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HomeMy WebLinkAboutWater Board - Minutes - 10/20/1995WATER BOARD MINUTES October 20,1995 3:00 - 5:26 P.M. Water and Wastewater Utility Conference Room 700 Wood Street WATER BOARD/COUNCIL LIAISON Chuck Wanner MEMBERS PRESENT Paul Clopper, President, John Bartholow, Vice President, Tom Brown, Ray Herrmann, Terry Podmore, Alison Adams, Dave Frick, David Lauer, Tom Sanders, Howard Goldman, Robert Ward STAFF Rich Shannon, Mike Smith, Wendy Williams, Gale McGaha Miller, Dennis Bode, Ben Alexander, Scott Harder, Beth Voelkel, Molly Nortier GUESTS George Reed, Citizen Observer John Bigham, Northern Colorado Water Conservancy District MEMBERS ABSENT None President Paul Clopper opened the meeting. The following items were discussed: MINUTES Terry Podmore made three corrections in the minutes of September 15, 1995: Page 3, item 4, criteria should be changed to criterion in lines two and five; and on page 4 the last paragraph "confused" should be changed to "concerned." Ray Herrmann moved that the minutes be approved as corrected. Terry Podmore seconded the motion, and the Board approved the motion unanimously. UPDATE: NORTHERN COLORADO WATER CONSERVANCY DISTRICT John Bigham distributed an updated list of the District's Board of Directors with addresses and phone numbers. Mike Applegate was re -appointed as director from Fort Collins. Bill Farr, after 40 years, has retired to director emeritus, and he has been replaced by Jerry Winters from Greeley. Wes Gerk of the Julesburg area has been replaced by George Jenik who has been active in a number of water organizations there. Water Board Minutes October 20, 1995 Page 2 Eric Wilkinson and Darell Zimbelman will be at the Water Board's November meeting for the discussion on CBT caps and whatever else the Board would like to bring up. He went on to say that the current water supply is good. The District has decided to put a hold on their weather modifications. They will not try to make snow on the west side because they anticipate if they did, there is a possibility of a spill on Granby due to the amount of storage there. John Bartholow pointed out in the District minutes that there was considerable discussion on the increase in rates this year and the reasons for it. "Could you go over that briefly and discuss what you anticipate the next few years to be like with the apparent need to replace a lot of equipment." Mr. Bigham said he didn't have a lot of insight into the rate discussion other than that the District is preparing a 5-year budget to try to determine what will be required for some of the additional programs anticipated for the future. ELECTION OF OFFICERS President Clopper explained that each October the Board elects or re-elects a president and vice president for a one year term. He called for nominations for president. Tom Sanders nominated Paul Clopper to serve another term. Mr. Clopper nominated Tom Sanders. He pointed out Dr. Sanders' 12 years of previous experience on the Board as an asset for the office. It was moved and seconded that nominations cease. Paul Clopper was re-elected as president. Mr. Clopper opened the floor for nominations for vice president. Ray Herrmann nominated Tom Sanders with a second from Alison Adams. Tom Sanders nominated Robert Ward who declined the nomination because he would prefer to be on the Board a little longer before becoming an officer. David Lauer nominated John Bartholow, with a second from Tom Brown. The nominations were closed, and John Bartholow was re-elected to serve another term as vice president. Board members received a draft of the 1996 Water Board Work Plan in their packets. Each year, usually in November, the City's boards and commissions submit their work plans for the following year to the City Council. Paul Clopper asked each of the committee chairs to look at his section on the plan and suggest deletions or additions. Water Supply Tom Brown, the Chair, was satisfied with what was listed under his section. John Bartholow wondered why Halligan Reservoir was listed under both Water Supply and Engineering. Paul Clopper explained that the Engineering Committee concentrates on the technical aspects of the project, and added that it helps to have "several sets of eyes" looking at it from different perspectives. Mike Smith Water Board Minutes October 20, 1995 Page 3 stated that it is important that it remain with the Engineering Committee because next year, if there is any work, it will probably be the feasibility study. Water Conservation and Public Education Chair Terry Podmore began by saying that the Committee met prior to the Board meeting and discussed these items. He didn't think there was anything to add or delete. Legislative and Finance Chairperson Howard Goldman agreed with what was listed under his Committee, but he thinks that category No. 5, Liaison Issues, probably should have a standing committee to deal with those items. It seems to Mr. Goldman that there have been, on a regular basis, all kinds of cooperative issues that require action. Mr. Clopper pointed out that the Water Planning Committee, made up of three council members and three water board members, has dealt with liaison issues in the past. Scott Harder suggested that in item B under Legislative and Finance, you may want to include water and wastewater Plant Investment Fees (PIFs). The Board agreed to add that. Engineering Mr. Clopper noted that there are only two members of the committee since he no longer qualifies as a standing member (the president is an ex officio member of all the committees), and there is also no committee chair. Dave Frick agreed to join the Committee and Tom Sanders was selected as the chairperson. What was listed under this item was approved by the committee members and the rest of the Board concurred. Liaison Issues Under the Legislative and Finance area, Howard Goldman suggested that a committee may be needed to deal with Liaison issues. The Council/Water Board Water Planning Committee has been handling those items. In speaking of the Water Planning Committee it was pointed out that another Water Board member needs to be selected to serve. Currently, Paul Clopper and Tom Brown represent the Board. Alison Adams said she would be interested in becoming the third member. Mike Smith stated that the Water Planning Committee looks at items other than Liaison issues. They concentrate on major issues such as water and wastewater treatment master plans, demand management, major land purchases, water quality, cost of service, etc. Mr. Goldman still thinks it would be worthwhile to create a separate group that would be prepared to handle communication relationships with outside entities. It seems to Dave Lauer that this kind of activity could be an executive committee function; the president and vice president would speak for the Board to another entity. Vice President John Bartholow suggested that he, Paul Clopper and Howard Goldman schedule a meeting with Mike Smith to discuss Item 5. In the meantime, the issues listed under this item will remain as submitted on the work plan. Water Board Minutes October 20, 1995 Page 4 Water