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HomeMy WebLinkAboutWater Board - Minutes - 08/24/2000FORT COLLINS WATER BOARD MINUTES August 24, 2000 3:10 — 4:45 p.m. Fort Collins Utilities Training Room 700 Wood Street City Council Liaison Water Board Chairman Water Board Vice Chair Chuck Wanner (not present) Tom Sanders — 491-5448 John Morris — 491-0185 Staff Liaison Molly Nortier — 221-6700 ROLL CALL Members Present Tom Sanders, Chair, George Reed, Paul Clopper, Dave Rau, Bill Fischer, Dave Frick, Joe Bergquist, David Lauer, Tom Brown, Robert Ward Member Absent John Morris, Vice Chair STAFF Wendy Williams, Dennis Bode, Jim Hibbard, Dennis Sumner, Molly Nortier GUESTS None MEETING OPENED Chair Tom Sanders opened the meeting. The following items were discussed: MINUTES Bill Fischer moved that the minutes of July 27, 2000 be approved as distributed. Joe Bergquist seconded the motion. Tom Sanders pointed out on p. 7, first paragraph, second sentence, that the phrase, "like the City" should be left out. Molly Nortier also realized that the date on the minutes should be the 271", not the 26m. With those corrections, the minutes were approved unanimously. NORTHERN COLORADO WATER CONSERVANCY DISTRICT UPDATE Gene Schleiger was not present, so there was no report. Water Board Minutes August 24, 2000 Page 2 SUGGESTIONS FOR CITY OF FORT COLLINS 2001 LEGISLATIVE AGENDA Dennis Sumner reported that the Legislative and Finance Committee met on August IOth to review the year 2000 Legislative agenda.They also reviewed a letter which was included in the packets which summarized the water related bills of the 2000 legislative session. It noted some legislation that had not passed in 2000 and suggested areas that might be of concern in 2001. He said that some specific items were identified that the Committee thought would be useful to discuss at the Board meeting: 1. 2000 Summary Document: Water Utilities / support — General: "Election of directors for water conservancy districts." Does the Water Board want to change this recommendation? What is the Board's position on how the directors move into that position —should it be by election or appointment? Bill Fischer gave some background on this item. Prior to doing that he said he would be excusing himself from the discussion of this item because Bill Brown, one of his partners in their law firm, is currently one of the directors on the Northern Colorado Water Conservancy District Board. Bill Brown was appointed by the Chief Judge of the Larimer County Court system. Bill Fischer explained that the Chief Judge appointed a group of 3-4 people who review applications for the director's position, and recommend 3 names to the Chief Judge. The Judge selects one of the recommended applicants for appointment. In the past, the Water Board and the City's position had been that the process should be changed to allow the directors to be elected. The question came up as to whether the City wants to maintain that position. He then excused himself because of the conflict that he mentioned earlier. Tom Sanders asked for discussion. Tom Brown asked if the District spends funds that it acquires from taxes. "Those funds are from the annual assessment on CBT water," George Reed pointed out. "There is a mill levy for the NCWCD that is assessed to all homeowners." "So every homeowner in Fort Collins pays taxes to the District." Tom Brown verified. He guessed that that was the thinking behind the call for electing at least some of the directors. George noted that the other approach was much like the theory has been for the appointment of Water Board members for a number of years, that the interview process would lead to the selection of those with background in water issues. "I surmise that the selection process was to try to prevent, for example, a developer from buying himself into an elected position on the NCWCD Board," he stated, "and perhaps then approving all kinds of transfers for developers." George explained the process the last time he went through it. There were four people on the selection committee who interviewed the applicants. "Who chooses the people who sift through the applicants?" "It's the judge," George replied. "He selects an advisory committee of people he thinks are knowledgeable on water issues, and the Committee takes it down to a list of seven that they interview." 