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HomeMy WebLinkAboutWater Board - Minutes - 12/05/1986E 11 MINUTES Special Water Board Meeting December 5, 1986 Members Present Norm Evans, President, Neil Grigg, Marylou Smith, Tom Sanders, John Scott, Ray Herrmann (alt.), Jo Boyd (alt.) Staff Present Rich Shannon, Mike Smith, Dennis Bode, Keith Elmund, Ben Alexander, Linda Burger, John Huisjen, City Attorney Guests Bill Fischer, Attorney for Water Supply and Storage Company Dave Stewart* and Dave Rau, consultants from Stewart Environmental Consul- tants *Dave Stewart is a member of the Water Board, but was present at the Board meeting as a consultant for Stewart Environmental Consultants and as such, did not participate as a Board member, in the discussion or the decisions of the Water Board relative to the agreements brought before the Board. Members Absent Stan Ponce, Jim O'Brien, Tom Moore, Henry Caulfield President Evans opened the special Board meeting to discuss the proposed agreements with Thornton and WSSC, specifically to determine the Water Board's recommendation to the Council as to how the City should vote its stock on that issue at the stockholder's meeting. The Board had received, prior to the meeting, a memorandum from the staff detailing their analysis and recommendations. Rich Shannon highlighted some of the philosophy behind the staff's analysis and recommendation. As staff looked at it, the water rights aspect and the financial aspect seemed very positive. The issue, however, was the water quality, and the uncertainty of water quality. Combined with that is a con- cern for the potential impact which is quite significant of the negative effects of the lack of water quality standards and the lack of assurance that, if it is negative, it will be addressed. Staff believes strongly that the burden of proof that there will not be detrimental impacts, should be on Thornton, and that we should not take their word for it, reminding ourselves that this is just the first of many metro "raids." Staff believes it is important to set the tone early on what we expect if we can't prevent those acquisitions, and if we can't prevent the first use concept from evolving. "We hope to at least set the tone on what we expect in terms of return water, and set it as strongly as we can," he emphasized. Whether we can influence that or not is yet to be seen. Water Board Minutes December 5, 1986 Page 2 He continued by saying that since the memo went out to the Board, staff has confirmed that WSSC has advised the City that they view the two agreements as tied togehter. In other words, you don't get one without voting yes on the other. We are disturbed by this, he said, because we were called upon as a City to offer our assistance. We offered the assistance that was requested; never was it tied to, "and by the way as a stockholder you must vote for whatever we come up with." Mr. Shannon introduced an option which was not included in the memo. If the Water Board is of the opinion that staff's reservations or concerns are a little extreme, then the option is to go to the Council and recommend that we vote yes but that it is a clearly qualified yes with stated reservations about water quality or lack of protection as related to water quality. Earlier last week the City thought it was headed in that direction and had the City Attorney draft a memo of understanding between Fort Collins, Thorn- ton and WSSC making it clear that before the City voted, should the City vote yes as a stockholder, we were not precluded as a City from taking whatever action we thought necessary to object in the courts and in other avenues. President Evans asked for comments from the Board. Neil Grigg suggested that it would be good to have an overview of the prin- ciple concerns, particularly why the water quality aspects are of concern. Ray Herrmann added that staff had given them a table earlier on water quality standards that would apply to this agreement. He wants to know what specifi- cally is out of line relative to those standards. Mr. Shannon related that one of staff's biggest concerns was some of the generic language. For example, "If the parties in the future agree there is a problem, they can change the standards." This gives us absolutely no lev- erage in the future, he stressed. There is no burden of proof that those standards will not create an impact and if it is perceived there is an impact, we have no recourse. Mike Smith pointed out on the map that, as stated in the agreement, Thornton has the option of returning water as part of their first use option, anywhere between the headgate and Rocky Ridge Reservoir. Rich Shannon clarified that in theory the water is going to Thornton, but it is coming back via the Platte River to Greeley. A second pipeline from hear Greeley will bring it back to the ditch. He explained that staff looked at what the nature of the effluent is that is going into the Platte, but more important, what is already in the river flowing to Greeley that could flow,in a pipeline back to Northern Colorado? "That's where we have some of our biggest concerns; not the effluent itself." Mike Smith went on to say that the basic concern is that currently, the Poudre River water in the Larimer Canal, is of extremely high quality. What is going to happen is the South Platte River water returned to the canal, is of far lesser