Quality Paul Clopper suggested wastewater quality be placed under this item. Robert Ward also wanted something there on the water quality input to the City. The Board agreed that these be included as B and C under item 6. (B) Review raw water quality trends and (C) Review wastewater effluent quality trends. Ray Herrmann moved that the Water Board approve the 1996 Water Board Work Plan as revised. After a second from John Bartholow, the Board voted unanimously for the motion. The revised copy of the work plan will be attached to the minutes. LAND ACQUISITION Board members received a draft summary item in their packets which explained that the Council adopted the Poudre River Land Use Framework on May 16, 1995 (Res. 95-64). The Pickle Plant Site was one of four key parcels of land identified for City acquisition. The reasons were: "To acquire and annex to prevent marginal industrial or commercial redevelopment; To develop site design to restore streambank, habitat and natural resource values, and act as a buffer for Wastewater Treatment Plant No. 1; and, to include designs for downtown gateway features and interpretive features." The 15,000 sq. ft. existing building and approximately 4 acres of land will cost $290,000. The cost will be split three ways: $110,000 from the Wastewater Utility Capital Reserves, $110,000 from the Conservation Trust Fund Reserves and $70,000 from a private business which will use the building to store furniture for five years. Rich Shannon commented that when the City purchased the site for Wastewater Plant 3 they wanted to make sure that there was plenty of land around it as a buffer. The Pickle Plant site purchase is viewed as an "insurance policy" that is consistent with what has been done and is still being done at the No. 2 Plant site. He referred to a revised drawing which showed that the City acquired a number of acres at the Drake Water Reclamation Facility site, "clearly with the intent that we could control what surrounds us, and not have neighbors too close." The shaded areas at the DWRF site on the drawing are parcels of land that the City may be interested in purchasing. The section south of Drake Rd. is owned by CSU and the triangular parcel to the north is owned by Cal Johnson. "We have not had a lot of conversations with him about purchasing his property," he said. He continued by saying that the same logic is being used for Wastewater Plant No. 1. The City has been tracking the Pickle plant site property for a lot of years. In the last year there have been inquiries about a couple of uses, one, surprisingly, was for multi -family housing. He said that's not the kind of neighbor that would be desirable near a wastewater treatment plant. The other inquiry was from a realtor who had envisioned putting a fairly marginal commercial use there taking advantage of a "use by right" designation. Given the pressure on infill, purchasing the property is probably a reasonable insurance policy to have some control over the corner area. Water Board Minutes October 20, 1995 Page 5 Tom Brown asked how the funding split was determined. "We began with what we could reasonably require from the tenant, subtracted that from the appraised price, and Parks and Wastewater agreed to split the difference," he explained. John Bartholow asked if any other options were explored other than outright purchase. "Not at great length," Mr. Shannon replied. "The use by right there is still a possibility if we want to influence future development. It doesn't preclude us from selling some or all of the property, but allows us to put whatever conditions on the sale that we want." He added that you really can't put conditions on it until development comes in. He concluded that, in theory there may have been something that could have been done. Terry Podmore asked if there are any plans for improvement on the site. "The entity that wants to do something different with the site would be responsible for the clean-up," Mr. Shannon explained. From the standpoint of the Utility, since the site would be used as a buffer, the Utility wouldn't feel the need to be heavily involved in a clean-up; and it would require considerable effort to clean up the site. Tom Sanders wondered if anyone has looked at it to see if there have been spills on the site. Paul Clopper commented that Stewart Environmental concluded, after completing a level 2 environmental audit, that no mitigation was required. Mr. Clopper asked what the nature of the contamination was from that kind of storage site. Gale McGaha Miller replied that it was gasoline from a station across the street. Some of that fuel has migrated to the western edge of the property. Some mitigation work was done and the site received a "no further action required" letter from the Department of Health, she said. The other concern has been chloride. With decades of pickling operations, there have been very elevated levels of chloride in the soil, some in the groundwater and some in the groundwater at the Mulberry facility site. Considerable sampling and modeling work was done to determine that it's not getting into the river at a level that would create concern. She added that "chloride is not a very worrisome compound." That aspect of the site has also been given a "no further action required" letter from the state. She has examined all of the site assessments carefully, and they required Stewart Environmental to do some additional work. Tom Sanders moved that the Water Board recommend to the Council, endorsement of the purchase of the Pickle Plant Site. Ray Herrmann seconded the motion. Mr. Clopper asked for further discussion. Tom Sanders asked what the plan is for that land. The River Corridor plan is evolving, and it is more incumbent upon Parks & Rec. and Natural Resources to decide if this could be an active or passive piece of property for whatever is done with the corridor plan, Mr. Shannon responded. The Udall property that is indicated on the attached map is due for some fairly major re -work in the next year or two, so there may be some interest in expanding the clean-up effort, Mr. Shannon continued. A significant number of massive old concrete structures need to be removed, and the river bank itself Water Board Minutes October 20, 1995 Page 6 is an eyesore, he emphasized. "My candid opinion is that it will be several more years before any City departments accumulate enough money to do anything really significant," he stated. There may be some minor improvements to give it more visual appeal. Dave Lauer asked if future plans include a bridge to take you into the bike trail from the Riverside side. "There are really no plans; just preserving our options at this point," Mr. Shannon replied. Mr. Lauer also asked if the existing structures will be removed. There is a 15,000 sq. ft. building that is very close to the bank and that is in bad shape. Larrabee's will re -roof and hope to get five years out of it for furniture storage, Mr. Shannon explained. His expectation is that, after five or six years it probably will be torn down. Tom Brown asked about the funding source for the wastewater part of the purchase. Mike Smith said it is