To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Mark Marlowe, P.E, Director of Castle Rock Water
Matt Benak, P.E., Water Resources Manager
Angie Brown, Water Resources Program Analyst
Title
Resolution Approving the Intergovernmental Agreement between the Town of Castle Rock and Dominion Water and Sanitation District (Parker Midsection Pipeline/ Canyons Pump Station Capacity License Agreement)
Body
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Executive Summary
The purpose of this memorandum is to request Town Council approval of a resolution (Attachment A) for an Intergovernmental Agreement (IGA) between the Town of Castle Rock (Castle Rock) and Dominion Water and Sanitation District (Dominion) for the design, construction and project management of the Parker Midsection Pipeline/Canyons Pump Station Project. This IGA and the corresponding project are part of the larger Water Infrastructure and Supply Efficiency (WISE) project. A map of the key components of the WISE project, including the proposed Parker Midsection Pipeline and Canyons Pump Station is provided as Attachment B.
The pipeline and pump station are wholly within Parker Water and Sanitation District’s (PWSD’s) service area, however, PWSD does not need capacity in this infrastructure for several years while Castle Rock and Dominion have more immediate needs. Furthermore, Castle Rock’s existing Wheeling IGA with PWSD limits our pipeline transmission capacity in PWSD’s infrastructure to 1 million gallons per day (MGD), and eliminates transmission capacity by December 31, 2023. As such, Castle Rock will be undertaking the cost burden and project management of this project now so that we can be ensured to have adequate water transmission capacity for WISE project water and some of our treated supplies out of Rueter-Hess Reservoir.
The estimated cost of the pipeline and pump station project, from design to the end of construction, is $13.76 million. Castle Rock will be funding the entire project up front, with PWSD paying back their portion of the pipeline costs (an estimated $7.05 million) in early 2024 and Dominion paying their portion of the pipeline costs (an estimated $1.6 million) in accordance with the attached IGA (Exhibit 1) between Castle Rock and Dominion. Castle Rock is the only entity that needs additional pump station capacity so Castle Rock will pay the entire cost of that portion of the project. One of the terms of IGA states that Dominion will convey their remaining excess capacity in certain WISE infrastructure as partial payment for their proportional share of project costs. Through this IGA, the Town will obtain needed capacity in the Binney Connection, WISE Western Pipeline, DIA Connection, and other WISE infrastructure.
Total investments in the larger WISE project are $52.4 million to date. Some of the additional future projects associated with the larger WISE project include the Denver International Airport (DIA) interconnect and the future WISE desalination plant, along with local pipelines paralleling our existing. Castle Rock currently anticipates $93 million in future capital costs associated with the overall WISE project.
History of Past Town Council, Boards & Commissions, or Other Discussions
On February 24, 2021, Castle Rock Water Commission voted to recommend that Town Council approve the IGA between the Town of Castle Rock and PWSD for the Parker Midsection Pipeline/Canyons Pump Station Project.
On March 16, 2021, Town Council voted to approved the Intergovernmental Agreement between the Town of Castle Rock and Parker Water and Sanitation District for the Parker Midsection Pipeline/ Canyons Pump Station Project.
On May 26, 2021, Castle Rock Water Commission voted 7-0 to recommend that Town Council approve the IGA between the Town of Castle Rock and Dominion for the Parker Midsection Pipeline/Canyons Pump Station Capacity License Agreement.
Discussion
The purpose of this memorandum is to request Town Council approval of an IGA between the Town of Castle Rock and Dominion for the design, construction and project management of the Parker Midsection Pipeline/Canyons Pump Station Project.
To be able to physically receive WISE water deliveries, South Metro WISE Authority (SMWA) members had to construct connections to the Western Pipeline, the main pipeline for WISE water deliveries. Most SMWA members were able to construct connections directly on the Western Pipeline, however, several members including Castle Rock and Dominion, had to convey their water through PWSD which necessitated the construction of the Ridgegate Line. In addition to the Ridgegate Line project, which was described to Council on April 19, 2016, a 36-inch, 3.4-mile pipeline (the “Canyons Pipeline”) was also constructed along with the Canyons Pump Station. Castle Rock then constructed the Outter Marker Road pipeline, a 5.1-mile pipeline, that brings the water to Ray Waterman Regional Water Treatment Facility for distribution to customers in the Town (see Attachment B).
On March 6, 2018, the Town and PWSD entered into a Wheeling Agreement for PWSD to transport WISE and other water to the Town through portions of the infrastructure owned and operated by PWSD. This Wheeling Agreement described the costs associated with the transport of water, and repair and maintenance of that transport infrastructure. This agreement also discussed a bottleneck in PWSD’s system that limits Castle Rock’s (and Dominion’s) flows to 1 MGD until December 31, 2023. After this date, Castle Rock and Dominion would no longer own capacity in this 24-inch pipeline section.
