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
Update: Chatfield Reservoir Reallocation Project
Body
________________________________________________________________________________
Executive Summary
The purpose of the memorandum is to provide an update to Town Council on the status of the Chatfield Reservoir Reallocation project. Castle Rock has purchased a total of 590 acre feet (AF) of our total option storage space of 2,000 AF. Castle Rock Water staff is pleased to report that on May 15, 2020, Castle Rock began storing water in its reallocated storage space. As of June 16, 2020, the Town has approximately 150 AF of water in storage with around five AF being added daily. This number will fluctuate through the season depending on when other surface water rights are in priority and the quantities of water needed for augmentation and pumping rates at the Town’s two other diversion locations (CR-1 and Plum Creek Diversion).
Total investments in the project to date are $4.9 million, and total expected future investments in the reallocation project and related projects are $47 million. These planned investments are shown by year in (Attachment A), and they are included in Castle Rock Water’s financial plan. Overall, the project came in under budget by approximately $3.97 million ($108,000 for Castle Rock). The project cost savings will be allocated to upcoming required operational and monitoring costs. Now that the reallocation project is complete, Castle Rock Water will work to maximize the use of the reservoir. In the near term, Castle Rock Water will utilize the water in the reservoir through our water rights exchange case and take the water at our diversions when the exchange is in priority and when we need the water. Castle Rock Water is also working on an agreement with Denver Water, Parker Water and Sanitation District (PWSD) and East Cherry Creek Valley Water and Sanitation District (ECCV) that will allow us to move water from Chatfield to Rueter-Hess Reservoir (RHR) through a paper exchange. We expect to bring this agreement to Council for consideration in late summer or early fall. Finally, Castle Rock Water partnered with Denver Water, Dominion Water and Sanitation District (DWSD), Centennial Water and Roxborough Water to study options for pump stations and pipelines to physically move water from Chatfield back to Castle Rock utilizing the Ravenna pipeline that we purchased from United Water and Sanitation District in 2017. A concept drawing of the preferred option for this project has been provided (Attachment B).
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 acre-feet.
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 acre-feet.
In September 2012, Town Council approved a resolution to submit a letter to the US Army Corps of Engineers in support of the Chatfield Reservoir Reallocation Project.
Utilities Commission was updated on the status of the project on June 26 and 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 the Colorado Water Conservation Board (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 Company, 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 CWCB 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 CWCB in 2020.
On February 4, 2020, Town Council approved the purchase of 129 AF of additional shares from the CWCB per resolution 2020-016. The CWCB acknowledged the receipt of the Town’s wire transfer of the funds for this additional storage space on April 30, 2020.
On June 24, 2020, Castle Rock Water Commission was updated on the completion of the Chatfield Reallocation Project and the plans for future related projects.
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. In 1994, the CWCB, on behalf of Colorado Department of Natural Resources (CDNR) and the project participants, initiated the study for the Project based on previous Congressional authorization for the US Army Corps of Engineers (USACE) to reallocate storage space within Chatfield Reservoir for water supply. On May 29, 2014, the USACE issued its Record of Decision approving the Project. Additionally, the State Fish, Wildlife and Recreation Mitigation Plan (122.2 Plan) was subsequently approved by the Colorado Parks and Wildlife Commission, satisfying all federal and state project review and approval requirements.
The Project consists of reallocating storage space in Chatfield Reservoir by USACE authorizing the use of 20,600 acre-feet of storage space by the project participants for municipal and other purposes. The Reallocation Report also included extensive hydrologic studies by USACE demonstrating that flood protection provided by Chatfield Reservoir would not be compromised by the Project.
The Town of Castle Rock is currently, and has been since 2004, a participant in this Project.
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 had been undergoing design and construction activities.
Construction activities for the Chatfield Reservoir Reallocation Project were substantially completed in December 2019. The final Project construction costs were approximately $167,016,960, which is $3.97 million less than the last official Project estimate. The Chatfield Reservoir Management Company (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 irrigation.
On February 4, 2020, Town Council approved the purchase of 129 AF of additional shares from the CWCB per resolution 2020-016. The CWCB acknowledged the receipt of the Town’s wire transfer of the funds ($1,070,825.13) for this additional storage space on April 30, 2020.
In early 2020, CRMC staff worked diligently to finalize the remaining USACE submittals that were a requirement prior to first storage. These final submittals were officially approved by USACE on May 13, 2020 who indicated that all recreation modifications, compensatory mitigation features, real estate interests, and other modifications to the Project have been satisfactorily completed. Payment for first storage was made by CRMC on May 14, 2020 to USACE. Given these final two critical path items, first storage of water into the reallocated storage space occurred on May 15, 2020, with Castle Rock Water being the first entity to store water.