quality. It will flow into the canal system and perhaps in the • • Water Board Minutes December 5, 1986 Page 3 reservoirs. "We are concerned about what impact that will have on the land, the groundwater and the river; and those questions are not answered." Neil Grigg asked if in the agreements, there is a limitation on where they must return that water. It merely says between the headgate and Rocky Ridge Reservoir. Of course it would depend on where they return it. If you increase the pollutant load in the River, then our wastewater allocation level would change too, he cautioned. Keith Elmund, Environmental Services Manager, addresssed some of the parame- ters that aren't mentioned in the agreement. He repeated that there are no provisions in the agreement for modifying the monitoring program once it is established -- only to amend the standards. If new compounds, down the road, are identified as a problem, there is no route to add those compounds or modify the programs. Dr. Evans asked Bill Fischer, the WSSC attorney, to respond to that. Mr. Fischer explained that the contract contains general language and they intended it to be that way. The reason is that the status of the science of water quality is not stable right now. New things are being discovered each day. If the parties agree that something should be studied, "we will study them." If one party believes that something should be studied, the burden will be on that party to go into Larimer County District Court, which will have jurisdiction over the matter, to prove that those standards should be incorporated into the agreement. If the parties agree, the change is incor- porated, if they don't they go to court. Dr. Elmund went on to state the specific areas which are not included in the agreement: Under chlorophenoxy herbicides there is no mention of the common herbicide 2,4-D, nor of the standard for it of o.1 mg/L; no limits are set for BOD or COD; no limits or monitoring are established for phosphates. Under physical parameters, the limit for dissolved oxygen is set at 2 mg/L with a comment that this would be a four week average not .to exceed -- He believes that language has been inverted, besides being a low limit. 4 mg/L would be a minimum type of a standard, and should be expressed as "not less than." The fecal coliform level of 200 organisms per 100 ml which Thornton is willing to meet would require chlorination of return flow water. In rela- tion to the point that was raised earlier, the impacts on receiving water and groundwater, there is no monitoring for any volatile organic chemicals which may either be present in the return waters or created as a result of the chlorination of the water from the Platte River. Towards the end of Exhibit A, no time periods are established for periodic completion of the analysis for reporting. In other words, it indicates that monitoring will be done but there are no deadlines such as quarterly or annual reports. There is no men- tion of sharing this information although it does indicate that it would be collected. There is no indication that the analytical quality assurance data that should be collected with this data would be included with the reports or made available for review. Tom Sanders asked about sodium. Dr. Elmund said it would be monitored but no standard met. He added that he thinks it would be prudent to know on an Water Board Minutes December 5, 1986 Page 4 ongoing basis, not only the basic information, but the quality of the water that the farmers would be applying to their fields, and there are not provi- sions in the document for that. Mike Smith commented further that, going through the standards, they noticed there was little consideration given to looking at the standards for the pro- tection of aquatic life. This appears to be an issue that Thornton does not wish to address and there are a couple of reservoirs in the system that are classified. Bill Fischer prefaced his remarks by saying that WSSC has enjoyed a fine reputation with Fort Collins through the years, and "we are hoping to con- tinue that relationship." He went on to summarize the background information starting with the time on April 9 when Thornton actually came into the WSSC office and announced that they were the owners of approximately 243 out of 600 of the Company's shares, with an actual option on about 283. After Thornton described their plan to them, the Board was very concerned because it put the entire system in jeopardy, in fact the life of the Company. WSSC took somewhat drastic action to make sure that the system and the Company was saved. It elected to go into the market and purchase some CBT shares which would be put back into the system to help replace some of the shares Thornton proposed to remove. It started purchasing some of its own shares to achieve the same result. It also approached the City of Fort Collins, after it had increased the number of outstanding shares from 600 to 900. The purpose of this was to give Fort Collins shares of water stock and in return get other equivalent waters. This would have the effect of diluting Thornton's interest and allowing WSSC to remain in control. Negotiations began with talking about Joe Wright Reservoir. Fort Collins said yes but they wanted a bail -out provision in the contract, because they weren't sure it would be beneficial for the City. After other discussions, it was