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HomeMy WebLinkAboutWater Board - Minutes - 02/15/1985J MINUTES Water Board February 15, 1985 Members Present Norman Evans, Chairman, Henry Caulfield, Vice Chairman, Neil Grigg, Tom Moore, Morton Bittinger, MaryLou Smith, Tom Sanders, Dave Stewart, Jim O'Brien (alt.), and John Scott (alt.) Staff Present Bill Carnahan, Mike Smith, Dennis Bode, Paul Eckman, Assistant City Attorney Guests Pat Graham Members Absent Ray Glabach Minutes The minutes for January 18, 1985 were approved as were the minutes of the special Water Rate Study meeting on January 25, 1985. One comment was offered about the minutes of the Legislative/Finance Committee meeting held on January 26, 198S. Jim O'Brien said that some of his specific arguments for election of District Board members were not included in the minutes. The secretary will review the tape and forward those arguments to Mr. O'Brien. Raw Water Rental Rates A brief memo and a table that showed the assessments and the rental rates for the last two years and recommended rental rates for 198S were included in the Water Board packets. Dennis Bode explained that each year after the irrigation companies have established the annual assessment rates for their water, the Water Board recommends to the City Council the rental rates for the City's surplus water. He also said that the rental rates were based, primarily, on three factors; one is assessment rates for 198S; the second is a general indication of the market and what has occured over the last year or two; and the third is based on the anticipated demand and supply that we see for 198S which is always somewhat unpredictable at this time of year. One question that Henry Caulfield asked at the last meeting concerned the proportion of ditch water that is used for irrigating City parks, golf courses and cemeteries. He was interested to know how much that is. After reviewing the percentages of the shares that the City uses for Parks & Recreation, Henry Caulfield and Dennis Bode agreed that the City uses a "significant" amount of water from the ditch company shares for this purpose. A list follows: -2- Ditch Company Warren Lake Pleasant Valley & New Mercer Larimer No. 2 Arthur Shares City Owns 46 Lake 140 25 45 200 Shares Used for P&R 46 50 10 10 6 After some other questions and comments from the Board, Tom Moore moved that the Water Board approve the adoption of the rental rates recommended by staff. After a seond from Mort Bittinger, approval from the Board was unanimous. The rates appear below: Irrigation Company NCWCD Water (CST) North Poudre Irrigation Co. Water Supply and Storage Co. Pleasant Valley & Lake Canal New Mercer Ditch Co. Larimer County Canal No. 2 Arthur Irrigation Co. Proposed 1985 Rental Charae* $ 12.00/ac-ft $ 100.00/share $1,500.00/share Co. $ 70.00/share $ 225.00/5hare $ 150.00/5hare $ 15.00/share * For late season rentals, rates may be adjusted to reflect the proportional yield of the water stock being rented (if applicable). Windy Gap Annexation Question Paul Eckman had provided a memo on the Windy Gap Annexation issue for Board members and staff. Mr. Eckman reviewed the background of this question. When this first came to the Water Board from the City Council, the Council wanted the Board to examine whether or not the City should annex into the subdistrict, a large amount of City land; anything annexed after 1971. The original part of the City is already in the subdistrict. The concern of both the Council and the Water Board was the risk of taxation, assessment or other fees to property owners as a result of being included in the Municipal Subdistrict. Mr. Eckman explained that the letter from John Sayre, attorney for the NCWCD, is a fairly reasonable assurance that this will not occur. The City would not be subject to any Windy Gap assessments having sold our interest to PRPA. Moreover, the likelihood of the mill levy would be fairly slim. The contracts for Windy Gap water are "take or pay" type contracts. Norm Evans asked if there are two issues here. He knows one is the possibility of a mill levy. Is the other the annexation issue? Mr. Eckman said if the land is not annexed into the subdistrict, there could be no mill levy. If it is annexed, it would be subject to a mill levy if there were one. Some contend that unless the land annexed since 1971 is made a part of the subdistrict, the City cannot use Windy Gap water. Mike Smith asked if part of the City is currently in the subdistrict, why can't we, through accounting practices, say that the Windy Gap water we have is delivered to that part of the City? Paul Eckman responded that he had posed that question to Larry Simpson and John Sayre and they indicated that they would be resistant to that kind of an arrangement. Henry Caulfield said his understanding is that we only have a right of first refusal. However, that is not written in a contract anywhere. Mr. Eckman clarified that he is talking about our contract right that we have under our reuse plan with PRPA where we deliver them 4200 AF of water. In turn, they deliver 4200 AF to us when Windy Gap water comes on line. Mr. Bode clarified that the Northern Colorado Water Conservancy District asked all the cities to include their annexations, not just Fort Collins. They want to clean up their books, he said. Mr. Eckman commented that Fort Collins is the only reluctant one since we