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HomeMy WebLinkAboutWater Board - Minutes - 04/21/1989r Water Board Minutes April 21, 1989 Members Present Henry Caulfield, President Neil Grigg, MaryLou Smith, Ray Herrmann, Terry Podmore, Dave Stewart, Tom Moore, Tim Dow, Mark Casey (alt.) Staff Mike Smith, Dennis Bode, Wendy Williams, Linda Burger, Andy Pineda, Ben Alexander, Molly Nortier Guests Loren Maxey, City Council Liaison to the Water Board John Bigham, Agency Coordinator, Northern Colorado Water Conservancy District Members Absent Tom Sanders, Vice President, Chester Watson (alt.) President Henry Caulfield opened the meeting. The following items were discussed: A brief executive session was called to discuss water acquisitions. Minutes The minutes of March 24, 1989 were approved as distributed. President Caulfield introduced Council member Loren Maxey who is the new Council Liaison to the Water Board. Mr. Maxey related some information about himself, in areas involved with water, that he said would help the Water Board understand why he is their council representative. He also men- tioned that he was one of the three Council members who served with MaryLou Smith, Henry Caulfield and Neil Grigg on the joint Water Board/Council Com- mittee that helped to establish the current water supply policy. Mr. Maxey said he is looking forward to attending Water Board meetings whenever he can. John Bigham began by distributing revised maps of the District. He also handed out several summary sheets that provided information on precipitation within the District; storage comparisons; an operations summary; snow pack and stream flow comparisons; stream flow forecasts; projected system carry- over storage; snow pack and stream flow comparisons; water supply and use comparisons; precipitation and delivery comparisons; and the NCWCD quota. Water Board Minutes April 21, 1989 Page 2 Mr. Bigham said that the Board set the allotment this year at 70%. This is obviously a changing situation, he added. He also related that storage is little bit above average, snow pack currently is in the high 80's or low 901s. Runoff is probably going to be in the 70% range, he predicted. Mr. Caulfield recalls that if the District Board were contemplating the pos- sibility of a drought this year, they would have come out for a 100% quota, not 70%. In other words, their policy is to give more water in times of anticipated drought. The 70% is about the average amount. Mr. Bigham said that the average is actually somewhat over 75%. If it continues to remain dry, the District Board could well increase it by 10%, and by increments of 10 in the following months if necessary. As most people are aware, Mr. Caulfield began, the District has received considerable publicity these past few days. In a nutshell, there was a demonstration by a number of people who accused the District of taxation without representation. Mr. Caulfield pointed out that one of the misconcep- tions which that group promotes is that there can't be an election to the District Board. If there is a challenge at the time there is an opening, they can call for a challenge vote and there can be a contest. If there is no contest, then the judge's selection holds. "This was just changed two or three years ago," he said. Mr. Bigham added that furthermore, anyone wish- ing to, can turn in a resume to the judge in their respective counties. President Caulfield announced that he, Mike Smith, Dennis Bode and any other Board member wishing to, are invited to attend a meeting with the District Board on May 4 at 9:00 in the District Board Room. At that time, the City will present its water needs through the year 2035 and discuss with the Board the City's hope that the District will approve of what we have been doing by purchasing water in advance of actual need. Cash In -Lieu -of Water Rights Staff provided background information to Board members as follows: Developers have the option of turning in water rights or cash when satisfy- ing the City's raw water requirements. The cash rate, in -lieu -of water rights, is periodically adjusted to reflect the market price of water rights in this area. The price of Colorado Big Thompson units normally sets the trend in prices, and there is normally enough market activity to establish the going rate. The last adjustment in the City's in -lieu -of rate was in July, 1987 when it was adjusted from $1,000 to $800 per acre foot. Since that time, the prices have gradually increased and the price of CBT water is now approximately $900 per unit. A graph was attached to illustrate the changes in price of CBT units, North Poudre Irrigation Company shares, and the City's cash in -lieu -of rate in the years 1975-1989. Staff recommended that the Water Board recommend to City Council a change in the cash in -lieu -of water rights from $800 to $900 per acre foot. r Water Board Minutes • April 21, 1989 