determined that Joe Wright was not the best source to trade, so CBT units were looked at. After those too were determined not to be the best, they chose Southside Ditch water and the same provision was included in the contract. The effect was to put WSSC in control in perpetuity. It was then that Thornton sued WSSC and Fort Collins. At the preliminary injunctive hearing we were successful. The trial was scheduled for January. After the hearing Thornton approached WSSC and wanted to start negotiaions and "we were willing to talk --the reason being that we were in the best possible position for talking with them." Mr. Fischer said, "We realized then, if we won the court battle, the war would be lost in 10 or 15 years because we simply could not issue shares as fast as Thornton could buy them. Thornton would have to buy only half as many shares as we issued to maintain control. Another alternative was to do nothing. In the end, "we realized that WSSC and Thornton had mutual inter- ests and the two of us could work together on these in the future." At the same time each had completely different interests which each had to get and those interests were mutually compatible. One of the concerns was water quality in the reuse water that was returned to our system. There is nobody more concerned than WSSC because they use the water directly. Another con- cern was the protection of the integrity of the ditch system and the Company because Thornton was taking so much water out and was going to dry up so much land. In this respect control of the Company was a critical concern simply • • Water Board Minutes December 5, 1986 Page 5 because if Thornton could get control, it could do what it wanted to do. Next Mr. Fischer addressed some of the points in the staff's memo. One was to vote no on the agreement which would allow us to renegotiate the contract. WSSC is happy with the contact because it accomplishes every goal they had to get. "The agreement is not renegotiable; it's as simple as that," he stated. If at the shareholders meeting, the agreement is voted down, the lawsuit is revived. He recognizes that .the water quality is a real concern for the City. Therefore, WSSC hired Dave Stewart and Dave Rau from Stewart Environmental Consultants to help out on the water quality standards. The Company thinks that the standards are stringent and that they do not signifi- cantly change the water quality of the ditch. Of all the issues the WSSC and Thornton had to face, water quality was the biggest hurdle. A creative solu- tion was arrived at and that was to lower the amount that Thornton was paying the Company in the long term by about $90,000 and allow Thornton to put it into an account that receives interest, which would allow them to treat the water to a higher degree than before. Dave Stewart explained point by point what they have done as consultants relative to the City's concerns. He said Thornton has taken several measure- ments across the ditch system from beginning to end. The consultants have data to substantiate this. They have also taken measurements on the Poudre River System and on the reservoir system. At this time Thornton doesn't have any first use rights and aren't returning any of it to the river. However, they have the right to go out to the shareholders and enter into the first use rights. Mr. Stewart said if you look at the water quality along the reservoir system and some of the sample points that were taken, the water quality in the return reach from Rocky Ridge to the headgate, the conductivities range from 300-400. When they were setting the standards they looked at all the water reuse standards they could find. Bob Danielson and Bill Franklin of CSU were the intermediate consultants who were totally independent,of either the Com- pany or Thornton. Thornton also provided their water quality expert, Rick Arber. As far as the impact on the land, Bill Franklin an agricultural expert, considers that it would be minor if at all. The water was still a good quality and most of the year it would be excellent. With regard to the groundwater, it is difficult to say. There certainly will be interaction with the soil. If there is any degradation, it will move very slowly because of the clay soils. They aren't sure what is going to happen. Any of the heavy metals and the TDS is probably going to exchange in this area and therefore, won't move. Unfortunately nobody knows. There hasn't been any underground water monitoring, therefore, we don't know what the existing groundwater quality is. Neil Grigg and Tom Sanders wanted to known if there are other constituents in the Platte that are raising alarm of any kind. Mr. Stewart said the metals were never detected at very high levels. The total coliform and the fecal coliform were of major concern. At the spots they were measuring along the Platte, they were unable to detect where it was coming from. It was not downstream of any discharge. They asked to have fecal strep monitored. Water Board Minutes December 5, 1986 Page 6 How about the nitrates, someone asked. Dave Rau answered that the maximum nitrite value that was detected was .19 mg/L and nitrates ran around 4 and there was one value up a little over 6. Their concern with nitrates and nit- rites was related to stock water. They included the state's groundwater standards for agriculture in developing their standards. How about