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File #: RES 2020-032    Version: 1 Name:
Type: Resolution Status: Passed
File created: 1/23/2020 In control: Town Council
On agenda: 3/3/2020 Final action: 3/3/2020
Title: Resolution Authorizing Payment of Castle Rock Water's Portion of the 2020 Binney Connection Fee and the Meridian Title Clean-Up Fee for the Water Infrastructure Supply Efficiency (WISE) Project
Attachments: 1. Attachment A: Resolution Binney Connection Costs, 2. Attachment B: CRW WISE Water Deliveries to Date, 3. Attachment C: WISE Project CIP Table, 4. Attachment D: Key Infrastructure Description, 5. Attachment E: SMWA WISE Project Map, 6. Attachment F: Aurora Water WISE Water Rate Increase Letter, 7. Attachment G: 2020 CRW WISE Budget Impact, 8. Attachment H: 2020 WISE Project Update Summary Memo, 9. Attachment I: SMWA 2020 Payment Summary, 10. Presentation

To:                     Honorable Mayor and Members of Town Council

 

From:                     Mark Marlow, P.E., Director of Castle Rock Water

                     Matt Benak, P.E., Water Resources Manager

                     Angie Brown, Water Resources Program Analyst

 

 

Title

Resolution Authorizing Payment of Castle Rock Water's Portion of the 2020 Binney Connection Fee and the Meridian Title Clean-Up Fee for the Water Infrastructure Supply Efficiency (WISE) Project

Body

________________________________________________________________________________

 

Executive Summary

 

The intent of this memorandum is to update Town Council on the Water Infrastructure Supply Efficiency (WISE) project, to request approval by resolution of the Binney Connection Cost (see Attachment A), and to provide context for other upcoming projects, commitments, and budgetary impacts anticipated in 2020. In 2020, Staff anticipates spending $2.3 million on 1,000 acre feet (AF) of WISE water deliveries, $712,090 on securing the Douglas County Option water (which will bring an additional 1,000 AF to the Town beginning in 2021), and $6,784,000 on Capital Improvement Projects (CIP) including the Binney Connection construction, Parker Water & Sanitation (PWSD) Bottleneck design, and more. Further detail regarding water deliveries and CIP will be discussed below and can be found in summarized tables in Attachment B and Attachment C.

 

The WISE project is a key piece of Castle Rock Water’s long term renewable water plan. The goal of that plan is to achieve 75% or more of Castle Rock’s supply as renewable water by 2050. WISE water will ultimately make up approximately 12% or more of the Town’s supply depending on the Town’s long term population.

 

History of Past Town Council, Boards & Commissions, or Other Discussions

 

In August 2009, Town Council unanimously approved participation in the Denver - Aurora - South Metro Intergovernmental Agreement to identify and evaluate opportunities to address long-term water supply needs for all Denver-metro communities in the most efficient and cost-effective manner possible.

 

In October 2009, Town Council approved the Town’s involvement in an Engineering Investigation Participation Agreement between Denver Water - Aurora Water - and South Metro Water Supply Authority (South Metro). The primary objective of that work was to further investigate the potential of a water delivery project to supply South Metro members with water from blending currently unused South Platte return flows and mountain waters.

 

On September 11, 2012, staff presented Town Council the details of the WISE agreements. Town Council directed staff to continue working with the WISE Partnership by negotiating the Town’s identified issues of concern and to present the final agreements and a staff recommendation to Town Council once the issues were resolved.

 

In October 2012, Town Council directed staff to further pursue a hybrid alternate water supply solution between 3,000 acre-feet and 4,000 acre-feet by negotiating proposed agreements with WISE and Stillwater Resources, Inc. (Stillwater) and to report back proposed agreements to Town Council for further consideration.

 

On April 24, 2013, staff presented the Intergovernmental Agreement (IGA) and WISE Water Delivery Agreement (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 acre-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 WDA between Denver Water, Aurora Water and SMWA is fully executed. Among the terms of the WDA agreed upon by South Metro Wise Authority (SMWA) members were the modifications to the Western Pipeline Infrastructure and the construction of the future Binney Connection to be constructed by (SMWA) prior to May 31, 2020.

 

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).

 

Staff presented a concept to do a lease purchase agreement with Dominion Water and Sanitation Dist. (DWSD) to the Water Resources Committee on April 8, 2014 and Utilities Commission on April 23, 2014. Water Resources Committee and Utilities Commission supported the concept of financing the purchasing of additional portions of the Western Pipeline and recommended bringing the concept to Town Council for consideration.

 

The draft Western Pipeline Purchase Agreement and the key deal terms for the lease purchase agreement with DWSD were brought to the Utilities Commission on May 28, 2014. Utilities Commission recommended Council proceed with approval of the purchase agreement and the related lease purchase agreement with Dominion.

 

The draft Western Pipeline Purchase Agreement was presented to Town Council on June 3, 2014.

Town Council recommended finalizing the western pipeline purchase agreement and finalizing the lease purchase agreement with Dominion to purchase additional portions of the western pipeline over and above the base infrastructure the Town plans to purchase.

 

The Purchase Agreement for the Western Pipeline was approved by Town Council on June 17, 2014 for $4,050,000. On July 22, 2014, Town Council approved a $4,300,000 Lease-Purchase Agreement with DWSD to assist with their down-payment needed for the closing of the Western Pipeline Purchase Agreement.

