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HomeMy WebLinkAboutWater Board - Minutes - 04/17/19920 E WATER BOARD MINUTES April 17, 1992 3:00 - 5:00 P.M. Water and Wastewater Utility Conference Room 700 Wood Street Water Board/Council Liaison Loren Maxey Staff Support Person Mike Smith Members Present Neil Grigg, President, MaryLou Smith, Mark Dow, Paul Clopper, Tom Brown, Dave Frick Casey, Terry Podmore, Ray Herrmann, Tim Staff Mike Smith, Dennis Bode, Ben Alexander, Andy Pineda, Beth Voelkel, Molly Nortier Guest Ward Fischer, Water Attorney and Former Water Board President Members Absent Dave Stewart, Tom Sanders President Neil Grigg opened the meeting. The following items were discussed: Minute Tim Dow moved, Ray Herrmann seconded and the Water Board voted unanimously to approve the minutes of March 27, 1992 as distributed. Discussion of Water Banking Con=t President Grigg welcomed Ward Fischer to the meeting. The purpose for inviting Mr. Fischer goes back to a recent meeting at which the Board was discussing topics related to water in Northern Colorado, and specifically the Thornton issue. Dr. Grigg has spoken a number of times to Board members about ideas that Ward Fischer has been advancing on water banking options. The Board agreed that it would be helpful to dialogue with Mr. Fischer on the subject and share ideas and perspectives. WATER BOARD MINUTES APREL 17, 1992 PAGE 2 Mr. Fischer began by saying that the Chamber of Commerce became concerned with the Thornton acquisition because they think this could be just the first of many who will pursue the possibility of obtaining water in Northern Colorado. The amount of water that Thornton takes from this basin will not preclude us from developing our area to whatever extent we have an opportunity and desire to develop it, he said. There is an abundance of water for industry, for growth of cities and for agriculture. However, if ten more Thornton were to take that kind of water out of the basin, we would be in bad shape, he warned. A few years ago the Chamber organized a special water committee in which Water Board members Neil Grigg and Dave Stewart have held leadership roles. He said that one of the committee's functions was to examine the effects of a large amount of water which might not be available to us, and to consider ways that we could alleviate that. The committee considered the water bank concept in which cities of the area would get together, either through an informal arrangement, or a formal arrangement such as a water authority. They might position themselves so that the next time a water provider from the metro area wanted to take our water, there would be a little competition for it. Mr. Fischer then read a letter which the Chamber wrote to the utility directors of Fort Collins, Greeley, Loveland and Longmont. The letter began by saying that Thornton's recent acquisition of substantial water rights of a mutual ditch company near Fort Collins, coupled with the apparent demise of the Two Forks Reservoir, were of concern to the Chamber. They believe that it is likely the Denver suburban communities will look with increasing frequency to Northern Colorado with its plentiful water supplies. While this is a legitimate activity on their part, the Chamber views "with disfavor, any raids upon Northern Colorado water which would result in our supplies being insufficient for our own future needs and quality of life," the letter continued. "For this reason the Chamber created a broad based water committee asking it to determine what adverse effects, including any adverse effects on instream flows and water quality, that might result from water basin transfers from our region." Among the committee's suggestions was the creation of an inter -governmental agency by the four cities of the region. One of the purposes of the agency might be to purchase any water rights sought by any out -of --basin entity at a price equal to or exceeding that of any other entity. Some of committee believe that the existence of such an agency would discourage or even prevent an attempt by outsiders to seek to purchase these waters, and force them to search elsewhere, the letter stated. Should this be true, the mere creation of the agency would have the beneficial effect desired. WATER BOARD MINUTES APRIL 17, 1992 PAGE 3 The letter explained that one of the committee members was Bryan Blakely who knows power law, and he felt very confident that we could establish a Platte River Water Authority (or whatever we wanted to call it) with the 4 cities. The thinking here was if we did create one, and it was highly publicized that PRWA stands ready to meet any water price that anybody would offer, a future Thornton might say: "Let's go look some place else." The letter stated further that others on the committee thought that the competition for our water rights was inevitable and the agency would be put to the test. If so, the agency must be in a position to expend sums of whatever is required to retain the waters for this area. For this reason the end could not be achieved unless each participating city committed itself to provide future needed funding as required by the agency. Each city would contribute in proportion to its population, and each city would rely upon its own revenue sources. The letter continued by saying that the disadvantages of the concept are that no city is actively seeking increased expenditures, and none of the cities has any present need for the waters to be purchased. The advantages of the proposal are that our excellent water supplies might be preserved for our own prosperity, development and quality of life. The letter concluded by saying that since the creation of such an agency and the required inter- governmental agreements would be a substantial effort, it warrants no further consideration unless it has broad based support. Mr. Fischer related that the committee set up a meeting and invited the utility directors of the four cities, and met in the NCWCD's office. Loveland was the only city that showed enthusiasm. "One of the problems we have is that none of the cities, as mentioned in the letter, need the water, and, of course, they all have plenty of other places to spend money. On the other hand, the cities could make this commitment and not