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HomeMy WebLinkAboutWater Board - Minutes - 01/15/1988WATER BOARD MINUTES January 15, 1988 Members Present Norm Evans, President, Henry Caulfield, Vice President, Neil Grigg, Jo Boyd, Tom Moore, John Scott, MaryLou Smith, Tom Sanders, Dave Stewart, Jim Kuiken (alt.), Chester Watson (alt.) Staff Mike Smith, Dennis Bode, Andy Pineda, Linda Burger, Paul Eckman, Assistant City Attorney Guests Darell Zimbleman, Assistant Manager, Northern Colorado Water Conservancy District John Carlson, Special Legal Counsel, City of Fort Collins Members Absent Ray Herrmann President Norm Evans opened the meeting. The following items were discussed: Minutes The minutes of December 18, 1987 were approved as distributed. Norm Evans distributed a draft of a memo to be sent to Mayor Estrada regard- ing conflicts of interest. The Board, at the last meeting, asked Dr. Evans to follow up with some inquiry about specific areas of conflicts of interest. He asked the Board to give him comments or suggestions or other concerns they would like to have expressed in the memo. Status Report on Excalibur and U.S. Reserved Rights Mike Smith introduced John Carlson, special counsel for the City of Fort Col- lins, who was invited to the meeting to give a status report on the Excalibur case as well as an update on the U.S. Reserved Rights issue. Water Board Minutes January 15, 1988 Page 2 Mr. Carlson prefaced his remarks by stating that if someone asks a question during the discussion that he thinks is inappropriate to answer unless the group was in a legal confidential session, he could perhaps provide an answer on a privileged basis at a later time. He believes it is important to take these pains because the City of Fort Collins has invested a great deal of money in acquiring and perfecting its rights in the Michigan Ditch, a trans - mountain water supply out of the North Platte River. There are contractual and distribution arrangements that have been made by the City over the years involving return flows from the Michigan Ditch. These are also of tremendous importance economically in contracts with Platte River Power Authority and arrangements with Anheuser-Busch. The Excalibur claim is essentially a claim for the right to divert 5,000 AF annually out of North Park, as a 1986 and 1987 series of water rights. They propose a pipeline from a point considerably downstream on the Michigan River. They propose, somehow, in an undefined manner, to pump that water over the mountains, again by an undefined manner, to deliver it to the Den- ver -metro region. At the time they filed their application for water rights on December 31, 1986, they asserted that they had a contract with a water and sanitation district which was then called the Dolly-O-Denver Water and Sani- tation District, now called the Douglas County Metropolitan District, to pur- chase the water. It is very clear that Excalibur itself is not a water pro- vider and does not have any use for the water other than "to make a buck." They need to show a legitimate end user and a contractual arrangement for that end use; otherwise, they are speculators and not entitled to water rights. They have taken great "surface pains" to try to legitimize the claim. The reason the claim is important to the City of Fort Collins has to do with the inter -state decree of the U.S. Supreme Court which equitably apportioned the waters of the North Platte River between Nebraska, Wyoming and Colorado. The U.S. Supreme Court entered its original decree in 1945 and it supple- mented that decree in the mid 1950's. Under the terms of that original decree, Colorado was limited to irrigation of approximately 120,000 acres in North Park. A second limitation was imposed and that is one of grave and important interest to the City of Fort Collins. The U.S. Supreme Court said that the quantity of water that could be exported out of North Park to the Front Range through the Michigan Ditch and the Cameron Pass Ditch, owned by Water Supply and Storage Co. (the only trans -mountain diverters), was limited to 60,000 AF in any 10 year running average period. Any new appropriator of water in North Park who today seeks a water right for exportation, must fit within that 60,000 AF supply that is allowed to be exported. The Michigan Ditch, in its heyday for irrigation use, could divert 6-7,000 AF in a good year. The Cameron Pass ditch is a small ditch with a very limited water sup- ply and unable to divert large quantities --perhaps 300-400 AF. The Michigan Ditch is a large system, and when it is in working order, it is essentially fully able to consume that available exportation. Water Board Minute• • January 15, 1988 Page 3 When the City first looked at the claim, their question was, how could one of these 10-year running averages work if Excalibur came in and diverted the water in a year when Fort Collins didn't need it? They would use up part of that 60,000, and in later years when Fort Collins needed it, there wouldn't be any water for Fort Collins. That remains a concern, Mr. Carlson stressed, although an unusual concern; the problem of trying to make consistent the doctrine of an annual appropriation amount versus the 60,000 AF over 10 years. Mr. Carlson went on to say: "As we have gotten into the case, it's become even more serious than that because it is very clear, and I think Excalibur makes no bones about it, that their plan is to try to destroy Fort Collins' right to use the Michigan Ditch to its decreed extent. This type of thing used to be called claim jumping," he laughed, "and we all know how claim jumpers were treated in those days." Now we take a more civilized approach in the form of court warfare. There is no capacity in the 60,000 AF export as a practical matter, unless the City of Fort Collins' rights are delimited or constrained. Obviously, the City has invested substantial funds in acquiring and rehabilitating that ditch to make sure it has a full water supply. The Excalibur people are a series of partnerships. One group is called the Ballar partnership and that involves a real estate investor/developer in the Denver area named Bill Walters. There are other investors whose identity we aren't completely sure of, Mr. Carlson admitted. There is also a group of investors from the Fort Collins area named Goodman and Blessman. The Excali- bur people are hoping to appropriate water, sell it and make a lot of money. In order to make their claim, they are hoping that the District mentioned earlier will legitimize them by taking them past the hurdle of being a specu- lator. Mr. Carlson said that, at this point, they are in the midst of very heavy discovery. Earlier this week, they took a deposition of the president of the district that is supposed to purchase the water from Excalibur. It turns out