 

On August 27, 2014, Utilities Commission reviewed the key terms of the Modifications Agreement and recommended to Town Council for approval.

 

On September 2, 2014, Water Resources Committee reviewed the Modifications Agreement and supported Town Council approval.

 

On September 16, 2014, Town Council approved Resolution No. 2014-82 approving the execution of the Modifications to Shared Infrastructure Agreement by the SMWA.

 

On December 16, 2014, Town Council was updated on progress on the Alternate Source of Supply projects, including the WISE project.

 

On February 25, 2015, Utilities Commission recommended Town Council approve the additional required funding of $368,337 for the WISE Western Pipeline modifications and the Aurora Temporary Connection.

 

On March 3, 2015, Water Resources Committee reviewed the additional required funding of

$368,337 or the WISE Western Pipeline modifications and the Aurora Connection and recommended Town Council move forward by general consensus.

 

On March 17, 2015, Town Council unanimously approved Resolution No. 2015-32 for additional funding of $368,337 for the WISE Western Pipeline modifications and the Aurora Temporary Connection.

 

Utilities staff presented an update of this project as part of the overall Alternate Source of Supply Project Update to the Utilities Commission on July 22, 2015 and to Town Council on August 4, 2015. Presentations to the groups highlighted the recent progress for the hybrid solution.

 

On October 6, 2015, Town Council approved Ordinance 2015-44 as presented on first reading. The ordinance authorizes the exercise of the Town's powers of eminent domain to acquire certain property interests necessary for the WISE Infrastructure transmission line.

 

On November 3, 2015, Town Council unanimously approved Ordinance No. 2015-44. The ordinance was presented on second reading with no additional public input or any changes being made since prior presentation. Staff reiterated that eminent domain would only be used if all efforts to secure the needed easements through good faith negotiations with property owners had failed.

 

On January 5, 2016, staff provided Town Council with an update on the various components of the Alternate Source of Water Supply (ASOS) projects, including recent accomplishments by the WISE partnership, the status of the Box Elder project and progress on the Plum Creek Diversion project.

 

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 May 17, 2016, staff provided an update on the WISE and Box Elder projects which made up the hybrid solution to address the Town's long term water supply needs.

 

On August 16, 2016, Town Council approved Resolution No. 2016-050, approving the Draft Intergovernmental Agreement for Water Service between the Town of Castle Rock and Dominion Water and Sanitation District. Staff reviewed key points of the proposed intergovernmental agreement and benefits to Town. This was an extension of the existing agreement between the Town and Dominion, and would work in conjunction with that agreement. Under the terms of the agreement the Town will take ownership of and treat and deliver 400 acre-feet (AF) per year (on average) of Denver Basin groundwater that Dominion currently owns as a backup to their renewable WISE supplies.

 

On August 16, 2016, Town Council approved Resolution No. 2016-077 approving the Town of Castle Rock and Parker Water and Sanitation District Intergovernmental Water Infrastructure Cost Sharing, Design, Construction and Capacity Allocation Agreement. The infrastructure consists of a 36-inch, 4- mile pipeline and a pump station that will deliver water from Parker Water and Sanitation District’s (PWSD) water distribution system to the Town’s planned WISE local transmission line that is currently under design. The initial cost for participation in this IGA is $10.5 million, a portion of which would be covered by Dominion Water and Sanitation District under the separate License Agreement.  The Town purchased 8.8 million gallons per day (MGD) of capacity in the pipeline and 4 MGD of capacity in the pump station.

On August 16, 2016, Town Council approved Resolution No. 2016-78 approving the Town of Castle Rock/ Dominion Water and Sanitation District Canyons Pipeline Capacity License Agreement. Staff noted this agreement was the companion agreement to the one approved by Resolution No. 2016- 077.

 

On September 20, 2016, Town Council approved Resolution No. 2016-087 approving an Intergovernmental Agreement for Water Service between DWSD and the Town. Staff reviewed the key points of the proposed IGA and the benefits to the Town.

 

On November 1, 2016, Town Council approved Resolution No. 2016-112, approving a construction contract with Garney Companies, Inc. for the WISE Local Infrastructure Construction Project. Staff reviewed highlights of the construction contract for the final section of pipeline needed to bring water to Castle Rock.

 

On February 28, 2018, Castle Rock Water Commission reviewed the (PWSD) Wheeling Agreement which delineates costs to be incurred as a result of conveying WISE water and northern supplies through PWSD's system. Castle Rock Water Commission recommended Town Council approval.

 

On March 6, 2018, Town Council approved Resolution No. 2018-014 approving the Town of Castle

Rock and PWSD Wheeling Agreement. The agreement with PWSD covers the infrastructure needed to convey WISE water, water stored in Rueter-Hess Reservoir, and future Box Elder water supplies to the Town. Parker will operate and maintain infrastructure and capital costs which will go on into perpetuity.

 

On March 28, 2018, staff presented updates on the WISE project, including the Wheeling Agreement and the infrastructure testing that has been conducted on the pipeline that runs from Parker Water to the Ray Waterman Regional Water Treatment Plant.

