To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, Director of Castle Rock Water
Matt Benak, P.E., Water Resources Program Manager
Sheri Scott, P.E., Water Resources Program Analyst
Title
Resolution Approving Town of Castle Rock and Parker Water and Sanitation District Intergovernmental Water Infrastructure Design, Construction Cost Sharing and Capacity Allocation Agreement
Body
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Executive Summary
One of the key pieces of the Town’s long-term water supply strategy is the incorporation of new, renewable imported supplies. Water from the WISE project will help us meet this goal. With that, the purpose of this memorandum is to request Town Council approval of an Intergovernmental Agreement (IGA) with Parker Water and Sanitation District (PWSD) for the cost sharing of key WISE project infrastructure. The resolution approving the agreement is provided in Attachment A. The benefits of the agreement are supported by a separate License Agreement with Dominion Water and Sanitation District (Dominion) which will allow Dominion to contribute resources to the construction of this regional piece of infrastructure. This infrastructure consists of a 36-inch, 3.4-mile pipeline and a pump station that will deliver water from PWSD’s water distribution system to the Town’s planned WISE local transmission line that is currently under construction (see Attachment B for map). This particular IGA is known as the ‘Canyons Pipeline IGA’ and covers cost sharing for the design, construction and capacity allocation of the infrastructure. This work is being performed by Reynolds (formerly Layne Heavy Civil) with a guaranteed maximum price for the work.
The Town had originally approved 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 Reynolds on a re-negotiated price for constructing the pipeline and a seven million gallon per day pump station. The pump station will not be required for initial delivery of WISE water to the Town. PWSD has indicated that this section of pipeline can be completed by the end of 2017. In order for Castle Rock Water to receive WISE water through the pipeline, PWSD must convert their system to a chloramine based disinfection process. This work will not be complete until the end of March 2018. As such, Castle Rock will not be able to take WISE water until April 2018. This scheduling does present a potential issue as Castle Rock Water is required to take our “take or pay” water under the WISE Water Delivery Agreement for the June 2017 to May 2018 water year by the end of May 2018. Castle Rock Water has to take 207 acre-feet of water, about $375,000 worth, by May 2018 to meet this obligation. While Castle Rock Water may be able to take all this water between April and May, staff is working with Aurora and the other WISE partners on options to ensure all of this water is used.
The Town’s cost for participation in this IGA is up to $12.11 million. Approximately, $510,000 of the $12.11 million is in the contract to handle rock excavation if rock is encountered during construction. A portion of the $12.11 million cost (approximately $5.76 million) will be covered by Dominion Water and Sanitation District under the separate License Agreement with Castle Rock that is being presented to Council under a separate resolution. The Town is purchasing 8.8 million gallons per day (MGD) of capacity in the pipeline and 4 MGD of capacity in the pump station. Capacity in the pump station can be expanded in the future to add necessary capacity. This infrastructure will be used by the Town to not only convey WISE water to the Town but other water including water from our Box Elder project.
History of Past Town Council, Boards & Commissions, or Other Discussions
On June 17, 2014, Town Council approved the execution of the Western Pipeline Purchase Agreement by the South Metro WISE Authority.
On September 16, 2014, Town Council approved the execution of the Modifications Agreement, key terms of the Operations Agreement, key terms of the Joint Use Agreement, and associated costs for other key WISE Project components which included design of the Ridgegate Infrastructure.
On October 22, 2014, staff provided the Castle Rock Water Commission with an update of the Alternate Source of Supply Projects which included an update regarding the Ridgegate infrastructure.
On November 18, 2014, Town Council approved Resolution 2014-92: Execution of the Ridgegate Line and Rueter-Hess WISE Infrastructure Design Intergovernmental Agreement
On February 13, 2015, Town Council approved the First Amendment to the IGA regarding the Ridgegate Line and Rueter-Hess WISE Infrastructure Design Intergovernmental Agreement dated November 19, 2014, which reduced Castle Rock’s cost by $169,580 due to the design contract being substantially less than originally estimated.
On January 5, 2016, staff provided Town Council an update regarding the Alternate Source of Supply Projects which included an update regarding the progress on the Ridgegate infrastructure design.
On April 19, 2016, Town Council approved the execution of an Intergovernmental Water Infrastructure Cost Sharing, Construction and Capacity Allocation Agreement between the Town of Castle Rock and Parker Water and Sanitation District for the Ridgegate Line portion of the WISE infrastructure.
