To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Utilities Director
Title
Resolution: Approving a Water Lease Agreement between the Town of Castle Rock and the Town of Wiggins
Body
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Executive Summary
The Utilities Department is seeking Town Council approval of a resolution (Attachment A) for a water lease with the Town of Wiggins, Colorado, which is located in Morgan County. Wiggins is interested in a three-year lease of our Rothe Recharge Credits, which came with Castle Rock’s purchase of the Rothe water rights in 2014. Wiggins intends to use this water to augment their tributary well pumping for up to three years while they proceed through water court on other augmentation sources. The Town of Castle Rock will not be able to use this water in the next five to ten years and the water cannot be reasonably moved by exchange back upstream to the Town of Castle Rock. Wiggins wishes to lease 780 acre-feet (AF) over the course of three years for a total price of $69,000 ($9,000 for first year, $30,000 for second year, and $30,000 for third year). The price is reasonable for leased water of this type at this location based on available data regarding other leases in the area. Either party may terminate the agreement with 180 days’ notice.
History of Past Town Council, Boards & Commissions, or Other Discussions
On December 9, 2015, the Utilities Commission unanimously recommended Council approve the draft lease agreement.
Discussion
As part of the hybrid solution, the Town purchased the Rothe Recharge property in 2014. The property came with 770 AF of water rights which can used as an augmentation water source in conjunction with the Box Elder Creek Well Field for the Alternative Source of Supply Project hybrid solution.
The general concept of the Rothe Recharge Project is that water can be diverted from the South Platte River at the Riverside Canal which is located east of Greeley under a water right with an effective 1988 priority date (see Attachment B). This water is delivered from the Riverside Canal into several recharge ponds which then makes its way through the alluvial sands as groundwater return flow to the South Platte River approximately 16 miles downstream of the point where Box Elder Creek theoretically enters the South Platte River. The hydrogeologic transport of this water through the alluvium takes a number of years. The decree in Colorado Water Court Case No. 89CW027 defines the terms and conditions for operation of this project, including the specific timing of the recharge credits. The Town of Castle Rock will not be able to use this water in the next five to ten years and the water cannot be reasonably moved by exchange back upstream to the Town of Castle Rock.
The key terms of the agreement are summarized below:
• Three year lease agreement.
• Wiggins will lease 180 AF at $50/AF for the first year which equates to $9,000.
• Wiggins will lease 300 AF at $100/AF for the second and third years of the lease which equates to $30,000 for each of these two years.
• Either party may terminate lease with notice.
The benefit of this lease agreement is that it generates revenue for the Utilities Department that would not otherwise be collected on the current water credits available. This would allow the Town to recoup a portion of the 2014 purchase price, thus, decreasing the overall financial impact to the Town. Another benefit of this lease is that the Town of Wiggins is a municipal water provider, and this lease will set a precedence for use of this water for municipal purposes. Arrangements like this also support the Colorado Water Plan by developing regional cooperation between other water providers and creating ways to utilize existing supplies within the state.
Budget Impact
If Council approves the agreement, Utilities would receive $69,000 in revenue ($9,000 for first year, $30,000 for second year, and $30,000 for third year). The revenue will be deposited into Water Resources Fund Capital Leases account 211-4375-393.70-00.
Staff Recommendation
Staff recommends approval of the water lease agreement with the Town of Wiggins, Colorado for 780 acre-feet of water over the course of three years which will generate revenue of $69,000 ($9,000 for first year, $30,000 for second year, and $30,000 for third year).
Proposed Motion
I move to approve a Resolution: Approving a Water Lease Agreement between the Town of Castle Rock and the Town of Wiggins
Attachments
Attachment A: Resolution
Exhibit 1: Agreement
Attachment B: Location Map