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HomeMy WebLinkAboutWater Board - Minutes - 06/21/19910 0 WATER BOARD MINUTES June 21, 1991 3:00 - 4:15 p.m. Water and Wastewater Utility Conference Room 700 Wood Street Members Present Henry Caulfield, President, Neil Grigg, Vice President, Tom Moore, Tom Sanders, Ray Herrmann, Tom Brown, Terry Podmore, Paul Clopper, Tim Dow, Mark Casey, MaryLou Smith 15kff Rich Shannon, Mike Smith, Dennis Bode, Andy Pineda, Molly Nortier Guests John Bigham, Agency Coordinator, Northern Colorado Water Conservancy District (NCWCD) Dorothy Huff, Observer League of Women Voters of Larimer County Brad Pace, Fort Collins Resident - Citizen observer Member Absent Dave Stewart President Henry Caulfield opened the meeting. The following items were discussed: Minutes The minutes of May 17, 1991, were approved as distributed. Henry Caulfield announced that Neil Grigg has been reappointed to an additional term. Alternates Dave Stewart and Paul Clopper are now regular members and have been appointed to four-year terms. It should be noted that alternate positions for City boards and commissions have been eliminated. In addition, the number of Water Board members has been decreased from 12 to 11. David Frick, a water resource engineer, has been appointed as the new member. Update: Northern Colorado Water Conservancy District John Bigham began by giving the reservoir storage numbers. Carter Lake is up to 89% of capacity; Horsetooth is 90% and Granby is up to 54%. There is actually 252,000 ac-ft. of active water in Granby. Overall storage is significantly better than last year. The virgin flows in the rivers have essentially kept the draw off the reservoirs, he said. Water Board Minutes June 21, 1991 Page 2 It appears that most of the rivers have peaked. The Poudre River at the mouth of the Canyon on June 2, was 3747 second feet. The Poudre at Greeley a day later got up to almost 2100. On June 2 the South Platte was running at 3101 second feet at Fort Lupton. By the time it reached Kersey it was 10,400 second feet, and when it was measured at Julesburg, 2,000 second feet of water was leaving the State of Colorado. As of midnight, June 20th, the Northern District had pumped 13,898 ac-ft. out of Windy Gap into Lake Granby, and had sold to the allotees in the District 11,119 ac-ft. "We have almost sold as much as we have pumped," he said. The District Board will allow up to 15,000 ac-ft. of water to be sold in addition to the regular quota to those people who wanted to purchase some of the water that was being pumped from the skim operation across the hill. Neil Grigg asked how much they were paying for that water. $21.00 an ac.ft., Mr. Bigham replied, "and that's not quota water," he added. A week ago to date, the Board included part of the City of Broomfield within the parent district; that portion which is north of the Weld and Boulder County lines. They rejected anything in Adams and Jefferson Counties. In his opinion, they will continue to object to anything south of the Weld and Boulder County lines. By September fast the District should know the results of the study of the outlet works at Carter and the potential pipeline, etc. Neil Grigg asked how the District is going to monitor to make certain Broomfield doesn't send any of the water to the adjoining counties. "We make them certify to the District how much private water they have, how much well water, how much rental water, and whether it is Windy Gap or CBT water." The District has a way of auditing in which they make sure there is enough water to service those people on that side of the line, he assured the Board. Mark Casey wanted to know the purpose of the sub -district. Mr. Bigham explained that it was formed basically by the six cities who wanted to build the Windy Gap project. Mr. Caulfield pointed out that the District originally was not formed to supply water for domestic use, and that the sub -district is strictly for domestic use. Mr. Bigham and Mr. Caulfield explained further the history of the District. When we finish buying out in the year 2002, are the water rights titles going to change over to the District? Dr. Grigg inquired. "No," Mr. Bigham replied, they belong to the United States." There are some districts that were able to have both the water rights and assets transferred at a minimal fee, but some of them have never been allowed to. "It's up to the Congress," he said. We will hope to maintain a fairly reasonable working relationship with Congress so that can occur. Dr. Grigg related that the House just passed a bill cutting back on the subsidies to 0 0 Water Board Minutes June 21, 1991 Page 3 the big California farmers and he wonders if this may happen if Congress begins to discuss the subsidies they are providing to the cities in northern Colorado. The District is working diligently on that now, Mr. Bigham stated. Discussion of Offer to Sell Water Certificates to Cily of Fort Collins Mr. Caulfield referred the Board to the staff memo which gave background on the offer and some history of water certificates. The text of that memo is included below: Mr. Robert Everitt has offered to sell the City 300 ac-ft rights from a City Water Certificate