that the District is 2,000 acres of land south of Denver; raw land that has never been developed. The district has existed 10-20 years and has been treated as a dead district by the Department of Local Affairs. Develop- ers acquired it 2-3 years ago and activated it. The district has no inhabi- tants, no service, no zoning, no plating, and yet they have all of these grandiose plans. The board of directors has authorized the issuance of $500 million in bonds. It is clear that the district is run by a man who is the principal manager of the group of investors. It is clear the district has no very firm plans. It is also clear that the district doesn't have the finan- cial where -with -all to cover those bonds, Mr. Carlson reported. Mr. Carlson and colleagues will take a series of 10-12 depositions of all the people involved, and examine what causes them to be entitled to a water right. Did they validly initiate a water right? Do they have anything behind it or is it a speculative scheme? He related that it will be a very time consuming, expensive proposition and wasteful for City employees because they are having to devote an extraordinary amount of time to it. Water Board Minutes January 15, 1988 Page 4 A pre-trial conference is scheduled in April. Trial has been set for 5 days in mid -May. The issue is: Did Excalibur make an appropriation? Have they done things that are required under Colorado law to have an appropriation? Will it hurt Fort Collins under the terms of the inter -state decree? They clearly intend to attack the validity of the Fort Collins right, Mr. Carlson emphasized. If Fort Collins wins, "you will be in the same position as you were in before. It doesn't create any new revenue for you. Unfortunately, you are purely in a defensive posture," he concluded. Mr. Carlson asked for questions and comments. MaryLou Smith asked for a clarification. It is her understanding that Excalibur has to do some work to show that they have a vaTid request. In addition, they need to show that Fort Collins has an invalid right. "What if Excalibur is shown to be an operation that doesn't have a valid claim, doesn't that still put us in the position of having this come up again with someone else who might be a more reputable operation? Perhaps we need to do something to clarify our right so that we won't have to pay out these legal fees over and over to defend our right." "That is a possibility," Mr. Carlson responded, "but it seems to me that the Colorado Supreme Court has decided a case, not involving Fort Col- lins, that gives substantial reason to believe that our decrees are valid." It seems to him that unless and until a court had said our decrees are not valid, and did not protect our position, there is no sense in making new claims or re -litigating or confirming those proceedings. Ms. Smith restated: "Is it possible to make our claim more solid so we would be less likely to be sued in the future?" "That is a possibility, Mr. Carlson replied, "although there are some prob- lems with that." It seems to him that until our position relative to Excali- bur is more definitely known, we shouldn't address that. "It may be some- thing we can sit down and talk about in a legal session when the dust settles." Mr. Carlson reiterated that we have two overwhelming objectives: 1) to show the court that Excalibur has not initiated a valid appropriation and 2) to the extent our rights are attacked, to beat down that attack. If we beat down that attack in the context of this case, that ought to dissuade other people, he assured the Board. Neil Grigg asked what court will it be tried in? "It's in the Water Court Division 6 in Steamboat Springs," Mr. Carlson replied. They seem to be ini- tiating ancillary or subordinate litigation. They have challenged Platte River's and the City's diligence rights on Rawhide Reservoir and a challenge to a miner augmentation plan involving Michigan Ditch water and Mr. Carlson was told that in December they made an exchange filing by which they hope to run the water using exchanges on the Poudre and on the Platte back up the river to their district which lies south of Chatfield Reservoir. In Dr. Grigg's second question he asked if what they are doing to us amounts to harassment, and if our costs are high, is it possible for us to counter sue and recover some of those costs? "I have seen only one case in which a court awarded fees and costs on that kind of ground in a water case," Mr. Carlson replied. "However, when we met with Excalibur, we advised them that Water Board Minute January 15, 1988 Page 5 we intended to seek those fees and costs." Whether the court will award us that sort of thing remains to be seen. You would have to have a total vic- tory and have convinced the court that it was frivolous, he added. Paul Eck- man agreed that he hasn't seen that kind of an award very frequently. Mr. Carlson stated that if the facts develop that allow us to do that, we will seek it wholeheartedly. Someone asked who Excalibur's attorneys are. Mr. Carlson answered that they have "a whole houseful of them!" The principal counsel is a firm called Albright and Buchanan. Martha Albright is the attorney for Excalibur. He mentioned 3 other firms that are involved. Henry Caulfield referred to Division 1 versus Division 6 in the Supreme Court case which was addressed in Mr. Carlson's memo. "I gather you don't want to discuss that any further," he said. "Do you want to discuss the dil- igence question with respect to development of the Michigan Ditch?" Mr. Carlson agreed that those discussions would be more appropriate in an execu- tive session. He did relate, however, that Excalibur's claim is that the decrees Fort Collins got back in the '70's were not entered by the proper court, and the "reason they seem to want to say that is they want to drive us back into court to seek confirmation and then allege that our rights are smaller than we fervently believe they are. That is why they are threatening the Division engineer. They want to try to compel us to submit ourselves to the court. We want to have the Supreme Court uphold what it has already said and that is, our decrees are appropriate." Henry Caufield commented: "I take it the court doesn't take responsibility for what jurisdiction it assumes." "That's true," Mr. Carlson replied, "judges acting in their official capacity are immune from civil suit." In case it isn't challenged, is there a statute of limitations, Mr. Caulfield ,wanted to know. "The rule of law is that a judgement, if the court had jurisdiction over the persons that were necessary and over the subject matter, then the judgement is unassailable." They can't be attacked, but if the court lacked jurisdiction over persons or subject matter, then the judge- ment is void. It can be attacked anytime--100 years later