On July 27, 2016, the Castle Rock Water Commission recommended approval of the Water Infrastructure Cost Sharing, Design, Construction and Capacity Allocation Agreement with PWSD as presented.
On August 16, 2016, Town Council approved the execution of an Intergovernmental Water Infrastructure Cost Sharing, Design, Construction and Capacity Allocation Agreement for the Canyons Pipeline design-build portion of the WISE infrastructure. The resolution approving this agreement was never fully executed by PWSD. The agreement being presented in this memo packet replaces the previously approved documents.
On May 24, 2017, the Castle Rock Water Commission unanimously re-approved an Intergovernmental Water Infrastructure Cost Sharing, Design, Construction and Capacity Allocation Agreement for the Canyons Pipeline design-build portion of the WISE infrastructure
Discussion
The purpose of this memorandum is to request Town Council approval of an Intergovernmental Agreement (IGA) that Parker Water and Sanitation District has taken the lead on developing. This IGA, known colloquially, as the ‘Canyons Pipeline IGA’, covers cost sharing for the construction and capacity allocation of the 36-inch diameter ‘Canyons’ pipeline and the WISE Transmission Pump Station. The infrastructure that is part of this agreement is described in Exhibit A of the Agreement.
The WISE Western Pipeline Purchase Agreement closed on October 21, 2014 and the WISE Authority selected Western Summit as the design-builder for the modifications to the Western Pipeline. These modifications included a 2 million gallon storage tank, a chloramination disinfection facility, a greensand filtration system in a new water treatment plant, a pump station by-pass and supervisory control and data acquisition system (SCADA) improvements. Substantial completion of the WISE modification work occurred in December 2016. Final completion is anticipated by June 2017.
To ensure the Town is able to receive WISE water deliveries, infrastructure from the Western Pipeline must be constructed. In addition to the Ridgegate Line project, which was described to Council on April 19, 2016, a new 36-inch, 3.4-mile Canyons pipeline will need to be constructed. In addition to the pipeline construction, a booster pump station will need to be built. Also, PWSD will need to convert their system from a free chlorine system to a chloraminated system and remove iron/manganese from their water supplies.
PWSD received proposals from several design/build teams on April 22, 2016 and interviewed four teams on May 10, 2016. PWSD originally awarded the contract to the Western Summit/Stantec design/build team at their May 26, 2016 Board meeting and provided notice to proceed the following day. A basis of design report and preliminary cost estimate was completed in July 2016. Unfortunately, PWSD was not able to come to an agreeable negotiated price with the Western Summit led design-build team. PWSD is now working with Reynolds on a re-negotiated price for constructing the pipeline and a seven million gallon per day pump station. The pump station will not be required for initial delivery of WISE water to the Town. PWSD has indicated that this section of pipeline can be completed by the end of 2017.
The key details of the IGA are as follows:
• PWSD will be responsible for the design and construction of the infrastructure and acquire the necessary easements.
• The infrastructure will be wholly owned, operated and maintained by PWSD; however, Castle Rock will have a perpetual license to use capacity in the infrastructure to convey our water.
• PWSD staff will administer the construction work for a small administrative fee (one-percent) and will provide regular updates on project progress.
• Castle Rock will be able to move not only WISE water but other water as well.
• The costs of maintenance, repair, replacement and operation of this infrastructure will be covered under a separate (“Wheeling”) agreement.
The Town’s Legal Department reviewed and provided input to the IGA.
Budget Impact
The Canyons Pipeline IGA will impact the Town’s WISE Project budget. The IGA states that all costs are due within 10 days of the effective date. The initial payment that the Town will be making in support of this IGA’s responsibility is $12.11 million; however, Dominion will be covering approximately $5.76 million of this cost through a separate License Agreement with the Town. PWSD has mentioned that there is a possibility of phasing the costs if necessary. The 2017 WISE budget currently does not have adequate funding for this project with a balance of $10.983 million remaining. The Town has $190,000 in other WISE obligations related to title clean-up and operational reserves to be paid later in 2017. The capital reserve account in the Water Resources Enterprise does have adequate funds and has funds that have been reserved specifically for WISE. The Town will also need an additional $200,000 for cultural resource monitoring related to the Canyons pipeline and other WISE related expenditures. A budget amendment of $1,516,415 will be needed to appropriate funds from capital reserves. Funding will come from WISE account 211-4375-443.77-72, Project Code WR WLI.
Recommendations
Staff and Castle Rock Water Commission recommend that Town Council approve the Agreement as presented in Exhibit 1.
Proposed Motion
“I move to approve the resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Agreement
Attachment B: Location Map