owned by the Everitt Lumber Co. The Everitt Companies previously turned over water rights to the City of Fort Collins with the expectation that it would be needed to satisfy raw water requirements for future development. The City issued a City Water Certificate for the quantity that was in excess of what was needed to satisfy the company's raw water requirements at that time. The Company has determined that 300 ac-ft of their water certificate is in excess of what they will need in the future. They have offered to sell the 300 ac-ft for $1,000 ac-ft. In 1971 the City of Fort Collins issued "Josh Ames" water certificates in exchange for the Josh Ames water right. Subsequently, the City issued other water certificates in exchange for water rights or as a means to credit the balance to the owner after he had satisfied a raw water requirement with a water right that was in excess of the requirement. This was done primarily as an accommodation to the developer and to make it easier to administer odd fractional shares of water rights. These certificates were assignable so that they could be traded among developers and used to satisfy raw water requirements. The current balance of issued water certificates is approximately 4,000 ac-ft. In the past, the City has accepted water certificates to satisfy raw water requirements but has not purchased any of them. However, in June 1990, the Water Board considered purchasing water certificates that had been offered to the City for approximately 50% of the cash in -lieu -of rate. After a lengthy discussion, the Water Board passed a motion to consider water certificates on a case by case basis and if it is a good business deal, consider purchasing them in the same way as other water rights would be purchased. The Board also asked for a legal opinion regarding the purchase of water certificates. Assistant City Attorney Paul Eckman advised that the City is not under any legal obligation to buy back city certificates as long as it was clear up front when the City accepted the water shares from developers, and issued the certificates, that the owner of the water was not expecting that the City would either give them their water back or buy the certificates back. The June 1990 offer was later rescinded because the owner found another buyer for the certificates. Factors that need to be considered in purchasing the water certificates include price, availability of funds, and priorities in spending the funds. During the last six years, approximately 13,000 Water Board Minutes June 21, 1991 Page 4 ac-ft of water has been purchased. About 85 % of that was CBT and North Poudre Irrigation Company water. The price ranged from 100% of the cash in-Heu-of rate for CBT water to about 65 % of the cash rate for some Pleasant Valley and Lake shares. Funds are available that could be used to make some purchases of water rights, however, most of this has been set aside to pursue a couple of specific projects. It is not feasible to purchase all the water rights that are offered to the City. In the last year there have been over 50 inquires about selling almost 7,000 ac-ft to the City. Additional cash accumulates slowly compared to the water rights offered to the City. The Water Utility staff recommended that the City purchase water certificates only when they are offered to the City at approximately 50% of the cash in -lieu -of rate and when adequate funds are available. "When you say approximately 50% in -lieu -of, what does that mean in terms of dollars?" Terry Podmore inquired. The in -lieu -of price currently is $1500 per ac-ft," Dennis Bode replied, "so 50% of that would be $750 per ac-ft." The $1500 rate was approved by the Board and the City Council in February of this year. What was in the in -lieu -of rate back when they obtained these certificates? Tom Sanders asked. The water they turned over to the City was actually acquired over some period of time, Mr. Bode responded. They turned water over to the City in several different quantities, all prior to 1988. In the early 80s the price of water was around $2,000 per ac-ft. In 1986 it went down to approximately $750 an ac-ft. Why aren't they trying to sell these to somebody else for $1,000? Mr. Caulfield wanted to know. Part of it may be that it is hard to find anybody that would buy that much all in one package. Of course it is far more convenient to sell it all in one block, he added. Tom Brown pointed out that in Mr. Everitt's letter one portion was rather confusing which said: "We have contacted several developers and they have an interest in purchasing the water, so I think we would have some customers for you immediately, and you could make the full value whereas, we are discounting the water." Mr. Caulfield surmised that it may not be the entire 300 ac-ft. Tim Dow asked what kind of water this is. Some of the major water they turned over through the years was New Mercer, Larimer No. 2, North Poudre, CBT units and Pleasant Valley and Lake, Mr. Bode said. What percentage of the $1,000 is the cash -in -lieu of rate? Neil Grigg asked. It would be 2/3 or 67%, Mr. Bode replied. "So that is a bit above what staff would recommend," Dr. Grigg suggested. "Yes, it is on the