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
Jakob Hartmann, Water Resources Program Analyst
Title
Resolution Approving Funding for the Town’s Purchase of 2022 Option Shares in the Chatfield Reservoir Reallocation Project [Chatfield Reservoir in Douglas and Jefferson County]
Body
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Executive Summary
The purpose of this memorandum is to request Town Council approval of a resolution (Attachment A) approving the funding of the Town’s purchase of our 2022 option in the Chatfield Reservoir Reallocation Project. Renewable water storage is a key component of the Town of Castle Rock’s long-term water plan and participation in the Chatfield Reservoir Reallocation Project gives the Town unique access to additional renewable water sources. The purpose of this memorandum is to request Town Council approval to authorize funding for the purchase of an additional 129 acre-feet (AF) of storage shares from the Colorado Water Conservation Board (CWCB) through our 2020 option in the Chatfield Reservoir Reallocation Project. First storage of reallocation pool water started in May 2020 and Castle Rock currently has approximately 1,600 AF of water in storage. The purchase of these additional shares will give the Town a total of 719 AF of water storage space with the ability to store additional water (up to 2,000 AF) under a storage lease agreement that we have in place with the CWCB.
The cost to purchase 129 AF of storage from CWCB is $1,070,825.13. This cost was included in the approved 2022 budget.
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 Reallocation Project.
Utilities Commission was updated on the status of the project on June 26, 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 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 Com., 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 Colorado Water Conservation Board 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 Colorado Water Conservation Board 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 July 7, 2020, Castle Rock Water staff provided an update to Town Council on the Chatfield Storage Reallocation Project.
On March 24, 2021, Castle Rock Water Commission was informed of the Lease Agreement with the CWCB for Use of Storage Space in the Chatfield Storage Reallocation Project and unanimously recommended Town Council approval.
On April 6, 2021, Town Council unanimously approved Resolution 2021-037 approving the Lease Agreement Between the CWCB and the Town of Castle Rock Water Enterprise for the Use of Storage Space in the Chatfield Storage Reallocation Project.
On April 27, 2022 Castle Rock Water Commission unanimously (5 to 0) to recommend Council approve the purchase of 129 AF of additional shares from the Colorado Water Conservation Board.
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. The Town of Castle Rock is currently, and has been since 2004, a participant in this Project. On June 7, 2014, Town Council approved a resolution to reduce the Town’s participation in the Chatfield Storage Reallocation Project from 1,500.3-AF to 200 AF based on staff’s recommendations of the then current need for storage in Chatfield by the Town and for the need to allocate funding to other renewable water projects.
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 has 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.
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 had 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. Presently, Castle Rock has approximately 1,600 AF of water in storage. With the purchase of this additional block of storage space the Town will own 719 AF of storage with the option to store water up to 2,000 AF in our optioned pool owned by CWCB. The cost for the 129 AF storage space purchase is $1,070,825.13.
Budget Impact
The Town has $1,097,596 in the project budget (Account Number 211-4375-443.77-29, Chatfield Reallocation) for 2022.
Staff Recommendation
Staff along with the Castle Rock Water Commission recommend that Town Council approve funding for 129 AF of additional storage shares for the 2022 option in the Chatfield Reservoir Reallocation Project.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Alternative Motions
“I move to approve the resolution as introduced by title, with the following conditions: (list conditions).
“I move to continue this item to the Town Council meeting on _____ date to allow additional time to (list information needed).”
Attachments
Attachment A: Resolution
Attachment B: Assumption Agreement
Attachment C: Water Provider Agreement Amend No. 4