actually fund it until "a Thornton" came into the area. An authority would be in a position to borrow at pretty good rates. It also may be possible to purchase the same farms and water "a Thornton" was after, "and as soon as the threat was over, cities could sell the farms and water back to someone and pay off the debt and wait for the next one," Mr. Fischer pointed out. In the meantime, Mr. Fischer said, the Chamber of Commerce Committee didn't take any further action because Loveland was the only city that showed a positive response. Mr. Fischer then brought the Board's attention to an article he had read in the Boulder Camera in March. According to the newspaper, a water acquisition group withdrew from purchasing water from farmers in the lower Arkansas Valley after the county commissioners down there offered to buy water from the farmers at the same amount the other group was offering. "The fact that the commissioners' action may have caused the purchasers to withdraw their offer gave me some encouragement," Mr. Fischer stated. However, the way Thornton purchased the farms WATER BOARD MINUTES APRIL 17, 1992 PAGE 4 along with the water shares, scares some cities, he said. Most are not interested in being left with a lot of land. The second point Mr. Fischer wanted to discuss was NCWCD's concept of a water bank which is entirely different. They think the only way we can make it into the next century very far is for some central water distributor to be appointed where "we all pool our water rights." In a particular year, water providers like Fort Collins, who have excess can give it to those who don't, he continued. The District's studies indicate that kind of action stretches out the availability of supply for a number of years. Mr. Fischer said he would appreciate any ideas Board members care to suggest, or any comments about the ideas he has discussed. MaryLou Smith said that what Mr. Fischer has discussed helps her understand what the thinking is, how far these ideas have progressed, and that a meeting was actually held with four communities. "As we mentioned at one of our recent meetings, each time our board gets together for a joint meeting with the Greeley and Loveland Water Boards, we always talk about a water bank, but it never goes very far," she related. "Sometime when the boards of various cities get together, I would like to come along, and maybe we can engender some discussion that might lead some place," Mr. Fischer proposed. Perhaps we should organize the entire next meeting around this topic, Ms. Smith suggested. Neil Grigg agreed. Ms. Smith suggested further that information be provided beforehand, and some kind of presentation be given, so we have a concrete basis for discussion. What is the administrative overhang in terms of setting up a water authority? Mark Casey asked. "We haven't looked at it in any detail," Mr. Fischer replied, "but I can't believe it is very much from talking with Bryan Blakely of Platte River." The law is fairly clear for creating one. It would just be a matter of the city attorneys of the various cities working together, and that would probably require minimal time. Mr. Casey also asked about the authority that would be specifically for fending off the raids at the same or better price of the raider's price. Would it basically be a standing offer? "I think that's the way you would want to set it up, but I don't think you would want to make it a bluff because that would be easily seen," Mr. Fisher replied. If you set up an authority and didn't fund it, but had a contractual commitment from each city according to population, the authority would fund it to the extent that it would fulfill its purposes. If you then advertised it, you would have an effective block. Then the authority would have to be in the position to raise the money and move forward on it? Mr. Casey asked. "Yes," but the authority wouldn't have to have much. "It would be all set WATER BOARD MINUTES APRIL 17, 1M PAGE 5 up so you could borrow the money overnight," he assured Mr. Casey. Mr. Casey continued by asking if the authority would be depending upon people following through and contacting the authority to sell to them, more out of their duty to Northern Colorado, or out of their economic interest to try to get a better deal? "That's a very good question," Mr. Fischer responded. Would the authority say, we are here to buy, but only in the event that outsiders try to take our water away. Otherwise, we are not interested in interfering with the market. Or do they say, we want everybody to know their water is safe and they don't have to go out and solicit buyers. Whenever a farmer is in a position to sell his water to pay off his debts etc, we're in a position to buy it. Mr. Fischer said, "there's hardly any water that some city couldn't use." If it were water in the Big Thompson, e.g., perhaps Loveland would buy it. "I don't think there would be too much of that because there aren't too many farmers who want to sell their water at today's market," he pointed out. Tom Brown asked if in deliberating this has the committee thought of the alternative of purchasing long term options on the water, as opposed to paying a higher price than anyone else? "No, we haven't and it's a good thought," Mr. Fischer replied. Dave Frick said it seems to him that if you optioned enough of each major ditch company, you could fend off somebody taking control of one ditch company. Most of the major ditch companies are substantially in municipal ownership already, so it wouldn't take many more options to put them in control of cities. "That's also a good thought," Mr. Fischer said. Neil Grigg reported that last month the Water Board talked briefly about the city/farm concept where a city would have an option on ag. water just for a dry year, and the farmer would stay in business during the other years. "We had a number of questions about that." There is a lot of talk these days about the concept. In California we hear there have been a few deals actually made, but very little has been done in Colorado. Tom Brown said that he thinks there are two types of options being discussed: 1) A dry year option where you do not buy the water right --it's an option to essentially rent the water in a year when things are dry; and 2) An