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HomeMy WebLinkAboutWater Board - Minutes - 06/15/1990Water Board Minutes Friday, June 15, 1990 3:00-5:00 p.m. Light and Power Conference Room 700 Wood Street Members Present Henry Caulfield, President, Tom Sanders, Vice President, Neil Grigg, Ray Herrmann, Tom Moore, Terry Podmore, Tom Brown, Dave Stewart, Mark Casey, Paul Clopper (alt.) Staff Rich Shannon, Mike Smith, Linda Burger, Tom Gallier, Andy Pineda, Wendy Williams, Jim Clark, Molly Nortier, Paul Eckman, Assistant City Attorney Guests Darell Zimbelman, Assistant Manager, Northern Colorado Water Conservancy District Madonna Kukay, Coloradoan Members Absent Mary Lou Smith, Tim Dow President Henry Caulfield opened the meeting. The following items were discussed: Minutes The minutes of May 19, 1990 were approved as distributed. nc-apuu mumenu ur members ano tilmination or Alternate Positions Molly Nortier announced that Terry Podmore was re -appointed to a second four year term, Mark Casey, the senior alternate, was appointed as a regular member and Dave Stewart was not re -appointed to an additional term. Henry Caulfield reported that the Council has decided to abolish the alternate positions, so the alternate position that was vacated when Mark Casey was appointed as a regular member was left vacant. Other alternate positions will be eliminated through attrition. Open Meetings Water Board members received a copy of a new proposal from the City Attorney which would require that all boards and commissions follow the same regulations on open meetings that the City Council follows. Henry Caulfield explained that the Water Board has always been authorized to have executive sessions on legal matters and land and water purchases. The only difference in the proposal for the Water Board would be that a formal decision must take place at an open meeting. Water Board Minutes June 15, 1990 Page 2 Tom Sanders moved that the Water Board agree to the same restrictions that the City Council follows on open meetings as outlined in the City Attorney's memo. As stated previously, the only additional stipulation for the Water Board is that actual voting take place in an open session. After a second from Paul Clopper, the Board voted unanimously to approve the motion. Neil Grigg reported that the Engineering Committee was generally pleased with the report from Montgomery Engineers, and the firm has performed well according to staff members who have been involved. The Committee recommended that the Water Board endorse the Wastewater Master Plan and that the regional cooperation issue be explored further. Dr. Grigg said it would be a nice gesture on the part of the City of Fort Collins to ask the regional entities what they think about a regional plant and then formalize that process. Mr. Caulfield reminded the Board that he and two Council members have been meeting as a committee with the Fort Collins -Loveland Water District, ELCO and North Weld on the question of a joint water treatment plant. That is under study now, with the Northern District sponsoring it. "During the course of negotiations with the Fort Collins -Loveland Water District, we clearly separated by contract the City's relationship with that Board versus the Board for the South Fort Collins Sanitation District," he explained. Mr. Caulfield brought this to the attention of the Board to give some background for a new approach. Mike Smith related that the Council/Water Board Wastewater Committee will be meeting again to discuss the issue of PIFs for commercial customers, before the end of the year. The Council will probably consider the master plan and the recommendations in July. When they consider the master plan, Mr. Smith expects that the regional issue will be one that they take some action on, Either they will appoint a committee or refer it to an existing committee, he said. One of the possibilities to explore the regional options is the existing steering committee to which Mr. Caulfield referred. Neil Grigg moved that the Water Board endorse the Master Plan and recommend to the City Council that they develop a process to explore the regional cooperation issue. After Tom Moore's second, the Board voted unanimously in favor of the motion. Update on Sludge Disposal Options Tom Gallier, Wastewater Manager, gave a status report on the sludge disposal options. Mr. Gallier pointed out that about 10 months ago, the Water Board reviewed a list of future options from a staff/consultant's report and made some recommendations. The Board directed the staff to proceed with the negotiations on a possible land purchase. "We have been in the process of negotiating ever since," he said, "and we have had difficulty agreeing on a Water Board Minutes June 15, 1990 Page 3 price with the primary land owners." As close as staff has been able to get so far is within $25 per acre. Staff has also looked at two other parcels of land within the same general area and initiated negotiations with the property owners. "In each case we have had difficulty getting down to the original appraised price," he said. Apparently it is not quite as good a deal, financially, as staff thought based on the original appraisal. However, staff will be continuing the negotiations, and it is expected that more solid information can be discussed at the July Water Board meeting; perhaps an actual written proposal for purchase. "From the point of view of the long term future, is the larger parcel of land preferable?" Mr. Caulfield asked. "That's really what