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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 03/02/2010 - FIRST READING OF ORDINANCE NO. 018, 2010, ESTABLIS DATE: March 2, 2010 STAFF: Susan Smolnik • • • First Reading of Ordinance No. 018, 2010, Establishing Rental Rates and Delivery Charges for the City's Raw Water for the 2010 Irrigation Season. EXECUTIVE SUMMARY This Ordinance approves rates for the rental and delivery of the City's raw water supplies. The Water Utility uses these rates to assess charges for agricultural use,for various contractual raw water obligations and for raw water deliveries to other City departments. The proposed rate for each type of water is based on several factors including market conditions and assessments charged by irrigation companies. BACKGROUND/ DISCUSSION The City is a shareholder in several local irrigation companies. Most years there is water in excess of that needed to meet City uses. To the extent there is surplus raw water, it can be rented to others for their use. Each year prior to the irrigation season and after the irrigation companies have established their annual assessments for water shares, the City Council approves rental rates and delivery charges for the use of the City's raw water. The Water Utility uses these annual raw water rates and charges for the purpose of charging for various uses of its raw water. These uses include rental to agricultural users,meeting certain rawwater delivery obligations,and uses by other City departments. The attached tables show the assessment rates as set by the irrigation companies and the raw water rates charged by the City for 2007 through 2009 as well as proposed rates for 2010. The snowpack is well below average in the Poudre Basin this winter. However, last summer's well-timed abundant rains combined with favorable stream-flows this fall allowed storage reservoirs to fill. In addition, the City was able to carry over water from the 2009 water year for use in 2010. To ensure that adequate supplies are maintained, staff will continue to closely monitor City water supplies when making surplus raw water available for rental each year. The first priority will be to insure that adequate supplies will be carried over into 2011. In 2009,the City rented about 24,500 acre-feet of surplus water for just under$850,000. This year staff is proposing two categories for raw water rates and charges. The first category includes only those sources for which an active rental market exists for the City's surplus water. The second category includes sources delivered under raw water agreements and used to irrigate greenbelts and City facilities (parks, golf courses, etc.). Surplus Water Rental Market Those sources with active water rental markets include the Colorado Big Thompson Project (CBT), North Poudre Irrigation Company(NPIC),and Water Supply and Storage Company(WSSC). For these sources,the proposed rates are based on expected rental market conditions. Fort Collins has some 2009 water remaining in the Colorado Big Thompson Project(CBT) system for use in 2010. This carryover, along with a minimum 2010 quota of 50%, means there will likely be some CBT water available for rental to the agricultural sector this summer. Staff recommends that agricultural rentals of CBT water be made at the rate of$35 per acre foot. Staff further proposes that CBT water rented for municipal or industrial (M&I) purposes be charged at$54 per acre foot in 2010 to reflect higher assessments charged to M&I water users. Each share of North Poudre Irrigation Company has an"agricultural"component and a"multiple use"component. The "ag" component can only be used for agricultural purposes on land served by the NPIC system. Therefore, this component of each NPIC share is of limited usefulness to the City and will likely be made available for rental in 2010. The multiple use portion of each NPIC share is available for the City's use but may or may not be needed this year. When users under the NPIC system rent either"ag"or"multiple use"water, it is run through the North Poudre System in the same way. Therefore, it is proposed that the"ag"water and any excess"multiple use"water be made available at$35 per acre foot. In some years there is a special class of NPIC water available for agricultural users for a very March 2, 2010 -2- ITEM 13 limited time early in the irrigation season. If this"early ag"water is available in 2010, staff proposes a rental rate of $14 per acre foot to reflect its very limited use. The decreed use of the City's Water