option to buy the right --not just a dry year option, but over a long time period. Mr. Fischer suspects that the option price would have to be pretty substantial because he said "we find that the farmers in this area, while they don't want the Thornton -type transfer to injure the river, they don't want to place any impediments to the free market of water; including to the Denver suburbs." WATER BOARD MINUTES APRIL 17, 1M PAGE 6 He went on to say that the farmers realize that Thornton saved a lot of farmers from going bankrupt. The stockholders in the local ditch companies would think a long time before they would cut themselves off from that opportunity; that is why the option price would have to be pretty high. On the other hand, it might still be worth it because there aren't too many irrigation companies that we would have to buy options on. There are only 3 or 4 companies for which you would have to tie up their stock. Dave Frick commented that if the purchase price for the option were for the market value of the water at the time, it would mean that the farmers would get their best price whenever the option was exercised. Paul Clopper wanted to know what the Northern District's perspective is on all of these discussions. Mr. Fischer said he didn't see any conflicts. "We haven't included them in the discussions because we didn't think they would be particularly interested in what we did," he added. Dr. Grigg pointed out that Bill Farr, who is a member of the District Board, entered freely into the discussions on water banking at a recent meeting of the Greeley, Loveland and Fort Collins Water Boards. Actually the District's position is that they want to keep all of the water possible in Northern Colorado, Mr. Fischer explained, because that's the base supply, and they are the supplemental provider. "They have a holy war going on with Thornton about Thornton taking any of the water out of the basin." MaryLou Smith wanted to get some perspective when we talk about the base supply and the supplemental supply. To her, as far as the base supply, Mr. Fischer is saying that there are only a few ditch companies we would need to have options in to secure that supply. "I would like to have a feel for what percentage we are talking about." The base supply we are talking about is the supply in the Poudre that existed before the District was created, Mr. Fischer began. The District brought the water supply over to supplement the already irrigated acreages in the cities, etc. There is a lot of water, but only 2 or 3 ditch companies have the kind of water that it would be worthwhile for somebody to come up here and try to get. The Big Windsor Reservoir, for example, has good water rights and storage. The Arthur, New Mercer, Larimer No. 2, and Pleasant Valley are small ditches, and they have no reservoirs. MaryLou Smith asked if most of the primary supply of water is administered through ditch companies? "We have very few private ditches; they are almost all mutual ditch companies," Mr. Fischer replied. Ms. Smith asked what percentage of the primary water is currently owned WATER BOARD NE[NUTES APRIL 17, 1992 PAGE 7 by agricultural users vs. municipal users and industrial users, etc. Dennis Bode answered that in the Poudre Basin, there is a total supply of 400,000 Ac-ft including CBT water. The cities, which are primarily Fort Collins and Greeley, use about 10- 15% of it. Without CBT water it is going to be just a little lower; perhaps 10%. For both the cities their CBT water might be about 30% of their supply. Ms. Smith said that CBT water was not a concern because it can't go out of this area. "How many Ac-ft of non CBT water are there in the Poudre?" There is about 90,000 Ac-ft of CBT water in the basin, Mr. Bode replied. Ward Fischer then calculated that about 310,000 Ac-ft is water that we are trying to protect. Ms. Smith concluded that perhaps we ought to focus our efforts on some options with the major ditch companies. Dave Frick pointed out that Greeley owns about 40% of the Greeley -Loveland system, and Loveland owns many of the smaller ditches. There is not a lot of water left in the Big Thompson, he said. "If we go back to that 310,000 Ac-ft we have left when we remove the CBT water, how much of that is at risk?" Mark Casey wanted to know. "I suppose it could be half," Dennis Bode estimated. Mr. Casey also asked what the average value of that water is per Ac-ft. In terms of the water itself, about $1,000, Mr. Bode responded. So, potentially, that would be $155 million worth of water at today's prices, Mr. Casey calculated. MaryLou Smith wanted a better understanding of the owners of the ditch companies and which water they have. Mr. Bode said there are 4 big ditch companies that take water from the Poudre: North Poudre, Water Supply & Storage Co., Larimer-Weld and New Cache. They control at least 2/3 of the water in the Poudre Basin, he said. "Is the other 1/3 highly fragmented water? Ms. Smith continued. Those are some of the smaller ditch companies, e.g. the Southside Ditches, Mr. Bode replied. Mike Smith later distributed copies of a graphic that showed diversions on the Poudre River. The numbers on the graphic show acre feet for each ditch company and annual diversions into the ditch. Mr. Smith said the information was taken out of the Poudre Basin Study. When we talk about the water resources of Northern Colorado that we ought to be concerned about, the Poudre Basin is one part, the Big Thompson is another, Neil Grigg said. "Is there another basin we should be thinking about? We had included Longmont among the cities for political reasons rather than for purposes of water, Ward Fischer replied. Dr. Grigg asked if there might be merit in doing further analyses on what the key deals might be on those larger ditch companies. Mr. Fischer thinks it would be wonderful if staff didn't WATER BOARD MINUTES APRIL 17, 1992 PAGE S mind spending a little time on it. They could determine which companies would be potential acquisitions. "I think you would agree that North Poudre probably isn't one and Big Windsor is," he said. Perhaps you might also have access to some information on the New Cache system. He knows the volume there would be good, but he is not sure about the water quality. Of the 155,000 Ac-ft we are talking