To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Mark Marlowe, PE, Director of Castle Rock Water
Matt Benak, PE, Water Resources Manager
Title
Resolution Approving the Project Participation Agreement Between the Members of the Cherry Creek Project Water Authority for the Construction of, and Sharing of Capacity in the Walker Reservoir [located near Walker Road, north of Highway 86, east of Highway 83, adjacent to Cherry Creek]
Body
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Executive Summary
This memo was prepared to seek Town Council approval by Resolution (see Attachment A) of a Project Participation Agreement (PPA) with the Cherry Creek Project Water Authority for Construction and Capacity in Walker Reservoir. A key project to firm the renewable water yield of the CCPWA, or “the Authority” is the construction of Walker Reservoir. Walker Reservoir will be a lined, 650 acre-foot (AF) water storage facility immediately adjacent to Cherry Creek, approximately ½-mile northwest of Franktown. This impoundment will allow the Authority to store renewable water when senior water rights are in priority, and to make releases to the members, or to augment downstream well pumping. The Town through Castle Rock Water (CRW) became a member of CCPWA in February 2021, along with the Pinery Water and Sanitation District, Cottonwood Water and Sanitation District and Inverness Water and Sanitation District. To optimize the renewable water yield for CRW’s portion of the water rights, the Town wishes to participate in the Walker Reservoir Project at a capacity of 150 AF. To effectuate this capacity allocation, CRW must enter into a PPA with the other Authority members.
History of Past Town Council, Boards & Commissions, or Other Discussions
On June 17, 2019, CRW staff presented the opportunity to purchase ACWWA’s interest in the CCPWA to the Castle Rock Water Commission (CRWC), who recommended that the Town move forward with the purchase.
On June, 18, 2019, CRW staff presented the opportunity to purchase ACWWA’s interest in the CCPWA to the Water Resources Committee. The Committee recommended moving forward with an offer, the offer ultimately agreed to and outlined in this memo.
On October 2, 2019, the Director of CRW attended the CCPWA’s Board Meeting to discuss Castle Rock’s proposed purchase of ACWWA’s interest in the project and to confirm that the other members were open to reevaluating the proposed capital infrastructure for the project and the manner in which that infrastructure is funded by the CCPWA members.
On October 23, 2019, CRW staff presented the revised agreement to CRWC, and CRWC again recommended that Council approve the purchase and the agreement.
On December 11, 2019, CRWC was updated on the final agreement approach and CRWC offered their continued support by general consensus.
On January 21, 2020, Town Council approved the Purchase and Sale Agreement with ACWWA.
On March 5, 2020 the Town and ACWWA entered into the Contract for the Purchase and Sale Agreement.
On May 5, 2020, the Town and ACWWA entered into the First Amendment to the Contract for the Purchase and Sale Agreement which put into effect a 90-day stay due to the potential impacts of the COVID-19 pandemic.
On November 3, 2020, the Town and ACWWA entered into the Second Amendment to the Contract for the Purchase and Sale Agreement which extended the due diligence deadline to December 15, 2020.
On February 12, 2021, the Town closed on the purchase of ACWWA’s interest in the CCPWA.
On July 28, 2021, Castle Rock Water Commission recommended that the Town enter into the Project Purchase Agreement with the CCPWA for Walker Reservoir.
Discussion
As part of the Establishing Contract of the CCPWA, member entities are allowed to make Project Participation Agreements (PPA) to define participation levels and ownership interests in certain projects. As such, a PPA is being developed for the Walker Reservoir project. Walker Reservoir is a planned water storage facility located approximately ½-mile northwest of Franktown, Colorado (see Attachment B). Walker Reservoir will serve multiple functions by being able to store tributary and non-tributary water and to release water for direct use, augmentation and release and re-diversion downstream to Rueter-Hess Reservoir. The Authority intends to construct Walker Reservoir at 650 AF capacity and CRW intends to participate at 150 AF, or approximately 23% of the capacity. Modelling work conducted by the Authority’s water resources engineer (Spronk Water Engineers, Inc.) indicates that this level of participation by CRW will help optimize renewable water storage on the Town’s behalf. If CRW did not participate in Walker, the model indicates that renewable water yield would drop by approximately 51 AF per year on average or by 172 AF in very wet years.
On June 7, 2021, the Authority received construction bids from four qualified general contractors ranging between $11,576,219 and $13,180,867 with the Engineer’s Opinion of Probable Cost being $12,093,252 (see Attachment C). On June 22, 2021, the Authority voted to enter into a construction contract with HPM Contracting for $11,576,219, with an additional Authority-managed 5% contingency, for a total authorization of $12,155,030. In addition, the Authority is authorizing Stantec Consulting to provide construction phase engineering services for a total of $642,705.
CRW’s portion of the construction contract and construction phase engineering services would be $2,953,717. Construction activities are scheduled to begin in September 2021 and project completion is scheduled for June 2023.
CRW has been in discussions with the Pinery to have approximately 250 AF of water delivered annually (or approximately 220,000 gallons per day) through the interconnect we share in the Cobblestone Ranch area. This water would be treated by the Pinery and would act like a renewable supply for the Town. In average years, the project would yield 250 AF of renewable water as CRW’s portion. In drier years, CRW would still receive 250 AF, but the project would use non-renewable groundwater to supplement CRW’s portion. In wet years, CRW could potentially take more water through the interconnect or deliver renewable water to Rueter-Hess Reservoir for storage. Staff intends to bring an Intergovernmental Agreement with the Pinery for Council consideration soon for this matter.
Budget Impact
CRW’s cost for this construction project is estimated to be $2,953,717 and will be drawn from the Water Resources Fund, Capital Projects Division, Account Number 211-4375-443.79-17, which has a current balance of $235,562. CRW has budgeted $3,000,000 for this account in 2022, so a budget amendment will be necessary to bring forward the majority of these funds into 2021.
Staff Recommendation
Castle Rock Water Commission and Staff recommend that CRW enter into the PPA.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Project Participation Agreement
Attachment B: Walker Reservoir Location Map
Attachment C: Bid Summary