 

On April 25, 2018, staff provided information to commission about the intergovernmental agreement with Dominion Water and Sanitation District for the Plum Creek raw water return pipeline / Eastern Regional pipeline project. Castle Rock Water Commission recommended Town Council approval.

 

On May 15, 2018, Town Council approved the Execution of the Water Infrastructure Design and Construction Cost Sharing Intergovernmental Agreement between the Town of Castle Rock and Dominion Water and Sanitation District (Plum Creek Raw Water Return Pipeline / Eastern Regional Pipeline Project). Dominion conveys their WISE water through Parker and Castle Rock, and the pipeline project would convey Dominion's WISE water from Castle Rock to them.

 

On May 23, 2018, staff provided Castle Rock Water Commission with a WISE water update after receiving Castle Rock's first WISE water deliveries on April 30, 2018.

 

On June 27, 2018, staff presented Castle Rock Water Commission with the First Amendment to the Intergovernmental Agreement for Water Service between Town and Dominion Water and Sanitation District, which was to be presented to Town Council on July 17, 2018. The amendment included cost and capacity sharing provisions for the recently constructed Outter Marker Road pipeline, including Dominion's cost-share of WISE water re-treated at the Ray Waterman Water Treatment Plant. Castle

Rock Water Commission approved and recommended Town Council approval.

 

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 approved and recommended Town Council approval.

 

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 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 WDA between SMWA, Aurora Water, and Denver Water.

 

On July 25, 2018, staff presented the temporary agreement with PWSD for the delivery of Castle Rock's water currently stored in Rueter-Hess Reservoir. The agreement would help the Town meet peak demands during the 2018 drought.

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. In order to maintain amicable relationships with WISE members, Castle Rock reduced our new subscription request from 1,137 AF to 1,000 AF.

 

On March 27, 2019, staff presented Castle Rock Water Commission with their recommendation to purchase the Western Pipeline and Ridgegate Capacity for sale by Denver Southeast Suburban Water & Sanitation District d/b/a Pinery Water & Sanitation (Pinery) for the sale price of

$2,287,966.50. It was recommended that the Town purchase additional WISE Infrastructure capacity in order to take full advantage of the Town's northern (Box Elder) and WISE supplies. Castle Rock Water Commission approved and recommended Town Council approval.

 

On April 19, 2019, Town Council unanimously approved Resolution 2019-047 approving the Agreement for Purchase and Sale of Western Pipeline and Ridgegate Pipeline Capacity. This purchase secured additional capacity in the Binney Connection, Western Pipeline, and the Ridgegate Pipeline for the conveyance of the Town's increased WISE water subscription of 2,000 AF and the Town's northern water supplies.

 

On September 3, 2019, Town Council approved Resolution No. 2019-084, approving payment for Castle Rock Water's portion of the 2019 Binney Connection Fee and the Meridian Title Clean-up fee for the WISE project. Castle Rock Water Staff additionally presented an update of the WISE project.

 

On January 7, 2020, Town Council unanimously approved Resolution No. 2020-004, approving the Second Amendment to the South Metro WISE Authority Formation and Organizational Intergovernmental Agreement (Formation IGA) and contemporaneously approved the Assignment and Assumption of the Town's portion of Douglas County Reservation Water.

 

On February 26, 2020, Castle Rock Water Commission recommended Town Council approval of payment to SMWA for the Town’s portion of the Binney Connection construction cost and the Meridian Title Cleanup Fee.

 

Background

 

Project Description & Intergovernmental Agreements (IGAs)

 

The Water Infrastructure & Supply Efficiency (WISE) Project is a first of its kind partnership between Denver Water, Aurora Water, and 10 water providers in the south metro Denver area that efficiently utilizes shared infrastructure and renewable and reusable water supplies on the South Platte River.

 

In 2002, the Front Range of Colorado experienced an historic drought that catalyzed Aurora Water’s efforts to develop a project that would return their renewable and reusable water supplies on the South Platte. The resulting project, known as the Prairie Waters Project (PWP), captured these supplies near Brighton, CO and conveyed them back to Aurora’s service area through a series of pipelines and pump stations. The project cost Aurora Water $600 million and, while it provided a much needed drought supply, left Aurora with excess water supplies in hydrologically wet and normal years and the financial burden of an expensive project.

 

Around the same time, Denver Water was investigating ways they could also convey their renewable and reusable supplies back to their service, and began initial discussions with Aurora on how they could partner on a project that would provide both entities with a drought-resilient water supply.

 

Meanwhile, water providers in the south metro Denver area were in search of renewable and reusable surface water supplies to reduce their reliance on non-renewable groundwater, and partnered together to form the South Metro Water Supply Authority (SMWSA), and later joined conversations with Denver and Aurora to investigate a joint project. Ultimately this conversation conceptualized the WISE Project which would provide interested SMWSA members with Denver and Aurora’s renewable and reusable supplies in hydrologically normal and wet years, Denver with an emergency drought supply, and Aurora water with funding through the sale of WISE water to SMWSA to help offset PWP costs.

 

In order to later formalize a partnership with Denver Water and Aurora Water, ten of SMWSA’s fourteen members created the South Metro WISE Authority, through the signing of the South Metro WISE Authority Formation and Organizational Intergovernmental Agreement (Formation IGA) in 2013.