about that could be at risk, what percentage is owned by farmers and/or speculators? Mark Casey asked. "Most of it is still owned by the ag. community," Dennis Bode replied. If you exclude the municipalities, there is a very small part attributed to just speculators. "It's hard to put a number on it." With the recession there are very few speculators out there, Ward Fischer added. "Do you perceive that the danger of a Denver up here will increase once Thornton's pipeline is in?" Tim Dow asked. Once that pipeline is constructed they could rent space in that conveyer. "I'm sure Thornton would like to have other entities involved to decrease the cost of the pipeline and maximize that facility," Mr. Fisher surmised. Thornton is going to have to build reservoirs too, and I'm sure they would like large reservoirs, so the pipeline could be used all the time, he added. Dr. Grigg asked what ditch company owns the Big Windsor Reservoir. Windsor Reservoir & Canal Co., Tim Dow replied. Ward Fischer explained further that almost all farmers will hold stock in both a reservoir company and a ditch company. Tom Brown contends that Northern Colorado cities would have a difficult time coming up with the money to fend off the Denver suburbs if the situation was difficult for them and water was scarce. They would have quite an incentive to buy water and build pipelines because they have an immediate need for water, whereas we would be buying water in advance that we wouldn't be using for perhaps 30 years. "The bluff may work, but how long are we going to be able to do that?" he stressed. Dave Frick said they are going to have to transport the water, so they must factor that into their costs. "I agree, it's a huge cost," Mr. Brown admitted. Mr. Frick added that they can't begin to pay the equivalent of what we pay. Tom Brown has a good point, Mr. Fisher observed. "Tim Dow makes a good point too," he said. "With the Thornton pipeline, an imaginative person could perhaps put together a number of fragmented rights." Ms. Smith would like staff to provide data that would show where the control lies, in which ditch companies, and where the greatest concentration of usable water is. Mike Smith said that staff could prepare some data to show where the water is. Neil Grigg recalled that when the Water Board previously had these discussions about what our strategies should be, they usually decided that it is the City's job to get the water we need for WATER BOARD NE NUTES APRII. 17, 1992 PAGE 9 the City, and take care of ourselves first. That is the City's interest, narrowly defined. "What we are talking about here is more of a broadly defined regional interest." How far does the City's interest go to pursue the future supply for the region; not only for urban and industrial development, but also to keep agriculture in development to maintain a good mixture? He went on to say that there are political questions here about the City's responsibility that need to be brought to the City Council for discussion. It would be good to have the information base provided by staff as a basis for discussion at perhaps a Council work session. Dr. Grigg also pointed out that there are various questions the Chamber group needs to consider as well; such as would we like to have a regional conference this fall? Dr. Grigg asked Mark Casey what was decided about referring some of these questions to the Water Supply Committee. "What we decided," Mr. Casey said, "was that this whole issue is too large and too all encompassing to leave it to the Committee." MaryLou Smith thinks that the discussions are too vague at this point, since we aren't talking about strategy, to involve a committee in the process. Philosophically, it is good to keep it at this level, she said --"keep talking about it from time to time, and continue to receive information from staff to help answer some of the questions." Tim Dow thinks one of the other things we should do more of, from a regional perspective, is to support the Denver metro area's exploration of water sources in their own backyard. When Two Forks wasn't approved, the pressure on Northern Colorado went up. "I'm not necessarily trumpeting Two Forks as an individual project," he emphasized. Neil Grigg wondered how we can focus on this so it doesn't drop though the cracks. How can we convert it from something that is so vague to something we can grapple with? His idea was to give it a name as a working item such as: "What is our regional water supply strategy as a Water Board?" Today we had a dialogue with Ward Fischer to discuss issues and thoughts, especially as they relate to the Chamber Committee. The second step might be for staff to produce a report indicating where the water is. The next step, when we meet with the regional water boards, would be to invite Ward Fischer and have a dialogue on this issue. He continued by saying that for another piece it would be advisable to get the thinking of the NCWCD, in terms of a water bank idea or pooling water. Then, one at a time, look at these different issues, so we can begin to build a strategy. The District's ideas and our ideas are not inconsistent, Ward Fischer began. What they are talking about is making our present supply, whatever it is, go as far as it can. What we are talking about with the banking idea, is to make sure we preserve the present supply. "It's not a choice between the District's plan and ours, both of which may or may not have merit," he WATER BOARD NIINUTES APRIL 17, 1992 PAGE 10 stressed. Neil Grigg said that another issue to pursue further, is the philosophical discussion of the city/farm option. Dr. Grigg read the student's thesis who did the research at CSU on this option. It seems to be an attractive idea conceptually. Because it hasn't been tried, it isn't known whether it is really practical. Ward Fischer related that the District is trying something similar to that option by allowing other entities like Broomfield to get into their Windy Gap water. Of course Windy Gap, because of a certain set of hydrological circumstances, doesn't produce consistently. On the average, it might produce very well, but Broomfield and other cities need the water every year, so the District is trying to devise a method that would allow a Broomfield to borrow water. "You