To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Director of Castle Rock Water
Matt Benak, P.E., Water Resources Manager
Title
Resolution Approving the Town of Castle Rock / Ravenna Metropolitan District Spot Water Lease Agreement
Body
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Executive Summary
Castle Rock Water is seeking Town Council approval of a resolution (Attachment A) for a spot water lease with Ravenna Metropolitan District (Ravenna). The terms of this lease are the same as the lease Council approved with Ravenna in 2016. Ravenna provides water service to the Ravenna residential area located near the mouth of Waterton Canyon, in northwestern Douglas County. Ravenna asked to lease the Town’s surplus reusable water supplies along Plum Creek, which are treated at the Plum Creek Water Reclamation Authority (PCWRA) and released back to the stream. The Town releases roughly 270 acre-feet (AF) per month of fully-consumable water from the PCWRA plant. Until the Plum Creek Diversion is constructed or until the Chatfield Reallocation Project is cleared to allow storage, the Town is limited in its ability to capture this water supply. Thus, leasing this water to other parties downstream is a good option and provides an income stream for the Water Resources Enterprise. We have proposed to a $300/AF price for the water, and Ravenna is asking for up to 195 AF of water for 2017. This could generate up to $58,500 in extra revenue. The agreement is non-exclusive, so the Town would be able to lease additional surplus supplies to other interested parties. The agreement will terminate at the end of 2017.
History of Past Town Council, Boards & Commissions, or Other Discussions
December 9, 2015, Utilities Commission unanimously approved the draft lease agreement.
On January 5, 2016, Town Council passed Resolution number 2016-002, approving a spot water lease agreement with Ravenna Metropolitan District for year 2016.
Discussion
Until June 2015, the Town had an exclusive effluent lease agreement with Centennial Water & Sanitation District which was set up in 2001. The leasing costs were never modified to meet market demand and could not be modified without terminating the lease agreement. In June 2015, the Town terminated the lease with Centennial Water & Sanitation District and marketed the supply to the area water providers. In late 2015, Ravenna contacted the Town, requesting to lease some of our available reusable water on Plum Creek, and the Town and Ravenna subsequently entered into a spot lease agreement for 2016. Ravenna has again asked to lease some of our available reusable water for 2017.
The key terms of the 2017 spot water lease agreement are summarized below:
• Ravenna will be leasing some excess reusable supplies that the Town cannot currently capture for reuse.
• Agreement will terminate December 31, 2017.
• Ravenna will lease up to 195 AF of water at a rate of $300/AF.
• Quantities will be limited to 6.66 AF/day between March 29 and April 14, 2017 and 5.13 AF/day between April 15 and April 30, 2017.
• Any remaining water (less than 195 AF total) can still be leased, but the delivery timing must be closely coordinated with Castle Rock Water.
• Point of delivery measurement is at PCWRA. Ravenna will be responsible for any stream transit losses incurred to the delivery quantity.
The benefit of the lease agreement is that it generates revenue for Castle Rock Water that wouldn’t otherwise be obtained since the water would continue to flow down Plum Creek to the South Platte River. Arrangements like this 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, Castle Rock Water would receive up to $58,500 in revenue in 2017. The revenue will be deposited into Water Resources Fund Capital Leases account 211-4375-393.70-00.
Staff Recommendation
Staff recommends approval of the spot water lease agreement with Ravenna Metropolitan District for 195 acre-feet of water which will generate a revenue of up to $58,500.
Proposed Motion
I move to approve a Resolution as introduced by title.
Attachments
Attachment A: Resolution
Exhibit 1: Water Lease Agreement