Page 3 Dave Stewart moved that the Water Board accept staff's recommendation to change the cash in -lieu -of water rights from $800 to $900 per acre foot. Ray Herrmann seconded the motion. Tom Moore asked: "Do we want water or do we want money?" We have the opportunity here to encourage getting whatever we want, he said. He recalled that at one time we wanted to encourage developers to turn in money and then we could buy the kind of water that is more useful to us. "It seems that we are right in the middle again," he observed. "We aren't encouraging it one way or the other. I would rather see developers turn in high quality water," he asserted. Dennis Bode replied: "I think that because of the way the water is turned in, I'm not sure a small change will make a lot of difference in the amount of cash." He recalled that at one time, the thought was if the rate was too high, we would discourage cash being turned in. As a result, "we tried to keep it somewhat lower." He thinks that due to the type of customer that turns in cash, the $100 difference may not influence him very much. How- ever, over the long term, we may want to consider a policy that requires that a certain amount of cash be turned in, he suggested. "Can't we set our conversion rates to encourage the kind of water we want turned in," Dave Stewart asked. "If we change conversion rates for south - side water," Tom Moore responded, "that raises the ire of those ditch compa- nies." Mr. Caulfield recalled that a few years ago, when a move to encourage money rather than rights was suggested, we, the Council or somebody rejected the idea. "Can anybody refresh my memory about that?" Dave Stewart thinks the City rejected it from the standpoint that we thought we shouldn't be forcing independent businesses to do that. Mr. Caulfield also brought up the point that if we set the price too high we could be accused of leading the market or encouraging the market price to rise. "What we find generally," Mike Smith explained, "is when a developer or home builder has property he wants to develop, and he has water, he is going to turn it in. If he doesn't have water, and the price is close, he will pay us instead of looking for water to buy and turn in. You can be off a little bit and still get as much money, because if the developer has water, he will usually turn it in." If there is perhaps $200 difference, he may elect to turn in money instead. However, if we want cash to buy water, we may want to require that part of the Raw Water Requirement be cash only, he con- cluded. Mr. Caulfield added, "we had the idea at one point of 50% cash and 50% water. "That may still be an idea you may want to think about," Mr. Smith suggested. Tim Dow asked what would be wrong with setting a discretionary or sliding scale arrangement instead of a fixed number now. "If you wanted to encour- Water Board Minutes April 21, 1989 Page 4 age one or the other, you could set that percentage accordingly." "What is the percent of market?" "It's somewhat subjective," Mr. Bode replied, "in that there is a range in the market for prices of CBT water. It would be difficult to tie it precisely to that, he said. He indicated on the graph that there were times when it was adjusted every three or four months, and other times when it has gone longer. "As the market was increasing, we tried to stay somewhat below so we were lagging the market. When the market was declining, we tried to stay somewhat above it. "We are at the period now when we are crossing over again into a rising market," he added. Mr. Caulfield pointed out that this decision is also made by the Council. This isn't just advisory to them. "Whatever we do, whether we have a for- mula or not, it has to be an administratively precise statement in order for the Council to give an authoritative decision to staff. Mr. Bode added that it's in the code and it takes an ordinance to change it. Tim Dow remarked that it appears to be the developer's decision. "If market is $1500 he will sell it and stick $600 in his pocket. Maybe we ought to have that option to take the $1500," he asserted. MaryLou Smith said, "don't we do that by making the decision time and again?" If the market goes up that quickly, staff will approach the Water Board to change it again. Mark Casey asked if there is a gage, like a prime rate, for example, that we could say this is what CBT costs today. "Not that I know of," Mr. Bode responded. There are various brokers that keep graphs. "I keep a graph too," he said. Mike Smith added, "we follow the sales and prices are currently going from $900 to $925." In past discussions, Mr. Caulfield explained, we haven't found a way of giv- ing a precise number. "Let's leave it that unless Tim Dow, Mark Casey or anyone else thinks of a way of improving this way of operating, we keep it the way it is, but we need to act on it today." Mr. Caulfield then called for the vote. The