40 Water Board Minutes August 24, 2000 Page 3 E Dennis Sumner pointed out that this document will end up being presented to City Council for consideration, and they will adopt whatever positions make sense to them. That then is the guidance given to staff in terms of what we, as a City organization, aspire to achieve in the next year. "It doesn't mean that we are going to immediately introduce legislation, but with this wording, we would be in support of a proposed change. If, on the other hand, the Board elected to support the current practice and that was approved by City Council, staff would oppose a change to an election process," he explained. Tom Sanders asked the Board's feeling on this item. His position is "if it ain't broke, don't fix it." Dave Rau said that water issues are quite complex. If the positions were elected, it would become political. ACTION: Motion Tom S. asked for a motion. We could vote to remain neutral, continue supporting elections or state that we favor leaving it the way it is. Dennis Sumner thought Bill Fischer mentioned that the Board's position was to support elections. Tom S. acknowledged that it had been, but the Board is being asked to make their position known again. Joe Bergquist moved that the Water Board recommend that the City's current position to support the election of water conservancy District directors be changed to retaining the existing policy of appointment of the directors. Dave Rau seconded the motion. Discussion Tom B. asked if the directors have the authority to spend tax dollars, i.e. like the Fort Collins City Council has. "Yes they do, with the assessment we were discussing earlier," David Lauer replied. Tom B. continued by saying that the members of the Water Board are appointed, but they do not have the authority to spend tax dollars. "We make recommendations to the City Council, but they are the elected representatives, and they have the authority to approve expenditures. Are we saying now that the appointed District Board should continue to have the authority to spend tax dollars?" "We're not saying that," Tom S. responded. "We are just talking about the makeup of that Board." Wendy Williams clarified that it's based on staff input. They have a similar process as City Council in that their staff makes recommendations to them. "But they have the authority to make decisions," Tom B. asserted. George Reed pointed out that the Board has the authority to hire the manager of the NCWCD. Like a corporate profit or not profit organization, they give the marching orders within the limitations of the whole District structure. It was also noted that the District Board members can be re -appointed. David Lauer contends that it seems to be a very undemocratic way of doing things, especially when tax dollars are involved. "As complicated as water issues are, it still seems to me that it is incumbent upon us, as an advisory board to the City Council, that we seriously consider not continuing the status quo." he stated. It doesn't seem to him that the general public has very much input as to who sits on the Northern District's governing Board. Water Board Minutes August 24, 2000 Page 4 Robert Ward noted that there are elections for members of the Upper Gunnison Water Conservancy District. He surmised that there must be some provision in the existing law that allows you to petition for elections. "Their elections are quite contentious," he added. "That decision must be made at the county level to do that," David L. pointed out. "It may be that the judge has the authority to do it," Robert responded. He said there was a session at the Colorado Water Workshop this summer where the conservancy district managers got together and talked about the election of directors. He wondered if some of the judges are beginning to use whatever power they have to open it up to elections. He is also aware that elections are about to occur in another district in addition to the Gunnison Conservancy District. It seems to Tom B. that the current process puts a lot of power in the hands of the judge who sets up the process for selecting people to be interviewed. Dave Frick explained that it isn't one judge. Isn't there a judge in each county or jurisdiction? There is different representation from different jurisdictions. For example, Weld County has a certain number of slots and Larimer County, etc. Those are county judicial picks, he thinks, because they have representation from each county. Dennis Bode said one of the difficulties of an election is that there are several different counties and you run into problems with the procedures for an election. David L. added that the number of slots they get is based on population. On several occasions George Reed has heard people express some frustration at the lack of responsiveness of some of the conservancy district boards. At least sometimes, that has been attributed to the fact that directors are appointed. He said the bottom line is that you have to measure the results. For example, is what is happening good for the water world? It seems there is a down side no matter what process is used. David L. acknowledged that one of the down sides of elections is that it does become political, but he thinks it should be more political. "Now it's just an `in group'. Somebody like me, who is a member of Friends of the Poudre, or others who are interested in the kinds of issues Friends of the Poudre support, don't have a chance in the world of getting appointed to the District Board," he asserted. Joe Bergquist mentioned that the other extreme is that the southern region starts dominating the board with people they know will vote for what they would like to see happen. "There is that risk," David L. admitted. "I would rather go with the power of the general public than a single judge," he insisted. Tom B. asked how many judges are involved in