823 |
$25,987,332 |
$569,585 |
$11,391,610 |
$6,220,000 |
$12,440,000 |
$0 |
|
Total |
$41,498,833 |
$25,987,332 |
$676,058 |
$19,721,610 |
$62,088,800 |
$52,147,800 |
$20,000,000 |
Staff Recommendation
Staff recommends finalizing the agreements with PWSD for the construction of the Canyons pipeline portion of the WISE project, finalizing IGAs with Dominion for their portion of the WISE infrastructure, and finalizing IGAs with PWSD for Wheeling and Purchase Capacity.
Staff also recommends continued hydrogeologic investigations on the Box Elder property in preparation for a Water Court application. Additionally, staff recommends pursuing additional water rights in the area such that a complete water augmentation plan can be developed.
Attachments
Staff Report