 

Several months after the Formation IGA was fully executed, Denver Water, Aurora Water, and the South Metro WISE Authority (SMWA) formally entered into the WISE Partnership through the full execution of the WISE Partnership Water Delivery Agreement (WDA) between Denver Water, the City of Aurora, acting by and through its Utility Enterprise, and the South Metro WISE Authority in 2013.

 

The WISE Partnership originally envisioned that 100,000 acre-feet (AF) of WISE water would be conveyed to SMWA members over a 10-year period. However, SMWA members could only commit to 72,250 AF at the time. Not wanting Douglas County water providers to miss out on a renewable water supply, Douglas County stepped in and agreed to hold 2,775 AF in reserve for any interested user within their jurisdiction. This reserved water is what we now refer to as Douglas County Option water.

 

The WDA outlined several key terms for the WISE Partnership:

                     Aurora Water would offer 72,250 AF of WISE water to SMWA over a 10-year period.

                     Aurora has maximum and minimum volumes of water they can offer seasonally and over time periods spanning up to five years.

                     SMWA is obligated to accept a minimum volume of water in any given WISE year based on Aurora Water’s offer known as Take-or-Pay (TOP) water, meaning SMWA will pay for TOP water regardless of whether the membership accepts the full minimum amount.

                     Denver Water has the right to use WISE water in 15 out of every 100 years, most likely meaning SMWA members will not receive any WISE water in that year or be able to utilize certain WISE infrastructure.

                     A WISE Year is defined as June 1 through May 31 of the following year and defines the period of time in which Aurora can offer and SMWA can accept WISE water.

                     Aurora Water would gradually increase annual offers of water to SMWA beginning in June 1, 2017 and continuing through May 31, 2021, so that WISE members have ample time to adjust their systems and operations to receive WISE water.

 

 

WISE Year & Take-or-Pay Obligation

 

Included in the Formation IGA were the average annual shares of WISE water each SMWA member committed to receive annually, commonly referred to as pro-rata WISE water subscriptions. In 2013, the Town of Castle Rock committed to 1,000 AF out of the total SMWA subscription of 7,225 AF annually, meaning on average the Town would pay for 1,000 AF of WISE water whether or not the Town accepted the full offer from Aurora. This also meant that the Town generally owned a 14% subscription in SMWA owned infrastructure. However, this percent subscription and infrastructure ownership has since changed due to the purchase of additional capacity and Douglas County Option water which will be discussed later in this memo.

 

When Aurora began offering WISE water to SMWA on June 1, 2017, the infrastructure necessary to convey water to participants in the Ridgegate Pipeline (discussed below) was not yet completed, thus Castle Rock was not able to accept any WISE deliveries until April 2018 when Castle Rock received its first WISE water. Because less than a month remained until WISE Year 2 began and the majority of SMWA members had not yet been able to receive their WISE water, Aurora Water offered a one- time compromise in which SMWA members were able to pay for their WISE Year 1 TOP prior to May 31, 2018, while receiving their actual deliveries during WISE Year 2. The Town received all WISE Year 1 water paid for in advance during summer 2018.

 

Key Infrastructure & Ownership Capacities

As discussed above, the WISE Project efficiently utilizes water resources by capturing renewable and reusable Denver Water and Aurora Water supplies on the South Platte, and conveying that water through infrastructure shared (to varying degrees) by the WISE Partners (Aurora Water, Denver Water, and SMWA) and East Cherry Creek Valley Water (ECCV). Key Infrastructure is described in Attachment D and shown visually in Attachment E.

 

WISE water is provided to members of SMWA through the use of Aurora Water’s Prairie Waters Project (PWP) which captures renewable and reusable water supplies on the South Platte. The water captured and conveyed by PWP consists of supplies owned by both Aurora Water and Denver Water to varying degrees depending on hydrologic conditions. This partnership provides water to SMWA members in hydrologically wet and normal years, and provides Denver Water with an emergency drought supply in 15 out of every 100 years.

 

From the PWP Pipeline, WISE water is treated at Aurora Water’s Binney Water Purification Facility and is then conveyed to SMWA members primarily through the Western Pipeline. However, several members receive water by conveying their water through one connection to the Western Pipeline known as the Ridgegate Connection, and then through infrastructure owned by PWSD where they receive their water at their local connection. SMWA Members receiving their water through the Ridgegate Connection (Ridgegate Participants) include:

                     Parker Water and Sanitation District

                     Pinery Water and Wastewater District

                     Castle Rock Water

                     Dominion Water and Sanitation District

 

Discussion

 

Water Deliveries

 

Deliveries to Date by WISE Year

 WISE Year

 Start

 End

SMWA Obligation (AF)

CRW Obligation (AF)

CRW Received (AF)

Cost of Deliveries + O&M (SMWA)

Cost of Deliveries (PWSD)

 Total Cost

1

6/1/2017

5/31/2018

1500

208

280

$         530,907

$            13,718

$          544,625

2

6/1/2018

5/31/2019

2500

346

981

$      1,899,217

$         183,873

$      2,083,090

*3

6/1/2019

5/31/2020

3500

484

998

$      2,030,000

$         190,000

$      2,220,000

*4

6/1/2020

5/31/2021

5000

692

1000

$      2,390,000

$         230,000

$      2,620,000

*Estimated costs and volumes

 

WISE Year 3 began on June 1, 2019 and will be completed on May 31, 2020. Castle Rock Water (CRW) is invoiced for WISE water deliveries from Aurora Water and Parker for conveyance through their system. In 2019, the WISE water rate from Aurora was $5.81 per one-thousand gallons (kgal), and the conveyance fee from Parker was $0.61 per kgal. Starting on January 1, 2020, Aurora Water increased their WISE water rate to $5.99 per kgal which will remain the rate through December 31, 2020 (Attachment F). Parker’s conveyance fee will remain at $0.61 per kgal through the end of WISE Year 3 (5/31/20) and it is anticipated they will increase their fee for WISE Year 4 after re- evaluation. Despite these fee increases, CRW anticipates completing WISE Year 3 TOP and making significant progress in WISE Year 4 TOP within the 2020 budget.