basically wastewater fund reserves that have built up over time, mostly from rates. "What would that money be used for if not for this purchase?" Mr. Brown asked. "In the next five years the reserves are fairly high in the wastewater fund, and there probably isn't 'an opportunity cost' except for interest on that investment over that time period," Mr. Smith said. Mr. Clopper wondered about the condition of the river bank; is it stable or in pretty good shape? Dave Frick said he couldn't recall that particular section. As Mr. Shannon recalls, it's fairly stable. Mr. Frick said it was more on the other side that there is a potential problem. Mr. Shannon pointed out that it's more of an aesthetic problem of discarded items and debris. Dave Lauer asked about the $290,000 figure the City is offering. "That's the appraised price," Mr. Shannon said. "Is that the price the City would pay?" "Yes," Mr. Shannon replied. He added that the City will be paying $220,000 and Larrabee's will pay $70,000 which they will put up front. "We end up paying $220,000 for the land." He added that he was rather surprised that it appraised that well. Mr. Lauer thinks if there is that much concrete and rebar that the City will have to remove, "isn't there room for negotiations on the price?" "It's better than the initial $330,000 they were asking; we were able to negotiate down because of the condition of the building," Mr. Shannon noted. Ray Herrmann asked if any construction is planned. "The only thing we plan to do is some re - vegetation with natural grasses," Mr. Shannon replied. He also commented that the kind of infill that has taken place in the last two years is a really telling story of what's happening with property. Just in the downtown area, parcels that have sat idle for a long time, are now being purchased. Tom Sanders called for the question. President Clopper asked for a show of hands. Nine members voted in favor of the motion. There were two abstentions: John Bartholow and Dave Lauer. John Bartholow abstained because he was uncomfortable with the fact that there wasn't a more concrete plan. "I don't think it's good open space property, and I think it's horrible gateway property, but it's probably good as a buffer," he remarked. David Lauer said he abstained because he feels he doesn't Water Board Minutes October 20, 1995 Page 7 know enough about it and he thinks it's going to be a tough sell commercially because of its location and the price. He also thinks the City could negotiate a better price. RAW WATER DEDICATION CREDITS FOR SOUTHSIDE DITCH COMPANIES Dennis Bode reported that the Water Supply Committee discussed this item and others at a committee meeting recently. The Water Utility has been working for the last several years to transfer the water shares in the Arthur Irrigation Co., the Latimer County Canal No. 2 Irrigating Co., the New Mercer Ditch Co., and the Warren Lake Reservoir Co. from agricultural use to municipal use. He said there is a water court hearing scheduled for November 13-17, 1995 to resolve any remaining issues regarding this case. "We've had a number of objectors in this case, and one of the objectors is a combined group of the Southside Ditch Companies. We have been working with those companies to come up with an agreement that spells out some of the details, like ditch losses and how much water we leave in the ditch and the Southside Ditch dedication credits." He went on to say that the Water Board has the authority to set the dedication credits or conversion factors, and that's the primary reason that this item is being brought to the Board. The credits that have been discussed with the companies are the ones that we've had for nearly 20 years. After discussing different approaches with the ditch companies, everybody became comfortable with leaving those dedication credits as they are for the next 10 years. It seemed to be reasonable and fair. Utility staff is seeking the Board's approval to continue the present conversion factors for the next ten year period as follows: Company Arthur Irrigation Company Larimer County Canal No. 2 Irrigating Co. New Mercer Ditch Company Warren Lake Reservoir Company Conversion Factor (AF/Sh) 3.442 42.687 30.236 10.0 Tom Brown, Chair of the Water Supply Committee, reported that the Committee recommended that these conversion factors be adopted for the next 10 years. Dennis Bode explained to the Committee that fixing the credits allows the people who currently own the shares to have some security in knowing what they will be worth. These make sense, from the City's standpoint, as long as the City can actually take advantage of the shares once they are turned over and we get that water for the City's use. They are based on the average yield, assuming that some storage is available. Mr. Bode has acknowledged that there is some uncertainty about them because they are based on the assumption of being able to store and deliver the water. "The Committee went along with the anticipation that the storage works out," he concluded. Water Board Minutes October 20, 1995 Page 8 Ray Herrmann observed that the agreement doesn't mean a whole lot if storage doesn't work out anyway. We are not changing the problems that we have with southside storage, he said. Dennis Bode said that there are several ways it can be used. There is some capacity in the existing pipeline, and certainly if we have an enlarged pipeline from the Poudre River someday, that will make it fairly easy to deliver most of that water to our system. It's also somewhat dependent on the demand level that we have; "as the City grows we will gradually grow into that demand level so we can take advantage of the Southside Ditch water rights," he explained. Other options include working out arrangements with some of the local irrigation companies to store at certain times and be able to exchange that water back into our system. He said that the water decree that the City is seeking provides for quite a lot of flexibility in looking at different points from which we can divert the water, or get it into storage and exchange it back into our system. He concluded that staff is comfortable with the number of options we have to eventually get that water into our system. Mr. Bode stated that one of the provisions of this agreement is that the Southside Ditch Companies will drop their objection, and will go along with the decree. He added that there are other objectors in the case and they all have their own issues."Once we get the change in use in ten years when this agreement runs out, are we re -negotiating the conversion factor totally from scratch again?" Mr. Herrmann asked. "I think it's pretty likely that in 10 years there will be very few shares left in these particular irrigation systems," Mr. Bode replied. Ray Herrmann moved that the Water Board approve the dedication credits as listed above for 10 years for the four companies. After Robert Ward's second, the motion was approved unanimously. WATER TRADE INVOLVING NORTH POUDRE AND CBT WATER The issue on this item is, should the City of Fort Collins enter into an agreement with Harrison Resource Corporation (Harrison) that provides that Harrison would permanently transfer up to 200 shares of North Poudre Irrigation Company (NPIC) to Fort Collins in exchange for Fort Collins annually transferring to a third party, 3 units of Colorado Big Thompson (CBT) water for each share of NPIC received. Harrison owns or is in the process of acquiring from 50 to 200 shares of NPIC stock. He has proposed to the City the following: 1. Harrison permanently transfers from 50 to 200 shares of NPIC to Fort Collins. 