To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Director of Castle Rock Water
Title
Resolution Approving Funding for the Town’s Purchase of 2020 Option Shares in the Chatfield Reservoir Reallocation Project
Body
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Executive Summary
The purpose of the memorandum is to request Council approval of a resolution (see Attachment A) approving the funding of the Town’s purchase of our 2020 option in the Chatfield Reservoir Reallocation project. Renewable water storage is a key component of the Town of Castle Rock’s long-term water plan and participation in the Chatfield Reservoir Reallocation Project gives the Town unique access to additional renewable water sources. The purpose of this memorandum is to request Town Council approval to authorize funding for the purchase of an additional 129 acre-feet (AF) of storage shares from the Colorado Water Conservation Board (CWCB) through our 2020 option in the Chatfield Reservoir Reallocation Project. As construction for the project was substantially complete in December 2019, first storage of reallocation pool water is planned for April 2020. The purchase of these additional shares would allow for the Town to immediately start filling up to 590 AF of water storage with the anticipation of a wet late winter/early spring in addition to our fully reusable water rights available each day on Plum Creek.
Furthermore, Castle Rock Water deferred the purchase of our optioned shares in 2019. Consistent with our agreement with the State, Castle Rock cannot defer two years in a row. As such, staff recommends purchasing 129 additional AF of storage in accordance with our 2020 option in the amount of $1,070,825.13. This purchase was included in the approved 2020 budget.
History of Past Town Council, Boards & Commissions, or Other Discussions
In 2004, the Town Council approved a resolution consenting to the South Metro Water Authority (currently the South Metro Water Supply Authority) reserving 1,400 acre-feet of the storage capacity on behalf of its members. The Town’s current share of that capacity is 34.8 percent (34.8%) or 487.2 AF.
In 2005, the Town signed a Letter of Commitment between the Town of Castle Rock and the Colorado Water Conservation Board (CWCB) to reserve permanent storage space in Chatfield Reservoir if the storage became available as a result of this project. The Town’s reserved capacity stood at 1,013.2 AF.
In September 2012, Town Council approved a resolution to submit a letter to the US Army Corps of Engineers in support of the Chatfield Reallocation Project.
Utilities Commission was updated on the status of the project on June 26, July 24, and October 22, 2013.
Town Council was updated on the status of the project in October 2013.
The Water Resources Committee reviewed this project on May 6, 2014.
On May 28, 2014, Utilities Commission was updated on the status of the recommended reduced participation level of 200 AF. Utilities Commission voted 5-1 approving the recommended reduced participation level with one Commissioner stating that participation at a higher level was preferred. The primary reason for a reduction in participation was the financial impact that full participation would have had to our customer’s water rates.
On June 17, 2014, Town Council approved a resolution to reduce participation in the Chatfield Reallocation Project from 1,500.3 AF to 200 AF.
On November 18, 2014, Town Council approved a resolution to approve the Execution of the Articles and Bylaws of the Chatfield Reservoir Mitigation Company, Water Storage Agreement, Escrow Agreement, and Water Provider Agreement for the project.
On April 21, 2015, the Town Council was provided with a discussion of the salient points of a draft option agreement with CWCB.
On May 27, 2015 the Utilities Commission unanimously supported the recommendation to Town Council to proceed with entering into an agreement with CWCB for the acquisition of additional project shares over a multi-year period.
On June 16, 2015, Town Council approved the option agreement for acquisition of additional Chatfield Reservoir project shares from the State of Colorado over time.
On October 5, 2015, the Mayor was presented with execution instructions and original forms for the:
• Articles of Incorporation and Bylaws of Chatfield Reservoir Mitigation Com., Inc.
• Water Provider Agreement
• Escrow Agreement
The Chatfield Storage Reallocation Project refined cost estimate was presented to Utilities Commission on April 27, 2016. The commissioners unanimously recommended that the Town continue its participation in the project.
On May 17, 2016, Town Council was provided with an update on the progress of the Chatfield Reallocation Project.
On May 25, 2016, Utilities Commission was provided with a discussion of the key points for an amendment to the CWCB Option Agreement to buy 1,713 AF of storage shares over the next nineteen years. The commissioners unanimously recommended that staff work with CWCB to develop an amendment to the existing CWCB Option Agreement.
In December 2016, the Town closed on an additional 87 AF of storage space, bringing our current total to 374 AF.