the appointments. It was surmised that it is at least the number of judges as there are counties. Dennis Bode said that Larimer County has three directors, and he thinks there are three from Weld County. Tom Sanders asked if the directors were all elected, would it be better for Fort Collins and our water issues. David Lauer thinks so. Water Board Minutes • • August 24, 2000 Page 5 ACTION: Vote Tom Sanders called for the question. He pointed out that a positive vote from the Board means that the Board supports recommending to the Council that the current status of appointing directors be retained. A negative vote means that the Board favors keeping the current recommendation that the directors be elected. The motion passed 54 with 1 abstention from Bill Fischer. Robert Ward, Joe Bergquist, Tom Sanders, George Reed and Dave Rau voted for the motion, and Paul Clopper, Dave Frick, David Lauer and Tom Brown voted against the motion. 2. 2000 Summary Document: Water Utilities / Support — Water: "Maximizing local control efforts for water conservation activities." Does the Water Board want to change this from "local" to a broader base? Discussion: George Reed asked for clarification. Are we talking about some kind of conservation device, or is this a broader interpretation? Robert Ward said he wasn't sure that the committee fully understood what this meant. The discussion the Committee had seemed to revolve around the idea that if this is not done in a more regional context, or watershed context, there really isn't an incentive for conservation. It's actually a disincentive. With this kind of position, it's almost counter water conservation. The idea was that you need to remove this item from the document or change it to say that the City supports water conservation efforts that are at a regional or statewide scale. George wondered, in a multiple use type of concept, e.g. where the City is pumping water from the wastewater treatment plant up to Platte River reservoir, where it is returned for irrigation use; to him that is water conservation on a broader scale. "Those kinds of efforts are very important to our future," he stressed. Tom S. related that he has always had a problem, in an appropriate rights doctrine state, about having water conservation programs in a city and not considering the impacts of agriculture. There is no mechanism to force agriculture to conserve water. If a farmer conserves water, he loses it. Bill Fischer reiterated that the Doctrine of Prior Appropriation is very complicated. He gave examples of some of the contradictions. He said the point the Committee was trying to make was, what are we trying to accomplish? Board members agreed that it was difficult to do anything with this item when it is not clear what it means. Dennis Bode said it is related more to local implementation of water conservation measures in the City system. It seems to him this was proposed several years ago when there might have been a state-wide initiative, in which the state was going to impose certain water conservation requirements on everybody in the state. "I think at that time we might have said we preferred to determine our own water conservation measures," he said. Wendy Williams said she thought it came out at the same time as the water metering mandate, and at that time, there were also several bills requiring other types of water conservation measures. Water Board Minutes August 24, 2000 Page 6 Bill Fischer suggested it be changed to, "encourage water conservation activities." Tom Brown suggested that the Board recommend striking it. ACTION: Motion and Vote Bill Fischer moved to strike this item from the Legislative Agenda as a recommendation from the Fort Collins Water Board. Robert Ward seconded the motion. The motion passed unanimously (10-0). 3. "Are there any issues the Board wants to specifically address in the 2001 Legislative Agenda?" Dennis Sumner asked. Joe Bergquist referred to an item that talks about "local development of watershed protection efforts." How do you work with the County on that? he asked. Robert Ward explained that with the phrase watershed protection efforts "you are just saying you want local people in the watershed to do that." Dennis Summer pointed out the full wording of that item: "Support legislation that enables local development of watershed protection efforts." From our point of view," Robert Ward said, "having our water supply coming out of the watershed, protection of that is something we are increasingly having to come to grips with." STAFF REPORTS Treated Water Production Summary Dennis Bode reported that in July the City used 4,641 ac-ft of treated water, which was about 2% above what is projected for an average year. Year to date at the end of July, we were running about 10% above the average year. "Actually during August our use has tapered off a bit." He said the area continues to have fairly low precip. and very warm temperatures, so we will probably end up for the year about 8 or 9% above the average. George Reed asked if the .64 in. of precip. in July is the average of several rain gauges in this