pesti- cides? Dave Rau said any pesticide analysis they took came up non - detectable. Dave Stewart added, with very limited data. Mr. Stewart also related that in his discussion with staff, they informed him that there is a possibility of 2,4-D in the South Platte at Masters. Dr. Grigg asked if this was a special monitoring for this study or was it taken from river records. It was a special monitoring program for this study and will continue. They began taking data in May of 1986 and it is contin- uing. Rivers were sampled twice a month, reservoirs once a month. Tom Sanders is concerned about where the intake will be for a future water treatment plant. He wants it established that we would not use the water for anything but exchanges and that we would not use it for water supply. Bill Fischer acknowledged that their goal was not to make the water drinkable when drawing up the agreement. Norm Evans asked Linda Burger, as a member of the State Water Quality Control Commission, if irrigation ditches are subject to state water quality control standards. She said they are to protect downstream users -- in this case the classifications of the reservoirs would be the driving force. If in the future, the ditch might be used for drinking, it would be reclassified. Jo Boyd asked the group to consider the following: You have figures on the South Platte now. Currently, all the figures from the ditch are based on a clean influent into the ditch. When the return flow comes in there will be a dirty influent into the ditch, and it will be compounded with the normal agricultural run-off, and normal high dissolved solids from certain reser- voirs, etc. The figures now could easily be doubled more or less. Bill Fischer answered that they did think of that. Dave Rau said they hadn't done anything very sophisticated, but they looked at the change of water quality through the ditch. They did not set up a model but looked at how much TDS was gained through the system. They also looked at conductivity, sodium absorbtion ratios, and at the big agricultural parameters. This phi- losophy, when they developed those standards, was that in the future, 100% of the ditch would be made up by the return flow waters. Bill Fischer phrased the concern in this way to try to clarify it. If the water quality above is 1, 1 being good, and 70 miles later it is 10; we would then start out with 5, and the water quality will be 15 down at the end. Dave Stewart said that was the right idea and it needs to be modeled. They still don't know how the reservoirs interact with the ditch. Dr. Boyd asked about the oxygen demand values. Mr. Stewart responded that the odors are addressed with the dissolved oxygen. Dr. Elmund is correct in Water Board Minutes December 5, 1986 Page 7 that the dissolved oxygen value should be greater than not less than. That dissolved oxygen if it is maintained in the ditch is a measure of the organic loading and if the organic loading is higher and it causes that dissolved oxygen to dip down, this water will not be accepted. Dave Rau made one more clarification. These are not in -ditch standards, he said, they are discharge standards to the ditch. Tom Sanders asked what the average return flow will be. The ditch flows at 400 cfs -- the return flow will depend on how big a pipe is put in. Bill Fischer added that at this point they don't know. Perhaps nobody will sign up for the reuse plan, perhaps everyone will, he said. Dave Stewart went on to conclude his presentation. He said, as far as degrading the City's effluent permit, the likelihood of surface water returning is small. The likelihood of groundwater deteriorating the Poudre River significantly to change the waste load allocation at the treatment plant outflow, they think is a possibility, but would not be significant. Lee Rice has done a study with regard to groundwater in the area. Any groundwater that gets into the system, is returned below Fossil Creek. Regarding the aquatic life issue, that is between Thornton and the Division of Wildlife or the WQCC. Thornton is the discharger. If they degrade the reservoir so aquatic life is no longer protected, Thornton would be respon- sible for cleaning up those discharges. Norm Evans asked, according to the agreement? Bill Fisher responded, no. He related that when they began negotiating, the fish was not a real concern. Aquatic life didn't seem as important as other things, he added. Jo Boyd asked, under the agreement who is responsible for doing the testing. Dr. Elumnd mentioned that there isn't any provision for analytical quality assurance data. Thornton would be responsible for doing the testing was the response. Dr. Boyd asked if there would be any chance for reimbursement should we feel that duplicate monitoring was required. Mr. Fischer respon- ded, "I doubt it." Dave Stewart assured the group that the sampling protocal was through Title 40 CFR, part 136 which states the quality assurance, quality control plan that has to be accepted by the EPA. They also specify the EPA's methods for chemical analysis of water waste, standard methods ASTM and any EPA Biological Field and Laboratory Methods These methods have to be approved by EPA and must be followed to the letter for both quality assurance and quality control. Dr. Grigg asked to shift the focus away from these points to the two differ- ent agreements. It seems clear that there are