2 Fort Collins annually transfers to another designated CBT allottee the quantity of CBT water that is attributable to three CBT units for each share of NPIC transferred to Fort Collins. Water Board Minutes October 20, 1995 Page 9 Fort Collins will be reimbursed for the annual assessments charged to Fort Collins by the Northern Colorado Water Conservancy District for the CBT water transferred to the other CBT allottee. Dennis Bode said that from time to time the Utility receives proposals that staff brings to the Water Board, and this is one of those. He said that the main thing to understand in this proposal is that each share of North Poudre contains 4 units of CBT water; when we get NPIC water we would have that water available to use in our system. In exchange for each share of North Poudre, we would be obligated to transfer 3 units of CBT water to another party. The benefits appear to be that we would gain some additional water, and it would be CBT water although it is different from regular CBT water because it comes as a part of a North Poudre share. It appears there would be no additional annual cost, in fact it may be worked out so that the Utility could earn a little income annually. Mr. Bode acknowledged that there are a number of concerns about this. He mentioned that the Water Supply Committee discussed this at length. He thinks there is a need to balance the CBT units and the North Poudre shares to the extent that we use our pool of CBT water to meet other obligations, it takes away some of the flexibility of using that water. Also, he isn't sure we want to encourage brokers to offer these kinds of deals to the City. These kinds of arrangements are normally somewhat speculative. Although there may be some cases where it may make sense to look into it. He asked the Committee members to discuss some of their thoughts about this offer. Chair Tom Brown stated that the Committee spent considerable time discussing this offer. There are, of course, the obvious benefits to the City which Mr. Bode mentioned. He said that the Committee spent most of the time on the potential problems. There was one aspect about which the entire group seemed to be a little uneasy. They weren't able to determine how "it all added up; specifically, how the broker, in this case, was going to make any money." Obviously he would or he wouldn't be doing it. That led the Committee to wonder if there was something about this that was hidden, and if they knew about it would they feel uncomfortable? "But there wasn't something that was totally apparent," he said. There were three other concerns: (1) We would not know who the user is to whom we would be obligating ourselves to deliver the 3 units of CBT water each year, other than that the allottee would be an already approved CBT user. "There's a possibility we wouldn't like who it is." (2) We worried that we might be setting a precedent by getting involved in this deal, and somehow commit the City to seriously considering any other similar offers. (3) We were concerned that perhaps we don't want to get involved in a deal with someone who is making a profit. At the end of the Committee's discussion there was a suggestion that if North Poudre shares are such a good deal, why isn't the City buying them itself? "I think it's a legitimate question given that we have $2 million of cash -in -lieu -of money that has been turned in by developers; perhaps some of that might Water Board Minutes October 20, 1995 Page 10 be used to purchase a few more North Poudre shares if they are so favorably priced right now," Mr. Brown pointed out. Mr. Herrmann asked if North Poudre shares are available for the City to buy directly. Mr. Bode said there are usually shares available. The Water Board has expressed preference for North Poudre shares when they were available in the past, Mr. Herrmann stated. Mr. Herrmann continued by saying, "if we stipulate to supply the 3 CBT units to somebody else, can we stipulate that it has to be below a certain point in the River." "With CBT water, we would normally transfer it to another CBT user to be delivered out of the CBT system at whatever delivery point that entity had," Mr. Bode responded. Mr. Herrmann agreed that it probably wouldn't impact us at all. His major concern is what advantage this deal has for the City. Mr. Bode thinks the advantage is the water. Would it be better to "just go out and buy 200 Poudre Shares?" Mr. Herrmann asked. "If you buy 200 shares it will cost roughly a million dollars," Mr. Bode said. "If you just receive them, you get the benefit of 200 units of CBT water without paying that amount; potentially the value of that at $1600 per unit is $320,000," Mr. Bode explained. There is benefit to the City with this deal that is being offered in a short term view, but the question is more one of policy and if we want to get into these kinds of arrangements," he added. "Is there any time requirement of providing those 3 units?" Alison Adams wanted to know. "It would be a perpetual arrangement," Mr. Bode replied. Ms. Adams said "she didn't like that," and Tom Sanders agreed. Tom Sanders commented that North Poudre is more than just a CBT water right; each share has 4 in it. "It looks like we get a lot of free water; if we get one share of NPIC water and we give back three shares of CBT, we get 1 share of CBT, plus the River rights. It seems crazy to be doing that," he contends. "The River rights haven't been changed to municipal use yet," Mike Smith pointed out. Dr. Sanders thinks "it seems too good to be true." Mr. Bode explained that the price Craig Harrison is looking at to make it work is $1650 per unit of CBT water and roughly $5,000, or slightly under for North Poudre shares. "Basically, the way it works for him is that North Poudre water is probably under -priced compared to CBT. Part of that is because you don't have the flexibility with the North Poudre CBT water, as you do with just CBT," he added. Dr. Sanders asked what the acre foot yield is on the native River rights. Mr. Bode referred to the table attached to the agenda item. "It's around 5 ac-ft per share, and CBT is about 3 ac-ft of that. "When you consider a dry year, firm yield to us isn't worth a lot," Dave Frick pointed out. Tom Sanders expressed concern about this proposal for two reasons: He is uncomfortable with the long term commitment that it appears "we couldn't get out of. We also won't know who the user of the CBT water will be." He also does not like the idea of the City giving back CBT water. Mr. Bode clarified that under this proposal the City would maintain ownership of the CBT water. Water Board Minutes October 20, 1995 Page 11 Mr. Herrmann asked how much