area. "Actually that is just the CSU gauge which is located on the west end of the Student Center parking lot," was the reply. Dennis said he had received .8 in. in one rainstorm at his rain gauge, but it was fairly light in the north end of town. George pointed out that the total, year to date, is 5.55 in., which is about half of what we should have according to the long-term average. Tom Sanders asked if the City is beginning to be concerned about the amount of water and storage we are going to have because of this mini drought. Dennis said the City has its supply lined up for this year. Next year beginning November 1" basically will be a new year. It is dependent on the appropriations from the CBT system for next year and the North Poudre appropriations, to determine our supplies for the year 2001. "We really don't anticipate a problem in terms of supply next year," Dennis assured the Board. "Are we going to hold off leasing our surplus water until later?" Tom Sanders asked. "We always plan for a year like this, so we don't lease any more than we can handle," Dennis replied. In most years, particularly when we have a 100% quota like we have this year, we still have quite a lot of surplus water that we can rent, he explained. Water Board Minutes • • August 24, 2000 Page 7 "Have you had any indication from the Northern District what they will be doing, operationally, in the future with the diminished capacity at Horsetooth?" Tom S. asked. "They will continue to bring the water over. The pattern will be slightly different," Dennis replied. "During summer months, when there is a hard draw on the reservoir, they will need to bring more in than they normally would," he explained. Tom S. thinks that the velocities in the reservoir probably will be higher and there will be more sediment and turbidity. "There could be," Dennis responded. "How does the west slope look in terms of their annual precip.?" someone asked. Dennis hadn't seen their numbers. "However, they have had some recent rains, and we are beginning to see a little more precip. in the Cameron Pass area. Perhaps the pattern may be changing," he responded. Dave Frick pointed out that the west slope has seen some very low stream flows in the rivers. David Lauer related that there was an article about Horsetooth recently in the campus newspaper, The Collegian. It also mentioned the idea of increased velocities of the water running through. He was wondering whether those volumes are going to get more than a little faster if this continues for the projected 3-5 years. "I think, although it's going to be restricted to a certain range, there will be certain periods when flows coming in are a little greater and the flows coming out are greater, but there will still be a fairly good pool there. With a pool that large, the velocities are going to be pretty small coming in from the south end to the north end," Dennis explained. He added that you might see more velocity in places where it goes from pond to pond. "Is the turbidity you are thinking of, coming from the lack of residence time at Horsetooth and that the water coming in is high turbidity, so there is less sedimentation?" George asked, "or are you talking about velocity through the water stirring up the bottoms through Horsetooth and increasing the turbidity?" Dennis said he's not an expert in this area, but he understands it is probably a combination of things. "It may be wind or wave action." "So velocity is only one of the factors?" George asked. "That's my understanding," Dennis answered. George noted that with all the sophisticated equipment they have at the treatment plant now, they can detect almost immediately where turbidity is occurring and what caused it, and make adjustments in the treatment process. Cancellation of September Meeting Due to a lack of agenda items and the absence of several Water Board members and staff, the Board decided to cancel the September meeting. Mandatory Metering Program Question Tom Sanders referred to an agenda item from the July meeting under the Budget Exception Process. One of the adjustment requests was for $458,776 (ongoing) for a second meter installation crew for the Mandatory Metering Program in order to meet the completion deadline of 2005. Since he was not at the meeting, he wanted some clarification on this item. He asked if that amount is in addition to the $450,000 the City has been spending, each year, on the program for the last few years. Wendy Williams replied that it is. "So that means we are spending nearly $1 million a year on the metering program?" Wendy said it is more than a million. "We're talking about $1.5 million?" he asked. "We're getting close," she answered. "Just think of all the Water Board Minutes August 24, 2000 Page 8 water we could have bought with that, and this program has been going on for 8-10 years!" he asserted. Wendy stated that the City has seen a real impact in the reduction in usage. David Lauer suggested that staff might want to do a study to project what the value of the water meters is. Dave Rau believes if we had spent the money on irrigation systems, we would have had