To: Members of the Castle Rock Water Commission
From: Mark Marlowe, P.E., Director of Castle Rock Water
Mark Henderson, P.E., Assistant Director of Castle Rock Water
Josh Hansen, P.E., Project Manager Supervisor
David Choi, Project Engineer
Title
Resolution Authorizing the Acquisition and Immediate Possess of Certain Real Property through the Statutory Condemnation Process in Furtherance of the Design and Construction of the Plum Creek to Rueter-Hess Reservoir Pipeline Infrastructure Project [North Canyons LLLP parcels located North of Castle Rock between I-25 and Crowfoot Valley Rd]
Town Council Agenda Date: September 15, 2026
Body
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Executive Summary
Castle Rock Water (CRW) is requesting Town Council adoption of a Resolution (Attachment A) authorizing the exercise of the Town’s power of eminent domain to acquire approximately 14.7 acres of permanent waterline easement and approximately 16.15 acres of temporary construction easement on properties (the “North Canyons Properties”) owned by North Canyons LLLP (the “Owner”) that are needed to complete final design and future construction of the Plum Creek to Rueter-Hess Reservoir (PCRHR) Pipeline Infrastructure Project. The proposed easements are located within the North Phase of the PCRHR Pipeline, generally located north of Castle Rock between I-25 and Crowfoot Valley Rd (Attachment B).
The Town retained Western States Land Services (Western States) to conduct good-faith negotiations with affected property owners and Kilty and Company (Kilty) to prepare independent appraisals of the required easement interests. Staff, the design team, and Western States have completed numerous meetings and discussions with the Owner regarding the proposed pipeline alignment and potential impacts to the North Canyons Properties.
The pipeline alignment through the North Canyons property was developed through multiple years in coordination with the Owner to accommodate the Owner's development plans at that time. The Owner subsequently developed new plans associated with a potential new buyer and requested major revisions to the pipeline alignment. These revisions would require significant redesign of the project.
The Town and the Owner have not been able to come to an agreement on acquisition of the required easements. Accordingly, staff is requesting authorization to proceed with acquisition through the statutory condemnation process to avoid significant costs associated with additional redesign of the pipeline and to allow the Town to complete final design in anticipation of future construction.
Notification and Outreach Efforts
In order to obtain right of entry agreements to complete survey and geotechnical investigations in the pipeline corridor, staff has conducted numerous meetings and discussions with the Owner.
A Notice of Intent letter was sent to the Owner on May 16, 2024.
The original offer to acquire the easements was sent on May 19, 2025.
A revised Notice of Intent and revised offer letter were sent on August 18, 2025.
Following the revised offer, the Owner informed the Town that it would not accept the Town’s proposal unless the Town agreed to make major revisions to the pipeline design.
Final Notice of Intent and Final Offer were sent to the Owner on August 4, 2026.
History of Past Town Council, Boards & Commissions, or Other Discussions
On XXXXXXX, Town Council adopted Ordinance No. 2023-021, and on July 21, 2026, Town Council adopted Ordinance No. 2026-024, amending Ordinance No. 2023-021, finding a compelling public need and purpose for construction of the PCRHR Pipeline Infrastructure Project and authorizing the Town to exercise its powers of eminent domain for the acquisition of real property interests necessary for the Project.
On July 21, 2026, Town Council approved a Resolution authorizing a sole-source construction agreement with Global Underground in the amount of $4,029,321 for construction of the South Phase of the PCRHR Pipeline.
On July 21, 2026, Town Council approved a Resolution authorizing an amendment to the services agreement with Providence Infrastructure Consultants for final design and engineering support services for the PCRHR Pipeline Project.
Discussion
Castle Rock Water is completing final design for the approximately seven-mile PCRHR Pipeline. The project will provide infrastructure necessary to convey renewable and reusable water from the Plum Creek Basin to Rueter-Hess Reservoir for storage during periods when available supply exceeds demand. The project is a key component of the Town's long-term renewable water supply strategy and will increase operational flexibility and drought resilience. The proposed pipeline extends northeast from East Plum Creek through the Promenade Development, around the western and northern boundaries of Sapphire Pointe, and north through the North Canyons Development before terminating at the south shore of Rueter-Hess Reservoir.