supposedly. The theory is that the constitution of the U.S. requires that people have due process of law and an opportunity to be heard before their rights can be adjudicated, Mr. Carlson explained. Mr. Caulfield continued: "Without getting into your legal judgements that you don't choose to discuss, could we review for the benefit of the Board, with respect to the Michigan Ditch, what we are really talking about?" As he understands it, we are talking about a ditch that was developed by a water company many years ago, that at some point was taken over by the North Poudre Irrigation Co. At that time, under its term, it had a certain historic use. The use went down substantially for parts of it. At that point, the City bought it from North Poudre. The City immediately began to re -develop it. "That's substantially correct," Mr. Carlson said. The water rights were appropriated by farmers in the Poudre Valley. The Ditch came into the hands Water Board Minutes January 15, 1988 Page 6 of North Poudre which was a successor. The decrees total to over 140 cfs. The Ditch is constructed in very difficult terrain at a high altitude, so there were snow slides and tremendous wear and tear on the wooden pipe. In the '20's, '30's and '40's it diverted enormous quantities of water. In the '50's the diversion fell off substantially. Through the '60's that continued to be the case. North Poudre chose not to spend much money on it. In 1972-73, an arrangement was struck between Fort Collins and North Poudre where North Poudre conveyed the Michigan to Fort Collins. Fort Collins con- veyed a series of agricultural rights that it had acquired through the years in the Poudre Basin to North Poudre; an arrangement that was the subject of a court action in Division 1 Water Court in 1974, at which time Fort Collins entered the decree. "The important fact to remember is that, by and large, although Fort Collins owns the Michigan Ditch, the physical molecules of the Michigan Ditch continue to go up to the North Poudre system. That is because the physical constraints of Fort Collins' system require you to work a series of exchanges. NPIC transfers CBT water to Fort Collins at Horsetooth Reser- voir which is gravity flow into the Fort Collins system, and they take the Michigan Ditch water. The point here is we don't need any change; we are still using it for irrigation in some sense," he stressed. Henry Caulfield asked about the water in the Michigan Ditch that is part of the City's understanding of Joe Wright. "That made Joe Wright more feasible than otherwise it would have been," he said. Mr. Carlson responded: "That's correct, but after it is stored in Joe Wright, it still goes to North Poudre." Mr. Carlson explained that there are also exchanges that are worked whereby return flows are accounted for after the North Poudre units come into the City. The return flows from that are accounted for as Michigan Ditch water and the return flows from the Michigan Ditch that go into North Poudre are accounted for as CBT return flows. "It is a complex accounting matter," he said, "that was developed in the 1970's to accommodate these interests." As soon as Fort Collins acquired the property, it launched a substantial effort to cause the Ditch to be in good shape and that has been a huge under- taking which has gone on consistently year in and year out since 19721 It was essentially completed before Excalibur filed a claim, Mr. Caulfield asserted. Mr. Carlson thinks that "any court in the world" would have to look at that should they actually put Fort Collins' interest at issue and attack. "Even though there was a period of time when there was a reduced level of use," Mr. Caulfield continued, "before Excalibur filed a claim, the City had substantially rehabilitated the Ditch to Lake Agnes." "Yes, but that happened in a period in which there was a very small degree of demand in the City," Mr. Carlson responded, "and when the City was in a very wet cycle, so there was not a corresponding exercise of the rights over there that would show a draft on the stream system." He explained that the draft on the North Park stream system has remained relatively modest because Joe Wright happened to remain full with native water and the City's lack of demand in that "remarkable" wet cycle. Water Board Minute • January 15, 1988 Page 7 As Mr. Caulfield understands, the City has, under certain court rulings, the right to have substantial surpluses of water. Mr. Carlson explained that this is why Excalibur wants to attack the validity of the City's decree. If the decree is good, they've got no "home," and for them to get anywhere, they must reduce Fort Collins' share of that 60,000 AF. Unless they do that, they have nothing. "If they only get about 1,000 AF, we all know that the project is not feasible." At this point, they have estimated the cost at $18 million to pump the water out of North Park. They haven't estimated the cost to take it to Denver. There are substantial economic analyses and engineering ques- tions that have to be addressed, he added. Tom Moore was curious about the $18 million figure. He believes that one could probably buy that much water for $6 million. During depositions did you get any ideas as to why they think this is economically feasible? Mr. Carlson replied that the value of water is always determined by where you are. In the Northern District, CBT water is available at a reasonable cost, and pretty freely transferable within the District. The Dolly-O-Denver District is not in an area of any raw water supply. They are near the Platte but that river is pretty well appropriated by Denver, Englewood and all of the agricultural users. People in the Denver area are looking at water cost- ing $6-7,000 per AF in today's market. That's far more than the cost of water here. "We know that there are prices the market won't bear. They don't know that yet or if they do, they aren't acknowledging it." Mr. Moore contends that this seems out of anyone's range. "We agree," Mr. Carlson said, "and we intend to show it." Jo Boyd asked: "Could there be the possibility of something akin to "green mail" in the corporate structure, where you set up and frighten someone enough by your takeover attempt that they will buy you off?" "I have no doubt that they are trying to do that," Mr. Carlson stated. "It's a form of blackmail." Norm Evans remarked that this has been a very fruitful exchange and suggested that the discussion now be directed to the Federal Reserved Rights issue. Dr. Evans asked a question that was brought up in previous discussions. What is the state attorney general doing in this matter and does it relate to what Ward Fischer and the Water Users are trying to do? Mr. Carlson explained that the State Legislature has appropriated funds, and the firm of Simons and Lee has the