Additionally, the CWCB provided a letter (Attachment C) indicating that they will allow Castle Rock to store water in the storage space that it has under option, beyond the 590 AF currently owned. The CWCB is not requiring any payment for the storage of water in this optioned space.
There are multiple benefits of the Project to the Town, some of which include:
• Reasonably priced storage capacity at the confluence of Plum Creek and the South Platte River. A location that gives us the ability to store reusable return flows as well as junior surface water rights on the South Platte when they are in priority.
• The Town has a 2,000 acre-foot conditional junior water storage right in Chatfield (Water Court Case No. 89CW169) with an appropriation date of November 6, 1989 that has a value of millions of dollars’ worth of renewable water supply.
• A regional project that has had statewide and Federal support and will increase cooperation amongst water providers in our area.
• The potential for Castle Rock to lease excess water or lease storage space at attractive rates, benefiting our rate payers.
• Options to collaborate with other regional entities on treatment and transmission infrastructure.
• More future flexibility with WISE water (potential deal with Denver Water, Parker and East Cherry Creek Valley to move water to Rueter-Hess Reservoir without pumping [paper trade]).
• Allows us to purchase spot water from other entities.
Now that the reallocation project is actively storing water, Castle Rock is working on how we can maximize the use of this asset. In the near term, Castle Rock Water will utilize the water in the reservoir by our previously decreed water rights exchange case. This allow us to take surface water at our diversions and release a similar amount of water from our Chatfield storage account.
Castle Rock Water is also working on a pilot agreement with Denver Water, Parker Water and Sanitation District (PWSD) and East Cherry Creek Valley Water and Sanitation District (ECCV) that will allow us to move water from Chatfield to Rueter-Hess Reservoir through a paper exchange. The concept is that Denver Water would transfer a quantity of water into the ECCV/WISE system using existing WISE infrastructure to PWSD’s Rueter-Hess Water Purification Facility, where it will combine with other water that PWSD has treated. This water will then be delivered to Parker’s customers for consumption. A like amount of water would remain in Rueter-Hess Reservoir that would have otherwise been released for treatment by PWSD. This remaining block of water would be placed into a Denver Water storage account in RHR. Then, at a mutually agreeable time Castle Rock Water and Denver Water will swap a block of water from Castle Rock’s Chatfield account into its Rueter-Hess account. In this way, Castle Rock Water can take advantage of its storage space and its treatment agreement with PWSD and have additional potable water delivered to its customers. We expect to bring this agreement to Council for consideration in late summer or early fall.
Finally, Castle Rock Water partnered with Denver Water, Dominion Water and Sanitation District (DWSD), Centennial Water and Roxborough Water to study options for pump stations and pipelines to physically move water from Chatfield back to Castle Rock utilizing the Ravenna pipeline that we purchased from United Water and Sanitation District in 2017. The objective of the study is to evaluate opportunities for the joint use of a future pump station(s) located at Chatfield and how water will be delivered from Chatfield to project participants in the future. Jacobs, who is performing the study, is also examining preliminary infrastructure sizing, project phasing and potential costs. The results of the study are expected in August 2020.
Budget Impact
Castle Rock Water has budgeted approximately $1.1 million per year in 2022 and 2024 (Account Number 211-4375-443.77-29, Chatfield Reallocation), and then 2026 through 2034 for the purchase of additional blocks of storage space each year. This budget is in line with our Option Agreement with CWCB to purchase shares over time and also allows the Town to take advantage of deferments on purchases in 2021, 2023 and 2025. Additionally, Castle Rock Water has budgeted approximately $300,000 annually for CRMC Assessments and Operation and Maintenance, Repair, Rehabilitation, Reconstruction and Replacement (OMRRR&R) as required by USACE.
Based on some of the early cost discussions of the Chatfield pump station and pipeline study, Castle Rock Water has included $31.3 million in the budget between 2022 and 2032 (Account Number 211-4375-443.78-03, Chatfield West Alt Project). This would be used for the design and construction of one or more pump stations out of Chatfield, shared infrastructure with Denver Water, and a pipeline system leading back to the Castle Rock Reservoir system near Sedalia where this water could be further pumped to Town from our nearly completed Plum Creek Pump Station.
Attachments
Attachment A: Planned Chatfield Investments
Attachment B: Chatfield Pump Station and Pipeline - Preliminary Preferred Option
Attachment C: May 15, 2020 Letter from CWCB - Castle Rock Use of Optioned Storage Space in Chatfield Storage Reallocation Project