high side," Mr. Bode agreed. Water Board Minutes June 21, 1991 Page 5 Do you have any indication if you the City can but it at $750? Terry Podmore asked. Mr. Bode said he didn't know at this time. The memo points out that the last time the Board discussed this they said 50% of the in -lieu -of would be the policy, which would mean we would be willing to take it for $750 on that basis. Tim Dow indicated that there is currently a balance of about $400,000 left for water purchases. How does this fit into the plans? Mr. Bode explained that nearly a year ago staff made most of the purchases that had been designated in terms of shares of stock. There were a couple of projects for which $1.8 million had been set aside. At this point there is not a specific plan for the $400,000. As Mr. Caulfield recalled from the Board's previous discussion on this, purchasing certificates has the effect of reducing the number of certificates the City is obliged to honor someday. At the last discussion, however, the Board didn't seem too concerned about that. "Are we still issuing certificates?" Dr. Grigg asked. We are, but not many, Mr. Bode replied. Do we generate new certificates? In some cases, we may generate some new ones; e.g. if somebody comes in with a share of water, and he only needs part of that share to satisfy the requirement, we may issue a certificate for the rest of that share, Mr. Bode explained. Mr. Brown pointed out that according to the handout, 1990 appears to be the biggest year for certificates since 1976. "Yes, that's correct," Mr. Bode replied. Part of the reason that it has increased in 1990, is that some of the credit that was being held was issued in certificates, he explained. In the past, for small quantities of water in particular, we have kept them as credits, and only issued a certificate if they wanted something tangible they could hold in their hands. Hence, 1990 was kind of a back log. It seems to Mark Casey that there are a couple of issues that need to be grappled with: 1) What is the lowest we can purchase the certificates for from the City's standpoint? 2) What is the intrinsic value of the water certificate to us? "The way I'm looking at it," Mr. Casey said, "is that certificates are a future obligation, and basically they are as good as a water right, and in some cases better, at least to the outside holder because they don't have to pay the annual assessments." There may be a couple of factors related to the intrinsic value of a certificate in terms of the priority of what the City would buy, Dennis Bode explained. One of the goals the last several years has been to control additional water so that we have some surpluses built up. In that respect there is some advantage in spending the money to buy new water rather than buying certificates to reduce further obligations. Water Board Minutes June 21, 1991 Page 6 The other comparison is to look at the price of water that is on the market. We can buy North Poudre shares or some of the southside ditch shares for perhaps 60-70% of the cash -in -lieu -of rate. That basically sets the price for the certificate to be something less than what we could buy those shares for. Tom Sanders moved that the Board reject the offer at $1000 per share, citing the policy that the maximum amount we can pay is 50%. His reasons for rejecting the offer were: 1) We already have the water and we can use it right now, so an expenditure of another $300,000 doesn't "bring us another drop of water." 2) We do not have a responsibility to buy these certificates back. The intention of the certificates was for development and speculation on their part to buy these and hope that in the future the property would be developed. "I don't want to reward speculation" he asserted. 3) This would deplete the water fund, and we wouldn't be adding to our water reserves. Neil Grigg seconded the motion. Paul Clopper suggested that we make a point of informing Everitt Companies of the 50% upper limit policy. Ray Herrmann recalled that in the previous discussion the 50% policy was almost a compromise position. The actual position was that it is not a good idea to buy the certificates back. However, if it is a good deal for the City if it is less than or up to 50% of the in -lieu -of price, then we could consider buying them back on an as come basis. "I'm kind of leery of buying them back even at the 50% rate." he added. He stated further that the certificate has a value of whatever they can sell it to another developer for. Tom Moore referred to a section on the last page of the memo which stated that: "Funds are available that could be used to make some purchases of water rights, however, most of this has been set aside to pursue a couple of specific projects." Does this mean we don't have the money anyway? The approximately $400,000 would be available, Mr. Bode clarified. Tim Dow said he agreed with Dr. Sander's motion. "From a policy standpoint, in a way, this can trick us into bailing out developers who need a quick fix on some cash." If we do it for one developer, what precedent does that set? Tom Brown reiterated that the Board agreed at the previous discussion that all of theses offers would be treated on a case