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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/24/2004 - HALLIGAN PROJECT SEMI-ANNUAL REPORT DATE: August 24, 2004 STUDY SESSION ITEM STAFF: Mike Smith FORT COLLINS CITY COUNCIL Brian Janonis SUBJECT FOR DISCUSSION Halligan Project Semi-Annual Report. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Staff is seeking Council feedback on progress to date. The purpose of this Study Session item is to provide Council with a brief update on the progress being made on the Halligan Reservoir Enlargement Project and provide an opportunity to comment or ask questions related to the project. A Halligan Project Semi-Annual Report dated May 2004 was previously provided to Council as directed by Resolution 2003-121. Staffs efforts are directed by the Council-approved Resolution 2003-104 adopting a Water Supply and Demand Management Policy and Resolution 2003-121 proceeding with the development of the Halligan Reservoir Project. Council acting as the Water Utility Enterprise Board also authorized the sale of $4,150,781.22 in subordinate water revenue bonds in order to exercise the Halligan Option Agreement and guarantee future payments to North Poudre Irrigation Company (NPIC). The Water Supply and Demand Management Policy gives the following specific directions relative to the Halligan Project: 1. Directs staff to acquire or develop 12,500 to 14,000 acre-feet of storage. Staff recommended that Council enlarge Halligan Reservoir as a means of acquiring 12,000 acre-feet of carryover capacity. 2. Directs staff to work with other municipal providers in Northern Colorado to assure adequate supplies are maintained in the region. Specifically staff is directed to work with Greeley, Northern Colorado Water Conservancy District and the Soldier Canyon Water Districts. Staff worked with other municipal providers to develop the Halligan-Seaman Regional Water Management Project. 3. Directs staff to cooperate with local irrigation companies. Staff worked with North Poudre Irrigation Company to include their needs in the Halligan enlargement. 4. Directs staff to cooperate with local groups for stream flow and ecosystem protection. Staff is working with various groups to do so and is undertaking hydrologic and aquatic habitat studies. August 24, 2004 Page 2 The resolution authorizing staff to proceed with the development of the Halligan Project gives the following specific directions: 1. Authorizes the City Manager to exercise the Halligan Option. Completed. 2. Authorizes the City Manager to proceed with permitting an enlargement up to 40,000 acre- feet subject to semi-annual review by Council. In progress. 3. Authorizes the City Manager to enter into agreements with NPIC, East Larimer County Water District,Fort-Collins Loveland Water District,and North Weld County Water District to share in costs of developing and permitting the project in exchange for possible future rights to a portion of the capacity in the enlarged Halligan Reservoir. In progress. 4. Authorizes the City Manager to enter into agreements with the City of Greeley and the U.S. Army Corps of Engineers related to the environmental review and permitting activities for the Halligan and Seaman Reservoir Enlargement Projects. In progress. 5. Authorizes the City Manager to enter into agreements with Greeley, East Larimer County Water District,Fort-Collins Loveland Water District,and North Weld County Water District for the construction, allocation of capacity and the ongoing operation of the project, which agreements shall be presented to Council for final approval. To be completed after the NEPA process. ATTACHMENTS Halligan Project Semi-Annual Report - May 2004 Halligan Project Semi-Annual Report May 2004 Purpose This report is the first in a series of semi-annual reports to be provided to the City Council for the purpose of its review of progress related to the Halligan Reservoir Enlargement Project and other activities directed by Resolution 2003-121. Background Resolution 2003-121 authorized exercising the City's purchase option with North Poudre Irrigation Company(NPIC)and those activities and agreements necessary for the permitting and development of the Halligan Reservoir Enlargement Project. The resolution provided the authority for the City Manager to execute the following: • An operation and maintenance agreement with North Poudre Irrigation Company; • Agreements with North Poudre Irrigation Company, Fort Collins-Loveland Water District, East Larimer County Water District, North Weld County Water District, and other water suppliers interested in acquiring capacity, through which the City may share costs of engineering and environmental studies,environmental mitigation,project management and design, and other project work; • An agreement with the City of Greeley providing for cooperation, coordination and cost sharing for activities involving environmental review, planning and permitting, and other work mutually beneficial for the City's Halligan project and Greeley's Seaman project; and • Agreements with the U.S. Army Corps of Engineers related to federal regulatory requirements. The resolution further provided that the City Manager proceed with work related to the enlargement of the Reservoir to up to 40,000 acre feet,subject to economic feasibility of the capacity and design, compliance with applicable