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
Lauren Moore, Water Resources Program Analyst
Title
Resolution Approving a Spot Water Lease Agreement Between the Town of Castle Rock and Central Colorado Conservancy District [Chatfield Reservoir, Douglas County]
Body
________________________________________________________________________________
Executive Summary
Castle Rock Water is seeking Town Council approval of a resolution (Attachment A) for a spot water lease with Central Colorado Water Conservancy District (Central). In anticipation of continued drought conditions next year, Central wishes to lease some of the Town’s surplus water stored in Chatfield Reservoir to increase their storage supplies within Chatfield and have additional water upon which to make projections for their well pumping augmentation plans. While the Town currently owns 719 acre-feet (AF) of storage in Chatfield, the Colorado Water Conservation Board (CWCB) allows for rental of the remaining permitted amount, for a total of 2,000 AF of storage. The Town currently has approximately 275 AF of water stored in the reservoir with additional reusable supplies expected to increase substantially over the winter months.
If Council approves this lease, up to 500 AF of water may be released from the Town’s Chatfield Reservoir storage account as a book-over into Central’s Chatfield Reservoir storage account during 2023. This release may occur between January 1, 2023 and December 31, 2023. The Town will assess a $90 per AF price for the water, with payment required within 30 days from requested releases. The potential revenue for this lease is up to $45,000. The agreement will terminate at the end of 2023.
Discussion
Castle Rock Water has a strategic goal to strive to maintain sustainable rates and fees, and demonstrate fiscal responsibility, accountability, and transparency. One of the tactics to achieve this goal is to maximize leasing opportunities for idle water rights. Over the past four years, the Town has generated over $630,000 by leasing idle water rights to downstream users (see Table 1 below). Until these water rights can be fully utilized by the Town, Staff will continue to seek out users that can put these rights to beneficial use.
Table 1. Revenue generated from leasing idle water rights to downstream users over the past four years.
|
2018 |
2019 |
2020 |
2021 |
|
$29,019.13 |
$30,606.65 |
$70,699.75 |
$499,449.73 |
The Town currently owns 719 AF of storage space in Chatfield Reservoir and plans to eventually reach 2,000 AF of storage by 2031. As part of the option agreement the Town has with CWCB, the Town will purchase blocks of storage over the next 10 years. The Town recently purchased 129 AF in 2022, bringing the Town’s total storage to 719 AF. The Town will then have two deferrals remaining until the full storage space is realized within the 10-year period.
As mentioned in the Executive Summary, the Town has been able to store excess supplies in Chatfield Reservoir over the past year, which have exceeded the purchased storage amounts (719 AF). Since the Town does not physically have a way to utilize these excess storage supplies at this point in time, CWCB has developed, and Town Council has approved, a lease agreement with the Town to lease the optioned storage space for $50/AF. With a current annual lease rate for 1,281 AF (2,000 AF minus 719 AF), the Town will pay the State $64,050 in 2022. The spot lease with Central would allow the Town to further maximize storage space within the reservoir and in addition to other similar leases, will help to cover the annual lease option of storage space with CWCB.
Budget Impact
If Council approves the agreement, Castle Rock Water would potentially receive up to $45,000 of additional revenue in 2023. The revenue will be deposited into the Water Resources Fund Capital Leases account 211-4375-393.70-00.
Staff Recommendation
Staff recommends approval of the resolution as presented.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Alternative Motions
“I move to approve the Ordinance 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
Exhibit 1: Agreement