don't have as great an interest in Windy Gap. Neil Grigg asked why the subdistrict was established initially. Norm Evans responded that it was for the convenience of the six cities who wanted to develop the project and use the CBT conveyance. It seemed most convenient to form a subdistrict of the Municipal District, but it was just one option from which to choose, he stressed. Mr. Caulfield suggested that we wait until something matures here with respect to a real issue. Why do we have to "jump in and add land to the subdistrict with everyone subject to a mill levy?" Now we have a "bargaining chip" in that we are not all in the area to which the mill levy would apply. Why do we have to move now? Paul Eckman said NCWCD would like to take all of the cities together as one package to have the Court rule on taking this land into the subdistrict: it can't just be a board action on their part. Norm Evans reiterated that the underlying objective we have, especially in Fort Collins, is that the subdistrict not get into the financing business through a mill levy. Therefore, he concurs with Mr. Caulfield, that we shouldn't take any steps until there is a necessity to do so. Mr. Caulfield asked if there is any real reason why we need to comply at this time. Paul Eckman said that it is necessary if we want to use the Windy gap water which could be as early as this year. The trade off is what is the value of the Windy Gap water versus the potential of a mill levy? We may be able to use the argument that the water is for the older parts of town which are already in the subdistrict, but it won't be without oppositon. Bill Carnahan reminded the group that the 4200 AF is delivered to Horsetooth without charge in exchange for our effluent, so we can't replace it with anything cheaper. Paul Eckman explained that NCWCD realizes that it was a mistake not to make it clear to all the cities 15 years ago that each time an annexation occurred, it had to be included in the subdistrict. At that time they had a very cumbersome statutory process, but now the statute has been ammended so it is fairly easy. Norm Evans provided some background about the original agreement. He explained that the Cities were allowed to finance this each in their own ways, but not by an ad valorem tax. It didn't make any difference if the annexations were added or not. Now, the idea of the mill levy has -4- come into the picture. He thinks they are looking for ways to finance the project since several of the cities are having difficulty paying for their portions. Several have found it necessary to sell large portions of their Windy Gap shares. Hence, in Mr. Evan's opinion, the real reason behind the annexations is to be able to assess a mill levy. Dennis Bode commented that in all the meetings he has had attended, he never heard them say that this is their intention. As far as Mr. Bode can ascertain, the Cities, for the most part, have lined up their financing or adjusted their rates to meet their obligations, or are talking about selling the water. Bill Carnahan confirmed, after some questions, that PRPA is obligated to deliver Windy Gap water unless some other arrangement is agreed upon. Technically, the contract says the City will receive 4200 AF of Windy Gap water in 198S, but the problem would not come to a head if another agreement were reached this first year. Dennis Bode explained that there is a strong desire to bring a small quantity of water over and have it used through the City by PRPA because of their decrees etc.; they want to make a showing of beneficial use. Henry Caulfield is reluctant to recommend to the Council thay they take unilateral action at this time to Just annex everything without further knowledge and further discussion. Thus, Henry Caulfield moved that the matter be tabled until such time that Assistant City Attorney Paul Eckman and the staff find that it is more germaine to reconsider the issue. Bernie Cain provided a second. The motion carried unanimously. Appointment or Election of Conservancy District Board Members Committe Chairman Henry Caulfield reviewed what had transpired at the Legislative/Finance Committee meeting on January 28. He brought a draft of a senate bill "concerning criteria for the Judicially appointed board of directors of water conservancy districts, and including criteria for their appointment, removal, meetings, and records." The bill summary follows: "Provides guidelines to district court judges in the appointment of directors to the boards of water conservany districts and authorizes such judges to remove those directors from office for cause after hearing. Designates the judges responsible for appointing such directors. Provides for the ratification and reopening of existing court decrees insofar as they relate to the appointment of directors. Provides that the meetings and records of water conservancy districts are subject to the requirements of the local open government meetings and state open public records statutes." Some Board members thought this bill was very restrictive. They would modify the bill to include open procedures for appointment to apply to current and future water conservancy districts. For a discussion of the background of this issue, please see the minutes of the Legislative/Finance Committee for January 28, 198S. The committee members were unable to make a recommendation on this issue at their meeting: Henry Caulfield and Neil Grigg favored sjme Lind of an appointment process, while Jim O'Brien and John Scott thought an election system would be best. The other committee member Mort Bittinger was unable to attend. Hence, all of the background information was sent to the entire Board for their comments and suggestions. Arguments in favor of appointment by County Commissioner were: 1) Elections would result in chaotic politics. 