might learn from the District how they are approaching this and the process they are using, and save yourselves a lot of work by seeing how it works for the District," Mr. Fischer advised. Tom Brown pointed out two advantages of the city/farm option: 1) The City is more assured about supply for the future, and 2) Some money will be going to the farming community. You could be paying them not only for the dry year when you take their water. They could be getting something else just to agree to all of this —perhaps some kind of premium --something that helps them stay in business as farmers, and would make them less likely to be in a situation like they were when Thornton bought out the farms. "I don't think most of those people sold because they wanted to sell their water, but because farming was in tough shape then." It would be helpful for them to have some other source of income —like something from the cities --for the occasional use of their water, Mr.Brown continued. Dr. Grigg agreed that it would be a partnership between the farmers and the cities. That is a place where City Council might be involved in the discussions because the approach would be on a political basis in terms of what the city's obligation is in helping our neighbors in the farming business, he concluded. "I wasn't suggesting that we just be nice guys and give them money." Tom Brown clarified. "It just happens to have a side benefit to us because they are more likely to stay in farming." Neil Grigg continued by saying that another issue relating to the city/farm dry year option, that seemed weak in the research, is under what legal basis it should be administered. "I asked the student what he had found out, and what the water judge had said." Apparently any discussion of this would rest on the Substitute Supply Provision which is essentially spelled out in some draft regulations in the State Engineer's Office. "I had the idea that this has never really been tested, and I wonder whether this could be done without a change in the statutes. It seems questionable," he concluded. WATER BOARD NIMUTES APRIL 17, 1992 PAGE 11 Ward Fischer said he has never seen it done, "but I don't see any impediment to it in the statutes," he added. Neil Grigg said the impediment that the student was suggesting is if you have a farm here and a city there, and you were going to move the water only in certain years to the city system, could you do it without going through the water court every time? "That would take some thought," Mr. Fischer responded. There is a provision that you can lease waters on a temporary basis. "We know, to the extent that the farmer has Big T water, there would be no problem." There might be practical problems if he, for example, had Larimer-Weld water that he ran with Big T water. It would be difficult physically to use the Larimer-Weld water. You might exact a deal that he would just raise half a crop and pay him well for that, he suggested. There are a number of practical elements as well as legal, he said. "I suspect that this is such a good idea and discussed so frequently, that you could probably get the state engineer --if you really had a well thought-out plan --to say he would approve it, even though it hadn't gone through the water court." Neil Grigg added, perhaps that is the reason they have written down some rules. MaryLou Smith thinks it might be a good idea to have a line item on each of our meeting agendas on the regional supply strategy. "If it were a part of our agenda, it would clue us in to talking about it each time, and each time we would talk about where we are headed for the next meeting." President Grigg said, "That's a great idea, and it wouldn't necessarily add a committee, but could be included like a report." Tim Dow offered another option for preserving the water in Northern Colorado. "Would we be just as well-off in the long run, instead of buying up options, to just invest our time and money into building a reservoir now, so we have ownership and control of the water? "It's a good thought," Mr. Fischer responded, "but I think not, because Fort Collins is going to survive beautifully. They have planned well and can always compete with anyone to get the water. What we are thinking about is the quality of life if the farms go out of business. We also might lose the opportunity to have a company locate here that has few employees and a tremendous tax base, but may need water, and without enough may have to locate elsewhere." He concluded that he thinks preserving the water supply of the Poudre Basin should be the goal. Ward Fischer thanked the Water Board for inviting him. "This has really been helpful to me because I have received a lot of new ideas which I will be pondering." He was also delighted that there will be a meeting with the regional water boards because "we will get even more WATER BOARD NE NUTES APRIL 17, 1992 PAGE 12 ideas." The more the water bank idea is discussed, the more pros and cons will emerge, he emphasized. Waiving of Water PIFs for City Jk=ments Board members received an agenda summary in their packets explaining the proposed change to the City Code which would allow the Water Utility to waive the requirement for city departments to pay water PIFs for specific installations which do not impact the Utility's ability or capacity to meet peak day water demands. The proposed ordinance follows: Sec. 26-120. Water plant investment fees (e) Notwithstanding the provisions of subparagraph (a) of this section, if the applicant desiring to connect to the water utility is a city service area, department, or division, or the Poudre Fire Authority, the Director may waive payment of the WPIF if the Director determines that the requested connection will not adversely affect the capacity of the water utility to treat and deliver water. Any such connection authorized by the Director shall only be operated at the time and for the duration as determined by the Director. In addition, a connection authorized under this subparagraph (e) may not be used during the period of May 1 through September 30 of any year unless the Director determines that the applicant's use of the connection during such time period is necessary because the applicant's regular water supply has become unavailable during that period