a much greater "bang for our buck. You could line ditches and take the water you save and run it back into our system," he added. "When you project the water use reduction with meters into the future, I'm not sure that it at least doesn't break even," David Lauer persisted. "With the maintenance, I'll bet it's very expensive water," Dave Rau contends. COMMITTEE REPORTS Water Supply Committee Chair Tom Brown reported that the Water Supply Committee met on Friday, August le. They discussed two issues; one was agricultural economy and open space, which would give preferred status to permanent agricultural lands for renting the City's surplus raw water, and the other was the Halligan Reservoir agreement. Agricultural Economy and Open Space Former Board member John Bartholow discussed the first item at the April Board meeting. The issue is: Should Fort Collins Utilities use its surplus raw water to help maintain the agricultural economy and open space around Fort Collins? If so, what policies or administrative procedures can be adopted to help with this objective? Tom B. said the Committee spent considerable time discussing it, but didn't arrive at any concrete conclusions to present to the Board. He presented the criteria that one would consider in the course of coming to that kind of decision. In general, the Committee seemed to see various potential problems with preferential treatment for agricultural users. There was general consensus that the Committee would be more favorable to an arrangement where someone would put his land into some kind of perpetual conservation easement, but something short of that, like a 2-5 year arrangement generated little enthusiasm. For example, they talked about a short-term deal where the City would essentially give farmers preferential treatment with a long-term interruptible contract for rental water, so if there were more water to rent, they would have first rights. There wasn't much enthusiasm for that idea either. It was even proposed as a possibility, that if certain agricultural interests were really interested in a longer term, several year rental deal, that we might consider putting such a situation up for bid, and sell it to the highest bidder. The thinking is that agricultural interests who are really needing a longer -term commitment are more likely to be those who have a higher demand for the water. In order to provide for this possibility, if we favor those who happen to say they are going to keep the land in agriculture for three years, we need to provide for this possibility. An impartial way to do it would be to put it up for bid. "That's just an idea at this point that the Committee was kicking around," he said, "as some way to accommodate this apparent desire for water, without being arbitrary." Water Board Minutes • • August 24, 2000 Page 9 Committee member Dave Frick said the thought was, if you put it out on a preferential basis, someone with agricultural land might say, "I also get a preferential lease on my water. I can sell my water at $15,000 an acre foot and make a fortune, and that means all the water is going to support development. Is that really what we are trying to accomplish?" The other argument on putting the water out to bid, is if someone is really wanting to be in agriculture in a big way and are into high value crops, they might be willing to pay higher prices for water. Tom Brown related that what the Committee also had general agreement about, was if we were going to give preferential treatment for land that was supposed to be open space for some period of time, the Utility should be paired with some larger program that is focused on open space. The water part of this is relatively minor, "and we shouldn't be the ones who are deciding what is open space and what is not. If we are going to be helping open space goals through providing some preferential access to water, then we should be working with some larger City or County effort which has gone through the work of defining what the goals are and how open space is defined," he concluded. Tom Sanders wondered who other than farmers want the water. "For instance, would an industry like Busch like to participate for a summer?" "It's mostly farmers," Dennis replied. However, A- B does rent water to irrigate some land around their plant. He also mentioned that the City sometimes gets requests from folks who are on one of the water district systems. They can turn over some raw water for credit, but that's very minor. He reiterated that more than 90% of it is for ag. use. Tom S. wondered if it would be better for a farmer to be able to plan for 2 or 3 years of water for operations, versus a one-year deal. Dave Rau added for investment of equipment. It seems to Tom B. that we ought to continue to look at this. Tom S. brought up another scenario. If water was given to a source that is using it for a wetland or habitat construction, "I can envision giving them water 3 or 4 years in a row. If the water was pulled back, and we dried up the wetland, we would be in all kinds of trouble." "We're not managing the wetlands," Dave Rau remarked. Drying