many water quality aspects that we can't settle here, but they are there. Let's look at what we are dealing with. We would be introducing water of unknown quality into the basin by virtue of Thornton pumping it here from Greeley or however they plan to do it. The thing that concerns us is that we don't have any control of the water entering our basin --not just the surface water. Normally if you have wastewater entering into any body, there is a regulatory mechanism to control the quality of the water. Here the machanism is the agreement between WSSC and Thornton. We have no control. We are going to have to rely Water Board Minutes December 5, 1986 Page 8 on a private company to regulate these waters returned to the basin. There is a structural difficulty in that. Whether we vote yes or not, that won't go away in the future. "This should be our focus," he contends. Dr. Grigg listed some possible options. NPDES permits where a pipline specification with a regulatory mechanism is an option. We are dealing with an inter -basin transfer. How are these normally regulated? He thinks there should be an inter -government agreement to regulate this, rather than something that is regulated by a private company. We could create a water quality management district that would allow us to study these things jointly and sign agreements. The only thing, however, is to look for some way to compel WSSC to regulate. The only lever we have is the two-party WSSC and Fort Collins agreement, if we redevelop that agreement with strong language so Fort Collins has legal language to force WSSC to either make Thornton comply or go to court over things not satisfactory. Someone asked why phosphorous was not included as a standard. The response was because it relates to fish. Dave Stewart finished his comments by relating how the standards were set. They were set by taking a compilation of the groundwater standards, the classification numerical standards, which are on the South Platte River basin and the blue book value regarding aquatic (not a real driving force), and values for reuse set by the National Research Council. (NRC) The strictest standard applied. Mary Lou Smith commented on Neil Grigg's suggestion to put more teeth in the two-party agreement between WSSC and Fort Collins. She asked Bill Fischer if we did that, how would it affect the agreement between WSSC and Thornton. Mr. Fischer replied that WSSC could not agree to that contract without Thornton's written consent because WSSC has accepted a great deal of consid- eration from Thornton. It would be bad faith for the Company to do something with those assets against Thornton's best interests. As to the provision that Dr. Grigg was talking about, he doubts that either Thornton or WSSC "would be too excited about it." It could be presented to the Board, how- ever. Mr. Fischer then praised Fort Collins for what it has done for WSSC and the area. "Fort Collins not only protected the Company, but in so doing protected the whole area," he stressed. What the agreement accomplishes, he went on to say, is control; WSSC maintains the integrity of the system, incuding, they believe, water quality. He realizes that Fort Collins must vote its conscience on the agreement. The Company continues to appreciate Fort Collins and that it scrutinizes issues like water quality. He expressed the Company's thanks for what Fort Colins has done whether or not the City decides to vote for or against the agreement. Dr. Evans thanked Mr. Fischer and assured him that Fort Colins wishes also to maintain harmony with WSSC, but "we also want to take seriously our respon- sibilities to the community and region in which we live." Tom Sanders commented that Mr. Fischer praised Fort Collins for what it did for the Company. "What is the Company doing for us?" Mr. Fischer responded Water Board Minutes December 5, 1986 Page 9 that they are still going to investigate the possibility of the Southside Ditch agreement. Furthermore, Fort Collins is a shareholder in the Company, which means you get all the benefits of the agreement. Dr. Sanders contends that we could have done nothing and still received those benefits. Politi- cally, Fort Collins has paid a lot, he added. Why doesn't the City have a voting member of the Board" Mr. Fischer replied, "We talked about that and Thornton would not agree." Dr. Evans asked the Board to concentrate now on what kind of a recommendation we will pass on to the City Council. Dr. Grigg stated that what bothers him about a no vote is he doesn't see what could be renegotiated that would give us the kind of protection we really need. What he would like to see rather than a no vote is a revision of the Fort Collins and WSSC agreement that would give Fort Collins a lever to com- pel the Company to take actions that the City sees as necessary to protect water quality. He would also like to see some kind of City -County water quality monitoring program. Dr. Evans suggested that the Board discuss the option which Rich Shannon put before the Board earlier. MaryLou Smith wondered if that option would have a different effect than the one Neil Grigg mentioned. The one that he proposed, she thinks would result in the agreement not going through. Ms. Smith believes that WSSC has water attorneys whom we all respect, and who have conceivably come up with the best "win -win" situation we could hope for. Instead