and the unavailability of the regular water supply will result in measurable economic damage to the applicant. Mike Smith emphasized that City departments will still be required to pay water PIFs under normal circumstances, as well as other development fees and monthly service fees. Mr. Smith went on to say that the primary reason for the proposed change is to address a problem facing the Parks and Recreation Dept. Currently some of the City's parks are irrigated with raw water, and the Parks Dept. has indicated that they would like to do more of this. Generally the need for raw water to irrigate the parks corresponds with the time when the irrigation ditches are running; approximately May -September. However, in years when the weather is extremely dry, there may be a need to irrigate the parks in early spring or late fall when there is no water running in the ditches. During those times, the Parks Dept. must use treated water. "What they have done in the past is connect a fire hose to a fire hydrant, and put the water into a pond somewhere," Mr. Smith explained. What they would like to have is a permanent connection from the water system to their sprinkler system. Mr. Smith also explained that presently there are no provisions in the City Code which allow WATER BOARD MINUTES APRIL 17, 1992 PAGE 13 the Parks Dept. to install a permanent connection to the water system without paying the water PIF. Currently the water PIF for a 2-inch connection is $20,300 and $33,100 for a 3-inch connection. Parks and Rec. is hesitant to invest that much money in a connection which may only be used a couple of times a year, and in some years not at all. From the Utility's standpoint, the Parks Department's need to use water once or twice a year during off-peak times, has little, if any, impact on the water system. "Since they are not using capacity which would otherwise be used by a new customer connecting to the system, assessing a water PIF doesn't make a lot of sense," Mr. Smith said. Making this change doesn't conform to the City Code, "so in order to do it, we have to provide the authority," he concluded. "Are you sure it isn't going to affect the peak?" Dave Frick asked. In other words, if it's a time when the parks are in need of the water, isn't everyone else in that situation too? Usually in the summer, the ditches are running when that happens, Mr. Smith replied. The time when the parks might need treated water would be late April or in October, he continued. "When it's very dry aren't other people watering in April and October, as well?" Mr. Frick pointed out. "We're going to have to monitor that, but there is still a lot of room between what we see in a peak day in April and one in July," Mr. Smith responded. Occasionally we may see use of around 40 mgd in April, whereas in July it can be 60 mgd. Mr. Smith added that the code change is flexible enough that "if we see a problem, we won't allow the Parks Dept. to take the water." Tim Dow wanted to know if there are other private businesses or government entities that are in a similar position. "We need to be careful that the City is not treating other City entities better than the private sector." Paul Clopper also was concerned that there may be others who could have the same kinds of requests. The Utility and the City Attorney's office have given that some thought, Mr. Smith remarked. At this point no obvious examples have emerged. Currently "most of our separate connections are for irrigation, which generally run from April into the summer, and then are turned off in October." If someone needs water for a short time, those situations are usually handled through construction meters, and "we have a process to do that," he explained. Any private or public entity can obtain a construction hydrant meter, use it for a day, a week or whatever time period is necessary, and they are charged accordingly. Dave Frick presented an hypothetical scenario where a large company like Anheuser Busch might say, "this is our constant demand and we need this size tap, but in order to provide some emergency capacity for irrigating a golf course, for example, we want to enlarge our tap from a 4-inch to a 6-inch (lets say), but we want to get it on that same provision, so we don't have to pay the extra tap fee." WATER BOARD NE NUTES APRIL 17, 1992 PAGE 14 Ray Herrmann pointed out that the ordinance clearly states that it is for the City. "In fact transferring the money from one pocket to another is mainly a code matter as opposed to a financial matter," he added. "The city attorney didn't feel uncomfortable with the idea of providing this condition for a City department versus someone else," Mr. Smith related. How much money is at issue here? Mark Casey asked. If the provision weren't there, P&R could continue to run the fug hose whenever they needed it and not pay the PIP either, Mr. Smith pointed out. What we are trying to do is provide a legal way for them to have a permanent connection so they don't have to run the fire hose. He stressed that they don't get out of paying for the water. Tom Brown pointed out that the meter will be there for two purposes: "one, so that they pay, and two so we know whether they use the water during the period when they are not supposed to." It seems to Paul Clopper that in order to enforce the May -Sept. provision, P&R will have to call the Utility and have the valve unlocked before they can turn it on. "In our discussions with the Parks Dept., we have told them that the valve will be disconnected until they need it," Mr. Smith emphasized. Tim Dow wondered if the City would have an ordinance stating if there were other private entities similarly situated, that they would be entitled to the same treatment. The City Attorney and Mike Smith discussed that, and both recommended "not opening it up." "If there are some folks who can't be accommodated with our existing system, we would too often be saying, here is a new situation we need to address." "We haven't had any problem meeting the needs of the private sector up to this point," Mike Smith stressed. Paul Clopper can see a homeowner's Association like Parkwood, as a perfect example of a group seeking a similar option because the City is providing it for P&R. "Anybody irrigating with raw water during the