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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/20/2001 - RESOLUTION 2001-42 ESTABLISHING RENTAL RATES TO BE AGENDA ITEM SUMMARY ITEM NUMBER: 23 DATE: March 20, 2001 FORT COLLINS CITY COUNCIL STAFF: Dennis Bode Beth Molenaar SUBJECT: Resolution 2001-42 Establishing Rental Rates to be Charged for the City's Surplus Raw Water for the 2001 Season. RECOMMENDATION: Staff and the Water Board recommend adoption of the Resolution. FINANCIAL IMPACT: The revenue from the City's rental of surplus raw water is expected to be approximately$275,000. The actual amount of surplus water rented will depend on both the City's supply and demand for such water in 2001, as well as the need for water by area farmers. is EXECUTIVE SUMMARY: This Resolution approves rates for the rental of the City's surplus raw water. Each year prior to the irrigation season,the City's Water Board(the 'Board")makes a recommendation to the Council on the rental rates to be charged for the City's surplus raw water. The surplus water rental program was discussed at the February 22, 2001 meeting of the Board. The proposed rental rate for each type of water is based on several factors including past rental rates,assessment rates and anticipated supply and demand conditions. BACKGROUND: The City is a shareholder in several local irrigation companies. The water available from these companies is sometimes in excess of the City's immediate needs and prior obligations. The surplus raw water rental program benefits those in this area that otherwise may have an inadequate raw water supply. The City benefits from this program by collecting revenues that can be used to offset IS the annual assessment charges levied by the irrigation companies. The City is expected in the 2001 season to have about 15,000 acre-feet of surplus raw water. Most of this will be in the form of DATE: March 20, 2001 2 1 ITEM NUMBER: 23 Colorado-Big Thompson Project water,shares in the North Poudre Irrigation Company,and shares in the Water Supply and Storage Company. The amount of surplus water actually rented will depend on both the City's supply and demand for 2001 as well as the need by area water users. hi 2000 a total of 24,561 acre-feet was rented for a total of$463,022. Municipal supply and demand will be monitored closely and quantities available for rent will be determined periodically. An adequate amount of water will be reserved to ensure that the City's needs are met. The proposed rental rates for 2001 are based on several factors including past rental rates in the area, current assessments,and anticipated supply and demand conditions. With the exception of Colorado Big Thompson Project(CBT) and Joe Wright Reservoir sources, water cannot be rented from one ditch company system into another. Therefore, for most systems the rental market is limited to individuals under each ditch and the rental price is largely dependent upon assessments as well as the supply and demand within each irrigation system. This causes considerable variation in prices per acre-foot among the various supply sources. The rental prices for CBT,North Poudre Irrigation Company,Water Supply and Storage Company, and Joe Wright Reservoir water are based primarily on market rental rates since there is an active rental market for this water. Typically, about 90% of the water rented by the City is from these sources. With the limited rental markets for the other sources, the rental prices are based primarily on assessment rates. At its February 22, 2001 meeting, the Board unanimously recommended that the following rental rates be adopted: Type of Water Proposed 2001 Rental Charge* NCWCD Water (CBT)—Ag $ 21.00 /ac-ft NCWCD Water(CBT) —M&I $ 35.00 /ac-ft North Poudre Irrigation Company—Early Ag Use $ 12.00 /ac-ft North Poudre Irrigation Company—Ag Use $ 22.00 /ac-ft North Poudre Irrigation Company—Multiple Use $ 27.00 /ac-ft Water Supply and Storage Company $ 2,800.00 /share Pleasant Valley and Lake Canal Company $ 200.00 /share New Mercer Ditch Company $ 250.00 /share Latimer County Canal No. 2 $ 450.00 /share Arthur Irrigation Company $ 17.00 /share Warren Lake Reservoir Company $ 140.00 /share Joe Wright Reservoir Water $ 75.00 /ac-ft Sherwood Reservoir Company $ 6.00 /share Sherwood Irrigation Company $ 450.00 /share Reusable Effluent $ 75.00 /ac-ft i * For late season rentals, rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. I DATE: March 20, 2001 3 ITEM NUMBER: 23 i Attachment City of Fort Collins Water Assessments and Rental Rates Conversion Yield Source (Ac-Ft/Sh) 1998 1999 2000 2001 /AcFt NCWCD(CBT) I Assessment Rate($/unit) 16.00 16.80 17.64 18.52 Ag Rental Rate($/ac-ft) 17.00 18.00 19.00 21.00 21.00 Multiple Use Rental Rate($/ac-ft) 32.00 33.00 34.00 35.00 35.00 North Poudre 1 Assessment Rate($/sh) 85.00 85.00 50.00 60.00 Early Ag Rental Rate($/ac-ft) 10.00 10.00 10.00 12.00 12.00 Ag Rental Rate($/ac-ft) 22.00 22.00 22.00 22.00 22.00 Multiple Use Rental Rate($/ac-ft) 27.00 27.00 27.00 27.00 27.00 Water Suuoly and Storage 105 Assessment Rate($/sh) 760.00 760.00 775.00 1000.00 Rental Rate ($/sh) 2400.00 2500.00 2600.00 2800.00 26.67 Pleasant Vallev&Lake 30 Assessment Rate($/sh) 150.00 150.00 150.00 150.00 Rental Rate($/sh) 180.00 180.00 200.00 200.00 6.67 New Mercer 30 Assessment Rate($/sh) 150.00 0.00 0.00 200.00 Rental Rate($/sh) 180.00 180.00 200.00 250.00 8.33 Latimer County#2 43 Assessment Rate($/sh) 250.00 200.00 200.00 400.00 Rental Rate($/sh) 300.00 275.00 300.00 450.00 10.47 Arthur 3.5 I Assessment Rate($/sh) 10.00 10.00 10.00 10.00 Rental Rate ($/sh) 12.00 14.00 16.00 17.00 4.86 Warren Lake 7 Assessment Rate($/sh) 0.00 0.00 0.00 0.00 Rental Rate($/sh) 120.00 120.00 130.00 140.00 20.00 Joe Wright Reservoir I Rental Rate($/ac-ft) 37.00 38.00 60.00 75.00 75.00 DATE: March 20, 2001 4 ITEM NUMBER: 23 I, I Sherwood Reservoir Co. Assessment Rate($/sh) 3.00 3.00 4.00 4.00 Rental Rate($/sh) 5.00 5.00 6.00 6.00 Sherwood Irrigation Co Assessment Rate($/sh) 650.00 400.00 400.00 400.00 Rental Rate($/sh) 700.00 400.00 400.00 450.00 Reusable Effluent I Rental Rate($/sh) 34.00 60.00 75.00 75.00 Note: For late season rentals, rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. I I I RESOLUTION 2001-42 OF THE COUNCIL OF THE CITY OF FORT COLLINS ESTABLISHING RENTAL RATES TO BE CHARGED FOR THE CTTY'S SURPLUS RAW WATER FOR THE 2001 SEASON WHEREAS, each year after the irrigation companies have established the annual assessment rates for their water, the City's Water Board (the "Board") makes a recommendation to the City Council on the rental rates to be charged for the City's surplus raw water; and WHEREAS, on February 22, 2001, the Board discussed the rental program and recommended the following rates for the 2001 irrigation season: Tvoe of Water 2001 Rental Charge* NCWCD Water(CBT)—Ag $ 21.00 /ac-ft NCWCD Water(CBT)—M&I $ 35.00 /ac-ft North Poudre Irrigation Company—Early Ag Use $ 12.00 /ac-ft North Poudre Irrigation Company—Ag Use $ 22.00 /ac-ft North Poudre Irrigation Company—Multiple Use $ 27.00 /ac-ft Water Supply and Storage Company $ 2,800.00 /share Pleasant Valley and Lake Canal Company $ 200.00 /share New Mercer Ditch Company $ 250.00 /share Larimer County Canal No. 2 $ 450.00 /share Arthur Irrigation Company $ 17.00 /share Warren Lake Reservoir Company $ 140.00 /share Joe Wright Reservoir Water $ 75.00 /ac-ft Sherwood Reservoir Company $ 6.00 /share Sherwood Irrigation Company $ 450.00 /share Reusable Effluent $ 75.00 /share * For late season rentals, rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. WHEREAS, municipal supply and demand will be monitored and quantities available for rent will be determined periodically; and WHEREAS, an adequate amount of water will be reserved to ensure that the City's requirements are met. NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the rental rates set forth above are hereby approved for the City's surplus raw water for 2001 and the Utilities General Manager, or his representative, is authorized to rent such surplus raw water at said rates. Passed and adopted at a regular meeting of the Council of the City of Fort Collins held this 20th day of March, A.D. 2001. Mayor ATTEST: City Clerk Excerpt from Water Board Minutes February 22, 2001 PROPOSED SURPLUS WATER RENTAL RATES Each year, after the irrigation companies have established their annual assessment rates for water shares, the Water Board recommends to the City Council the rental rates for the City's surplus raw water. A table was included in the packets that showed the assessment rates as set by the irrigation companies and the rental rates set by the City for 1998 through 2000, as well as proposed rates for 2001. The per acre-foot prices for the proposed rental rates were also shown for 2001. According to staff, the proposed rental rates for 2001 are based on several factors, including past rental rates in the