up a wetland, even though we created it, might be a hard thing to pull back from, Tom S. noted. The final issue Tom S. brought up was the idea of bidding of the lease water. "Is that going to go against City staff s thinking on this?" he asked. "It would cause administrative concerns for us," Dennis replied. He related that it was interesting this year that a couple of farmers who had the high value crops, were the only ones who said they couldn't afford to pay up front. It tends to be a cash flow problem for some of them. George Reed pointed out that many farmers have a credit line going. If you can't get a credit line going everything else depends on that. Dave Frick stated that if we are looking at farmers trying to plan for 4 years without getting preferential treatment, and if we are adjusting our water supply for drought conditions, that doesn't guarantee that they will have enough water for 3 years. "I don't know that having preferential treatment necessarily guarantees them enough to go out and make investments in equipment, etc.," he added. Water Board Minutes August 24, 2000 Page 10 George said another concern that may be difficult to sort out is the large number of commercial farmers in the area. They spend money to level their fields so they use water more effectively, and the labor for irrigating. "They have some beautiful crops in places," he said. Then there are people who may have 40 acres, and they would just as soon put a conservation easement on 35 acres of it and grow a little pasture. They usually are not very serious about farming. Moreover, the water they run may not be used that effectively. He gave an example of that happening. "These are things that need to be sorted out for the future," he concluded. Tom S. said we eventually need to address this issue and come up with a yes or no on it. Dave Frick said one thing the Committee concluded, in the grand scheme of things, was that this can't be used as a land use governing tool. Rental of a few thousand acre-feet of water isn't going to dictate land use in the County. The Board has always taken a position that we are somewhat neutral about trying to use water for land use control. "Even if we decided to do something like this, I don't think it would have any appreciable effect," he said. Dave Rau pointed out something Dennis Bode has said, which is one reason the City likes to do it year to year, is that you take all your allotments, basically figure out the year, and take the extra and rent it. If we get into long-term commitments, this proposal takes that flexibility away. Tom Brown said that we have been looking at this as interruptible. All it is, is preferential treatment. Tom B. acknowledged that it has been confusing when talking about this because there are actually two things we are discussing: One, based on John Bartholow's initial proposal, is helping to preserve open space. The second is helping agriculture stay viable. "They are not necessarily the same thing," he said. It turns out that the draft of the proposal that John B. has sent (and it's just a draft) says specifically for up to five years. It doesn't talk about anything long-term. If somebody is willing to not develop their property for up to five years, they would be eligible for this program. "That's not long-term open space. You could help a farmer maintain open space for 5 years and then it could be developed, which means we haven't really protected open space in the long run, but maybe you have helped agriculture. These goals seem to overlap, but I don't really think they do. We may find ourselves with two separate policies. He reiterated that the Committee doesn't think we should get involved unless we are a part of some larger effort," he concluded. Paul Clopper asked if John Bartholow was speaking to the Board as a representative of the Larimer County Natural Resources Board. David Lauer said it was the Ag. Advisory Board. David said John sent an e-mail recently that said he was going to go to the City's Natural Resources Board and give the same presentation to them. Its original impetus was the County's Ag. Advisory Board. Paul said the reason he asked is if John was here representing a County Board, as a matter of courtesy, we should send them a copy of the minutes of this discussion. Tom B. stated that John said he wasn't formally representing anyone. David said the idea originally came from the Ag. Board. Out of that, the City's Natural Resources Board had asked him to address them. He added that it would still be good to communicate what this Board and Water Board Minutes • August 24, 2000 Page 11 the Water Supply Committee have come up with in terms of response. Dave Frick suggested that John Bartholow be asked to attend the next Water Supply Committee meeting. David Lauer agreed with Tom Sanders that if the City is going to get serious about open space corridors around it, we need to be a part of a larger plan. "I don't necessarily agree that the water piece is a small piece." From the perspective of the property owners out there, he thinks it's a fairly large piece. "Water policy and rental