The North Canyons Properties is located within the North Phase of the project, north of Castle Rock. The required permanent and temporary easements are necessary to bring the pipeline to Rueter-Hess Reservoir using open-trench installation methods. Because the property is planned for residential development, timely acquisition of the required easements is necessary to preserve the approved pipeline corridor and avoid conflicts with future site development.
The Town and the project design engineer coordinated with the Owner for multiple years regarding the proposed pipeline alignment and anticipated development plans for the property. Through this coordination, the Town worked to design the pipeline alignment to accommodate the Owner’s development plans at that time. On May 16, 2024, Western States sent the Owner the initial Notice of Intent to acquire the required easements.
The Town obtained an appraisal from Kilty, which reflected an estimated fair market value of the easements of $810,486. The Owner obtained an appraisal from Daniels Real Estate Services, which reflected an estimated fair market value of $674,973. An original offer based upon the appraised values was sent to the Owner on May 19, 2025. Shortly thereafter, additional area was identified as necessary for the temporary construction easement. As a result, a revised Notice of Intent and revised offer were sent to the Owner on August 18, 2025.
Following the revised offer, the Owner advised the Town that it would not accept the proposed easements unless the Town agreed to make major revisions to the pipeline design to accommodate new development plans associated with a potential new buyer. These new plans would require the Town to significantly revise the pipeline alignment and redesign portions of the project, resulting in additional engineering costs and delays in completion of final design.
The Town has continued communicating with the Owner to reach agreement on the required easements. However, the parties have not been able to come to a final agreement.
According to Section 14.02.070 of the Castle Rock Municipal Code, if the Town is unable to reach agreement with a property owner on purchase price, time of possession, or any other terms of acquisition, the Town Attorney will advise the Town Council. A public hearing is then scheduled at which the Town Council will be apprised of prior negotiations and determine whether the statutory condemnation process for acquisition of the property should be initiated with the District Court. The property owner will have the opportunity to address Council at the hearing. It should be noted that the Notice of Intent to Acquire and Final Offer to Purchase letter Western States sent to the Owner dated August 4, 2026 (Attachment C) included notification of the Town Council’s consideration of the proposed Resolution and the Owner’s opportunity to address Town Council. The letter contained an offer to acquire the permanent waterline easement and temporary construction easement from the Owner. The offer included the estimated fair market value of the permanent waterline easement at $563,655, and the estimated fair market value of the temporary construction easement at $148,598 based on a one-year term, for a total estimated acquisition value of $712,253. The basis for the updated offer was XXX.
The commencement of the condemnation action enables the Town to seek to acquire immediate possession of the North Canyons Properties easements at the outset of the legal process, as timely possession of the property is critical to complete final design of the project and avoid additional redesign of the pipeline. Later, a judicial determination of the fair market value of the easement interests will be made unless the Town and the Owner reach agreement on valuation. The Owner may elect to have the fair market value determined by a Court-appointed commission or by a jury. In any event, the commencement of the condemnation action does not restrict or impair the ability of the Owner or the Town to advocate for their respective positions on the proper valuation of the North Canyons Properties easements.
Budget Impact
The current available budget for the PCRHR Pipeline Infrastructure Project is $1,947,259.50. The total estimated acquisition value for the easements is $712,253.
|
Account Number |
Account Name |
Estimated Acquisition Value |
Available Budget |
|
211-4375-443.78.04 |
PlumCreek-RueterHes PL & PS |
$712,253 |
$1,947,259.50 |
Staff Recommendation
Staff recommends Town Council approval of a Resolution authorizing the acquisition and immediate possession of the North Canyons Properties permanent waterline easement and temporary construction easement through the statutory condemnation process in furtherance of completing final design and future construction of the PCRHR project.
Attachments
Attachment A: Resolution
Exhibit 1: Legal Description
Attachment B: Alignment Corridor Map
Attachment C: Intent to Acquire and Final Offer to Purchase Property Letter dated August 4, 2026
Proposed Motion
“I move to recommend to Town Council approval of the Resolution as presented”
Attachments
Attachment A: Resolution
Exhibit 1: Legal Description
Attachment B: Alignment Corridor Map
Attachment C: Intent to Acquire and Final Offer to Purchase Property Letter dated August 4, 2026