prime contract. They are doing work in analysis of one par- ticular claim that the government is making. The claim on the front range that is of most concern to the water users involves an allegation that when the U.S. Congress created the National Forest back in the 1890's and passed the Organic Act, they impliedly intended that sufficient water should be kept in all the streams to keep the stream channels viable and cleansed of sedi- ment. There are several problems with that theory. In reviewing the legis- lative history and the text of the act, you find nothing in it. In fact, in the act itself there is a provision that says, "all water rising on the national forest may be appropriated under the laws of the state." "That hasn't stopped Uncle before," Mr. Carlson laughed. The theory that the gov- ernment is advancing is somewhat new. It came on the heals of a defeat they Water Board Minutes January 15, 1988 Page 8 suffered in the U.S. Supreme Court in the case of U.S. versus New Mexico. There they were claiming that the forests were created with the implied water purpose of recreation and aesthetics. They have developed a methodology in the Forest Service that shows that channels degrade. They therefore have asserted that it is not in the U.S. Government's interest for a channel to degrade. The methodology they have developed to quantify that theory indi- cates that streams need flushing or scouring flows to prevent the channels from degrading. Mr. Carlson has been told by engineers involved, that the methodology they use is a stream channel sediment loading study that was done in Nebraska and that it has no relevance to Colorado high mountain streams. The consequence of that is that they might have some proof problems. There is another more basic issue. The U.S. Government has conceded that the reason they need the flushing and scouring flows is to deliver more water to appropriators off the forest. They say the claim is not made on their own behalf, but is made to benefit people downstream. There are instances in the front range and elsewhere, particularly the San Luis Valley, where the last thing people who have a head gate out on the flat lands need, is more sedi- ment. In fact, it can be shown to be a detriment and whether that is con- sistent with their claim remains to be seen. Mr. Carlson related that he and a group of water users throughout the state tried to get the Colorado Supreme Court to rule as a matter of law that these kinds of claims simply could not be considered, and had previously been ruled not to be recognizable claim to prior case laws. In the fall of 1987, the Colorado Supreme Court unanimously said, "everybody gets their day in Court. Give them a chance to try and prove it." Apparently they are going to advance those claims first in Divi- sion 1. If your head gates and diversion structures are all below national forest land, it ought not to be a case of great concern. If you have struc- tures and reservoirs on national forest land, then you must satisfy yourself that the recognition of the claim will not interfere with the storage yield that you thought you had. He suspects that for Fort Collins, the principal concern will be, "how does this impact the rights we have at Joe Wright Reservoir?" There may be opportunities to settle and resolve this with the U.S. because, he believes they are anxious to acquire rights that would pre- clude future development and do it in a way that perhaps wouldn't ruin exist- ing uses. "It's hard for them to advance the theory they have developed without applying it both prospectively and retrospectively." The second signal the Forest Service has given Mr. Carlson in other parts of the state is, "if you have a reservoir that is 60-70 years old we aren't going to hurt you. We'll just make a deal. You can have that reservoir and we will subordinate to you." Mr. Carlson said he asked "what about a reser- voir that has been there 10 years? That's a tougher question, they say, since that stream may have not reached equilibrium. "It remains to be seen," he concluded. It is his understanding that Simons and Lee has done an enor- mous amount of work for the state. He believes the attorney general will make a big effort on this issue. Mr. Carlson had a discussion with the attorney general in which his office was considering consolidating all the cases in the state in front of one court. "A group of us who met with him said we thought that was the craziest thing we'd ever heard, because individual Water Board Minute January 15, 1988 Page 9 cases, where circumstances and facts can be different, tend to get lost and it becomes significantly more expensive for them. We opposed the idea." "Who has done the legal research on the question of what watershed management meant in the Forest Service in the 1890's through the first decade of the century," Mr. Caulfield wanted to know. "I happen to know that the forests were acquired because of watershed management --the theory was that the forest would hold back the water in such a way as to yield more," he recalled. Mr. Carlson agreed. "We tried to argue that in the supreme Court," he added. "We filed every document we could find that described what they were intend- ing at the time the forests were created. The supreme court said no, we want to let them have a trial.." That will be argued again, Mr. Carlson emphas- ized. Dr. Evans pointed out that the firm for which Water Board member Chester Wat- son works has been doing work on this case. Dr. Watson confirmed that his company has the contract for technical oversight on SLA for the attorney Gen- eral's office. Mr. Carlson said he is familiar with the firm and is impressed with their work. Mr. Carlson continued. Other than people with reservoirs, the other group with a problem are people with head gates on national forests. Mr. Caulfield pointed out that North Poudre is among those. Jim Kuiken said it is still not clear to him what the relationship is between the state attorney general's case and the case with the Cache La Poudre Water Users. Mr. Carlson replied that it is the same case. "Water cases tend to be a general free-for-all. The State is acting for everybody's good. The trouble is, many people might say, "our interest may not get sorted out." The other point is that the state isn't in a position to say, "we own the water rights that are going to be hurt." The state attorney general's office sig- naled a willingness to try to provide as much help and service as people want; particularly in the engineering area. Chairman Evans thanked Mr. Carlson for his status report on Excalibur and the update on the Reserved Rights issue. "It appears our water interests are in good hands," he said. Update. Northern Colorado Water Conservancy District Darell Zimbleman confirmed that the District and the