2) Interest in special district elections is very low which would probably be the case for conservancy districts. 3) NCWCO encompasses five counties so there is no community focal point. 4) Commissioners are elected so would be held politically accountable for their appointments. 5) Judges who currently appoint board members are not politically accountable. 6) Would we get qualified candidates with a background in water and who would be willing to run? 7) An election clause currently exists in the statutes in which 1S% of the qualified electors could call for a vote. 8) Commissioner appointment is local whereas an appointment by the governor, for example, would not be. Arguments for Election of the Board are: 1) The Board members would be directly accountable to their constituents. 2) Because of the visible issues facing the District, there would be broad public participation and interest. 3) Board members are paid a minimum salary each year of approximately $1000 - 1200. 4) If we are going to face possible issues like development on the Poudre and other things of that nature that have strong political rifts, we should have a board that determines policy and not one with only a water management scope. S) Qualified candidates would emerge (e.g.) agricultural leaders in the more rural counties would probably run for office and would be visible people. 6) The appointment process is closed and does not allow for citizen input or for those interested to apply for appointment. 7) The election clause may be constitutional, but very impractical. Some of both arguments apply to both the election of the Board members or appointment by county commissioners. After considerable discussion of the alternatives, MaryLou Smith moved that the Board vote on the following three options and present these to the City Council. Henry Caulfield provided a second. The secretary polled the members. The options and those who voted for each follow: 1) Election --- John Scott, MaryLou Smith and Jim O'Brien 2) Appointment by County Commissioners --- Norm Evans, Henry Caulfield, Tom Moore, Morton Bittinger, Neil Grigg, and Dave Stewart 3) Modification of the Draft Senate Bill --- Bernie Cain Tom Sanders abstained. The motion to send these options to the City Council won unanimous approval. Rate Studv Bill Carnahan explained the procedure that the staff would follow if time permits. There are two general areas to be presented. An expansion of the outlne that the Water Board had discussed at the Rate Study meeting was included in the Board's packets, now titled "Water System Study." The staff thinks that there should be a "little more meat" in some areas. Nevertheless, it gives the direction that we hope to go in each area. Staff would appreciate the Board's comments. The other item for today is a presentation prepared by Dennis Bode which includes in depth information on Item 3, the overview of the system components -- what drives the system; what is the system sensitive to; and how do we look at allocating costs? This is important information for the Board to have as we look at other alternatives. The Water System Outline was addressed first. Chairman Evans asked for comments from the Board. Henry Caulfield made a few notations on his copy which he will turn in to the staff. Neil Grigg complimented the staff on the outline. However, he didn't feel that the outline addressed how this study was going to take us to the place where we emerge with a plan or a set of options. Thus, the substantive issue here would be to change the title to a more descriptive one of what it will be when it is finished; such as a "Program that would Lead to Better Management of Our Water, for example. Jim O'Brien was given a copy of the Metering Study that was completed by staff in 1980. In it there are comparisions of costs and savings per meter. Mr. O'Brien suggested that this information be updated, if possible. Norm Evans said one of the general topic areas which is not there but probably should be included is the general subject of water supply; future reservoir needs, opportunities for reuse etc. Bill Carnahan said the staff had discussed this at length and had decided that this study is related, essentially, to the treated water side of the system. When the drought study is completed, we intend to do a similar kind of study from the results. At that time, we will be looking at the supply options. Henry Caulfield suggested that the title No. 2 on page 2 be changed to "Water Riahts and Raw Water Storage." Dave Stewart asked how much influence the raw water system has on the treated water system. That is an important question we need to answer. If that has a lot of sensitivity to what happens on the treated water side, he thinks we need to integrate them. Bill Carnahan explained that we would talk about the sensitivity but, a future plan of how we deal with it would come later. The staff is saying let's get a feel for the treated water side of the system, but not in terms