vote was unanimous to recommend to Council that the cash in -lieu -of water rights be changed from $800 to $900 per acre foot. Staff Reports Treated Water Production Summary Dennis Bode reported that so far this year "we are sitting at about 96% of what we had projected." Everything appears to be fairly normal at this point. The last few days, because of above normal temperatures, there has been higher water use than we would expect at this time of year. "If it remains hot and dry, we will expect higher than normal water use," he con- cluded. ' Water Board Minutes • April 21, 1989 Page 5 Committee Reports Legislative/Finance Committee Neil Grigg asked Linda Burger about the final fate of the conservation bill. Ms. Burger clarified that there were three conservation bills. The one on plumbing fixtures passed and is about to be signed by the governor, she said. The Utility supported that because it was fairly consistent with our own ordinance. There were two other bills, one of which died. The other was a landscaping recommendation bill for state funded projects, that also passed. Originally it was trying to limit parks to 10-12 inches of water per year, which is very stringent. When it was amended, the irrigation standards were removed. The only bill that continues to be a problem is 181, and it has passed both the senate and the house. There is a threat of veto by the governor. "I'm not sure why," she added. "It was very controversial at one time, but I think the amendments have basically made it fair to everyone." Mr. Caulfield said, "That's the bill where the Water Quality Control Commis- sion sets the standards, but the implementation responsibilities are the oil and gas commission's. Ms. Burger explained that the bill actually says that the WQCC is the only body that can set classifications and standards. It basically clarifies where responsibilities lie for implementation of programs that protect water quality that are run by other areas of state government; such as mined land reclamation. But, it also says that any permitting activities that go on by those agencies must be based on the quality standards adopted by the Commis- sion, and they have to protect present and future beneficial uses of water. "Some people were trying to accomplish more than that," she said. "What they really tried to do was reduce duplication and friction among agencies by making the ground rules a little more clear," she concluded. Mr. Caulfield asked who makes the decision as to whether the standard has been implemented; the other agencies or the WQCC? The initial determination would be done by the implementing agency in consultation with the Commission or Division, Ms. Burger replied. If there is a situation where there is a disagreement, the Division or Commission would take action through a control regulation authorization enforcement proceeding to solve the problem. It keeps the Commission as the prime agency, she stressed. "What's the status of the bill involving the out of Conservancy District leases or transfers," Tim Dow wanted to know. "That's in the Governor's office awaiting his signature," Ms. Burger replied. Conservation and Public Education Committee MaryLou Smith announced that her committee met prior to the Water Board meeting. "We are making progress," she said, "but we don't have anything specific to report to the Board." She pointed out that the May issue of Sun- set Magazine has a very nice article about the Fort Collins Xeriscape Demon- stration Garden. The Water Board secretary made copies for each member. Water Board Minutes April 21, 1989 Page 6 National Recreation Area Water Board Task Force Mr. Caulfield commented that there has been a great deal of media coverage recently regarding the proposed National Recreation Area in Fort Collins. "We have a Water Board task force on this but the chairman, Tom Sanders is not here today, so we won't have a report," he said. Ray Herrmann, a member of the task force, said the group has not yet met. Molly Nortier reported that the preliminary reports won't be available until about May 15. She will make certain the committee chairman knows as soon as the reports are out. Linda Burger reported that the Planning Department, along with the Forest Service have been holding a number of public meetings. They have a more for- mal meeting scheduled for this coming week. "I think that the options that have been outlined sound reasonable and non -disruptive in terms of what has been outlined for the corridor itself. I'm not sure that the questions concerning the institutional arrangements have been thoroughly addressed," she said. Basically now they are just waiting for the report to be final- ized. She added that it will be on a rather limited time schedule because she thinks that the report to Congress is due in June or July. Ms. Burger thinks one of the big issues we need to look at is that there will be federal