by case basis. Mr. Caulfield was concerned that staff needs to be able to talk to these people. Would it be our understanding if the Board votes for Tom Sander's motion, that staff can say, "our policy has been up to 50%, but we really aren't interested in buying these back. However, if you want to return with a 50% offer, the Board would entertain it?" Staff must have some guidance in dealing with these people, he stressed. Water Board Minutes June 21, 1991 Page 7 "It is my understanding that when these certificates are issued," MaryLou Smith pointed out, "that it is very clear to those who are taking them, that they are not very negotiable back to the City." Mr. Bode said he believes that has been made clear to them. Ms. Smith thinks that is very important in terms of good will, and "frankly Mr. Everitt is one of the developers who has made a good impact on the City," she said. She is concerned that we express clearly that buying the certificates isn't to the advantage of the City. Mr. Caulfield added that legally we aren't under any obligation to buy them back either. Tom Brown had a question regarding the increasing number of certificates that are out. Is it staffs understanding that it is increasing because these are good things to hold, or is it increasing because they can't get rid of them? Mr. Bode thinks that it is gradually shifting. In 1983 the City changed from a system of satisfying land on just an area basis to another system that considered density and other things. Previously, there were large parcels that were satisfied with water and it left quite an area of land that was satisfied and, as a result, we haven't had quite as much turned over in comparison to what the development has been. Some of that land has been filled up now, and we are getting to the point where developers are aware of the certificates out there, and "we suspect that more of the certificates are going to be turned in to satisfy the requirements for the next few years, and that we will begin seeing a decline in that balance." Mr. Caulfield wanted to known who pays the annual assessment costs on the water that is turned in. The City. pays that, Mr. Bode replied. "So it was an incentive to get certificates because it relieved the owners of their annual assessments." Mr. Caulfield observed. "So they can hold the water without paying the fee," Mr. Brown added. Mark Casey observed that it would take a lot of time and effort for Mr. Everitt to pedal 300 certificates. While he plans to vote in favor of Dr. Sanders' motion, he thinks it would be shortsighted of the Board to be completely against buying back certificates. "I think these purchases at times could be a good deal for us, and we ought to evaluate them on a case by case basis," he stressed. President Caulfield called for the question. The Board voted unanimously in favor of the motion. Ray Herrmann moved that the Board authorize staff to continue negotiating with Bob Everitt for the possibility of buying for 50% or less of the in -lieu -of rate; in other words, explain the policy, and let him decide what he wants to do after that. Paul Clopper seconded the motion. The vote was again unanimous in favor of the motion. Water Board Minutes June 21, 1991 Page 8 Update on Wilderness Legislation Henry Caulfield said that last time the Board discussed the Wilderness legislation, they agreed to send a letter to the City Council, outlining the Board's concerns about the City's water rights above the proposed designation. A copy of that letter was included in the packets. According to the newspapers, there is some degree of activity in considering the legislation, particularly in the senate. Do we have an attorney who is actively looking out for our interests? Mike Smith reported that John Carlson, the attorney whose counsel we sought, just sent a fax of a letter on this subject. However, Mr. Smith had not had a chance to read it. During a telephone conversation, before he wrote the letter, Mr. Carlson said that the language as it exists perhaps isn't ideal, but he thinks it will provide protection. He also said that there is probably little chance of changing it at this point. One of the critical questions, is does it protect us from a suit by the federal government on those 1988 rights we obtained? Mr. Caulfield asked. Mr. Smith quoted the last paragraph of Mr. Carlson's letter: "Despite some concern (which he outlined in the letter) I tend to the opinion that the proposed legislation is as good as can be expected." The real question may be whether it can pass in Congress because of other opposition. John Bigham reported that Larry Simpson just recently returned from Washington D.C. after testifying before Senators Brown and Wirth. They indicated that the bill isn't perfect but, this is the best it's going to get. Both congressmen said if they try to change the wording, it would kill the bill. Mr. Caulfield believes the City's case involves a special provision, a proviso type of language, that relates strictly to the North Platte, given that the situation is different from the general problem others are confronting. Tom Sanders asked if we are the only entity in Colorado that is above a wilderness area. All the