area, current assessments, and anticipated supply and demand conditions. With the exception of Colorado Big Thompson Project(CBT), Joe Wright Reservoir and Reusable Effluent, water cannot be rented from one ditch company system into another. Therefore, for these systems, the rental market is limited to individuals under each ditch and the rental price is largely dependent upon assessments, as well as the supply and demand within each irrigation system. This causes considerable variation in prices per acre-foot among the various supply sources. Beth Molenaar said that the rental prices for CBT,North Poudre Irrigation Company (NPIC) and Water Supply and Storage Company shares are based primarily on market rental rates since there is an active rental market for these shares. Typically, about 90% of the water rented by the City is from these three sources. With the limited rental markets for the other sources, the rental prices . are based primarily on assessment rates. Beth continued by saying that there aren't any major changes this year. There is a slight increase in most of the rates. "One sizable increase is in our reusable types of water," she said. This includes Joe Wright Reservoir water and Reusable Effluent. "There is a tremendous market for that water right now," she said. Staff learned recently that some other municipalities are charging more than our proposed $75 per ac-ft. "Last year we brought in about$460,000 in rental revenue," Beth reported. That was primarily because we had a 100% quota on CBT water, and we were able to rent a lot of that. Because we had such a dry season all the way through the summer, there were still customers out there who were willing to pay for it late in the season," she added. Dave Frick asked how much reusable water is normally requested from the City. With all the substitute supply plans it's about at 500-600 ac-ft.," Susan Smolnik replied. "Is there anybody that is renting the water from us and selling it to someone else?" Tom Sanders asked. "The only case in which that happens, is, for example,Larimer and Weld will sometimes rent a block of CBT water and then they will re-rent that at the same price to their share holders," Beth responded. "To my knowledge, we don't rent to anyone who's making a profit by re- renting it," she added. ACTION: Motion and Vote John Morris moved that the Water Board recommend to City Council that they approve the proposed rental rates. Joe Bergquist seconded the motion. Further Discussion Mike Smith said there is an issue that may come from Council on this. In recent years there has been some discussion about how we select those who are allowed to rent the water. Currently, it is rented via a lottery when there is not enough to go around. Mike said that we are still interested in the discussions about the policy procedure for renting the water, but in the meantime, we need to get the rates adopted,because the season is upon us. "We don't want to see this held up because someone is interested in trying a different policy," he stressed. He hoped that the Water Board would concur with staff to continue to use the current procedure while looking at other policies. He emphasized that we need to adopt the proposed rental rates first. John Moms, who made the motion and Joe Bergquist who seconded it, agreed to amend the motion to say that, in addition to approving the 2001 rental rates,that the Board recommend that staff continue to follow existing policies for this rental season. Robert Ward informed the Board that the Larimer/Weld Water Issues Group still exists. They are into a number of discussions about creating a water bank in Northern Colorado, and that concept will result in having to come to grips with a lot of the issues that have been brought to the table about rental policies. He thinks it would be premature for Fort Collins to try to establish something different, while this larger group continues to deal with many of those same issues. Tom Sanders pointed out that apparently the state legislature is introducing some bills relating to this. Robert said there are two bills that deal with water banking. Tom suggested that the Legislative and Finance Committee look into this. "Given all this, I think Mike Smith's suggestion is very appropriate,"Robert Ward concluded. Vote The Board voted unanimously to recommend the approval of the rental rates and to continue the existing policy for allocating rental water this rental season.