preferences shouldn't be driving it; it should be the other way around," he stressed. He also emphasized that at the very least, it should be a 30-50 year period of time that these protections would be in place, not 5, 10 or even 20 year periods, and it would be best if it would be in perpetuity, as most conservation easements are. Tom Sanders asked that John Bartholow be invited to the next Water Supply Committee meeting. He hopes that a resolution could be presented at the October Board meeting. Halligan Reservoir Agreement A. Issue The agreement between the City of Fort Collins and the North Poudre Irrigation Company (NPIC) requires that the City make some decisions by December 31, 2000 regarding the option to proceed with the enlargement of Halligan Reservoir. B. Background The City of Fort Collins and the North Poudre Irrigation Company (NPIC) entered into the Halligan Reservoir Agreement in November 1993. The purpose of the agreement was to give the City the option of pursuing the enlargement of Halligan Reservoir. If the City were to decide to pursue the project, it would exercise the option and could then proceed with the design, permitting and construction of the facility. The property around the existing reservoir that is presently owned by NPIC would be conveyed to the City. Dennis Bode related that the agreement states that at the end of seven years the option expires unless the City either extends it or exercises the option. C. Options Dennis said the City is faced with several options that we need to consider. The City needs to decide this fall how it should proceed regarding the Halligan Reservoir Agreement with NPIC. The options that have been identified are summarized below: Exercise Option to Purchase the Halligan Reservoir Site, The City would need to notify NPIC in November or December of this year that it is exercising its option. A payment of $188,223.51 would be due to NPIC, and within 60 days, NPIC would be required to convey property at Halligan Reservoir to the City. Annual payments as set out in Exhibit A of the agreement would constitute the purchase Water Board Minutes August 24, 2000 Page 12 price of the property and the project. If prior to construction, the City determines that the project is not feasible, the City may terminate the project and re -convey the property to NPIC. Annual payments would also cease. 2. Extend Option Until December 31.2002. The City would need to notify NPIC in November or December of this year that it desires to extend the option period for two more years. A payment of $188,223.51 would be due to NPIC before December 31, 2000 and again in December 2001. This would give the City an additional two years to study the project and determine how it wants to proceed. The City may have additional information regarding the effect of other projects and the progress on the Platte River endangered species recovery project. Discussion: Dennis said the original agreement was set up so that the payments would basically pay for the capital improvements that North Poudre has made in their system. That's what those payments are based on and recognizing too that the City is a shareholder, which amounts to about 35%. 3. Terminate Option with NPIC. Without any additional extension and payment to NPIC by the end of December 2000, the option to proceed with the Halligan enlargement expires. The City would assign all rights in the conditional decree to NPIC and NPIC would retain all option payments made by the City. Discussion: Dennis noted that this would mean that the conditional decree that's on that project could be challenged. Right now the conditional decree is owned by both the NPIC and the City. The use was always intended to be more for a municipal purpose. Walking away means the City is probably not interested in maintaining that decree. That means that Thornton would be senior to that decree. Dave Frick pointed out that, if you look at it from the standpoint of about 30,000 ac-ft of storage, that's $6.00 a year per ac-ft the City is paying to maintain that right, "which is pretty cheap," he added. 4. Negotiate with NPIC for Modification of NPIC Agreement. It may be possible to amend the Halligan Agreement to allow for another year or two of extensions without increasing the annual payment to the amount presently specified in the agreement. This option would basically give the City additional time to determine how it should proceed with the project without going to the higher annual payments. Discussion: Tom Sanders asked when the decision has to be made. "It needs "to be made no later than December 31, 2000," Dennis replied. "Does Council need to make a decision on this?" Tom continued. "That's one thing we need to sort out," Dennis said, "depending on which option we choose. If it's just extending it, we may not need Council approval. If we exercise the option, it would probably be wise to get Council approval." Water Board Minutes August 24, 2000 Page 13 D Conclusions The enlargement of Halligan Reservoir was identified many years ago as an attractive project to increase the City's storage capacity and the