To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Director of Castle Rock Water
Matt Benak, P.E., Water Resources Program Manager
Title
Resolution Approving the Purchase of Douglas County WISE Reservation Water
Body
________________________________________________________________________________
Executive Summary
The purpose of this memorandum is to seek Town Council approval of a resolution (Attachment A) to purchase 1,137.5 acre-feet (AF) of WISE water supply that is currently under reservation by Douglas County. This water supply would be funded solely through system development fees since the need is being driven by growth. The current estimates of buildout population have risen from 105,000 to as much as 145,000 by 2050 since approval of the hybrid renewable water projects in 2013. In order to ensure we continue to meet our long term goal of 75% renewable water by 2050, Castle Rock needs to secure additional renewable water supplies, and some of the WISE option water is a good first step.
With the WISE infrastructure now in place and operating, Castle Rock has an opportunity to secure additional renewable water supplies for our growing community. Presently, Douglas County has 2,775 AF of WISE water supply reserved. Of this quantity, 500 AF is intended to be used by Dominion and Stonegate, and 775 AF is reserved for Douglas County water users that are outside of the South Metro Water Supply Authority (SMWSA) member boundaries, yet will be served by this supply through an existing WISE Authority member.
Castle Rock is proposing to take down 1,137.5 AF, of which 387.5 AF would be reserved for other County users, but would be available for Castle Rock’s use until other County users come forward. Parker Water and Sanitation District (PWSD) has expressed interest to the County for the other 1,137.5 AF of the total 2,275 AF of available WISE supplies.
To effectuate this purchase, Castle Rock will need to pay $199,062.50 (the ‘reservation fee’) to Douglas County and $1,882,369 to the WISE Authority in 2018. Staff is in discussions with the County to see if they would be willing to waive the reservation fee in exchange for Castle Rock reserving the 387.5 AF of water for existing customers in the unincorporated areas of Douglas County. The concept is that Castle Rock would use this water until an existing customer in unincorporated Douglas County comes forward. It is important to note that any existing customer in unincorporated Douglas County will also need to pay their fair share of the WISE infrastructure costs to get access to this water supply.
Use of this additional WISE water could begin prior to 2021, following an amendment to the WISE Partnership Water Delivery Agreement (“WDA”). This water costs approximately $3.04 per 1,000 gallons more than our current average supply. System development fees would pay the equivalent of an additional $3.04 per 1,000 gallons over a 25-year period of use to help buy down the operational costs associated with the WISE option water since the need for this additional WISE water is being driven solely by growth. This is a total of $30.16 million in present dollars including the capital costs to the WISE Authority and the reservation fee to Douglas County.
History of Past Town Council, Boards & Commissions, or Other Discussions
On June 27, 2018, Castle Rock Water Commission unanimously recommended that Town Council approve the purchase of 1,137.5 AF of additional WISE water.
Discussion
The Town of Castle Rock started participating in the WISE project feasibility and agreement negotiations in 2009 and in April 2018, the Town started receiving WISE water supplies into our system. The WISE project is a key component in the Town’s conversion from nonrenewable groundwater to renewable water supplies and it shares the cost of key infrastructure with nine other South Metro partners. The Town is currently subscribed at 1,000 AF.
With the continued rapid pace of growth within the community, and the fact that the Town now has the water delivery infrastructure in place to receive WISE water into our system, staff recommends seizing the opportunity to take down additional WISE supplies that are being held in reserve by Douglas County. This additional water will help to increase our renewable supplies and could also be stored in Rueter-Hess Reservoir or our Aquifer Storage and Recovery (ASR) system in times of lower water demand. Additionally, the WISE water can be used and reused to extinction, and will be recaptured downstream at the Town’s Plum Creek Diversion and sent back to the Plum Creek Water Purification Facility (PCWPF) for treatment.
Since 2014, Douglas County has been holding 2,775 AF of WISE water in reserve for Douglas County users that are outside of the SMWSA service area and for those SMWSA members who desire to increase their allocation of WISE water supply beyond their initial contract amount. To formally request any of the reserved water from the County, the Town must submit an application (Attachment B) to the County detailing how the water fits into our water supply plan and how our water conservation plan is being implemented; and where the water supply will be used and if we have the necessary infrastructure in place to move the water. The County Manager will have the authority to approve or deny the request.
If approved, the Town would pay $199,062.50 to Douglas County to recover the WISE reservation fees (or potentially less if the County elects to waive part or all of the reservation fee) that the County has paid to the WISE Authority. Additionally, the Town would pay $1,654.83 per AF to the WISE Authority for their reimbursements, which equates to $1,882,369. The total cost in 2018 would range from $1,882,369 to $2,081,432.
Budget Impact
Discussions with our rates and fees consultant (Stantec) indicated that the take-down of the additional WISE supplies from the County should be wholly borne by system development fees as outlined in the Executive Summary. The total present worth costs of this takedown are estimated at $30.16 million. As such, by purchasing this additional WISE water, system development fees will need to be increased by approximately 1.4%, or $247 on a typical residential ¾” meter, to $17,402.
Funding for the County payment and WISE Authority payment would come from the Water Resources - WISE Project Capital Account <211-4375-443.77-72> and a budget amendment will be necessary in 2018 to cover the payments to the WISE Authority and Douglas County.
Staff Recommendation
Staff and the Castle Rock Water Commission recommend that Town Council approve the purchase of 1,137.5 AF of additional WISE water.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Attachment B: Application Letter