Thus, a new IGA has been developed between Castle Rock and PWSD for the design and construction of a new 2.5-mile, 42-inch diameter pipeline (the “Midsection Pipeline”) that will parallel the smaller diameter pipeline. Castle Rock will retain 8.8 MGD of capacity in this new pipeline, Dominion will obtain 4.2 MGD of capacity, and PWSD will obtain the balance of the 31.8 MGD total pipeline capacity. Additionally, the Canyons Pump Station will be expanded to increase Castle Rock’s capacity from 3 MGD to 8.8 MGD.
Because PWSD does not have an immediate need for the Midsection Pipeline, Castle Rock plans to pay for the design and construction of this pipeline and pump station expansion now, with reimbursement from PWSD in early 2024 for their portion. The Town has developed a new IGA with Dominion for payment of their portion. Key terms of this IGA with Dominion are as follows:
• Castle Rock will initially fund the cost of the project including the costs of easements, design, and construction of the pipeline, pump station expansion, and related appurtenances (Project Infrastructure).
• Dominion will verify the final project costs and will reimburse their proportional cost share upon final completion of the project.
• Castle Rock will invoice Dominion upon the later of final completion or January 15, 2024, and Dominion’s payment will be due no later than 45 days following receipt of the invoice.
• Castle Rock will manage the project including change orders and cost adjustments and will provide written notice of change orders to Dominion.
• Castle Rock will maintain ownership of the Project Infrastructure until final completion of the project, at which time Castle Rock will convey to Parker Water and Sanitation District for their proportional share of ownership in the Project Infrastructure (59.12%) via Bill of Sale, and will grant Dominion permanent license to their proportional share of capacity (13.21%) in the Project Infrastructure. Castle Rock will retain 27.67% of permanent licensed capacity in the Project Pipeline Infrastructure and 100% of the new pump station capacity.
• Upon execution of the Agreement, Dominion will convey a Bill of Sale for their remaining excess WISE Infrastructure capacity as a down payment for their share of project costs. Any outstanding payment for final project costs will be paid in cash unless otherwise agreed upon. Dominion will convey WISE Infrastructure capacity to Castle Rock as follows:
(1) 0.59 MGD in the Western Pipeline valued at $772,281
(2) 0.21 MGD in the Binney Connection valued at $275,044
(3) 0.25 MGD in the State Land Board Line valued at $187,546
(4) 1.24% in the DIA connection valued at $77,326
The conveyance of Dominion’s remaining excess WISE Infrastructure capacity will be of great benefit to the Town and will help the Town close the gap between current capacity and capacity needed to convey Castle Rock’s pro-rata share of maximum WISE flow, 6 MGD, and future northern supply flows at a maximum rate of 3 MGD, for a total maximum flow rate of 9 MGD. The Town’s capacity needs are summarized in the table below:
|
|
Capacity Needed |
Current Capacity |
Capacity from Dominion Exchange |
Capacity After Dominion Exchange |
|
*State Land Board Line (MGD) |
NA |
2.83 |
0.25 |
3.08 |
|
Binney Connection (MGD) |
6 |
5.29 |
0.21 |
5.50 |
|
Western Pipeline (MGD) |
9 |
7.78 |
0.59 |
8.37 |
|
Ridgegate Pipeline (MGD) |
9 |
4.00 |
0.00 |
4.00 |
|
**DIA Connection (percent ownership) |
NA |
23.39% |
1.24% |
24.63% |
|
*The State Land Board Line is the pipeline currently used for WISE deliveries and will only be utilized until the Binney Connection is completed. After such time, this pipeline will only be used for emergency flows or flows in excess of 30 MGD from Aurora. ** The DIA connection does not have a planned capacity at this time so the sale was conducted by percent ownership. |
Budget Impact
The overall estimated cost of the project is $13,762,000. The initial phase of the project will be the design of the new pipeline and pump station expansion. Proposals for this design work were received and reviewed, and a contract has been executed with Burns and McDonnell for $450,951 for the work. As discussed above, these costs will be fronted by Castle Rock and reimbursed by PWSD and Dominion.
Upon execution of this IGA, Dominion will convey WISE infrastructure capacity to Castle Rock, valued at $1,312,197. Since Dominion and the Town are conducting an exchange of WISE infrastructure capacity in lieu of a cash down payment, there is no immediate impact to the budget. At the conclusion of the project, with acceptance of the infrastructure by PWSD, final costs will be determined and invoices sent out to both PWSD and Dominion.
Staff Recommendation
Staff and Castle Rock Commission recommend that Town Council approve the Agreement as presented in Exhibit 1.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Agreement
Attachment B: Map of WISE Local Infrastructure