reliability of its water supply system. If no action is taken, the option to pursue the project expires at the end of this year. The City needs to carefully evaluate the options that are available and determine which way to proceed. Further Discussion Tom Sanders asked what the Committee did. Tom Brown responded that the Committee did not see much advantage in Option 2. This would just postpone the decision for up to two years. The only benefit of doing that, is avoiding some paper work, which will go along with Option 1. "We didn't see that as such a great benefit. We didn't think much of Option 3, which was just to walk away because we all agreed that we need some storage, and this is one viable option for getting it. That left Options 1 and 4, one meaning go ahead now and four meaning trying to re -negotiate so we could postpone the decision without paying so much money in the interim." He said further that there is a great deal of uncertainty as to how this is all going to play out. The NCWCD project sits there with an earlier priority than the Halligan expansion. Also, there is uncertainty about Platte River endangered species and what kind of commitment needs to be met there. It's not unreasonable to ask for an extension because of this uncertainty. He went on to say that even if we go ahead with Option 1 and begin the transfer of the land and pay them the $188,000, we're still not going to know today whether we will be able to expand Halligan. Even if we expand Halligan, we may want to consider going in with others who might also be interested in helping to pay for it. "I don't think the Committee came to a conclusion of recommending 1 or 4 at this point. We are trying to sort out more details," Tom B. concluded. Dennis said that one of the things the City plans to do is talk to North Poudre to see if they are receptive to re -negotiating that price for a year or two. He also cautioned that we don't want to discard any of the four options for awhile. He suggested that the Board put the options in order of preference. Tom Brown added that a diligence application needs to be submitted sometime in the next few months. Going with Option 1 would make that more secure, even though there is still a great deal of uncertainty about it. Dennis explained that when the City files an application for due diligence, there would probably be objectors in the case review. Tom Sanders asked if arrangements have been made to talk with North Poudre. Dennis said we will be bringing it up at their next Board meeting. Tom S. hopes that this will help make matters a little clearer when the Board discusses it at the October meeting. He concluded that the Board should plan to discuss this and make a decision at the October meeting. Joe Bergquist asked if we decide to exercise the option, and we don't want it, can we sell it? "Is it an asset?" he added. Dennis responded that "it's a pretty tricky road to make sure that you have a secure decree. Until we actually build the reservoir, we need to be somewhat cautious about Water Board Minutes August 24, 2000 Page 14 how we proceed. Even if we were to exercise the option, there is a provision in the agreement where if, down the road 3 or 4 years, there was something that came up that made it unfeasible to proceed, at that point we would terminate the agreement and payments would stop. There was some discussion about some of the details of construction and EIS issues that will need to be addressed in order to expand Halligan. "With either of the possible options, is the total still 30,000 ac-ft?" David Lauer asked. "The options don't really address the size," Dennis replied. "That is something that can be determined in the future. The decree is for an additional 33,000+ ac-ft. If you add the existing North Poudre decrees on Halligan, the total was 40,000 ac-ft. That was the maximum size the City looked at. We also did some studies for two other sizes: 25,000 and 15,000 ac-ft. The initial maximum size was for a total of 40,000 ac-ft.," Dennis explained. "How long would it take to fill that with the North Fork?" David Lauer asked. "It depends on whether it is like 1983 or the year 2000," Dennis replied. David said when there is discussion about the Seaman expansion, they are saying it would take somewhere between 5 and 7 years to fill it. "Actually, if you have a couple of above average years, you could probably fill it sooner," Dennis responded. George Reed asked if the Nature Conservancy has had any particular point of view on this expansion recently. "I'm not sure they have a formal position, but they keep in touch with us on what's occurring with Halligan," Dennis replied, "and they seem fairly receptive to the idea of an enlargement." "I think they would love it if the outlet works would work year around," George commented. "I think we would try to make some arrangements with them, which would help them with their program up there," Dennis said. There were no reports from the rest of the committees ADJOUNMENT Since there was no further business, the meeting was adjourned at 4:45 p.m. 7'Yl o-'e-�i �r���2.✓ Water BoardSecretary