of voting no on the agreement and dilute our chances, she thinks we need to look instead at a memo of understanding that reserves our right to object as a City in the future if water quality standards aren't met. Mr. Shannon replied, "At the heart of what you are suggesting is that the Water Board would be comfortable saying the City will absorb the role of pro- viding the burden of proof that there is damage to the area rather than plac- ing the burden on Thornton to prove there is no damage to the area." She replied, "No, we would like to reserve the right to complain later." Mr. Shannon contends "that our ability to complain gives us nothing but the ability to complain, " as opposed to setting an agreement now that places the burden on Thornton not to damage us. She would agree to that if she had the feeling that we have any negotiating power. She is concerned that we, for example have a large "pie" that we are trying to get. If we throw a "cog in the works" on one small piece of the pie, we may lose the whole pie. She has confidence in WSSC and Ward Fischer that they are looking out for Fort Collins as well as the whole area, and would hate to see all of us lose because we are unhappy with "one wedge of the pie." John Scott asked if Thornton has announced their plan of where they are going to dump their water and take it back out ect., and does Greeeley know since Water Board Minutes December 5, 1986 Page 10 they may be the most impacted. Thornton's wastewater is treated by metro, Mike Smith explained. Greeley won't be impacted any more than they are now. As more urbanization occurs, the quality may deteriorate more, however. Mr. Scott also wanted to know if Thornton has announced any operation changes in the system. Mr. Fischer replied, that as far as WSSC is concerned, they start at the normal irrigating season and end it at the normal time. We deliver water to the headgates. "They fit into our system, not we to theirs." Norm Evans reiterated a concern that phosphates are not included in the list of standards. The impact of that may be in eutrophication or problems with aquatic life in reservoirs. What would be the state regulatory position on that? Say it happens under these circumstances. Linda Burger replied that the kinds of regulatory remedies for that situation are then applied by adopting the site specific regulations. This has happened in Cherry Creek Reservoir and others. Phosphorous normally has both point sources that are in wastewater treatment plant origins as well as origins from run-off from the soils from agriculture, etc. Normally regulations develop that require reductions in the wastewater plant effluent phosphorous levels, as very expensive measures to control non -point sources, be they agriculture run-off or urban storm drainage, or whatever. Once phosphorous becomes an issue it has widespread effects. It is, by the way, regulated not only for aquatic life but for the protection of recreation uses, as well. Dr. Evans asked is it prudent on the City to take care of that as a possibil- ity or is this a state matter? Ms. Burger's reply was that it is up to the Board to decide what their philosophy is. High algae content can also be a problem in terms of operating an irrigation system. You need to decide if your concern is only in terms of your position as a shareholder and what the pros and cons are in terms of the City's water supply, or whether you have a more regional concern for aesthetics and recreation opportunities or whether your shares as a shareholder carry with it a concern for agricultural uses as well as just for the Poudre River itself. Mary Lou Smith said that her understanding of Dr. Evan's question is if there is a state agency to specifically look out for that. Ms. Burger replied that the WQCC would certainly look at the issue if it was petitioned to do so. Is there anything active in the 208 agency these days. Normally this is where regional issues are discussed. Ms. Burger said that staff has dis- cussed taking these issues to the 208 agency. However, that places the bur- den on either Fort Collins or the 208 to fund developing the information to go forward. Dr. Evans stated that we can assume that no agreement can supersede the state's regulatory authority. Rich Shannon responded to Neil Grigg's suggestion. If the potential was there for the City to renegotiate the agreement between the City and WSSC and the Company gave us a lever, that would be significant. His understanding is, that is very unlikely. We already have the ability to study the impacts, we Water Board Minutes December 5, 1986 Page 11 don't require anyone's permission to do so. The ability to force someone to change is not within our control. "We are dealing with a changing entity." When you talk to the WSSC Board now the tone is similar to the past, but the moment Thornton is in the room you have a totally different atmosphere. It is Mr. Shannon's belief that we should not expect any cooperation from that Board 5 years from now. "The ability to have a good faith discussion over a concern we see will get us nowhere." Mary Lou Smith askedr could it -be perhaps that WSSC was trying to come up with an agreement that would be best for our basin? Mr. Shannon replied that the crux we are at is a value judement on that point. To use Ms. Smith's analogy of a small wedge in a good pie. "Our concern isthat small