Cache La Poudre Water Users are involved in the Reserved Rights case. The NCWCD has some contracts with Ev Richardson at CSU to help them with some analyses. Henry Caulfield recalled from the last meeting that Brian Werner agreed to supply information about reservoir levels along with numbers about the Dis- trict's water distribution, etc. People on the District's mailing list used to get the reservoir information, Mr. Caulfield said. Mr. Zimbleman promised to check on that. Water Board Minutes January 15, 1988 Page 10 Mr. Caulfield asked if there were any new issues. He said that Mr. Werner agreed to inform the Board of forthcoming issues. Mr. Zimbleman said, "to the degree that we can, we will try to do that." He added that he isn't aware of any new issues. Dr. Evans referred to the "slow down in the transfer of Bureau power facil- ities" as a matter that may be worth reporting on. Mr. Zimbleman said it is "on hold" for the time being while they try to resolve some of the issues that have been raised. Apparently there is an evaluation team being created by the Department of the Interior that "supposedly" will set criteria by which the Department can transfer power facilities to the irrigation dis- tricts. "I don't know why that's an issue now," he remarked, "because the Bureau has been doing it for years." John Scott said that he thinks they began meeting this past Tuesday. Thaine Michie, Director of PRPA is on that committee. Mr. Caulfield said that raises the question of reducing the amount of power that is available to the Western Area Power Administration for administration. Mr. Scott replied that he doesn't think that amount will ever change whether it is in Bureau hands or District hands. Dr. Evans had a question relating to the municipal sub -district. There is some kind of a reserve fund that has been under discussion. Could you clarify what it is? Mr. Zimbleman explained that what happened was this: "When we did the Series D restructuring, we refunded the Series C with Series D. The District set up an escrow fund to pay off those series C bonds." When the stock market crashed, the value of those securities went up considerably. The District took advantage of the opportunity to take those government securi- ties and buy other government securities which resulted in earnings of $300,000 for the Sub -district. The money was placed into an operations reserve fund. Now will the money be used, Dr. Evans inquired. Mr. Zimbleman explained that the District believes the Windy Gap Project will develop 48,000 AF a year. "In order to do that we need to pump zero some years and 90,000 other years," he said. "Quite frankly, it is difficult to deal with zero pumping one year and 90,000 the next year." What the District has said all along that they would like to do, is set up a reserve fund that the Dis- trict can manage by billing the Windy Gap participants on an even basis each year, and use that reserve fund to manage the ups and downs. Thus, the cities would not have to deal with high rates one year and low rates the next. The $300,000 is the seed money for creating that operations reserve. Conflicts of Interest Paul Eckman was asked to report on three items that he was asked to get answers for at the last meeting in specific areas of conflicts of interest. He acknowledged the draft memo to the Mayor on conflicts of interest which Dr. Evans distributed to the group. After the discussion today, Mr. Eckman will prepare a more formal report in writing on this subject which he will give to each Board member. He first discussed the interpretation of Paragraph 6 in the Boards and Com- missions Ethics Statement: "A member of a board or commission should refrain from representing any person or interest for compensation before the City Water Board Minute • January 15, 1988 Page 11 Council or any board or commission of the City on any matter which pertains to the function or activity of the board or commission on which such member serves." He talked with the City Attorney about this and the question arose, what is a person or interest? Is the City a person or interest? It was clearly not the City's intention, as in Dave Stewart's case, that a board member working for the City couldn't explain to the City Council what he had done for the City. The City is not a person or interest in that sense; another client would be. "If you had a client that was paying you separate from the City, and you went to the Water Board or the City Council and talked on behalf of your client as a Board member, that is what that paragraph was intended to cover; not appearing before the City Council with the City as you client." Henry Caulfield asked about Jim Kuiken's case where he is an employee of a company that is doing work for the City. Mr. Kuiken said that it seems to him Paul Eckman's opening statement explained that if you represent the City before the Council, ("In my case I'm under contract to the City.") that is allowable, but if I was under contract to Thornton, for example, and came before City Council, that would be representing another interest. Is that your distinction, he asked Mr. Eckman. "That's the correct interpretation of par. 6," Mr. Eckman replied. Dave Stewart asked, "isn't that contrary to the articles that you passed out last time?" That gets to the other more difficult part of it which is that charter section point that was discussed at the last meeting, Mr. Eckman replied. He paraphrased Art. IV, Section 9 of the Charter: "No officer or employee of the City shall be financially interested directly or indirectly, ..in the supply of services except personal services as an officer or employee. Any violation of this section..... shall render the contract voidable." In those cases Dave Stewart referred to, those were always clearly officers; one was a city council member and one was a director of a special district. City Council members are always officers. They even receive compensation --meager as it is. Board and commission membership is a gray area. All of you are appointed subject to removal and the question that is hard to answer with a guarantee is whether you are not an officer or employee. Mr. Eckman then explained the indemnification part of the question because it describes what a public employee is. He brought along a copy of the Govern- mental Immunity Statutes of the state just to read the definition of what the State Legislature says a public employee is. It defines a public employee as an officer, employee, servant, or authorized volunteer of the public entity, whether or not compensated, elected or appointed. "So you fit within that definition of public employee." Let's suppose you are authorized volunteers. That means, "a person who performs an act for the benefit of a public entity at the request of and subject to the control