environmental requirements and semi-annual review by the City Council. Purchase Option The letter of intent to exercise the option was delivered to North Poudre Irrigation Company(NPIC) on December 4,2003. The closing to acquire the Reservoir was completed on January 21,2004 and the deed was recorded in the City's name on January 22, 2004. Permitting Staff has met with federal permitting agencies numerous times to discuss the project since adoption of the resolution. Several themes are consistently reinforced by the federal agencies and are being used to guide our efforts. • The NEPA process begins when the City files a letter of intent to construct the project. It will take at least two to three years. The process requires the federal government to compare the City's project to all other alternatives that meet the project's purpose and need. The project will require an Environmental Impact Statement and extensive public input. • Alternatives to the proposed project will include a no action alternative as well as a myriad of options that could reasonably meet the City's needs. Glade Reservoir,which is part of the Northern Colorado Water Conservancy District's Northern Integrated Supply Proj ect(NISP), is a potential alternative to the City's project. • The City's project must meet a regional need and be analyzed based on cumulative environmental impacts within the region. Demand management (conservation) is an important consideration in determining the need for a project. • Only the least environmentally damaging practicable alternative will be permitted. The lead federal agency will hire an independent third party consultant to analyze environmental impacts at City expense. The U.S. Corps of Engineers likely will be the lead federal agency for review of the project. • The more controversial the project, the more it will cost; therefore, it is important to have regional support. The less controversial projects have a better chance of getting permitted. • The permitting process does not guarantee that the project will be built, regardless of how much is spent or how beneficial the City considers the project to be. Very few water storage projects are permitted. Regional Approach Staff and the Corps have also met numerous times with potential project participants to discuss a regional approach. This approach emphasizes improving water management to stretch regional water resources and improve efficiency. Halligan would be enlarged and become operational about 2010. Fort Collins,Fort-Collins Loveland Water District,East Larimer County Water District,North Weld County Water District and North Poudre Irrigation Company would use the reservoir to store existing and newly acquired water rights. Greeley's needs would be delayed by maximizing the use of their existing reservoirs. Greeley would then build an enlarged Seaman reservoir around 2020. By cooperatively managing these water portfolios this regional group anticipates improving the regional water system efficiency and ecology both on the North Fork and main stem of the Poudre River. Agreements Staff has negotiated an agreement with North Poudre Irrigation Company to continue operation and maintenance of Halligan Reservoir until it is enlarged. This is to the City's advantage since the operations will be for irrigation deliveries until the enlargement. Legal counsel are working on agreements with other project participants. Staff anticipates these will be completed in the next several months. The agreements include cost sharing provisions based on an expected capacity allocation. Other Letters of intent for other regional projects,such as NISP,have been filed and the NEPA process for them has begun. Staff anticipates filing the letter of intent for the Halligan-Seaman Project by this fall. The project is referred to as the Halligan-Seaman Project, because of the interrelationship between the impacts and benefits of these two projects from a regional water supply and storage perspective. Greeley dropped out of NISP in favor of pursuing the joint Halligan-Seaman Project. Fort Collins and Greeley staffs are working together on hydrologic and ecologic modeling. The Cache La Poudre Water Users Association did not turn over its one-eighth interest in the Grey Mountain decree to NISP in favor of using it to support one or more Poudre water users'projects. A potential environmental concern that has been identified in connection with the Halligan—Seaman Project is the possibility of disturbing Preble's Meadow Jumping Mouse habitat. Based on recent scientific studies, the Prebles Meadow Jumping Mouse is being considered for de-listing as an endangered species. However, Utilities is continuing to work cooperatively with the Natural Resources Department, on the acquisition of conservation easements to mitigate possible habitat impacts,because of the uncertainty and length of time associated with de-listing. The City is prepared to launch a web page on the Halligan-Seaman Project to facilitate the dissemination of information to the public. The Halligan— Seaman Project participants are meeting with The Nature Conservancy, Colorado Division of Wildlife,the U.S.Forest Service,and others to identify and discuss environmental issues that maybe associated with the Project. The next update report to the City Council on the Halligan — Seaman Project is scheduled for December, 2004.