To: Honorable Mayor and Members of Town Council
From: Matt Benak, PE, Water Resources Manager
Angie Brown, Water Resources Program Analyst
Mark Marlowe, PE, Director of Castle Rock Water
Title
Resolution Approving the Second Amendment to the South Metro WISE Authority Formation and Organizational Intergovernmental Agreement (IGA) and Contemporaneously Approving the Assignment and Assumption of Reservation Water
Body
________________________________________________________________________________
Executive Summary
The purpose of this memorandum is to seek Town Council approval of a resolution (Attachment A) to approve South Metro WISE Authority (SMWA) IGAs to finalize the purchase of 1,000 acre feet (AF) of additional WISE subscription water through the Douglas County Option, which Town Council approved in August 2018. These IGAs include the Second Amendment to the Formation IGA (Attachment B) and the Assignment and Assumption IGA for Town of Castle Rock’s portion of Douglas County WISE water (Attachment C).
The Second Amendment to the Formation IGA is an agreement between all of the members that simply updates all of the respective water subscription amounts in the IGA for the members of SMWA to be reflective of the additional option water that some of the members have purchased. The only other significant item included in the second amendment is an update to the reserves that the SMWA will maintain for operations, catastrophic failures and other purposes. The Assignment and Assumption IGA is an agreement between the Town and SMWA that assigns the additional option water to the Town and allows the Town to assume the costs and requirements associated with that additional option water. Once these two IGAs are complete, the SMWA will work with Denver Water and Aurora Water to update the Water Delivery Agreement to also be reflective of the new water subscription amounts.
In August of 2018 when Town Council approved the purchase of additional WISE option water, the Council approved $2,081,432 for the purchase of 1,137 AF. The actual cost of the option water will be $887,090 for the purchase of 1,000 AF. As WISE supplies ramp up, Castle Rock Water will want to purchase additional infrastructure capacity in key components of the WISE infrastructure to ensure that we can deliver the full option at all times. These items will be brought back to Council for consideration as the opportunities are identified. 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 the WISE option helps us towards that goal.
History of Past Town Council, Boards & Commissions, or Other Discussions
On April 24, 2013, staff presented the IGA and WISE WDA to the Utilities Commission for discussion. The Utilities Commission voted unanimously to recommend to Town Council the approval of the IGA subject to satisfaction of the contingencies in Section 20 of the IGA and at a subscription level of 1,000 acres-feet.
On May 7, 2013, staff presented the IGA and WISE WDA to Town Council for approval. Town Council approved the IGA which included a requirement for the satisfaction of the contingencies in Section 20 of the IGA and at a subscription level of 1,000 acre-feet.
On August 14, 2013, the Water Delivery Agreement between Denver Water, Aurora Water and SMWA is fully executed. Among the terms of the WDA agreed upon by SMWA members were the modifications to the Western Pipeline Infrastructure and the construction of the future Binney Connection to be constructed by SFFWA prior to May 31, 2021.
On October 23, 2013, staff presented the Amended and Restated WISE WDA extension and Resolution to the Utilities Commission. By general consensus, the Utilities Commission recommended these documents to Town Council for approval.
On December 3, 2013, Town Council approved Resolution No. 2013-74 approving the amendment of the SMWA Formation IGA. The amendment to the IGA authorized a one year extension to several deadlines to satisfy the remaining two contingencies of the WISE Water Delivery Agreement. Extended terms included WISE deliveries beginning in 2016, Take-or-Pay beginning in 2017 (moved out 1 year), construction of the Binney Connection by May 31, 2021 (moved out 1 year), and End phase-in period in 2021 (moved out 1 year).
On April 16, 2016, Town Council unanimously approved Resolution No. 2016-040, approving the execution of the Intergovernmental Water Infrastructure Cost Sharing, Construction and Capacity Allocation Agreement.
On June 27, 2018, staff presented Castle Rock Water Commission with a request to purchase an additional 1,137 AF of WISE water previously under reservation by Douglas County, which would bring the Town's total subscription to 2,137 AF. Castle Rock Water Commission unanimously recommended that Town Council approve the purchase additional WISE water.