wedge in hindsight will be an enormous wedge and that the millions of dollars and the water put into that pie, in hindsight, will be very insignificant compared to the potential damage to the region by lack of protection of the water quality." Whether we vote yes or no, we would expect Fort Collins to use every hurdle available to place in front of Thornton; whether it is Water Quality Control Commission, the EPA, or Environmental Assessment requirements. Ms. Smith asked, is there a chance that in going to bat for water quality that we may lose quantity --that we may have caused problems with an agreement that would have been the best solution for an unsavory situation? Mr. Shannon said, "If you truly think this agreement is 'the best of both worlds,' then you should vote yes." Ms. Smith asked what are our chances of coming up with another agreement? Mr. Fischer contends that it is this or court. Mr. Shannon replied, "If I were in their shoes I. would say there is no chance of renegotiating, but I have also been in situations where that's been said and at the llth hour there always seems to be room for negotiating one more point." From the City's standpoint, he is not sure what we would lose by going to court. He doesn't see that as an enornous risk. Bill Fischer stated flatly that we either have this agreement by the share- holders or we lose. The reason is that you don't know what a judge is going to do, but in the long run, "we are going to lose." Tom Sanders asked what would be the effect of Fort Collins voting no. We have only 17 shares. Mr. Fischer replied that they are treating Fort Collins as a very special shareholder. At the meeting coming up in December, to get the contract approved there must be 2/3 of all the shareholders represented at the meeting. Thornton already has 283; they will be voting 47%. Mr. Shannon countered, "If you are that comfortable with the water quality standards, why are both agreements tied together? Why can't the City vote its conscience as every other stockholder and receive the benefit to the City Water Board Minutes December 5, 1986 Page 12 that we gave WSSC earlier? Mr. Fischer replied that first there was a three -party agreement. When the City felt it was best to have a two-party agreement, WSSC felt it would be bad faith to enter without Thornton' s approval because they are giving us monetary benefits. Tom Sanders asked who from the City will vote at the meeting? The response was, the question of who will carry the vote, the Council will discuss later. Norm Evans explained that whatever the Water Board wishes to recommend will go as that, a recommendation. The Council will decide on what the City's vote is. Neil Grigg, at this point moved that the Water Board ask the staff to com- municate to WSSC the Board's desire to renegotiate the two-party agreement between Fort Collins and WSSC to ensure adequate water quality protection in this area. If the outcome of that renegotiation is satisfactory, the Water Board recommends that the City Council vote yes on the overall agreement. If the outcome is not satisfactory, the Board recommends that the Council vote no. Tom Sanders seconded the motion. Rich Shannon advised that a memo of understanding with Thornton's signature be included as part of the motion. This insures that if we do vote yes that it doesn't preclude the City from complaining about water quality issues in the future. MaryLou Smith stated that Mr. Shannon would like this as a part of the motion "whereas some of us would like this in place of the renegotiation of the two- party agreement." Neil Grigg clarified that the intent of his motion was that when the agree- ment was renegotiated, Fort Collins and WSSC would develop a mechanism where the City would compel the Company to exercise this contract right over Thorn- ton in the future. Mr. Shannon presented the following scenario: We have an agreement with WSSC that we have input in the water quality issues. We go to the meeting and vote yes. We later go to the WQCC and complain. The City of Thorton counters, "As a stockholder, they voted yes; they have no grounds to complain now." Dr. Grigg agreed to change his motion with permission from the second to incorporate this point. City Attorney John Huisjen clarified the City's interpretation of what Neil Grigg's motion stated. He added that as a shareholder in this ditch company, the City has as much right as anybody to observe and monitor and have rights to see that this agreement is enforced. It shouldn't offend Thornton to have a major stockholder, as we are, to be able to observe to see if they are complying with the terms of their agree- ment. He doesn't see it as offensive for Fort Collins to have that right. He therefore, does not think it is unreasonable to go down the path that Fort Collins should have some input on water quality. Water Board Minutes December 5, 1986 Page 13 There was a question about a third party doing the monitoring. Jo Boyd said she thinks Mr. Shannon is saying that even if Fort Collins does some monito- ring of its own, and we may disagree with their third party, are we going to have to initiate court action to get the quality improved or will the burden be on Thornton? Ray Herrmann asked if Thornton is in violation of the standards, what happens? Bill Fischer stated that WSSC goes to court and gets an injunctive order to shut them off. At this