To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, Utilities Director
Matt Benak, Water Resources Manager
Sheri Scott, Water Resources Program Analyst
Title
Update: Alternate Source of Water Supply Projects
Body
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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 design phase or getting ready to be designed. Intergovernmental agreements with potential partners in the local infrastructure are also being negotiated. See Staff Report for a map of the infrastructure.
Total WISE project expenditures to date are $6.34 million. The expected expenditures in the next five years are $24.7 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 has completed the topographical survey for the project and are working on the alignment design. Western States Land Surveying is developing right-of-entry agreements with the property owners to allow geotechnical, cultural and environmental investigations to begin. Western States is also working with an appraiser and Town legal staff to ultimately present offers to acquire easements for the project.
• The Ridgegate design is approximately 90% complete with project bidding scheduled for February, 2016 and construction commencement in March, 2016.
• 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 is slated to go out for bid for construction in early 2016. PWSD is working on IGAs for cost sharing and wheeling rates for this pipeline. Additionally, PWSD and the Town will have an IGA for the WISE pump station, which will be constructed and owned by PWSD.
• The Town and PWSD are partnered 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 was selected to perform this work and the study information is expected by January 2016. Costs will be split 50/50 with PWSD.
• The design of the Quebec Street Water Treatment Plant is 100% complete and the construction has started. The contractor is currently drilling and pouring caissons.
• The Smoky Hill Tank is complete with the exception of aesthetic treatment. The tank facades will be added in spring, 2016.
• The South Metro WISE partners are working with Black and Veatch to develop draft rules and regulations for the western pipeline operations.
• The WISE Authority met with Aurora Water regarding the contractually required annual rate update. The change for 2016 will be from $5.50 per thousand gallons to $5.52 per thousand gallons.
• Invoices were received for the DIA Interconnect in the amount of $114,181.49 and the WISE Operational Reserve in the amount of $89,579.29, and were consistent with expectations and budget, and recommended for payment.
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.
Recent developments 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 put the project on hold, temporarily. The proposed 1041 Permit process could significantly increase the cost of the project and decrease the chances for successful completion of the project. The total expenditures to date for the project are $5.8 million. Of this amount, $565,000 has been associated with option payments and due diligence work on the Box Elder wellfield. Assuming resolution of the 1041 permitting issue, the expected expenditures in the next five years are $36.7 million. Key project updates are as follows:
• The Town paid the Box Elder well field option agreement payment of $200,000 by 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.
• In summer 2016, Sublette, Inc. completed the re-vegetation of the majority of the Rothe Property with native seed.
• Staff has temporarily stopped working with Stillwater Resources on multiple water rights opportunities to provide a total of 2,500 acre-feet of water pending outcomes on the Weld County 2041 permit process. Staff was evaluating two opportunities in the Lost Creek Basin that have the potential to provide up to 1,240 acre-feet of additional water rights. These, combined with our Rothe rights, would have gotten us to approximately 80% of the water rights needed for the project.
• Staff has a draft water lease with the Town of Wiggins for our Rothe water rights that will be brought to Council for consideration in January 2016. This will help to offset the overall cost of the project.
Budget Impact
To date, both the WISE and Box Elder projects continue to be within budgeted amounts for 2015 through 2019.
Staff Recommendation
Staff recommends continuing to move forward with modifications to the WISE core infrastructure to allow WISE water deliveries by 2017, continuing negotiations with South Metro WISE partners to share local infrastructure design and construction costs, working with the State and regional partners to store water in Rueter-Hess Reservoir, putting a temporary hold on due diligence activities on the Box Elder project, evaluating other options in case Box Elder becomes too risky or too costly, and closely following the developing Weld County regulations for the 1041 Permitting Process.
Attachments
Staff Report