of such public entity." You are within the control of that entity because you are subject to removal. That makes you a public employee for purposes of the Governmental Immunity Act. The good news is you get indemnification and you receive sovereign immunity. Water Board Minutes January 15, 1988 Page 12 "A public entity shall be immune from liability in all claims for injury which lie in tort except for certain exceptions, like the operation of motor vehicles of the City, public buildings, public roads, public hospitals, jails, operation of public utilities." In other words, we have sovereign immunity for all civil claims in state courts under this state law. By a later provision of this article we read that: "as long as the public employees are acting within the scope of their employment, and the act that they committed or the omission occurred during the performance of their duties, and the act was not willful or wanton," you have sovereign immunity. You also have, by statute, the City's indemnification of you in state claims. Mr. Eckman said he would send Board members copies of 2 resolutions the City Council passed last June which extend that indemnification to federal claims too. One resolution defines willful or wanton: "conduct purposefully com- mitted which the employee must have realized is dangerous, done heedlessly and recklessly without regard to consequences or the rights and safety of others, particularly the claimant." Last time Council met, it provided a funding mechanism for that indemnification through its insurance. There would be $150,000 per person, $400,000 per incident coverage. If you get sued in excess of that, the City has an excess carrier policy up to $1 million. If it is more than E1 million, you have to look at the general wealth of the City to the extent that it can be tapped for coverage. As far as a taxpayer suit is concerned, Mr. Caulfield asked, as we covered? "Yes," Mr. Eckman replied, "you will have indemnification." "You will have indemnification if there is a suit for damages against you in a civil claim; you will have both the indemnification with regard to payment of the judge- ment and you would have the City's defense. If at a later time, a court should decide you were willful and wanton in your behavior, you would have to pay back the cost of your defense." Chester Watson asked if there is an ethics board in the City. "No," Mr. Eck- man replied, "but the City Council has an ethics committee that they use internally to determine conflicts, but I don't know if that committee deter- mines conflicts outside the Council." Dr. Watson believes it would be benefi- cial if there were such a committee or board that a board or commission mem- ber could consult if he/she had questions. Mr. Eckman said he struggles with this issue. It is awkward to say you are public employees for the purpose of indemnification under state law, and then turn around and say, "but you are not public employees for the purpose of the charter which prohibits officers and employees from having contracts with the City." He believes that the intention of the charter was that officers or employees in that context were people who were paid for their services; "employees like me, and officers like City Council members." Authorized volunteers don't fit that definition. "I feel comfortable arguing that," he assured, "but unfortunately I can't make any guarantees." Mr. Eckman believes that the Water Board is the most critical board with regard to this issue because there are so many professional consulting people on the board. Water Board Minute • January 15, 1988 Page 13 Dave Stewart suggested that the City consider an ethics board. He also asked about the situation when he was doing work for Water Supply and Storage Co. and the Council asked him to give a presentation on his work. Mr. Eckman believes that, in that case, since the Council requested that he give the presentation, they waived that provision; on that one occasion at least. Chester Watson suggested that if one might be in a situation like that, it would be advisable for the Council to make an affirmative statement in that regard. Paul Eckman related that the differences in those frightening cases he cited last month, was that those involved were clearly officers. Chairman Evans reviewed what Mr. Eckman was requested to cover and it appeared that he had explained all of those items. The only item that Dr. Evans would write to the Council about is the suggestion of creating an ethics Board. Paul Eckman will put everything that was discussed in written form for Board members to keep as a reference. He will also include the indemnification resolutions. Committee Reports Program Evaluation Committee Neil Grigg, committee chairman, reported that at the last meeting President Evans appointed a number of standing committees. Today each committee chair- man was to report what his/her committee's charge would be. Dr. Grigg's com- mittee met on January 5 and grappled with some substantive issues that relate to what the work of the Water Board should be. Each Board member received a copy of the preliminary report of the Program Evaluation Committee. The report raises a number of questions that the Water Board needs to deal with relative to the work of the Water Board in general, the work of the staff and also the work of the other standing committees. The Program Evaluation Committee has several duties and these relate to goals, objectives strategies and Board performance, according to Dr. Evan's handout. In the past, the Water Board's goals have been very general. Our committee sees a need to make these goals more specific if the Water Board is going to be effective in its own work, Dr. Grigg related. He thinks the name of the committee is in a sense a misnomer because the committee deals with establishing goals and objectives, strategies and plans as well as evaluating programs. Establishing goals is the first step in planning the work of the Water Board. Program evaluation is the last step. In essence the committee is charged with planning and evaluating what the Water Board is doing. Dr. Grigg said if we are going to do that correctly, we must know what the Water Board is supposed to do. If you consult the City Code and the Water Board Bylaws, you find that they are general and vague. Generally they state that the Water Board is supposed to be advisory to the City Council on matters relating to water rights, "and matters pertaining to the municipal water works and wastewater treatment systems." The Water Board has dealt Water Board Minutes January 15, 1988 Page 14 very little with matters relating to wastewater treatment and very little with the water works facilities. "We spend most of our time dealing with water rights issues. The question is, is that correct?" Dr. Grigg's