funds available to contribute towards anything that needs to be constructed; lands purchased or whatever to make the NRA work. One of the things that could be done, depending on how the report is structured, is that we could get 50% or perhaps 75% money to purchase water rights for instream flows, if we are interested in doing that. "I think that is a crit- ical issue to examine in the report in terms of our wastewater treatment situation," she stressed. Ray Herrmann asked how the Nature Conservancy water right in Phantom Canyon can help us. It's only about 2 cfs, he added. Mike Smith replied that the agreement that has been worked out so far is the water will be picked up before it gets to Fort Collins. It will be captured in Seamons and stored there. That ended the committee reports. Dennis Bode announced that he had prepared two tables on water supply for the Board. One of the tables is from the annual report. The other table shows the number of shares that the City has in the various irrigation comp- anies. New Approach to Gravel Ponds Proposal Craig Harrison has proposed some new approaches with regard to the gravel ponds arrangements which were discussed at the last Water Board meeting. Mr. Harrison distributed a memorandum outlining the new ideas he wants the Board to consider. He stated that these new ideas are an attempt to provide a "better deal for everyone." r Water Board Minutes • April 21, 1989 Page 7 Following is a review of what the Water Board recommended at their last meeting: They recommended approval of the Gravel Ponds proposal by a vote of 7-3 with the provisions that Parks and Recreation will assume the $200,000 additional liability, except for the water rights, if the Utility finds through further investigation that storage capability of Pond No. 1 is not feasible from the Utility point of view; that a provision be included that requires the current owner to be responsible for the costs to restore the mined land; and that there be a time limit of not longer than two years to resolve the storage capability issue. Henry Caulfield asked what happened to the Board's recommendation. Mike Smith replied that the last decision wasn't turned down. The Parks staff would like to have the property. A few of the Council members were somewhat "cool" to the idea as it was presented originally. Mr. Harrison's approach is to try to make it a more palatable deal for everyone involved, Mr. Smith said. Mr. Harrison thinks that the new proposal will allow the Rogers group to "share the risk" of the $100,000 with the City that this is a viable reser- voir project. Mr. Craig's memo lists the following changes to modify the existing con- tract: A. Purchase price: $265,000 versus $365,000. B. By November 4, 2001, if the City decides to proceed with the reservoir project in Lakes 1, an additional payment of $100,000 would be made to Rog- ers. There will be no interest during the option period. If the City decides not to go forward with the reservoir project within that time period, no additional monies would be paid. Possession of the property to the City would be the same, as per the original contract. C. At the option of the City, the contract would also be made contingent upon Rogers successfully negotiating with Sterling Companies to cancel its first -right -of -refusal regarding the property with the proposed Lakes #6 and transfer this right to the City, subject to the payment in "B" above being made. Rogers is negotiating with Sterling to modify the mining lease to allow for reconstruction of the mining area for reservoir purposes. The modification will allow for Rogers, at its cost, to back -fill and compact with shale and to construct water inlet and outlet conduits during construction of the reservoir. It appears that Reservoirs #6 should hold an additional 1,000 acre feet, in addition to the 1,000 acre feet in Lakes #1. The City could trigger the option to have the first -right -of -refusal by paying the payment in "B" above. In our original contract, it states that if the City is successful in obtaining the Rails -to -Trails designation paralleling the Rogers property, payment would be made to the City to vacate a 35 foot parcel of land con- Water Board Minutes April 21, 1989 Page 8 necting Taft Hill Road with the property. This amount paid back to the City would be $30,000. Henry Caulfield said that the Utility's attitude regarding the original proposal was "what's in it for the Utility? What are you talking about today that would relate to our concern?" Originally our share would have been $205,000. "I think we should look at this from a zero recreation side," Mr. Harrision replied. He believes that it should be approached as a water storage pro- ject. Mr. Caulfield interjected that the Board is not opposed to the Parks and Recreation involvement. "It's a money question," he stressed. Mike Smith explained that what was planned regarding