times when the ditches are running could potentially want to use this," Mr. Brown pointed out. "If they don't have a source," Mr. Smith added; Parkwood, for example, has their own lake, but P&R relies on small ponds, and when they go dry they are out of water." Ray Herrmann insisted that it is not a question of equity. Whether the Parks Dept. pays or the Utility pays, the City is getting the money. "If a private company asks for a free tap because the City has a free tap, it's a fallacious argument!" "Let's say P&R does pay the money to the City, it is still staying in the City," Mark Casey commented. "The problem is that the Utility isn't in a position to go out and build parks, and there is a financial impact to that." Mike Smith acknowledged that in that case, within the City WATER BOARD MINUTES APRIL 17, 1M PAGE 15 the Utility gets the money and the parks lose the money. "If you start carving out exceptions, does that undercut the whole philosophy of the water PIF in the first place?" Tim Dow asked. "You have to be careful about how many exceptions you make," Mr. Smith replied. If the fee is charged because the customer uses a certain capacity in the system —and the capacity is generally a peak day capacity --the consumption occurs year around and the peak at a certain period. In this case the Utility isn't incurring an expense because of P&R's use. "We are not having to build additional capacity or provide additional capacity because they have tied to the system," Mr. Smith reiterated. "Isn't this a case where they are already using this water," Tom Brown remarked. "Yes," Mr. Smith replied, and they could install a hydrant meter and use it anyway; and use it during peak times. Mr. Smith emphasized that once Parks & Rec. gets the connection, the Utility has the control of when they use it. They will also pay for the installation of the hookup. Ray Herrmann moved that the Water Board support the staff s recommendation and the proposed code change. Paul Clopper seconded the motion and commented that he had originally been concerned about "opening a Pandora's Box," with this ordinance, but he is now comfortable with the fact that the Utility has control of when the water is used, and that P&R will pay installation costs, and the charges to turn the service on and off. Dave Frick asked why the Poudre Fire Authority is listed in the ordinance. The city attorney was concerned about the Fire Authority's use of fire hydrants for other than fighting fires, Mike Smith responded. It is general knowledge that the Authority plans to build a training center in the near future. If they use the hydrants and do not use a tap to connect to the center, the ordinance could be a way the Utility could control when they can use the water. Mr. Smith speculated that the PFA will choose to pay the PIF so they can use the water whenever they want to. Neil Grigg called for the question. The vote was unanimous for approval. Staff RQ=S Treated Water Production Summary Dennis Bode reported that March water use was 1,472 Ac-ft, which is 86% of what was projected. Under the precipitation figures, there were 4.44 inches in March compared to a 1.07 average. When you say projected use, do you mean just historical average or are there some other variables? Tom Brown asked. "We go through a process of trying to calculate what we think it is, based on recent years," Mr. Bode explained. "I wouldn't say it was a long term historical average." 0 WATER BOARD MINUTES APRIL 17, 1992 PAGE 16 MaryLou Smith observed that this is the 3rd or 4th year that we have been below the projected use. She has always wondered if that is because we project conservatively. In the winter months we are just a little lower, Mr. Bode replied. Recently we have been in a transitional period, so it's hard to tell right where we are. For March, in particular, being below the projected use was due to the above normal precipitation. "If we ever get to an average month, it will be very close to the projection," he said. We are probably somewhat conservative in our projections as well, he added. Committee Reports Water Supply Chairman Mark Casey echoed what MaryLou Smith said with respect to the water bank issue, that the Committee isn't in a position to take on specific tasks. Once the issue is more defined, work can begin on strategies. Mr. Casey also noted that until Ward Fischer brought it up today, he had not thought that water intensive industries like Anheuser-Busch can help us to keep our water from going south. Legislative and Finance No report Conservation and Public Education MaryLou Smith reported that the Council approved the Demand Management Resolution on April7th. "The more I look at it, the more I think it is an effective resolution," she observed. There were a couple of Council members who didn't think there was quite enough substance, but for the most part, the Council agreed that this is an excellent first step to take; and it's workable and practical. Today when the Committee looked at the resolution and reviewed it item by item, to decide what must happen to enact the strategies, they began to realize that it has "quite a lot of meat to it." One of the items the Committee was excited about is the voluntary certification program for automatic sprinkler system contractors. Although it is voluntary, the certification is something they can use as a good marketing tool, and that can have some impact on good design of irrigation systems for water conservation. Another interesting item is one that would make some changes in the Land Development Guidance System where developers get points for including water conservation aspects in their plans. One of the biggest items would require developers to go through the Planning Dept. to have their irrigation plans approved at the same time their landscape plans are reviewed, and the plans would have to meet water conservation specifications. WATER BOARD MINUTES APRIL 17, 1M PAGE 17 The Committee will be going though these items one by one and working with staff to determine who is going to be doing what to fulfill the purpose of the resolution. The Committee will conform to the qualifications of annual reporting in January of each year when staff will report to Council what the Committee is doing to meet the intent of the