analy- sis of that, and this is generally what was discussed when the committee met, is that we need to be clear about the role of the Water Board as advisory to the City Council viz -a -viz the role of the staff. Because we are an advisory board and the City Council is a legislative policy group, it appears to Dr. Grigg that the role of the Water Board ought to include formulating policy in matters where the City Council has to set policy or have to make decisions that have to do with legislation. "Our charge ought not to deal with any operational matters that staff should be carrying out. That's a chain of man- agement responsibility that culminates with the city manager as the chief executive of the City." Dr. Grigg is proposing this as a way to distinguish matters that the Water Board should get into to advise the staff and Council on. On operational matters that staff deals with, the Water Board should be kept informed about them but not get involved in them. As a way for the Water Board to know what is going on, Henry Caulfield made a proposal which Dr. Grigg included as a tentative recommendation of the com- mittee. Once a year, at a meeting, the staff would inform the Board about plans involving the water works, physical facilities and operational and financial matters. Water Board would be fully informed, but would not have to deal with those matters. Following is the suggested charge of the committee: "The Program Evaluation Committee will prepare goals, objectives, strategies and plans for consid- eration by the full Water Board. In preparing goals, the committee is guided by the principle that the Water Board considers policy matters that require decisions and actions by the City Council, but normally only receives infor- mation and reports about normal utility operations without providing advice about them unless policy matters are involved. The committee evaluates and reports the performance of the Board in achieving its goals." Next Dr. Grigg took the goals that were articulated at the workshop and con- verted them to a revised list. On the right side of the page he listed how those goals can be achieved with specific actions by the staff and by the Water Board committees, following the principle that the Water Board doesn't deal with staff matters, but does deal with policy matters. It appears to Dr. Grigg that if the committees do everything that is listed, they are going to be kept very busy and the staff will be overwhelmed trying to stay up with the committees. He gave an example. No. 1 says "complete and implement the Water Supply Policy plan." He proposed two additional goals: "to articulate Fort Collins' role and strategy in response to Metro -Denver and to develop a strategy for dealing with the Northern Colorado Water Conservancy District. He sees those three things as being linked to the Water Supply Policy plan. The plan could include resolution of the metering issue and the response to Metro -Denver. What he proposes as a working strategy is that issue be referred to the Program Evaluation Committee for development of the strategy Water Board Minutes January 15, 1988 Page 15 and the committee would work with the staff. As he mentioned earlier, the committee is misnamed in that it needs to deal with strategy development, so he has recommended it be changed to the "Planning and Evaluation Committee." He gave two more examples of goals that need to be referred to committees. Under "formulating a policy regarding in -stream flows," he believes that staff could prepare a draft policy and that would be referred to the Legisla- tive and Finance Committee. Under "adopt policy regarding watershed protec- tion," staff would prepare a policy. He would refer it to the Engineering Committee. He went on to list other goals and what he believed would be the appropriate committee assignments. "We need to grapple with these issues and assignments as a Water Board," he said. In conclusion, he presented these specific recommendations: * The Program Evaluation Committee notes that committee work dealing with preparation of overall water supply strategies and response to Metro -Denver does not logically fall to any of the standing committees. It recommends that this issue be referred to the Program Evaluation Committee to provide the staff with a forum to formulate strategy and preliminary policy suggestions prior to presentation to the full Water Board. * The committee recommends that the Board request an annual presentation by the staff where operational plans are reviewed. The purpose of this briefing would be to inform the Board about capital, operational and financial plans under consideration by the staff but which do not require specific Board action. * The committee recommends that no additional recommendation be made to the Council by the Board at this time about metering. If the Council requests additional information or studies, the Board should respond. The committee cautions that should the Council decide to accept the draft Water Supply Pol- icy document without the phased metering plan, it should be informed that the estimates of water supply needs and developer contributions are based on a scenario of metering and are not valid without the phased metering program. The basis for this recommendation is that it seems best for the City Council to make the next move. * Since the duties of the committee described above entail planning as well as evaluation of programs, it is recommended that the name of the committee be changed to the "Planning and Evaluation Committee." Norm Evans said that Neil Grigg's report raises two questions: One the dif- ferentiation between the operational matters and the policy matters. He understands that operational matters are those that don't require Council approval and policy matters are those that do, more or less. Yet, there are some policies that don't necessarily require Council approval, but they are major polices within the Utility. His reaction is there may be a difficult distinction to draw. A second part of that question relates to a comment Mike Smith made earlier that staff would appreciate it if the Water Board Water Board Minutes January 15, 1988 Page 16 was depending less upon the staff to originate policy ideas. Is this in harmony with your feelings, he asked Mike Smith. What staff would like is for the Water Board to be less dependent on staff to research an issue and return with a policy, Mr. Smith responded. There is considerable expertise on the Board which would allow the Board to formulate policy that they might recommend to Council as well. The Board shouldn't think that it is entirely up to staff to initiate policies, he added. Dr. Evans asked for Neil Grigg's reaction. Dr. Grigg responded that he doesn't see how any committee could go very far without at least