money the City risks on this. Mr. Bode doesn't think that the City would risk any money if we were to agree to this proposal. "We're not getting something for nothing, what is the risk then?" Mr. Herrmann insisted. Alison Adams said that "we could end up losing the water. We're not going to be able to buy the water and use it for our own City purposes; we're going to have to give it way," she contends. "We're taking something out of the market if we do this," she added. Mr. Herrmann commented that assuming a dry year, when you are getting almost nothing out of the Poudre, you are still going to have one CBT unit. Tom Brown emphasized that we are promising to give "so many" acre feet per year, and we are promising to trade CBT shares whatever they are. Mr. Brown also responded to Ms. Adams' concern. "The City has a stack of transfers they do every year. A lot of the trades make a whole system work; this is just one more. It's a long term commitment." Dr. Sanders wondered how this proposal affects the new Northern District CBT policy. "Does this make it easier for the City to own it since we own it in North Poudre shares?" Terry Podmore pointed out that we wouldn't own all four units because we would have to give three away. Ray Herrmann said we may be able to trade those units against the lid. "In other words our lid goes down four units not down one, so in that sense there could be a real advantage to the City if we are going to get caught in a lid." Tom Sanders suggested that the City get its attorneys to look at this. "What do you want our attorneys to do?" Mike Smith asked. "I don't know exactly," Dr. Sanders admitted. He wondered if the City enters into agreements like this not knowing where their product is going. "Number one, is there some way we can demand to know the user ahead of time, and No. 2 if they don't pay their assessment on the CBT shares that would mean the City would have to pick up that assessment; would we have some recourse?" Mr. Herrmann asked. "The agreement would cover that," Mike Smith responded. "If we don't give them the water, they won't pay the assessment," Mr. Brown added. "Is the reason we won't know who the 3 shares are going to because it would be a client of Harrison?" Mr. Lauer asked. "We won't know until after we close," Mr. Smith replied. "It may very well be that Mr. Harrison doesn't know at this point," Mr. Brown said. He added that it has to be an existing approved CBT user within the system, just as the City is. If the numbers are as Mr. Bode presented, essentially they just match and Mr. Harrison makes a commission. Mr. Bode explained that one reason Mr. Harrison has assembled this package is probably that people have contacted him who want to sell North Poudre shares, and he also has people that contact him who want to sell CBT units. The North Poudre shares can't be transferred to those buyers. If he can make that exchange with the City or other North Poudre users, he can make the deal work. Ray Herrmann commented that maybe the City could permanently transfer the CBT units to the other Water Board Minutes October 20, 1995 Page 12 party. "In fact Craig Harrison asked me if the City would like to do that, and I said we've never done that before, and I think we would be receptive to it," Mr. Bode remarked. "In some ways when you think about it that way, a long term perpetual obligation is roughly the same thing," he continued. Mike Smith acknowledged that frankly this arrangement is a marginal one for him. "There is not a good market for North Poudre to start with and there may never be a good market, so the City may always have an advantage to buy more North Poudre in the future at a fairly low price," he said. "Potentially a unit of CBT per share now is going to be okay." Tom Brown insisted that we are not giving up anything if we did this. "There is risk involved," Mr. Smith asserted. "It's not a clean deal because North Poudre has control, and we don't. They're the ones that have the running water, and they are nice enough to give us the 4 units for every share. They could change their policy," he explained. Mr. Frick pointed out that they give the City credit for that water in Horsetooth, "our share of the water that we have. But there could be a time, if one of these deals goes through, that it may open the flood gates, and everybody is going to come to us wanting the same deal," he stressed. "Soon it would get to a point where they couldn't transfer enough water into Horsetooth to meet our demands and therefore we would have an upper limit on how much we can use," he predicted. Mike Smith continued by saying that North Poudre probably can't run their company by giving all their CBT water away to their users." Mr. Sanders wondered if North Poudre would use that water to fill Halligan. Mr. Bode explained that there are two parts to Halligan under the enlarged scenario. The City would have control over the enlargement part of it, and "we could store various kinds of water: river water we receive under a junior decree, or it could be some of the Southside Ditch water, or we might be able to store some of our water that comes through ownership of North Poudre shares. It would be quite flexible." Mr. Bode concluded that the Harrison deal looks good, but there are a number of risks with it. He added that this deal could be offered primarily to the water districts that also use North Poudre shares: Fort Collins -Loveland, ELCO and North Weld; that's about it. "If you decide to do this," Mr. Smith cautioned the Board, "you are probably going to see more of it, unless you say 'we will do it once and not any more."' Mr. Herrmann asked what percentage of the shares of North Poudre the City has and how long until we reach 50%? "We have almost 35% of the shares so we need 1500 to reach 50%," Mr. Bode replied. Mike Smith remarked that the worst that can happen on this proposal is one for one, or "that we break even. We may not get 4 for 3, it may be 3 1/2 or three for three." Mr. Sanders asked how this compares with the Kodak deal. The difference Mr. Bode's sees is that with Kodak we dealt directly with another entity. And they are a little more involved in this area. "I think there might be opportunities where deals are worked out with adjacent water districts, for example, that could involve the kind of swaps that are proposed by Harrison," he said. "To make it Water Board Minutes October 20, 1995 Page 13 a third entity that is completely separated from Fort Collins, I think, is going into a different dimension," he concluded. Mr. Herrmann asked if there is speculation about who the other entity that gets the 3 ac-ft may be. It's most likely small towns such as those in the southern District like Broomfield, Fort Lupton or LaSalle, or a water district, Mr. Bode guessed. "If it is another district, I would rather work with them," Mr. Smith remarked. Mr. Frick also concluded that "if this is such a good deal, let's just deal directly with whoever it is; why give Harrison his commission?" Mr. Lauer wanted to know if there is any advantage of going back to Mr. Harrison to find out what type the potential user would be and if we could