it comes to," Mr. Gallier replied. One of the parcels is perhaps a 20-30 year option at the outside, and the other is a 50-70 year option. In addition, access and some other aspects of the larger parcel are also better. There is also a substantial amount of leased land that comes with the larger purchase. These will be discussed in executive session next month, since it is a land purchase, he presumed. Mr. Gallier pointed out that one of the options discussed a few months ago was co -disposal of the waste in the landfill which actually is the least expensive on a dry ton basis. The Board rejected that 10 months ago, he said. An alternative to that has emerged recently and is one that will probably be discussed in more detail at the July meeting. The option is chemically stabilizing the sludge with a locally available waste by-product from the cement manufacturing industry; it's called cement kiln dust and is similar to fly ash. It creates an alkaline condition within the sludge, drys it out faster, tends to bind up metals and basically eliminates pathogens. "It's not cheap and there is basically just a single source of supply in this area." Furthermore, the cost is dependant on transportation and of course depends on the Ideal Cement Plant remaining in business for a period of time, he added. The company has discussed the possibility of using its material at the landfill as a supplement to their daily cover. Federal and state regulations require that a small amount of dirt or fill material be placed over refuse on a daily basis. After some testing, this concept was essentially rejected last year as far as using it for beneficial use on agricultural land because the alkaline nature of the material doesn't fit with the alkaline nature of the soils in this area. Neil Grigg pointed out that what we do with the sludge is bound to become a regional issue too. Mr. Gallier acknowledged that the area 208 committee has expressed that concern also. There is some discussion about an evaluation of a regional sludge disposal facility for the Larimer/Weld area. It's a concern that cities around the state are sharing because of the new federal sludge regulations that are due out next year. Water Board Minutes June 15, 1990 Page 4 The issues involved with sludge disposal will be discussed in more detail at the July meeting. Update: Demand Management Committee Tom Moore, a member of the Demand Management Committee, reported on some of the major issues from the June 7 meeting. Essentially, the discussion centered around who pays for metering existing homes. Two methods of financing were discussed: Charge a fee to current customers and amortize it with the bill for the next 20 years until the meters are all installed; or take the approach that metering existing homes will reduce water use and those reductions in water use will make it possible to serve more customers with existing water supplies and facilities. Meters will be installed in all new homes beginning July 1, 1990. An additional charge of $89:61 will be included in the building permit to cover the cost of the water meter and installation. Mr. Caulfield asked if a distinction in installation costs has been made between those homes with yokes and those without. Mr. Moore believes that the City will not make a distinction between older homes and those with yokes. He pointed out, however, that the state legislation allows 500 homes to remain unmetered. Some of the very old homes that would be very expensive to convert might fit in that category. In a previous recommendation from the Water Board for a phased metering program, it was stated that the City would pay up to $500 for a meter installation. Tom Sanders suggested the possibility of installing a meter at the time a house is sold. Wendy Williams explained that this was originally proposed in the state bill, but it was strongly opposed by realtors, and was subsequently removed. Mike Smith emphasized that the Committee has not resolved the process of who will get meters first in existing homes. Terry Podmore moved that the Water Board endorse the Demand Management Committee's recommendation that the builder pay $89.61 at the time a building permit is issued to finance the cost of a water meter and its installation in all new homes, beginning July 1, 1990. Mr. Caulfield pointed out that the meter will continue to be owned by the City. Tom Brown seconded the motion. Mr. Caulfield asked if there was further discussion. Mark Casey asked if the $89.61 is set or will it be adjusted over time. Mr. Smith replied that it is set right now, but as the cost goes up, it will be administratively determined. Mr. Caulfield called for the question. The motion passed unanimously. Staff Reports Treated Water Production Summary Andy Pineda reported that water use for May was about 5% above average. "As of today for June we are about 93% of average." He said that recent water use has been in the mid 40's mgd, and those types of demands are well within our capability. Recently water treatment capacity was expanded to 74 MGD. Water Board Minutes June 15, 1990 Page 5 Mike Smith reported that the City has purchased land for a wastewater treatment plant No. 3 site --the 160 acres that were recommended to be purchased. The City has recently closed on the property. Tom Sanders asked if the Poudre River has peaked. Mr. Pineda replied that it peaked, as far as the native river flow, on Tuesday June 12 at about 3200 cfs. Committee Reports Legislative/Finance Linda Burger reported that the committee expects