 

In WISE Year 3, CRW’s TOP obligation is 484 AF. As of the December 2019 invoice issued by WISE, CRW has received credit for 299 AF of WISE water, leaving 185 AF remaining to complete CRW’s WISE Year 3 TOP obligation. Although CRW has only received credit for 299 AF of WISE water   since June 1, 2019, through trades with other SMWA members, CRW has received 401 AF of WISE water for a total cost of $1.62 million including O&M and PWSD conveyance fees.

 

It is anticipated CRW will receive a total of 200 AF of WISE water from January 1, 2020 through May 31, 2020 for approximately $565,000 including O&M and PWSD conveyance fees. With a budget of $2.3 million in 2020 for WISE water, this will leave us approximately $1.7 million for the remainder of 2020, primarily to help meet summer demands.

 

At this time we anticipate WISE water deliveries similar to the 2019 delivery pattern during June through September when CRW received 700 AF of WISE water for a total cost of $1.6 million. Aurora Water will likely stop deliveries in October and November to conduct maintenance, and deliveries will commence in December at which time CRW will reduce flows to our pro-rata share. This should allow us to come in near budget, and will result in a total WISE water delivery of roughly 1,000 AF in 2020, and total TOP credit of nearly 400 AF from June 2020 through December 2020 which will leave roughly 292 AF remaining to take down in early 2021. With 292 AF remaining to take down in early 2021, CRW will plan to adequately budget for this remaining TOP volume as well as for demand season of 2021, which is when full deliveries of WISE water will begin.

 

CRW Staff expects WISE costs in 2020 to be close to the budgeted amount of $2,291,231 for WISE water deliveries which includes the cost of WISE water, O&M charges from SMWA, conveyance fees through Parker, and potential deliveries of Rueter-Hess Reservoir supplies. Funds will be paid from the Other Professional Services Account <211-4340-443.30-70>. Additional detail including Project Codes and a breakout of anticipated spending in comparison to the 2020 Budget, can be found Attachment G.

Invoicing for Water Deliveries

 

Since CRW began receiving WISE deliveries in April 2018, the average monthly cost of WISE water has been roughly $200,000, with a high monthly cost of $560,000 in July of 2019. Since April 2018, CRW has sent check requests directly to Finance who then forwarded the request for approval by the Town Manager. Approval from Town Council was not sought out because it was the understanding of Staff that since Town Council had already approved the Formation IGA and annual budget, by extension Town Council had already approved monthly invoices.

 

However, after reconsidering this process, CRW and Finance determined it would be in the best interest of the Town to develop an alternate Best Practice which is outlined below.

 

Moving forward, CRW will provide Town Council with annual WISE Project updates to include expected costs of WISE water deliveries for the calendar year which will also delineate between WISE water years so that Town Council and the Town Manager are aware of expected costs. It is the intention of CRW that the update will thereby function as Town Council approval for monthly invoices above Town Manager approval, barring any alternate direction by Town Council after being presented with the annual update. Then, when monthly WISE water delivery invoices are received for amounts above the CRW Director’s signing authority (including conveyance fee invoices from Parker for WISE or Rueter-Hess deliveries), CRW staff will send a check request to the Town Manager with the attached Annual WISE Update Summary Memo (Attachment H) which will include references to approved resolutions including approval of the Formation IGA Second Amendment to the Formation IGA, Douglas County Option purchase, and the 2020 budget.

 

 

Operations with Dominion Water & Sanitation District

 

In 2014, CRW and Dominion Water and Sanitation District (Dominion) entered into the 2014 Water Service Intergovernmental Agreement (2014 Dominion Wheeling IGA). Among the terms of the IGA is the Town’s commitment to provide Dominion with 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, with CRW receiving reimbursement for losses through the system as well as a carriage charge.

 

In 2016 the Town 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.

 

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.

 

In 2019, CRW staff began monthly discussions with Dominion to develop operating standards in a memorandum of understanding (MOU) that would accomplish the following based on the language of the 2014 and 2016 IGAs:

 

                     Document the agreed upon intent of the IGAs.

                     Outline daily, monthly, annual and emergency Standard Operating Procedures.

                     Best practices for flow change coordination including annual and monthly or quarterly coordination meetings.

                     Develop water accounting to track water delivered to CRW and received by Dominion.

                     Develop monthly accounting protocol.

 

At this time, Dominion plans on receiving their first deliveries of WISE water through CRW’s system in 2021. Staff plans on completing the Dominion MOU in 2020.