resolution. In three months staff will provide a detailed account of where we are heading for each of the items in the resolution. In May, Jim Clark, Water Conservation Specialist, will report on the current program for educating the public about water,,conservation. The Committee will continue to work on expanding our conservation public education efforts. There will also be a special meeting to discuss the zero interest loan program. Ms. Smith pointed out that other items may involve increasing staff, so those items must be considered during the City's budget process. She concluded that the work of the Committee will be an on- going process. Dave Frick suggested that when the Committee looks at the landscape certification for contractors, they may want to think about certifying the landscape maintenance people as well, because they are the ones who actually set the clocks for the sprinkler systems, which can significantly affect the demand. MaryLou Smith made note of his suggestion. Engineering Committee No report Other Business New AWWA Policy Statement Neil Grigg called the Board's attention to a new policy statement which the AWWA recently published in their newsletter that related to how utilities should run. He made copies in case anyone missed it. Relating to that, Mike Smith said that what the Fort Collins Utility is concerned about for the future is its ability to compete with the surrounding districts. First of all, they are serving City customers who don't have to pay a PILOT (Payment In Lieu -of Taxes), so there is a 5 % difference already in the City's costs. All of these figures go into the cost of service, making us less competitive. "So far we also believe in higher water quality which costs more," MaryLou Smith pointed out. It should be noted however, that today, even with our higher quality of water, we are still competitive, Mr. Smith concluded. Communication from the ELCO Water District President Grigg referred the Board to the letter from ELCO Water District. They are interested in working with the City to develop a plan to provide water service to northeastern Fort Collins, WATER BOARD MINUTES APRIL 17, 1992 PAGE 18 he said. Mike Smith explained that Mayor Kirkpatrick sent a letter to ELCO recently (Board members were sent a copy.). This letter is their response. They have arranged the first meeting with the City on May 7th at 7:00 at ELCO. Issues of immediate concern to ELCO are: (1) determination of service areas, (2) joint use of facilities, and (3) development potential northeast of Fort Collins. "The ELCO Board feels these issues need to be addressed to insure the best possible water service is provided to residents of northeast Fort Collins," the letter stated. Mr. Smith related that this is the same process the City went through with the South District 5 or 6 years ago. However, there aren't any burning issues as there were with that district, where lawsuits were pending. With E1CO there are potential issues such as service areas. MaryLou Smith wanted to know who is serving northeastern Fort Collins now. Mr. Smith said that ELCO is serving the existing customers. They want a clear understanding of who is going to serve future customers. Ms. Smith believes that it is important that Fort Collins serve any future people in the urban growth area. Mr. Smith agreed that is a major philosophical and political issue. There are a number of people on the Administrative Council who share Ms. Smith's view, Mr. Smith pointed out. On the other hand, there are others who think that ELCO should serve them. "Why would they think that?" Ms. Smith asked. Mr. Smith recalled that, at the time when discussions were going on with the South District, various Council members felt that the issue should be level of service. If the District provides the same level of service as City residents receive, "why worry about who serves them?" MaryLou Smith answered that by saying, "because we have no control over whether they will continue to provide the same level of service." Dave Frick pointed out that the Districts also have a problem in that they will lose all of the large existing customers that provide their economic base. Mike Smith related that ELCO and the South District have tried hard to provide a good level of service. The main concern the City has is with their water treatment and getting it to the level of treatment that we employ. They are now expanding their plant, and will have a process somewhat similar to ours. Mr. Smith went on to say that the real problem in north Fort Collins right now is with the sanitation district. ELCO used to manage Boxelder, but they recently dropped that contract. "They don't have much capacity and the treatment system they have is marginal," he said. One WATER BOARD MINUTES APRIL 17, 1992 PAGE 19 of the biggest problems is when industries are considering locating in northeast Fort Collins, served by Boxelder, "they reject any notion of being served by them, so they end up looking elsewhere." Woodward Governor was looking at sites in that area but said they would not pursue locating there unless the City guaranteed service somehow. President Grigg said he will not be able to attend the meeting with ELCO and asked if any other Board members would be interested in following the issue. Tim Dow volunteered to attend the meeting. "Is there an understood boundary between EL.CO and us?" Tom Brown asked. "No," Mr. Smith responded, "they would like to have one." There hasn't been a problem at this point because there hasn't been a lot of growth in northeast Fort Collins, he added. Report on Thornton Case Tim Dow reported that the Thornton case is finally concluded as far as evidence is concerned. The briefings need to be in within the next couple of months, and the closing arguments are scheduled for July 17th. Annual Report Neil Grigg complimented staff on the excellent utility annual report which was included in Water Board packets. "It is particularly well done this year," he said. Mike Smith gave credit to staff member Diana Royval who is responsible for coordinating the content and doing the layout of the report. "The annual report continues to improve each year under her leadership," he said. Adjourn Since there was no further business, the meeting was adjourned at 5:00 P.M.