to meet within the next two weeks to discuss the budget. She distributed copies of the budget to members of the committee. Any other Board member interested in a copy should contact Ms. Burger. The Budget will be discussed with the Water Board as a whole at the July meeting. update: Northern Colorado Water Conservancy District Darell Zimbleman reported that, according to District records, the streams are now peaking. The St. Vrain, Boulder Creek, the Big Thompson and Poudre were flowing at 4,700 cfs, whereas last year, there was a total for the four streams of about 2,000 cfs. On the west slope the flows are similar. Carter and Horsetooth Reservoirs are right at 80% of capacity and Boulder is about 90%. Granby is back up to 36%, and looking better than it did before. Mr. Zimbleman also remarked that "it looks like we are going to live with the 50% quota." Mr. Caulfield asked if the farmers will. Mr. Zimbleman contends that the farmers probably could have been in good shape had they cut back a little on their crops. Mr. Caulfield asked if the District may be pressured to go to a 60-70% quota. Mr. Zimbleman related that North Poudre is having a hard time at the 50% quota and they have commented that they would like to see it go up. Has the City rented all of its excess water? Mr. Caulfield asked. Mr. Pineda replied that the Utility has rented very little CBT water. "We have rented all we can from North Poudre shares, and basically from all the other shares," he said. "We will not be renting any more CBT water," he added, "because we don't know what the rest of the year will bring." Mr. Zimbleman went on to say that it looks like the District will be able tc pump one pump of Windy Gap for another week and through the rest of the month since the District has already paid the high demand charge. They will probably pump about 12-13,000 AF, which is quite good for a dry year, he said. The City of Fort Lupton will have an inclusion for the District Board to act on, Mr. Zimbleman reported. It's one of those communities that, for the last several years, has had serious water quality problems. It should have been in the District to begin with, but due to local politics it wasn't, he explained. It looks as though they now will be included in both the District and the Sub -district. Water Board Minutes June 15, 1990 Page 6 The town of Nunn, an area of Brighton in Weld County, and the Town of Erie will probably be coming along for similar inclusions in the near future, he predicted. Tom Moore asked how the District compensates for the taxes that "the rest of us have already paid." They will all pay back taxes, Mr. Zimbleman, replied. The District has a formula they use for that purpose. It is a 1 mill tax since 1937, he explained. Mr. Zimbleman announced that the District has contributed $5,000 to the study leading up to the National Heritage Corridor designation for the Poudre River. Henry Caulfield explained that about three weeks ago the Park Service said that for $25,000 they would produce a technical study. "It is not a plan," he stressed; "it is largely a question of examining the history of the area and deciding that what is proposed here for a museum and education program is of national significance." To the Park Service, the Department of the Interior and the Congress, a verification about national significance is very important, he concluded. Mr. Zimbleman pointed out that the City of Fort Collins is contributing $10,000; Colorado State $5,000; Larimer County, $5,000; and the District $5,000, which adds up to the $25,000 for the study. Mr. Zimbleman also reported that Thornton continues to be an issue. Mike Smith and Larry Simpson will meet on Monday to discuss the matter. The District Board has received a number of resolutions asking them to pursue the issue as a matter of importance to the region as a whole, he said. Other Business Communication with Irrigation Ditch Companies At the last Water Board meeting, Tom Sanders expressed his concern about the tree -cutting practices of some of the ditch companies in the area. In response to that, staff included in the Water Board packets, a brochure with Irrigation Ditches Information and a letter from the City Manager to a ditch company president about improving communication and coordination between the City and Ditch companies relating to ditch companies activities. Dennis Bode of the Water Utility staff, is the City's contact person with the ditch companies. Mr. Caulfield asked if Dr. Sanders wished to pursue the issue any further. He replied that he is satisfied with what is being done. Joint Meeting of Loveland, Greeley and Fort Collins Water Boards Henry Caulfield announced that the Water Boards and support staff from Greeley, Loveland and Fort Collins will meet for dinner on Tuesday, June 26 at 6:30 at the University Park Holiday Inn. Fort Collins is hosting the event. Topics for discussion will be the Water Bank Issue that evolved through a Chamber of Commerce Committee, the Thornton Case and the proposed regional wastewater treatment plant that could relate to Loveland. Water Board Minutes June 15, 1990 Page 7 New Business Purchase of City Certificates Mike Smith explained that earlier in the week staff was approached by a member of the City's business community who is the owner of 95 shares of City certificates equal to 95 AF. He acquired the certificates several years ago for a development, in which a part was never developed. In stead of returning the water to him, the City gave him the certificates, saying