point Neil Grigg restated his motion as follows: The Water Board recommends that the staff attempt to develop with WSSC and Thornton two agreements: 1) A modified Fort Collins-WSSC agreement to incorporate water quality protection; 2) A Fort Collins-WSSC-Thornton agreement reserving Fort Collins' right to object. If these negotiations are satisfactory, Water Board recommends that City Council vote yes on the main agreement at the stockholder's meeting, if unsatisfactory, the Board recommends a no vote. Ray Herrmann moved to amend the original motion. The second agreed. Marylou Smith still maintains that "to incorporate water quality protection" doesn't say anything about who the burden of proof is on. Mr. Shannon is not optimistic that we would come to an agreement with Thornton on language that addresses that. Dr. Grigg said, "Then we would vote no according to the motion." He left that statement brief, delegating to the staff the task to develop provisions that should go in there that would ensure every aspect of water quality pro- tection. Mr. Shannon asked that three members of the Board be included to make a value judement as to whether we achieved enough to vote yes. These members will be Norm Evans, Henry Caulfield and Neil Grigg who have been involved all along. The vote was taken. Since two members voted no, members were polled with the following results: John Scott, yes; Tom Sanders, yes; Mary Lou Smith, no; Neil Grigg, Yes; Norm Evans, yes; Jo Boyd, yes; Ray Herrmann, no. Marylou Smith voted no because she favors a memo of understanding to retain our right to object at some future time, and she is concerned that we could lose "the bigger picture" by objecting at this point. Ray Herrmann said he voted no because he simply doesn't have enough informa- tion about our existing capabilities to protect water quality at this point. President Evans said he is optimistic that something can be worked out; that is why he voted yes. Mr. Fischer thanked the Board for having him come to the meeting and also expressed the hope that something can be worked out. Water Board Minutes December 5, 1986 Page 14 Other Business It should be noted that because the business was unrelated to Thornton, Dave Stewart was allowed to participate in the remainder of the meeting as a Board member. Mike Smith reminded the Board that at a special meeting on October 9, the staff presented a number of water acquisition opportunities to the Water Board for consideration. One of those opportunities involved obtaining the first right of refusal for 225 units of CBT water from Hugo Anderson repre- sented by Lynn Hammond. The City had previously (in 1979) entered into a first right of refusal agreement with Lynn Hammond for 105 CBT units. At the October 9th meeting, the Board recommended that the City offer to purchase both the 225 and 105 units of CBT water instead of pursuing the first right of refusal. Subsequently, the staff made the purchase offer to Lynn Hammond and he declined. Following that, the staff asked the Board if there was any interest in pursuing the first right of refusal and the consensus of the Board was "no." Yesterday Mike Smith received a call from Lynn Hammond and he offered to sell the 225 and 105 units of CBT water for $775 a unit or $255,750. In accor- dance with the Board's previous action on this item, the staff recommends that the City acquire the 330 units of CBT water at a price not to exceed $775 per unit. However, the staff would like the Board's concurrence to negotiate with Mr. Hammond on the price ...something between $750 and $775. Ray Herrmann moved that the Board direct the staff to proceed with the pur- chase following further negotiations on the price. Following a second from Jo Boyd, the motion received unanimous approval. Mike Smith also related that early today the staff received an offer from Craig Harrison to sell 105 shares of North Poudre Irrigation Company stock at a price of $3250 per share. This appears to be an exceptional offer. Available information indicates that the market price for NPIC stock is $3500 to $4000 per share. The average annual yield of the stock is about 5.9 acre feet per share. The City presently owns about 1025 shares of NPIC stock, about 10% of the total (10,000). The staff recommends the City acquire the 105 shares of NPIC stock. Tom Sanders moved that the Water Board approve this transaction. After a second from Ray Herrmann, the motion carried unanimously. Mike Smith summarized the existing opportunities that have been approved. He said they add up to $1,717,000. We have adequate reserves to purchase that amount, he said. We have some money appropriatead in this year's budget to buy a small portion, he assured the Board. Ray Herrmann asked how many more opportunities are we going to be able to take advantage of before the capital limits. Mr. Smith replied that "our water supply plan is coming to conclusion in the next few weeks. We will put everything together so we have a more definate plan of acquisition. These all fit in," he added. Water Board Minutes December 5, 1986 Page 15 For future reference, Dave Stewart suggested that staff and selected Board members do some financial analyses to get an idea as to where the spilt comes between existing money and having to borrow it. Since there was no further business, the meeting was adjourned at 5:30 p.m. Water Board Secretary