 

Douglas County Option

As discussed in the Background, Douglas County held 2,775 AF of annual WISE water in reserve for interested Douglas County parties. With approval from Castle Rock Water Commission and Town Council, in 2018 CRW began the process to secure an additional 1,137.5 AF of WISE water annually (half of the Douglas County Option water), which would have increased CRW’s annual subscription to 2,137.5 AF. However, once CRW and Parker began pursuing the Douglas County Option water, additional SMWA members expressed interest in purchasing some of the reserved 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

TOTAL

2,275 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.

 

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> Project Code WRWDCO.

 

Item

Project Code

Account

Amount

2020 Douglas County Option Reimbursement

WRWDCO

211-4375-443.77-72

$712,090

 

 

Capacity Needs

 

When the WISE Authority formed in 2013, CRW originally subscribed to 1,000 AF of annual WISE flows and subsequently purchased capacity in WISE infrastructure proportionate to CRW’s pro-rata water subscription. CRW’s original capacity subscription was sufficient, or nearly sufficient to meet even maximum WISE flows.

 

However, since 2013, CRW has secured additional water rights northeast of the Denver Metro area which staff anticipates bringing to the Town through the WISE infrastructure at a rate of 3 million gallons per day (MGD) as a base flow beginning in the mid- to late 2020’s. Furthermore, CRW is in process of purchasing Douglas County Option water which will increase our pro-rata share of WISE offers from 14% to 20%. Including the original WISE subscription, the Douglas County option, and future northern supplies (from our Box Elder project), the average daily flow can now be anticipated at a rate of 4.8 MGD while maximum flows can be expected at 9 MGD. Once CRW began pursuing Douglas County Option water, Staff assessed the need to secure additional infrastructure capacity and in 2019, Town Council approved the purchase of capacity in the Binney Connection, the Western Pipeline, and the Ridgegate Pipeline from Pinery. The tables below reflect these updated capacities and outline expected flow rates from our northern supplies and the average and maximum anticipated WISE flows in light of current capacity ownership:

 

Flows Influencing Capacity Needs

Planned Box Elder Flows (MGD)

3.00

Average TCR WISE Flows (MGD)

1.78

Maximum TCR WISE Flows (MGD)

6.00

Average WISE + Box Elder Flows (MGD)

4.78

Maximum WISE + Box Elder Flows (MGD)

9.00

 

 

Town of Castle Rock WISE System Capacity Needs

 

Current System Capacity (MGD)

TCR Current Owned Capacity (MGD)

Additional Capacity needed for Average WISE & Box Elder Flows  (MGD)

Additional Capacity needed for Maximum WISE & Box Elder Flo (MGD)

Binney Connection

30

4.74

0

1.26

Western Pipeline

38

6.33

0

2.67

Ridgegate Pipeline

15

4

0.78

5.0

*PWSD Bottleneck

10.2

1

3.78

8.0

Canyons Pipeline

18.3

8.8

0

0.2

Outter Marker Road Pipeline

14.3

10.1

0

-

*CRW is currently participating with Parker W&SD regarding the conceptual layout and cost sharing of additional pipeline infrastructure.

 

As you can see in the table above, the biggest need to increase capacity is through Parker’s system, specifically through their 24” pipeline on the east side of Rueter-Hess Reservoir, known as the Parker Bottleneck. This will be discussed in the section below.

 

With the purchase of additional capacity in 2019 and excluding the Parker Bottleneck, CRW will only need additional capacity in the Ridgegate Pipeline. Alternatively, if CRW is offered the maximum 6 MGD from Aurora, CRW will be limited by capacity in nearly every section of WISE infrastructure, meaning that in order to take full advantage of offers of WISE water, CRW will need to purchase additional capacity in existing infrastructure or will need to work with other entities to develop projects that will increase infrastructure capacity, or lease capacity from other members if available.

 

At this time, CRW is focusing on increasing capacity through Parker’s system where the greatest need for capacity exists.

 

Parker Water & Sanitation District (PWSD) Bottleneck

 

In order for CRW to receive WISE water deliveries at Ray Waterman Water Treatment Plant, or directly into distribution, water must be conveyed through PWSD’s distribution system. In 2018, the Town of Castle Rock entered into a Wheeling Agreement with PWSD (Parker Wheeling IGA). The Parker Wheeling IGA provides CRW with a temporary license of 1 MGD capacity through Parker’s eastern Rueter-Hess Reservoir (RHR) pipeline through 2024, and acknowledges that Parker’s existing infrastructure capacity to convey WISE water from the Ridgegate Pipeline to Castle Rock’s Outter Marker Pipeline is not sufficient to meet full WISE deliveries. Therefore, the Parker Wheeling IGA contemplates a replacement pipeline to the east of RHR, paralleling the current pipeline that would be constructed by Parker, Dominion, and CRW.

 

A 2015 joint study between CRW and Parker envisioned a second larger pipeline on the western side of RHR that would provide enough capacity for CRW to convey a total of 21 MGD of supplies between the eastern and western RHR pipelines to meet long-term demands, plus additional capacity for Parker and DWSD.