On July 17, 2018, Town Council approved Resolution No. 2018-068, approving Castle Rock Water's purchase of Douglas County WISE Reservation Water. In 2013 Aurora and Denver offered 10,000 acre feet and Douglas County reserved 2,775 AF when WISE members were unsure of their ability to convey more than the WISE membership subscription of 7,225 AF. Staff proposed purchasing an additional 1,137.5 AF of WISE water reserved under the Douglas County Option which would provide the Town with a renewable and reusable supply to be paid for by growth. This purchase would additionally require an amendment to the Water Delivery Agreement between SMWA, Aurora Water, and Denver Water.
On August 22, 2018, staff presented an update on the Douglas County WISE water option. Castle Rock Water had initially pursued the purchase of 1,137 AF in additional WISE water subscription that had previously been reserved under the Douglas County Option. However, since this was last presented to Castle Rock Water Commission, additional WISE members expressed interest in obtaining water from the Douglas County Option, and ultimately more water was requested than available under the Douglas County Option. Douglas County, the SMWA, and the members of the SMWA worked together to divide the option water amongst those who had requested more water based on need and timing of their requests in an equitable manner. Castle Rock Water’s option amount was reduced from the 1,137 AF we requested to 1,000 AF. Staff believes the process that was used for dividing the option water was fair.
Discussion
The WISE project is a key component in the Town’s conversion from primarily nonrenewable groundwater supplies to 75% renewable water supplies. The Town of Castle Rock began participating in the WISE project feasibility and agreement negotiations in 2009, originally subscribing to 1,000 AF of WISE water in 2013, and in April 2018, the Town started receiving WISE water supplies into the Castle Rock Water (CRW) system.
Since 2014, Douglas County has been holding 2,775 AF of WISE water in reserve for Douglas County users that are outside of the South Metro Water Supply Authority (SMWSA) service area and for those SMWSA members who desire to increase their allocation of WISE water supply beyond their initial contract amount. This reserved water has historically been referred to as the Douglas County Option.
In August of 2018, Staff presented Town Council with the opportunity to purchase an additional 1,137.5 AF of WISE water through the Douglas County Option and since that time, additional WISE members have expressed their interest in purchasing Douglas County Option water. In order to continue to promote regional partnerships and in accordance with the process Douglas County and SWMA used to divide the option water, CRW relinquished 137.5 AF of the Option water for other WISE members to purchase for their annual subscription. The final division of the WISE option water is as follows:
|
WISE Member |
Douglas County Option |
|
Town of Castle Rock |
1,000 AF |
|
Meridian Metropolitan District |
475 AF |
|
Parker Water & Sanitation District |
800 AF |
|
Stonegate Village Metropolitan District |
500 AF |
|
TOTAL |
2,775 AF |
This brings the Town’s purchase of Option water to 1,000 AF and increases the Town’s total subscription of WISE water from the original subscription of 1,000 AF annually to 2,000 AF, which the Town will be eligible to receive in total beginning on June 1, 2021.
Budget Impact
To date, CRW has paid a total of $175,000 from the WISE Infrastructure account <211-4375-443.77-72> for one invoice received in 2019 for the Douglas County Reservation Fee. Staff anticipates one additional payment will be made in the first quarter of 2020 to finalize the purchase of 1,000 AF of Douglas County Option water. The most recent WISE budget states that CRW will pay a total of $712,090 for the SMWA Operational Reserve and for the Reimbursement for Operations to Douglas County, which will be paid from the WISE Infrastructure account, 211-4375-443.77-72.
|
Item |
Project Code |
Account |
Amount |
|
2020 Douglas County Option Reimbursement |
WRWDCO |
211-4375-443.77-72 |
$712,090 |
Staff Recommendation
Staff recommends that Town Council approve the WISE Second Amendment to the SMWA Formation & Organizational IGA and the Assignment and Assumption Agreement.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Attachment B: WISE Second Amendment to the SMWA Formation & Organizational IGA
Attachment C: Assignment and Assumption Agreement