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 First Amendment to the Intergovernmental Agreement (IGA) for Water Service between Dominion Water and Sanitation District, Acting in its Capacity as a Water Activity Enterprise and the Town of Castle Rock, Acting Through the Town of Castle Rock Water Enterprise
Body
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Executive Summary
The purpose of this memorandum is to seek Town Council approval of a resolution (see Attachment A) amending the 2014 Water Service Intergovernmental Agreement (IGA) (see Exhibit 1) between Castle Rock and Dominion Water and Sanitation District (Dominion). The purpose for amending this agreement is that the final connecting pipeline (the Outter Marker Road pipeline) for the WISE delivery infrastructure has been completed, and this infrastructure was not included within the original agreement nor included in the cost of service model to determine the correct water service rate. While Dominion paid for their proportionate share of this new infrastructure, the amended agreement addresses how Dominion will pay for operations and maintenance, and future repairs and replacement expenses.
In Spring 2018, Castle Rock Water engaged the services of Stantec Consulting Services (who’s staff members had previously developed the cost model) to revise the cost of service model to include the newly constructed WISE infrastructure. The 2019 rate calculated for this service is $0.40 per thousand gallons while the 2019 cost for treating the water is $0.76 per thousand gallons. In addition, a 2019 fixed monthly charge per connection point is included as a rate of $0.001428 per thousand gallons.
Key aspects of the amended IGA include:
• Changes to Section 4 - Revised references to Exhibits 2, 3 and 4 and replacement of these exhibits with new ones. Exhibit 2 - Ground Water Supply was updated to reference the newly calculated water service rate; Exhibit 3 was added to reference delivery of water relative to the 2016 Water Service Agreement (also known as the “Firming Service Commitment”); and Exhibit 4 (which was formerly Exhibit 3) was updated to reference the recording number of the WISE project WDA and to reflect the 2019 rates.
• Changes to Section 6 - Delivery Infrastructure. These changes make reference to the latest design information available for the connection point location, and reference to the Cost Sharing Design/Build Contract between the Town and Dominion for concurrent design of the Town's raw water return pipeline and Dominion's potable water delivery pipeline. It also includes information about the entire delivery infrastructure, from Parker Water and Sanitation District through the Town's newly constructed Outter Marker Road pipeline and to the Ray Waterman Water Treatment plant. It also discusses treating the water if the Town determines that re-treatment of the WISE water is necessary. This determination shall be at the discretion of the Director of Castle Rock Water.
• Section 15 - Notices. These were updated with Dominion's current contact information.
History of Past Town Council, Boards & Commissions, or Other Discussions
On June 27, 2018, Castle Rock Water Commission unanimously recommended that staff seek Town Council approval of the amendment to the Wheeling Agreement IGA.
Discussion
Per the 2014 Dominion Wheeling IGA, Dominion will have the ability to move up to 4.0 million gallons per day (MGD) of their water through the Town's system and other facilities shared by the Town and Dominion. Additionally, the Town has entered into the Firming Service Commitment agreement with Dominion to provide the Town with additional supplies and provide the conditions under which the Town will treat and deliver additional water to Dominion at the Dominion connection point (see Attachment B).
The original agreement and this first amendment have multiple advantages for the Town:
• Recovering costs of extra capacity within the Town’s existing infrastructure that is not currently utilized. The agreement could result in annual revenues of approximately $600,000 based on the current calculated rate, and more if treatment of the water is required.
• Continues our regional water partnership with Dominion.
• Provides emergency redundancy to our system.
• $180,000 one-time connection fee charge.
• Five percent of the water provided by Dominion will be given to Castle Rock to cover losses through our system.
• Capacity reservation fee of $150,000 in 2019 and any year thereafter (with amounts over $50,000 applied to a one-time connection fee) are assessed to reserve future capacity in the pipeline until water is moved through the system.
Budget Impact
The Wheeling Agreement has positive impacts to the Water Resources budget by providing a revenue stream. At the currently calculated rates, the Town will receive approximately $600,000 in revenue when Dominion connects and moves 4,500 acre-feet (AF) of water in a year and will be more if this water is retreated before delivery. Additionally, the Town will receive the reservation fee in 2019.
Recommendations
Staff and Castle Rock Water Commission recommend that Town Council approve the first amendment to the Water Service IGA.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Agreement