the first proposal was that the Utility would put up $205,000 and Parks and Rec. would pay $100,000. Then if we found we couldn't use it as a water project, P&R would be required to pick up the $205,000. The difference now is that P&R would just have to pay $205,000 instead of $305,000 for the whole thing. Mr. Harrison contends that it's a water deal. "We want to stretch that time limit," he said. When you get to the year 2000 and CBT is $4,000 a unit, $200 an AF to get the original bucket is going to look cheap," he asserted. "We think as time goes on, this is going to be a more viable water project." Furthermore, the bucket happens to be located near the City's ditches. Neil Grigg reviewed what has been proposed: $60,000 for the water rights, $100,000 from P&R, $105,000 from the Utility now. So our total would be $205,000 for the reservoirs. We have reservoir 1 and the first right of refusal on 6. "What if it didn't become a water deal?" Mr. Smith answered that P&R would pay the whole $205,000. "Did they agree to that," Dr. Grigg asked. "They agreed but a couple of the Council members were doubtful. Now they would pay $105,000 which is probably more in line with what the land is worth," Mr. Smith responded. Would we line the reservoir and how much would it cost? "That's what we're not certain about," Mr. Smith replied. By certain methods it could be pretty expensive. It could cost $400-500,000 just to line it. Henry Caulfield raised the issue that we may have the legal right to use the water, but from the practical political sense, from May -Sept,; we don't. You must keep it at a recreational level, he contends. Mr. Harrison responded that he thinks being next to the river the reservoirs could be used as ', minimum stream flow buckets. The reservoirs could be kept full with flood water, then releases could be made all the way to May. Mike Smith replied that the Utility hasn't identified one or the other as a use for the reservoirs. "Both are potential uses." "The ground water table is high there," Neil Grigg remarked. "That's why there is water in the reservoirs now. If we lined them, we would have water on both sides of our lining." Water Board Minutes April 21, 1989 Page 9 Craig Harrison described some simpler forms of lining that they are seeing now. One of those linings, he said, meets the state engineer's specs. Dave Stewart asked what Parks & Recreation's reaction was to lowering the reservoirs. "They understand that if they turned out to be water storage reservoirs they would go up and down," Mike Smith replied. Mr. Stewart asserted that saying that and actually having it happen are two different things. "They may have people going by and saying, why is it low?" Mr. Caulfield asked Mike Smith to clarify what the current proposal is. Mr. Harrison's proposal is the same as last time except that the price is basically $100,000 less for P&R if the Utility doesn't do anything with the reservoirs. The price would be the same for the Utility if we do something with the reservoirs. Perhaps the price is less for us because we give $100,000 10 years later instead of now, he acknowledged. Staff can't recom- mend that we go out and do a whole project without having time to look at it, he stressed. This new proposal allows us time to look at it and pull out of it we decide it isn't to the City's advantage. From our point of view, Neil Grigg began, there isn't any risk if Parks & Recreation is willing to pick up the difference. The only risk we have is we are using $105,000 of our money for the time we take to determine if it's to our advantage to do the project. Mr. Smith stressed that we could use the ponds as water supply reservoirs with which exchanges are possible because the southside ditches are close by. In this way, we could optimize the use of some of our ditch water. If it were a water right for an in -stream use versus domestic use, what is the value of the water right to us, Dave Stewart asked. "It would be used for dilution of the wastewater, wouldn't it? "We haven't defined the value of that dilution yet," Mike Smith responded. In the wastewater treatment study currently in progress, a consultant is doing a sensitivity analysis. The study will answer the question, if we put water in what will that do for us?" "We'll have that answer, but we don't know what the answer will be," he stated. "That $200 AF sounds fantastic," Dave Stewart admitted, "but is that really what it's worth to us? If we are talking about an in -stream use to dilute wastewater, that might only be worth $100 an AF to us." Neil Grigg calculated that if it's 1,000 AF, that is like 500 days at 1 cfs, more or less. You could release 10 cfs for 50 days. "It would help, but we don't know what the value of that is right now," Mr. Smith said. Mr. Caulfield asked what the ball park cost is of the studies we would have to do. Mike Smith replied that we wouldn't have to do a