getting the basic data from the staff. It is hard for a new member to have the histori- cal background to proceed on his/her own. In fact, the staff has a tremendous amount of power compared to Board members because they control the informa- tion. An exception might be the Conservation and Public Education Committee where they might have ideas and make moves that staff hadn't thought about, he said. Mr. Smith said he would feel uncomfortable if the sub -committees went off on their own without some input from staff. Mr. Caulfield said that he made the suggestion to have the equivalent of an annual meeting, where the Water Board would review, in effect, the activities of the Water Utilities. As you look at the ordinance establishing the Water Board, the Board appears to be responsible for everything that is involved with the Utility. From the public point of view, Mr. Caulfield thinks it is important for the Water Board to recognize this. The annual meeting idea is to take cognizance of it. "On the basis of that, we can decide if we have any interest in particular things." On the other hand, this Board does not, want to become involved in many areas; for example, the sizing of the trunk sewers. However, the Board shouldn't say that its interest is only that which would go to the Council for action. There are operating policies the staff may want to share with Board, and that staff may want advice on --that "staff doesn't have to go to the Council on and the Board doesn't have to go to the Council on, that could be important for us to discuss." Neil Grigg said, "that's what I would like to do, but the code and bylaws say we are advisory to the City Council, not advisory to the Water and Wastewater Util- ity." Dr. Evans related that the code does say other things about responsibilities. Dr. Grigg conceded that it does have one "murky" statement in the charter that charges the Board "to provide advice on all matters of concern to the City with which the foregoing matters are substantially related." "Let's assume that a subject came up, Mr. Caulfield conjectured where the Board debated with staff on a particular matter, and where staff resisted implementation of what the Board thought was very important. The only way we could force staff to do it would be through the Council." Ultimately the Council is the authority that could decide something, he stressed. There are many things short of going to the Council that staff and the Board could agree on after discussion, he believes. Water Board Minutes January 15, 1988 Page 17 Mike Smith believes the Board may be getting "into some muddy water there," and he isn't sure where it may lead. Mr. Caulfield insisted that it is not his intention that the Board would delve into "a lot of things that staff has to do." MaryLou Smith pointed out that there is some confusion on this and it is worth clearing up. For instance, all of the tasks that the goals say the Water Board should tackle, would be an inordinate amount of work. Does it become the role of the Water Board to say, "these are our goals, and we want staff to work with us on these goals; that becomes a direct relationship between us and staff implementing our goals, when our bylaws say we are to advise Council. Our bylaws say nothing about our advising staff. "It is also unclear how much leeway the Water Board has about asking staff to help us meet our goals. If we are to do the things that we list, and it takes all of staff's time and they have also been directed by Council to do things to meet their goals, it becomes very confusing for staff. "Perhaps we are trying to clear something up that has worked well in the past. Have we had some actual problems with it? Mr. Smith said there haven't been problems in the past. "It has worked okay." What he seems to be hearing, however, is that the Water Board wants to go a step further. Marylou Smith admits that as chairman of the Conservation and Public Education Committee, she has felt some confusion in trying to deter- mine the charge of that committee. "Do we work with staff on what they are already doing to evaluate whether changes need to be made?" That is not a part of the Water Board's stated duties. Henry Caulfield pointed out that there is a section in the Bylaws relating to that under, Relations with Staff, Section C: "On matters not requiring Coun- cil action, and where the Board and staff are in agreement, the staff is expected to carry out promptly, an agreed upon action." On the other hand, if the Water Board felt strongly about an issue that staff did not favor, the Water Board could work with the Council to get the issue resolved. Paul Eckman read the duties of the Water Board according to the charter: "The duties of the Water Board are: a) to advise the Council on matters per- taining to acquisition, control and disposition of water rights; b) to advise the Council on matters pertaining to the municipal water works and wastewater treatment systems; c) and to perform such other duties and functions, and have such other powers as may be provided by ordinance of the Council." MaryLou Smith said, "and our bylaws read just that way." Mr. Eckman added and the code says the same thing as the charter. The question is, are there any other ordinances that empower the Water Board to do anything other than advise the Council, Mr. Eckman asked. There is during emergencies such as a severe shortage of water, Dr. Evans replied, when the Water Board could impose restrictions. Mr. Eckman read that in case of a water emergency, "the City manager is authorized to order any restric- tions on the use of water." Drought or water shortage is another section but then it is an advisory role. "In the event of drought or water shortage, the City Council may place restrictions on all uses of City water and even prohi- Water Board Minutes January 15, 1988 Page 18 bit if necessary, all domestic uses of City water, if the Water Board so rec- ommends." Dennis Bode related that there is also an area having to do with satisfaction of raw water requirements. Paul Eckman read: "The Water Board determines which water rights are acceptable to the City," and that's not an advisory role. That is one of the only areas where the Water Board is the final authority. Henry Caulfield suggested that in line with the recommendation of the commit- tee chairman, to remand this matter back to the sub -committee for further consideration in light of this discussion. Neil Grigg reminded his committee that they will meet on January 21 at 3:00. The Water Board went into executive session to consider a confidential water acquisition opportunity. The staff recommended that the proposal not be pur- sued. The Water Board concurred. Since there was no further business, the meeting was adjourned at 5:20 p.m. 772" / !Zt;� Water Board 5ecretary