he was entitled to that amount of water later on. The gentleman is no longer actively in the development business, so he has approached the City to consider purchasing the certificates. The offer is at a considerable discount compared to what the price of water is today. He has offered the certificates to the City at a price of $700/AF for 95 AF. In the past there has been discussion about the City's buying back the liability that exists in the form of certificates. It has been the Water Board's preference to buy additional water and not purchase back certificates. Another issue involved is that some of the certificates were issued prior to the agreements with the Fort Collins -Loveland Water District. The District is now serving a major growth area of the City and developers can't use the certificates there. As a result, they are asking the City how they can dispose of their certificates. Relative to whether the City should purchase the certificates at a greatly . discounted price, Mr. Smith gave the following example: "If we say our total supply is 60,000 AF, and that includes 3,000 AF of certificates, then our real supply that we have to serve existing customers is only 57,000 AF." By purchasing back these certificates, the available supply is actually increased to existing customers; in other words, the liability is eliminated. "At $700/AF versus $1200-1300/AF, it may not be such a bad deal business -wise," he concluded. Dave Stewart asked if they can transfer the certificates. Mr. Smith answered, "yes they can be transferred from person to person." However, in discussing this with some of the developers, there is just not a lot of development happening at this time, so there is no market for them in Fort Collins. Mr. Smith emphasized that when the developers turned water in, it wasn't necessarily CBT water. It may have been from Southside Ditches or North Poudre water, etc. Neil Grigg calculated that if the City bought back all 3,000 certificates at $700, it would cost the City $2 million. Terry Podmore asked if the certificates would go down in value. Mr. Smith said that the value is to the developer. If a developer doesn't have water to give to the City, he pays the in -lieu -of price which is $1300. Theoretically, if he had • Water Board Minutes June 15, 1990 Page 8 certificates, the value would be $1300. Mike Smith pointed out that one of the things the City could do to help besides buying back this portion of 95 that has been offered, is when developers don't have water to turn in, staff could refer them to a list of people who have certificates they could purchase. That would provide them an opportunity to take those off the market, and perhaps save themselves some money. It also provides us an opportunity to give good service to some customers, he said. Tom Sanders pointed out that a developer could buy them now and sell them later for a higher price. "I would hate to have a situation where people could speculate on our water," he asserted. Neil Grigg also pointed out that the situation is complicated because the City still has the use of the water while the certificates are out there. "If we didn't have use of the water, we would be looking at water rights. Therefore, you can't jump to the conclusion that it is that good a deal," he stressed. An analysis would have to be made of when it would be likely that the certificates would actually be turned in for water. Mr. Caulfield asked if it is still our policy to give developers a certificate for the water they won't immediately be using. "It is," Mr. Smith replied. "We don't have a policy of giving water back," he emphasized, so we give them certificates." "Is that a good policy to have or is that an inevitable policy,? "Mr. Caulfield questioned. Mr. Smith responded that "once the policy is accepted, if a developer turns in the water as a Raw Water Requirement (RWR) and something happens with the development, you either have to give back his water or give him some credit." Dave Stewart commented: "If you look at long term planning, you have a real problem if you don't issue a certificate. Mr. Stewart contends that you ought to be able to turn in the certificate and say. "I want my water back." "If we continue to play the game of issuing certificates instead of returning the water, perhaps we should then buy back the certificate," Mr. Caulfield stated. Tom Moore pointed out that there is an advantage to the developer getting certificates in that he gets out of the possession of water and he avoids all of the liability of having the water too. Dr. Grigg summarized by saying there appears to be two basic policies we can follow: 1) If we don't buy back the certificates, we have the water now, and there will be a period of years when we will continue to have the water. If the certificate is redeemed in the future, we add demand on the system and we have to buy the water for whatever the market price is in order to make good on that demand. Under that scenario, you could make a financial analysis. 11 • Water Board Minutes June 15, 1990 Page 9 If you knew the probability that development would occur at a particular rate, and you knew how fast water rights were going to go up, you could determine if it was a good deal. However, there are two uncertainties: (1) A person may never develop and, (2) Some certificates may never be redeemed. 