negotiate on the time period. "I think we know what type of entity it is likely to be," Mr. Bode replied. He added that he thinks it is the type of arrangement where they wouldn't agree to any type of a temporary period. Could it be another entity that would be affected by the cap? "Possibly, but it may be that Harrison just has someone who needs some CBT water." Mr. Lauer wondered if it could be another A-B type of situation. That is doubtful, was the answer. It seems to Tom Brown that if the City could actually take these North Poudre shares and sell this other entity three shares, then we are doing pretty well. "We would have the small risk that somehow the NP shares in the future would deliver fewer than 3 CBT units, but that doesn't seem like a very big risk, so I don't see what's wrong with doing it that way," he stressed. "It also has the side benefit because it doesn't affect the CBT cap that may be imposed on us," he added. Tom Sanders always liked the idea that Fort Collins would become a water broker in Northern Colorado. He wouldn't mind having a policy to lease water to other entities where we continue to maintain ownership of the water. Ray Herrmann moved that the Water Board accept, after further examination, Craig Harrison's offer. Tom Brown seconded the motion. Tom Sanders asked that someone who is going to vote for the proposal give a reason. Tom Brown said he would vote for it because he believes it is a win situation, especially if it could be worked out that we sell three CBT shares for North Poudre water that we acquire. Mr. Smith clarified that you probably wouldn't really sell it, what you would probably do is exchange it. Dave Frick mentioned again that we would be setting a precedent. Mr. Bode commented that we would probably be encouraging others to make an offer. Alison Adams called the question. Nine members voted to reject the offer for reasons stated previously. Tom Brown voted in favor of the motion for reasons he stated earlier, and Ray Herrmann Water Board Minutes October 20, 1995 Page 14 abstained because he didn't feel there was enough information to know if it was a good or bad proposal for the City. The motion was defeated 9 to 1 with one abstention. John Bartholow suggested that as a follow-up to this perhaps we should examine the possibility of setting up some kind of policy relative to this situation. Dave Frick observed that there may be some implications of use of North Poudre water as we begin acquiring more, where there may be terms and conditions that this offer may be acceptable. Robert Ward added, "and make it available to anybody." This would provide the staff and City Council the protection that it's fair, so the public wont think that we are dealing with just one developer and not with another. Mr. Smith agreed that if there is a strategy involved, it will be far more comfortable. Mr. Bartholow said in follow-up that "it seems that we have this cash -in -lieu -of payment for raw water that's a set fee ($1500 per unit). "Given this kind of arbitrage situation, maybe we should be thinking about whether we want a set fee for all sources of water. It certainly appears that CBT water is now, and will continue to be the premier source of water," he said. "Is one ac-ft of CBT water equal to one ac-ft of North Poudre water?" "Apparently not," he answered himself. Mr. Bode clarified that $1500 is paid if somebody does not turn in any water and pays cash instead. "We do have a list of conversion factorsfor water that is turned in to the City. Actually some of those were set up with that very idea in mind, in other words, we accept CBT water at one ac-ft per unit already. It seems to give developers an incentive to turn that water in to the City. Certainly that policy could be reviewed and discussed more at some time," he concluded. REGIONAL 201 FACILITIES PLAN Board members received in their packets, an agenda summary, a copy of the Memorandum of Understanding (MOU) Concerning Completion of a Regional Wastewater Treatment Study in the Cache La Poudre River Basin, and a Memorandum of Agreement (MOA) to provide a mechanism for payment of consulting services for the study. Background information stated that local wastewater treatment entities have begun meeting to discuss regional wastewater treatment needs in the Cache la Poudre River basin from Fort Collins to Windsor. These entities have agreed to conduct a study on the feasibility of regional cooperation for wastewater treatment services. The MOU represents a commitment on the part of the co -signors to participate in the study. The participants include the Boxelder Sanitation District, South Fort Collins Sanitation District, Town of Timnath, Town of Windsor, Larimer County, and the City of Fort Collins. The Study will be coordinated by the North Front Range Water Quality Planning Association (NFRWQPA). The Memorandum of Understanding (MOA) provides a mechanism for payment of consulting services in relation to the development of the study. The NFRWQPA will approve bills submitted by the consultant and invoice the participants. In signing the MOA, the City authorizes NFRWQPA to Water Board Minutes October 20, 1995 Page 15 contract with the consultant on the City's behalf and approve bills for payment by the City to the consultant. Gale McGaha Miller mentioned at the last meeting that several wastewater entities have been meeting on a regular basis to come up with a game plan on the Regional Facilities Study. As mentioned earlier, they have developed a MOA that basically allows them to participate in the study. "It doesn't bind any of us to the recommendations in the study, but it is a firm commitment on the part of all these entities," she explained. The MOA is just between the City of Fort Collins and the NFRWQPA and it provides for a payment mechanism. Alison Adams moved that the Water Board approve the study as per the staff recommendation which states that: This cooperative study will provide information that Fort Collins will need to plan for future wastewater treatment needs. It provides an opportunity to cooperate with other neighboring wastewater treatment entities in gathering this information. Staff recommends that City Council authorize the MOU and MOA. Robert Ward seconded the motion. Ms. McGaha Miller said that there may be some slight tinkering with the MOA. Although all of the entities have approved it, Boxelder is a little nervous about some of the language, but any changes they would make would be very minor and "wouldn't affect us," she assured the Board. John Bartholow asked when the study is expected to be completed. "Actually we don't have a firm time line on that," she replied. It would go through a special proposal process to select a consultant and it is anticipated that the study will take from 8-12 months; 16 months would be a conservative maximum for the project. Dave Frick asked what kind of control the City would have over the study. "We will have an equal vote with the other entities," Ms. McGaha Miller responded. Tom Sanders said he wasn't comfortable with the equal vote. Howard Goldman asked if they have agreed on the consultant yet. "No, we need to get