 

In 2019, Parker modeled their system demands as part of their Master Plan update. The model showed that the larger pipeline on the western side of RHR was needed more immediately than the eastern RHR replacement pipeline. In late 2019 CRW staff met with Parker, Dominion, and Shea Homes to discuss conveyance needs including volume and timing. It was determined that further study would be needed and, in February 2020, the group contracted with Jacobs Engineering to:

                     Identify design flows for each party (Parker, Dominion, CRW)

                      Refine the western RHR facilities configuration (pipeline and pump stations)

                      Estimate and allocate costs

 

The study will cost CRW $10,142.60 and will be paid out of the 2020 CIP/ WISE Infrastructure account <211-4375-443.77-72>, Project Code WR WLI. Results of the study are expected in the summer of 2020 at which time CRW staff will provide an update to Town Council.

 

Binney Connection

 

WISE Authority members have been receiving water from Aurora since 2017 through a temporary connection from Aurora’s system to the Western Pipeline, known as the Temporary Aurora Connection. This connection only has capacity to convey 15 million gallons per day (MGD), which is 15 MGD less than the maximum volume SMWA members have the potential to receive from Aurora (30 MGD), and it has been long understood that additional infrastructure would need to be built to continue deliveries from Aurora in perpetuity.

 

As part of the WDA signed by SMWA in 2013, the WISE Authority agreed to construct infrastructure connecting the WISE Pipeline to Aurora’s system. This connection, referred to in the WDA as the Binney Connection, must be constructed by May 31, 2021.

 

Once members began receiving WISE deliveries in the summer of 2017, SMWA began efforts needed to construct the Binney Connection. Proposals were received from consultants to determine the location and alignment of the infrastructure needed to connect from Aurora’s Binney Water Purification Facility north of Aurora Reservoir, to SMWA’s Western Pipeline, running along E-470.

 

In 2018, SMWA selected a location for both the pipeline alignment to connect to the Western Pipeline and the connections pump stations. Shortly afterwards Jacobs began designing Binney Connection infrastructure and the initial design was completed in 2019. In December 2019, SMWA sent the design out to solicit proposals for construction.

 

SMWA received several responses and in February 2020, selected a contractor to construct the Binney Connection. On February 19, 2020, the SMWA Board was presented with an updated budget as quoted by the selected contractors and costs came in lower than anticipated in SMWA’s most recent budget released in January 2020 (Attachment I). The January 2020 budget estimated CRW’s share of costs to be $6.4 million, however, SMWA updated CRW’s cost to be no more than $5.8 million including a ten percent (10%) contingency and including CRW’s share of the Meridian Title Clean-up.

 

It is anticipated that CRW will be invoiced up to $5,800,000 in 1st Quarter 2020 for the Town’s portion of Binney Connection Construction costs and Meridian Title Clean-up fee. This cost has been budgeted for and will be invoiced out of the WISE Infrastructure account <211-4375-443.77-72>, Project Code WR_WBC.  Construction will begin in 2020 after a contract is fully executed with the SMWA selected contractors.

 

The Binney Connection has been designed to flow 30 MGD, of which the Town currently owns 4.74 MGD. In order to accommodate the Town’s portion of maximum flows (6 MGD of 30 MGD offered), the Town will need to purchase at least 1.26 MGD of additional capacity. Further detail is provided above in the “Capacity Needs” section.

 

DIA Connection

 

Part of the supply that Denver Water contributes to the WISE Project is located near Denver International Airport (DIA). In order to convey this water to SMWA members, and ultimately to Denver Water’s service area in emergency drought conditions, it is necessary to build a connection from DIA to the WISE system, referred to in the WDA as the DIA Connection.

 

Two options exist to connect Denver’s DIA supply to the WISE system. The first option for a connection would be to Aurora’s PWP Pipeline where the supply would be conveyed to the WISE system through the Binney WPF with the rest of the WISE water supply. The second option would be for Denver to connect to ECCV’s Northern Pipeline and to connect into the Western Pipeline through future infrastructure including a pump station and a station for chloramine conversion. Since CRW plans to convey our northern supplies through ECCV’s Northern Pipeline, the second option could be beneficial in that the infrastructure needed to join the Northern and Western Pipelines would then be a WISE Partnership project rather than solely a CRW project.

 

There has been delay in determining which option will be pursued as Denver Water has been awaiting determination from the Environmental Protection Agency (U.S. EPA) on whether or not they would need to add orthophosphates to their supply for corrosion control. In January 2020, Denver Water received a three-year variance from the U.S. EPA which allowed them to forgo adding orthophosphates to their system which allows the WISE Partnership to begin discussion on which option to pursue, though the final determination will be made once it is understood what the U.S. EPA’s long-term requirements for Denver Water regarding orthophosphates will be.

As a participant in the WISE Project through SMWA, the Town has agreed to participate financially in certain infrastructure projects as outlined in the WDA including the DIA Connection. The WDA outlines a payment schedule for SMWA to pay Denver Water for the construction of the DIA connection. Because the WDA requires Denver Water to construct the DIA Connection prior to 2021, the WDA will need to be amended (discussed below in “Intergovernmental Agreements”).

 

SMWA began collecting DIA Connection fees from members in 2014 to fulfill terms of the WDA. Castle Rock Water has paid these fees annually since that time and, per the WDA, it is anticipated that the 2020 payment was the final fee collected for the DIA connection. The 2020 DIA connection fee totaled $229,334.00 and was attributed to the 2019 CIP/ WISE Infrastructure account <211-4375- 443.77-72>, Project Code WRWPSF, since the invoice was received in January 2020 and additional funds were available in the 2019 budget.