2) The other policy is, we buy it back now and pay $700 and we continue to have water, which we already have, so we really don't get anything for the $700 except assurance when development occurs and demand is added, we will then get additional water that would have to be brought in because the certificate wouldn't be there to be redeemed. "If you look at the exposure of a policy of buying back the entire 3,000 AF, if it did come in, that seems like a pretty big exposure," he concluded. Rich Shannon clarified that staff is not presenting a policy of all or nothing. "The fact that it is discounted substantially, weights heavily on our bringing it to you today," he stressed. Staff sees this no differently from bringing the Board water acquisitions when sometimes they seem right and other times it's the right type of water. He emphasized that staff doesn't have a policy today that says we buy all water that is offered to us, and at the same time, if this is a good business decision, that sets a precedent that we buy all certificates that are offered to us. Dr. Grigg contends that if we never have bought a certificate back previously and we agree to buy these today, we would be setting a de -facto policy. Tom Brown asked if it would be fair to turn somebody else down who wanted to sell his certificates if we buy these today? Mr. Shannon replied that we do it all the time with water purchases. It depends on the timing, the price, the need and the kind of water. Mr. Caulfield asked if it is a legally defensible position if we refuse to buy these certificates and also say we won't give him the water back. Tom Sanders pointed out that the Water Board was arguing about something legal on which they should have a lawyer's input. Chairman Caulfield proposed that staff determine what the legal consequences of this action may be for the City. Mark Casey recalled talking to the City about certificates and it was clearly presented to him that he could buy them but there "never was anything implied that the City would ever buy them back or that the shares would be returned. It was strictly presented that we could hold on to them and that they could be sold." He asked if the certificates are restricted so a speculator can't buy them. Mr. Smith replied that staff never really knows if they are speculators. Staff is very careful about issuing the certificates in that those applying must have a reason for purchasing them, and they are required to have a piece of property to attach them to. Water Board Minutes June 15, 1990 Page 10 Mr. Casey believes there is good reason to take a hard look at the offer. Dr. Grigg asked at what rate the certificates are being turned in when development occurs. Mike Smith gave the following information: Year Number Issued Number Turned In 1989 149 AF 124 AF 1988 392 AF 334 AF 1987 330 AF 343 AF 1986 117 AF 159 AF Since 1982 through 1989, the liability may have increased by 200 AF, he said. "That makes me think that it's a good investment for us," Dr. Grigg stated. Tom Brown asked if the City has completely replaced all the water given to Anheuser-Busch, or are we still looking for more? Mr. Smith replied that several months ago we pursued buying water and that has basically been accomplished. "We are still pursuing Reservoir 6 and Meadow Creek," he added. All the items that the Water Board identified for staff to accomplish have been addressed or are being addressed, he concluded. It was asked if staff is concerned about the $66,000 needed to acquire the certificates for 95 shares. Mr. Smith replied that the money was not the main issue. When a developer gets a certificate, does it make any difference what kind of water he turns, in? Dr. Grigg asked. "It must meet the conversion rate that has been developed." Mr. Smith responded. Mr. Caulfield wanted to know if there is an ordinance that governs the certificates "that speaks to the question of whether you can get your water back, or is it just administrative policy that you can't get your water back?" Mr. Smith doesn't think there is an ordinance. However, he thinks there is a charter provision that says the City can't sell its water without a vote of the people. Tom Moore believes that staff should have the flexibility to treat certificates like any water purchases. Tom Moore moved that staff consider water certificates as they would any water purchase on a case by case basis and if it is a good and viable deal, purchase them. Dave Stewart seconded the motion. Mr. Moore added that before the Water Board votes on the actual purchase offered today, it would be prudent to allow staff a little more time to research it, and also look into the legal ramifications. Water Board Minutes June 15, 1990 Page 11 Rich Shannon reviewed the direction from the Board. From a business standpoint, the offer is worth studying just as we would any water share. However, more research needs to be done. Staff needs to investigate the legal aspects, and staff needs to research what the actual market for certificates is in Fort Collins. Should this turn out to be good from the market standpoint, and there is not a legal hurdle, next month the Board will vote on the actual purchase of the 95 shares. A vote was taken and there was unanimous approval of the motion. At this point the Board went into executive session to discuss legal matters. Continued Other Business Since Dave Stewart was not re -appointed to the Water Board, Neil Grigg moved that the Water Board recognize him for his two terms on the Board. After a second from Paul Clopper, the motion passed unanimously and with enthusiasm. Since there was no further business, the meeting was adjourned at 5:15 p.m. 7I'! o-e-ey �Dz�u�J Water Board Secretary