the MOU in place first, and then we'll go ahead," she explained. "What if they can't agree on the consultant?" Mr. Goldman continued. Alison Adams pointed out in the agreement that, "a management committee will be formed, made up of one representative and one alternate from each participating entity. Each representative shall have one vote, and all decisions of the Management Committee shall be decided by a majority vote of all the representatives." "I think that's probably how the conflict would be resolved," she said. Ms. Adams continued by saying that she realizes that in order to get this agreement to fly, language is needed that says nobody is bound to participate in the solution, but she hopes that doesn't cloud the criteria of promoting a regional solution, if in fact that turns out to be the best alternative. Water Board Minutes October 20, 1995 Page 16 "Clearly this is a potentially frustrating situation where we may not be able to agree," Ms. McGaha Miller acknowledged. However, the information that would be gathered by the consultants for the study would be valuable to Fort Collins even though others may not choose to participate. Paul Clopper asked about the scope of the study. Ms. McGaha Miller stressed that those items on p. 1 are just a summary of the scope. The complete scope goes into greater detail, but was not included in the packets. "You helped establish and develop that scope and the other participating entities are in agreement with that?" Mr. Clopper asked. "Yes, that's been the easy part," she stated. "What is the procedure for acceptance of the consultant's report?" Ray Herrmann asked. "We have been meeting on a regular basis and we will come up with selection criteria, and review the proposals as a group," she replied. Mr. Herrmann was not as concerned about selecting the consultant as acceptance of the final report itself. "Are there no criteria for acceptance other than majority rule?" he asked. Acceptance of the report will be by majority rule, Ms. McGaha Miller replied. Tom Sanders asked if selection of the consultant is also by majority rule. "Yes," she answered. Alison Adams said she is not very familiar with the North Front Range Water Quality Planning Association. The MOA says that the manager of that group will act as a project coordinator for the study, so what role does that give him? "It doesn't give the manager any particular power or authority; it's just a facilitation type of role where he coordinates meetings, pulls together documents, etc.," Ms. McGaha Miller responded. He does not have a decision -making capacity. "Doesn't Fort Collins already pay into this association?" Robert Ward asked. "Yes, we do," she said. She explained that this is the kind of thing this association was intended to do. Tom Sanders asked if "this is the best we can do, particularly where Boxelder is concerned?" "I think so," Mike Smith replied; "It's the next best thing to trying to do it yourself and trying to get them to buy into it," he added. "So is the regional planning agency the one that basically accepts this report?" Mr. Hemnann asked. "No, the five entities do, but the regional planning agency could adopt this report as part of the plan," Mr. Smith explained, "and if they do that, there is a lot of leverage." Ms. McGaha Miller pointed out that it's one of the firmest basis to be used in either accepting or rejecting the site application; whether it's consistent with the area -wide water quality plan. Currently that plan doesn't have anything firm on regional wastewater treatment. "When was the plan last revised?" Mr. Ward inquired. "Two years ago; it gets updated every two years," Ms. McGaha Miller replied. "By the time we complete this, it will probably be time for the next update, so it will fall right in synch," Mr. Smith added. Mr. Bartholow asked if there are any recalcitrant parties other than Boxelder. Ms. McGaha Miller replied, "No." Dave Frick asked if there will be a public process associated with this. "Could this become a pawn in the growth, no growth controversy?" "Wastewater Plant 3 has already gone through a bit of a public process," Ms. McGaha Miller replied. "There is no question that this is driven by growth." Mr. Clopper asked if the public participation aspect is part of that report. "Yes," she answered. Water Board Minutes October 20, 1995 Page 17 Dave Lauer asked what the $100,000, our share of the cost, is going to buy us. "Hopefully it will buy us a study that shows what the options are for future wastewater treatment, that include regionalization or other options," Mike Smith replied. Mr. Smith pointed out that the Utility did it's own wastewater treatment master plan about four years ago. "At that time, we didn't invite anyone else to participate," he said. Ms. McGaha Miller explained that in order to plan a regional wastewater facility, we are going to have to get some participation from area entities because we have a limited service area, and without them, "it won't fly." Mr. Smith said that when the Utility did its study, options for the other districts weren't explored. "We looked at what was the best way for the City to treat wastewater." The Utility hired a consultant for the study which cost about $200,000. Tom Sanders wanted to know if this could jeopardize our plans for the new wastewater treatment plant (No. 3). "It could," Mr. Smith answered. "The options from the study may tell us that we don't need that plant." Dr. Sanders is concerned that the more time we spend on this, the more opposition for Plant 3 will emerge because of the pressure from development. Mr. Smith explained that the City Council has not made a decision to build Plant 3. They still want to know if that plant is the best option for the City, and this study gives us the opportunity to do that. "We'll definitely get something out of it," he assured the Board. Ms. McGaha Miller related that there is another entity that has expressed an interest in participating. The City of Loveland inquired a few days ago if it was too late for them to join in on this. Cooperation in treating wastewater may be a possibility for the north end of their service area. Mr. Ward asked about the total cost of this project. There is grant money from the state in the sum of $50,000 that Larimer County acquired on behalf of the other entities, Ms. McGaha Miller explained. The City has proposed to agree to contribute up to a maximum of $100,000 in addition to that. The total cost is estimated at under $150,000. "Aren't the other entities contributing anything," Mr. Ward asked. "No," that's why they received the grant," Mr. Smith replied. He added that if the cost were done proportionally by population, the City would be paying more than $100,000. Rich Shannon pointed out that the only reason the other $50,000 is there is because the other 4 entities are eligible to receive the grant, and Fort Collins is not. Dave Frick stated that when this report is completed, it is important to be able to say to the State that this a regional plan that other entities have helped to develop. "The thing I like about it," Robert Ward said, "is that it gets the whole idea of regionalization