 

Intergovernmental Agreements (IGA’s)

 

Currently the WDA requires Denver Water to construct the DIA Connection by 2021 which will not be feasible due to delays directly related to the EPA’s recent Orthophosphates requirements.

 

Furthermore, both the WDA and the Formation IGA specify that SMWA will receive on average 7,225 AF annually, and the Formation IGA further delineates each SMWA member’s pro-rata WISE water subscription prior to the Douglas County Option water purchase. The delay in the DIA connection and the purchase of Douglas County Option necessitate amendments to both the WDA and the Formation IGA.

 

SMWA began work amending the Formation IGA in 2019 with updated pro-rata shares of WISE water after the purchase of Douglas County Option water. On January 7, 2020, CRW staff presented the amended IGA to Town Council which was unanimously approved.

 

Also in 2019, SMWA staff met with Denver Water and Aurora Water to begin discussions on amending the WDA with updated values directly affected by the purchase of Douglas County Option water. Furthermore, the WDA will also amend the timing of certain WISE infrastructure elements including the DIA Connection. The negotiations group will hold meetings once a month to discuss specific topics of the WDA until such time as an agreeable amendment to all parties is completed.

 

Total Dissolved Solids (TDS) Management

 

Total Dissolved Solids (TDS) refer to any minerals, salts, metals, cations, or anions dissolved in water and are comprised of inorganic salts and some small amounts of organic matter that are dissolved in water. Primary drinking water standards have not been established for TDS, though the current secondary standard is 500 milligrams per liter (mg/L), which was also the standard at the time the WDA was fully executed.

 

Through May 31, 2030, Denver Water and Aurora Water are required, per the WDA, to deliver water with a TDS concentration at or below 500 mg/L. Salinity in water diverted near Brighton (where Aurora Water captures return flows that are in part utilized as WISE water deliveries to SMWA) can vary from below 500 mg/L of TDS during the spring to above 700 mg/L of TDS during low flow periods such as the winter. Currently, Denver Water and Aurora Water meet this water quality goal by blending some of their low TDS mountain water supplies with the water captured on the South Platte. After May 31, 2030, the WDA allows Denver Water and Aurora Water to deliver unblended WISE water to SMWA.

 

To mitigate the TDS concentrations of WISE water after 2030, SMWA will need to develop a project to decrease TDS concentrations. SMWA contracted with Jacobs engineering to evaluate mitigation options for SMWA and the feasibility of those options. A first draft of Jacobs report was released in the fall of 2019 and SMWA is currently awaiting a final draft after receiving comments from members.

 

Among options presented by Jacobs are options to blend water with SMWA members’ current supplies, or to construct a desalination plant. CRW staff will continue to provide updates to Town Council as more information becomes available.

 

Well PA-3

 

Well PA-3 is located adjacent to the University Tank on the west end of the Far Western Pipeline

Segment where Denver Water will eventually have the ability to receive water through WISE infrastructure. To avoid stagnant water in the Far Western Pipeline Segment, this well has historically been operated at a fairly continuous rate of approximately 300 gallons per minute (gpm). However, water from this well is suspected to have elevated levels of iron and manganese and previous water quality mitigation strategies will no longer be feasible after the addition of SMWA’s Quebec Street Filter Plant. In late 2019, construction began on Well PA-3 to update water quality mitigation and construction is anticipated to be completed by the end of March 2020. SMWA is paying for one-third of the construction costs and will be utilizing CIP funds previously contributed by SMWA members for

WISE operations and maintenance.

 

Budget Impact

 

As described in the above sections, cost for the WISE project will be allocated from two accounts. The Other Professional Services account <211-4340-443.30-70> will be used to pay for charges associated with WISE water deliveries, and the CIP/ WISE Infrastructure account <211-4375- 443.77- 72> will be used to pay for costs associated with WISE Infrastructure. Staff is requesting a carryforward of the entire remaining 2019 WISE Infrastructure Budget of $2,277,156.75. This carryforward request is being made to cover the known infrastructure costs as well as the anticipated Parker Bottleneck design costs later in 2020.

Below is a summary of anticipated spending from each account with regard to the budget. Attachment H breaks out specific costs expected in 2020 and details applicable Project Codes.

 

 

 

(77-72_CIP)

(77-30_Oth. Prof. Serv.)

2019 Carryforward

 $                           2,277,157

 $                                           -  

2020 Budget

 $                           4,833,000

 $                           2,400,000

2020 Anticipated Spending

 $                           6,784,000

 $                           2,392,000

Difference

 $                               326,157

 $                                    8,000

 

Proposed Motion

 

“I move to approve the Resolution as introduced by title.”

 

Attachments

 

Attachment A:                     Resolution Binney Connection Costs

Attachment B:                     CRW WISE Water Deliveries to Date

Attachment C:                     WISE Project CIP Table

Attachment D:                     Key Infrastructure Description

Attachment E:                     SMWA WISE Project Map

Attachment F:                     Aurora Water WISE Water Rate Increase Letter

Attachment G:                     2020 CRW WISE Budget Impact

Attachment H:                     2020 WISE Project Update Summary Memo

Attachment I:                                          SMWA 2020 Payment Summary