of planning, just in terms of what influence it has, and how sensitive we are to it, etc. That will lay the ground work for the other half. Tom Moore asked if the entire study will be done in house. Bill Carnahan said the Rate Study will help the staff greatly because it contains cost data that will be needed for the study. Dennis Bode added that the Drought Study will also help, but won't play as major a part in the study. Chairman Evans asked any of the members who have other suggestions or comments to turn them in to the staff. Henry Caulfield briefly described a book called, Savina Water In a Desert City, which he considers to be worthwhile and instructive reading for Board members, staff and City Council. The desert City is Tucson, Arizona. The staff agreed to purchase two copies of the book to be available for staff and City Council; Mr. Caulfield's copy will be available for the Board. Bill Carnahan introduced the next segment by saying that the staff is trying to give the Board some feel for what drives the system. What is a water Utility? What is it sensitive to? Where does the money come from and where does it go? He added that the information will be fairly conceptual; just to give the Board a perspective to be used for background. With the aid of charts and graphs on the overhead projector, Mike Smith first reviewed the Functional Areas of the Water Utility which included the purpose of each of the divisions, the facilities associated with that function; the number of personnel in each area; the Net Utility Plant Value as of 1984; the Capital budget in each division; the Budget O&M and Minor Capital for 1984; and Primary Sizing factors for each area. After some clarifications and questions, he proceeded to the next area called Major Components of the Water System. This included the major heading of: New Capital Facilities; Water Rights; and Operation, Maintenance, and Replacement of Capital Facilities. He showed examples from each araea; the Source of Funds, From Whom the Funds Come, and the Primary Impacts on the Components. (The next overhead slides showed a graph of the Peaking Factors and the final graph depicted Cost of Service By Class.) Dennis Bode reviewed the two graphs on Peaking Factors and Cost of Service. The Peaking Factor graph showed the Base Use, the Max Day Use, and the Max Hour Use. The graph listed the four major customer classes which are: Inside City Metered, Inside City Unmetered, Outside City and Contractural showing the base use, max day and max hour use in each customer class. Henry Caulfield wanted to point out that the graph shows inside city metered to be much lower in max hour and peak day consumption then unmetered. He wanted it stressed that a significant number of the metered customers use wells or other raw water for supplementary irrigation which makes consumption look more out of proportion than it should. Dennis Bode explained that he didn't think the ratios would change much on the graphs with the inclusion of other raw water sources for the metered customers. He also explained that the base use, primarily, relates to water supply, max day mostly relates to water treatment considerations, and max hour relates to the transmission and distribution system. Next, Mr. Bode presented a brief look at Cost of Service by class which included the same four customer classifications that were mentioned previously. The graph included base costs, max day costs, max hour costs and customers costs for each classification. The staff wanted to give an overall feel where all the costs are in these areas. There was a question about the cost of reading meters. Bill Carnahan said that our costs are very low compared with other cities partly because we are using hand-held computer devices instead of writing in meter books. Copies of the information presented by Mike Smith and Dennis Bode were distributed to Water Board members. The Board members praised the presentation as being very helpful and that the information will be valuable to keep in their notebooks for future reference. Norm Evans asked the Board to look over the leadership workshop information for the next meeting since they weren't able to get to it today. Chairman Evans announced that Ray Glabach had submitted his resignation from the Board because of the demands of his job. This means that there will be a vacancy on the Board. Mike Smith updated the Board on the pretreatment site that Anheuser-Busch has an option to purchase with an appraised per acre cost of $25,000. This will be on the Council agenda on Tuesday, February 19. Tom Sanders asked where the staff is on the purchase of Horsatooth water. Mike Smith said the staff has developed an agenda summary for a resolution to the Council. Paul Eckman will prepare the resolution. Mr. Smith suggested that the Water Board prepare a memo for the Council which includes their position on the purcase of CST water. Marylou Smith pointed out that the vote on this issue was close and that should be mentioned in the summary. The staff will remain neutral on the subject. This item should be an the Council agenda on March 19. The staff will keep the Board informed on the progress. Norm Evans announced that Sim O'Brien has been appointed to the Legislative/Finance Committee, so please mark committee assignment sheets to reflect that. Since there was no further business, the meeting was adjourned at S:18 p.vi.