To: Members of the Castle Rock Water Commission
From: Mark Marlowe, P.E., Director of Castle Rock Water
Title
Ordinance to Change Cash in Lieu Code
Town Council Agenda Date: To be Determined
Body
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Executive Summary
This memorandum has been prepared to request Commission recommend Council approval of an Ordinance on first reading (see Attachment A) revising section 4.04.080 of Town code to update the manner of compliance for accepting Denver Basin groundwater for land use approvals. Dedication of groundwater rights for land use approvals has been in place since 1998. The overall requirements and specifically the dollar amounts for cash in lieu of groundwater have not been updated since the code was first adopted. Further since code adoption, most of the Denver Basin groundwater within the Town boundaries has been acquired by the Town, and the current code does not account for this change. Denver Basin groundwater rights from outside the Town limits will likely be required to meet the dedication requirements for future land use approvals.
The proposed changes to code address these items. First, the code is updated to allow the cash in lieu price for groundwater within the Town to be updated based on a market study by Castle Rock Water (CRW) if this is deemed to be needed. If no groundwater is available inside Town boundaries as is likely to be the case, the code is updated to provide for an additional cash amount to be added to the cash in lieu price to account for the need to move that groundwater back to Town once purchased. Finally, code is updated to address the fact that most groundwater rights will need to be dedicated from properties outside the current and future Town boundary as identified in a study completed by CRW (Attachment B). In this case at Council’s discretion, the applicant would be required to provide a minimum of 3 acre feet (AF) of groundwater for every acre foot of demand. No Laramie Fox Hills water rights will be accepted from outside of the Town boundaries to meet this requirement.
Notification and Outreach Efforts
This proposed code change has been presented to the Economic Development Council. Further, the proposed changes have been presented at the Developer’s Roundtable. There has not been significant feedback from the development community at this point.
History of Past Town Council, Boards & Commissions, or Other Discussions
The draft ordinance was presented to Castle Rock Water Commission (CRWC) on January 22, 2020. CRWC tabled the item until further refinement.
Discussion
Current code requires all groundwater underlying a potential annexation be dedicated to the Town at the time of annexation. Further, the current code requires the dedication of 2 AF of groundwater within Town boundaries for every 1 AF of demand anticipated from the proposed development of the annexed and zoned property. If groundwater underlying a potential annexation is not adequate to satisfy the dedication requirements, applicants for annexation have the option to bring other groundwater within Town boundaries to the Town to satisfy the requirements. There is very little “other groundwater” left within Town boundaries not already owned by the Town. Alternatively, if proposed development has exceptional qualities, Council may allow an annexation to pay “cash in lieu” for the required groundwater dedication if groundwater underlying the property is not adequate to satisfy the dedication requirement. The price set in code for “cash in lieu” has been set at $2,500 per AF of water since the code was first created in 1998. This value was set based on the assumption that groundwater would be available for purchase by the Town within Town boundaries. Again, this is no longer a reasonable assumption.
The proposed changes to code allow for the “cash in lieu” price to be adjusted based on market studies conducted by CRW. In addition, the changes add language addressing how groundwater outside Town boundaries can be used to satisfy the dedication requirements. This language specifies that for groundwater outside Town boundaries, 3 AF of groundwater will be required for every AF of demand. Laramie Fox Hills groundwater cannot be used to satisfy the requirement. Finally, if cash in lieu is approved by Council, the price per AF must be adjusted with an adder for transmission of that groundwater back to Town. The reason for the adder is that the Town will have to build a transmission main to get the water to the Town boundaries where it can be used. The adder is based off of an assumed cost per linear foot for a transmission main from a theoretical location where the groundwater may be available for purchase divided by the number of acre feet to be offset with cash in lieu. The adder is established using a standard operating procedure developed and maintained by CRW. A sample of the calculation methodology is provided in Attachment C.
Budget
The actual amount of cash in lieu paid by the development community since inception of the code is relatively minor. There have been no cash in lieu payments in the last five years. As such, these changes are not expected to have a significant impact on CRW’s revenues.
Staff Recommendation
Staff recommends approval of the Ordinance as presented on first reading.
Proposed Motion
“I move to recommend to Town Council approval of the above Ordinance as presented”.
Attachments
Attachment A: Ordinance
Attachment B: Map of Groundwater Outside Town
Attachment C: Sample Cash in Lieu Calculation