On October 25, 2017, Castle Rock Water Commission was provided with a discussion of the Chatfield Storage Reallocation Project updated cost estimate and off-ramp option, and unanimously recommended the Town continue its participation in the project.
On November 14, 2017, Town Council was provided with a discussion of the Chatfield Storage Reallocation Project updated cost estimate and off-ramp option, and approved the Town’s continued participation in the project.
On March 28, 2018, the Castle Rock Water Commission unanimously recommended support of the purchase of 87 AF of additional shares.
On April 17, 2018, Town Council approved the purchase of 87 AF of additional shares. The Town closed on this tranche of storage space before the end of 2018.
On September 26, 2018 the Castle Rock Water Commission unanimously recommended Town Council approval for entering into the Modified Agreement for Acquisition of Chatfield Reservoir Reallocation Project Shares with the State of Colorado.
On October 2, 2018, Town Council approved Resolution 2018-093, a Modified Agreement for Acquisition of Chatfield Reservoir Reallocation Project shares from the State of Colorado, ultimately increasing our optioned amount of storage by 500 AF, eventually allowing the Town to reach 2,000 AF of storage.
On August 27, 2019, Castle Rock Water staff informed the Colorado Water Conservation Board of its intent to defer the purchase of an additional 129 AF of optioned shares.
On January 22, 2020, Castle Rock Water Commission unanimously recommended Council approve the purchase of 129 AF of additional shares from the Colorado Water Conservation Board in 2020.
Discussion
The Chatfield Reservoir Reallocation Project (Project) is a water storage project to reallocate flood storage space in the existing Chatfield Reservoir located in northwest Douglas County to space that can be used for storing renewable water supplies. The Town of Castle Rock is currently, and has been since 2004, a participant in this Project. On June 7, 2014, Town Council approved a resolution to reduce the Town’s participation in the Chatfield Storage Reallocation Project from 1,500.3-AF to 200 AF based on staff’s recommendations of the then current need for storage in Chatfield by the Town and for the need to allocate funding to other renewable water projects.
As the Town continues to develop and firm its renewable water rights on Plum Creek and the South Platte River, in addition to its fully reusable return flows, additional storage in Chatfield becomes beneficial. The Town entered into a multi-year agreement with the CWCB in July 2015 to purchase shares in the Chatfield Reservoir Reallocation Project. This agreement has allowed the Town to spread out the project costs over time while the Project has been undergoing design and construction activities.
Construction activities for the Chatfield Reservoir Reallocation Project were substantially completed in December 2019 with just a few minor punch list items remaining. The final Project construction costs (as of January 22, 2020) are expected to be approximately $168,300,000, which is approximately $2,700,000 less than the last official Project estimate. The CRMC has been directed to utilize the remaining funds to pay for the first five years of post-construction Project obligations, such as vegetation and habitat monitoring, erosion monitoring, weed management and new vegetation watering.
The Chatfield Reservoir Management Company staff is also working diligently to finalize the remaining US Army Corps of Engineers (USACE) submittals that are a requirement prior to first storage. This final step has garnered the attention of Colorado’s Congressional Delegation who have corresponded with the Deputy Commanding General at USACE expressing their desire for a speedy review of the final documents (Attachment B). Assuming the final documentation is in order and approval given by the USACE, first storage of reallocation pool water is expected in April 2020.
By exercising our 2020 option now, we can potentially capture more water into our storage space should our junior water rights come into priority this year. Currently, the Town owns 461 AF of storage space, and wishes to exercise its option to buy an additional 129 AF of storage space now, bringing the Town’s total storage shares to 590 AF. The cost for this year’s option is $1,070,825.13.
Budget Impact
Currently, the Town has $1,132,996 in the project budget (Account Number 211-4375-443.77-29, Chatfield Reallocation) for 2020. Thus, adequate funds are available to pay for the purchase of additional Chatfield shares in accordance with our existing option agreement with the State (a purchase of 129 AF of additional storage shares in 2020 for $1,070,825.13).
Staff Recommendation
Staff and Castle Rock Water Commission recommend that Town Council approve funding for 129 AF of additional storage shares for the 2020 option in the Chatfield Reservoir Reallocation Project.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Attachment B: January 13, 2020 Letter from Colorado Congressional Delegation to USACE