in a continuing discussion, and this area needs to constantly look at that and think about it." Tom Brown wanted to clarify that even if we didn't participate in this study we would need to do some of the same planning and would spend the money anyway. "Yes, through the next step from what we learned from the Wastewater Master Plan," Ms. McGaha Miller added. Water Board Minutes October 20, 1995 Page 18 Tom Sanders called for the question. The motion had been made previously and seconded to accept the staff recommendation to recommend to Council that they authorize the MOU and MOA. The motion passed unanimously. STAFF REPORTS Treated Water Production Summary Dennis Bode reported that for September the treated water use was about 87% of what was projected, primarily because we received significant precipitation in September. Financial Status Report Scott Harder reported that as of the end of September, the water operating revenue is 3% above where it was at this time last year. "We took a bit of a hit in June and July because we didn't sell the water that we normally do," he said. On the Plant Investment Fee (PIF) side for water we are 8% off the pace of last year. "Last year, of course, was a record breaker," he reminded the Board. The wastewater side operating revenue, is 5 1/2% above from where it was last year. "For wastewater PIFs we are about 7% off the pace," he said. Water Treatment Master Plan Mike Smith said the consultant, C112M Hill, is working on Phase I of the improvements of the Water Treatment Master Plan. "We are having a partnering session with the consultant the first couple days of November, after which we will begin reviewing the master plan," he said. It will probably be a few months or more before the Council/Water Board Water Planning Committee will become involved in the process. COMMITTEE REPORTS Water Supply Tom Brown had already summed up the Committee's involvement in the raw water dedication credits for the Southside Ditch Companies and in the water trade involving North Poudre and CBT water, as a part of those agenda items. Mr. Brown said that the Committee also discussed the questions that the Board will ask Eric Wilkinson when he attends the Board meeting in November. It was already 5:00 when they reached this topic at their meeting, so they didn't get to the point of detailing specific questions, he related. What they ended up agreeing on was that there are three levels of interest or concern: (1) The specific wording of the guidelines, and how they might be clarified in areas dealing with treatment of future commitments for raw water irrigation, and those things that Dennis Bode has described in the past; (2) The long term effect of the guidelines on the City of Fort Collins; They appear to discriminate against the City, so shouldn't we pursue a change in those guidelines? (3) What is the purpose of these limits, and are these limits, as currently specified, really meeting that purpose? "You will Water Board Minutes October 20, 1995 Page 19 remember that the purpose, as stated in Eric Wilkinson's letter, had to do with equitable allocation of CBT shares, supporting the agricultural community and encouraging the cities and districts purchase of base supplies. The Committee wondered if the guidelines really achieve those purposes. They concluded that it would be more productive to focus on these broader issues at the November meeting, than trying to detail specific questions. These general questions are similar to the ones that have been included in information sent previously to Board members. Legislative and Finance No Report Conservation and Public Education Terry Podmore reported that the Conservation and Public Education Committee met at 2:00 prior to this meeting to review the Demand Management Program. Currently, ten out of the 12 conservation provisions are either underway or complete. The other two which are yet to be implemented, are guidelines for City -owned landscaping and auditing the indoor water use in City facilities. Staff anticipates that both will be completed by the end of the year, and will be included in the Demand Management Annual Report. One of the Public Education aspects that will be considered will be what is going to be done about mandatory metering, when that eventually becomes necessary, and how voluntary metering can be encouraged to defer mandatory metering as long as possible. Engineering No report REGIONAL WATER SUPPLY STRATEGY UPDATE No report REGIONAL WASTEWATER SERVICE ISSUES UPDATE No report OTHER BUSINESS Date for Wastewater Treatment Facility Tour Paul Clopper reported the results of the informal poll to select a date for the Wastewater Treatment Facility tour. It appears that the most frequently selected first place choice was for Wednesday, November 1st. We will also be inviting staff and board members from the Boxelder Sanitation District, he said. Molly Nortier called the Board's attention to the comparison ofBoxelder and Fort Collins effluent discharge permit limitations which Gale McGaha Miller prepared for them. She also pointed out the newspaper article in their packets recognizing Industrial Pretreatment's national first place EPA award for the Utility's outstanding pretreatment program. Water Board Minutes October 20, 1995 Page 20 ADJOURNMENT Since there was no further business, the meeting was adjourned at 5:26 P.M. ?e2� Water Board ecretary WATER BOARD WORK PLAN - 1996 1. Water Supply A. Review opportunities for purchase of water rights or option contracts B. Continue to monitor proposed Halligan Reservoir Project C. Periodically review status of Southside Ditches water rights transfer D. Periodically review status of NCWCD's water Projects E. Review NCWCD Regional Water Supply Study F. Periodically review status of Thornton's Northern Project 2. Water Conservation and Public Education A. Play an advisory role in implementing demand management measures and monitor progress relative to goals as recommended by the Demand Management Committee and adopted by the City Council B. Continue to monitor volunteer metering program C. Help promote additional public education projects 3. Legislative and Finance A. Review and make recommendations on water related legislation B. Review Utility proposed budget and make recommendations regarding water and wastewater rate increases and water and wastewater PIFs 4. Engineering A. Continue to monitor NCWCD Regional Water Supply Study B. Review planning and designing phases of construction projects as needed C. Review water treatment master plan D. Review Scope of Work for Halligan Feasibility Study 5. Liaison Issues A. Pursue cooperation and interaction with related City Boards B. Meet with regional water boards to discuss issues of regional interest C. Review issues with regional water and sanitation districts as needed 6. Water Quality A. Review and monitor Water Treatment Master Plan Improvements B. Review raw water quality trends C. Review wastewater effluent quality trends 7. Routine Items The Water Board will review and consider as needed such items as raw water rental rates, cash in -lieu -of water rights rates, and Water Board attendance goals.