other people in that area also have water rights in that stretch, Mr. Smith related. There are a number of water rights above the wilderness area. In the law there is a special provision for that section. In all other areas of the state the headwaters are potential areas of development, Mr. Caulfield pointed out. The City of Fort Collins is an actual area of development. He believes that there should be further discussions with our attorney to see if there is some way to get a proviso. Mr. Smith said there is a section in the bill now that addresses the North Platte. The question was if that language was sufficient. Mr. Smith will provide copies to the Board of Mr. Carlson's letter as well as the highlighted section of the bill referring to the North Platte. Water Board Minutes June 21, 1991 Page 9 Staff Reports Treated Water Production Summary Dennis Bode reported that the month of May ended with about 95% of the projected use. By the end of May it started raining, he said. For June so far, the figure is 60% of the projected average. It's been quite wet, but, of course, it can turn around any time. MaryLou Smith asked to be reminded about what the projection is based on. It seems to her that both last year and this year the use has been below even the average projection. Basically the staff looks at historic use, rainfall, ET and the growth rate, and from that data a projection is made for an average type year, Dennis Bode explained. Andy Pineda added that in those figures, the projections that we make for Anheuser-Busch are actually a little higher than what they are using. Paul Clopper pointed out that if everyone had meters there would be a little better data base too. Committee Reports Legislative and Finance Each member received a summary in their packets of the status of state legislation relating to water. Tim Dow directed the Board's attention to Rep. Redder's bill (HB 1190) which the Utility opposed. The bill, which didn't pass, would have required a general election in the county for virtually any project involving water, including water diversion or storage projects, treatment facility expansions, delivery system improvements, etc. It would have also prevented the expenditures of any public funds to inform the public about the reason for the project. Mr. Dow thinks that "this is one of the craziest proposals" he has seen. We must keep an eye on legislation like this, he said. It could cause major problems for the City and a lot of other people involved in water. Mr. Caulfield surmised that the Bill was probably primarily directed at the proposed Grey Mountain Reservoir. Rich Shannon wondered if the Board wanted to communicate something in writing on this subject. Mr. Dow said it would be appropriate given that Rep. Redder has "stuck his toe in the water" so to speak by introducing this and that he should receive some kind of communication from the Utility or the Board the next time he has an interest in legislation of this kind. We could relate to him that we would appreciate hearing from him ahead of time so we could have some input into the process. Ray Herrmann suggested that we invite him to meet with the Board and inform us of his rationale for the item. Mr. Shannon asked staff if they had received any communication from Rep. Redder or his office on this bill regarding construction of water projects. "No, I don't believe we received any communication on that," Mr. Smith replied. Water Board Minutes June 21, 1991 Page 10 Neil Grigg moved that the Board request the staff to send a letter inviting Rep. Redder to visit with the Board prior to future legislation. Tim Dow seconded the motion. It was the consensus of the Board that it would be more appropriate if the letter came from the Board; otherwise staff could be placed in a rather uncomfortable position. The Board voted unanimously to have the Water Board president draft a letter from the Board inviting Rep. Redder to attend a future Board meeting. Because Tom Moore had been a member of the Legislative and Finance Committee and this was his last meeting as a Water Board member, he thought this was an appropriate time to express a few observations about the Committee, which he believes serves an important function. This has probably been one of the lightest years for water legislation in the state, he began. He encouraged someone from the Committee to take an active interest in the state legislation. He isn't sure if the City Council wants to hear from the Water Board on legislative issues, "but we need to be heard," he asserted. "Good luck to whoever takes my place on the Committee," he concluded. Water Supply Committee Chairman Neil Grigg reported that two months ago the Board asked the Water Supply Committee to review the process of renting water. Members of the Committee besides Dr. Grigg are Tom Brown, MaryLou Smith, Mark Casey and Paul Clopper. The Committee has not yet completed this task. Since the renting is already accomplished for this season, and staff is busy with other matters, it seemed that it might be better to take this matter up in 2 or 3 months. Conservation and Public Education Committee MaryLou Smith reported that at the last Demand Management Committee