whole lot. We would do some soil borings. We would investigate the methods of lining, and look at the operation of an unlined reservoir to see how that would work. "We may spend $10-20,000 on it," he estimated. Water Board Minutes April 21, 1989 Page 10 "If I can get you the first right of refusal on 6, and we know we'll do six far differently; we'll be using conduits to move from one to the other before dykes are even in there. I figure that some of this money would be allocated to the concept of an option to control that other asset." With an 11 year first right of refusal, you do control it. A lot of people won't even bid on things with first rights of refusal. "Who's our potential competition," Mr. Caulfield asked. "Private water skiers," Mr. Harrison replied. "We are taking a group out Monday to look at it." Tom Moore asked why we are looking at this again. "We approved it last month." "You may have approved it," Mr. Harrison replied, "but it was my feeling that it was going to die on May 2. Therefore, I took it back to the drawing board to try to make it better," he added. Mark Casey wanted to know if we have identified any reclamation measures on those ponds, whether or not they are used for storage.. "Grass seed has to grow," Mr. Harrison replied. We have looked into the bonding. The grass seed should take about two years to grow. Then the Mined Land Board would sign off on it and the City would have full possession. After talking to the MLB, we think the City will be able to take over earlier," he concluded. "Are you saying Rogers is bonded to do the reclamation work," Mr. Smith asked. "Sterling is bonded," Mr. Harrison said. "I sent the bonds to Paul Eckman, but I haven't heard from him yet." Mark Casey asked what it would cost. "If the grass seed didn't come up, it would cost $1500 to re -seed it." Mike Smith reiterated that staff still thinks the proposal has merit to look at. However, we can't recommend that there will be a reservoir. We don't have enough information. We have basically 0 risk. Another action from the Board would be helpful to P&R. Neil Grigg moved that the Water Board affirm their previous motion with the changes of the 11 year period and the possible $100,000 reduction in cost. In addition, that the Water Board communicate to P&R that this is an even more attractive proposal from the standpoint of the Water Utility. Tom Moore seconded the motion. Tim Dow observed that we keep talking about "us and them." He contends that ultimately it is the taxpayers who pay $205,000 for it. "It seems to me it's all coming out of the same pocket. We ought to take a broader view of it; not our budget versus their budget. The question should be what is the value of the overall package to the City," he asserted. Tom Moore said that he thinks we all thought that a lot of it was geared towards P&R and whether or not they could really benefit from it. "I don't feel comfortable deciding that for them." Water Board Minutes April 21, 1989 Page 11 Mr. Caulfield remarked: "I don't think any of us disagree with you on that. It's just that we should be thinking about what money comes out of the water rates that are charged. Are we getting value from those dollars from a water utility perspective?" The question was called. The motion passed 8-1 with Tim Dow casting the negative vote. Craig Harrison said that in this proposal he wants to get first right of refusal from Sterling. "We've had a lousy time negotiating with them," he admitted. Would it change it a lot if I couldn't get that first right of refusal on 6?" It's Dave Stewart's inclination that without 6, it's probably not a good project. During the summer, he thinks it is going to be a recreational lake if the City owns it. It's going to be pretty tough to draw if down, he con- tends. "Maybe if we point out who is going to end up with the first right of refusal, and it's the City, perhaps that will make them comfortable," Craig Harrison suggested. Henry Caulfield also thinks 6 is important if the City goes ahead with the project. Perhaps if Sterling gave it to the City, they would get a tax write off. Craig Harrison replied that they used to get a tax write off, but with the tax law changes of 1986, donations of these kinds of properties could be a thing of the past. Neil Grigg commented: From the narrow sense of the Water Utility point of view, how useful is all this going to be from a management standpoint? It's up to staff to assess that. "It seems to me, the more storage we have out there the better it might look for water management. First right of refusal would be important, maybe not 100% critical, but important. I don't know what more we can say?" Other Business Henry Caulfield brought the Board up to date on what has been happening with the districts that surround the City. Since there was no further business, the meeting was adjourned at 5:15 p.m. kA4 n.ili� Water Board ecre a� ry