meeting the group made some progress towards continuing to look at conservation measures other than meters. Before the next meeting staff will take all of the discussion of all the measures and prepare a report that shows what has been determined about each measure. They will also prepare a draft resolution for the Committee to review. The Committee's work should be wrapped up in one or two more meetings. Other Business This was Henry Caulfield's and Tom Moore's final Water Board meeting. Each of them was a valuable, contributing, long term member of the Board. Each of them took this opportunity to make some concluding remarks. Tom Moore was a faithful, dedicated member of the Board for 12 years. He began his remarks by repeating what he said about the importance of someone following closely any water legislation, and making certain that the Water Board has some input and impact. Next he urged Water Board Minutes June 21, 1991 Page 11 the Board to be constantly aware of good opportunities to enhance our future water supply. During his 12 years on the Board, he has seen some good things accomplished. "Continue to be innovative," he stressed. In this light he contends that limiting water supplies does not control population growth as some people believe. "Santa Barbara, California is a good example that it doesn't work," he said." He cautioned the Board to resist those kinds of pressures. "While I have great regard for the Northern Colorado Water Conservancy District, what's good for the District isn't necessarily always good for the City of Fort Collins. I think the District has an obligation to take a strong leadership role, but on the other hand, "the tail shouldn't wag the dog." I want to make sure we take care of Fort Collins! He added that he strongly objected to the inclusion of Broomfield into the District. He went on to say that conflicts between City Departments concern him; e.g. Parks and Recreation and Natural Resources. "We need to especially keep an eye on the Natural Resources Division," he insisted. They appear to be infringing in areas where they don't have the expertise, although I can understand their desire to bring "warm fuzzy" type amenities to the City. They need to realize the realities and ramifications of some of their proposals. He praised the current Water & Wastewater Utility staff. "It has been a pleasure to see the tremendous professional growth in the Department since I've been on the Board, and the professionalism of the Board itself." He continued by saying that "how the citizens see you is always a tough balancing act." How the budget is prepared and getting the best quality for the lowest number of dollars, is important to people. "I urge you to be extremely cautious about how you spend the money!" He concluded by expressing his feelings about the importance of preserving the City's green environment. "You have to use the water to make it worthwhile and productive." he asserted. Otherwise, why did we bother to purchase all of that water? "I urge you not to be stingy with it and encourage its use." Good luck to all of you in the future. It's been a genuine pleasure working with all of you. I take much away from this experience that I have really enjoyed! Henry Caulfield has made a substantial impact during his 17 years of service on the Water Board, and his four years as president. Following are some observations he shared with the Board members and staff. "During my 17 years, this Board has not been shy of my opinion about a lot of things, not just since I've been president," he began, "I didn't hesitate to speak out. I have greatly enjoyed my years on the Board, and I hope I have made significant contributions." "I would like to note that when I came on the Board there was no Mike Smith or Dennis Bode. In fact there was very little staff at all. Ward Fischer was president 17 years ago and Norm Evans was Vice President. Both were charter members of the Board. E.V. Richardson was an Water Board Minutes June 21, 1991 Page 12 active, influential member. As Tom Moore indicated, the situation is very different today in terms of the professionalism of the staff, in terms of the system, and also in the professionalism of this Board itself. "Again, I have greatly enjoyed being on the Board and being president these last few years." I wish all of you great success in the future —both the Board and staff." Adjourn Since there was no further business the meeting was adjourned at 4:15 p.m. Following the Board meeting a reception was held for Henry and Tom to honor their years of service on the Water Board. The attached letters of recognition were read and presented. Other tokens of appreciation for their extraordinary service were presented to them (two to test their sense of humor). The remarks of Board members and staff were taped and the tapes will be given to Mr. Moore and Mr. Caulfield for them to enjoy later. A more formal reception with the Mayor, City Council members, City and Water Utility staff and former Water Board members will be held after the Water Board meeting on Friday, July 19, 1991, from 4:00 to 5:00 p.m. in the Water and Wastewater Utility Conference Room at 700 Wood Street. Water Board Secretary