Supply and Storage Company(WSSC) shares remains agricultural at this time and, except for a special exchange that may be exercised in some situations, these shares are not available for diversion by the City of Fort Collins. These shares will be made available to irrigators under the WSSC system in 2010. This has historically been a very active rental market and the rental price of WSSC water is expected to be about$3,200 per share again this year. In addition, it is anticipated that WSSC's reusable return flow rental program will generate revenues of approximately$1,400 per share. The City has seen an increase in demand for its reusable sources to satisfy state requirements for substitute supply plans and augmentation plans. The City's primary reusable sources are Joe Wright Reservoir water and reusable effluent from the City's water reclamation facilities. It is proposed that the rental price for these sources be$500 per acre-foot in 2010. Raw Water Delivery Charges This category covers sources that are used primarily on City facilities, such as parks and golf courses, or by other entities that have turned over raw water or otherwise met the City's raw water requirements for their properties. These other entities with raw water delivery agreements are mostly HOAs and the Poudre School District. Sources in this category include the Pleasant Valley and Lake Canal Company(PV&L)shares and other"Southside Ditches"shares. It is proposed that the charges be set at a rate that is 10% above the assessments charged by the various irrigation companies. This is to help offset administrative costs. For example, the assessment rate for PV&L water has been set at$175 per share. Based on this method, the raw water delivery charges would be set at$175 x 1.1 (110%) _ $192.50 per share. The City has delivery obligations for small amounts of reusable water on land where the City's raw water requirement has been met. In this situation it is proposed that a fee of$100 per acre-foot be charged to help offset operation and administrative costs. FINANCIAL IMPACT The revenue from the City's rental and delivery of raw water is expected to be approximately$500,000 for 2010. SUSTAINABILITY: ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS The City's raw water rental program assists farmers in Northern Colorado and indirectly supports an open space agricultural landscape. The revenue generated through the rentals helps off-set costs incurred by the City. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BOARD/COMMISSION RECOMMENDATION Each year prior to the irrigation season, the City's Water Board ("the Board") makes a recommendation to Council regarding the raw water charges. The Board will discuss the proposed rates and charges at its February 25, 2010 meeting. The recommendation from the Board and the minutes from that meeting will be provided to Council prior to the March 2, 2010 meeting. March 2, 2010 -3- ITEM 13 ATTACHMENTS 1. Proposed water rental rates for 2010 2. Water assessment rates as set by the irrigation companies 3. Raw water rental rates charged by the City from 2007 through 2009 and proposed 2010 rental rates ATTACHMENT 1 Staff recommends that the following rental rates and charges be adopted: Table 1 Type of Water Proposed 2010 Rental Rates/Charges Surplus Water Rental Rates NCWCD Water (CBT) - Ag $ 35.00/ac-ft NCWCD Water(CBT)—M&I $ 54.00 /ac-ft North Poudre Irrigation Co. —Early Ag Use $ 14.00/ac-ft North Poudre Irrigation Co. - Ag Use $ 35.00/ac-ft North Poudre Irrigation Co. —Multiple Use $ 35.00/ac-ft Water Supply and Storage Co. $ 3,200.00/share Reusable Sources $ 500.00/ac-ft Raw Water Delivery Charges NCWCD Water(CBT)—Ag $ 35.00/share Arthur Irrigation Co. $ 15.40/share Larimer County Canal No. 2 $ 385.00 /share New Mercer Ditch Co. $ 660.00 /share Pleasant Valley& Lake Canal Co. $ 192.50 /share Warren Lake Reservoir Co. $ 330.00/share Sherwood Res. Co. $ 7.70/share Sherwood Irrigation Co. $ 660.00/share Reusable Sources $ 100.00/ac-ft Notes: (1) Rental rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. (2) Charges for those who have satisfied the City's raw water requirements are set at approximately 110% of the assessments charged by that company. ATTACHMENT 2 Table 2 Water Assessments Source 2007 2008 2009 2010 CBT (NCWCD, $/unit) 22.80 23.60 24.32 25.06 North Poudre Irrigation Co. ($/sh) 85.00 90.00 100.00 100.00 Water Supply& Storage Co.($/sh) 2,100.00 2,300.00 2,300.00 2,500.00 Arthur Irrigation Co. ($/sh) 8.00 14.00 14.00 14.00 Larimer County Canal #2 ($/sh) 350.00 350.00 450.00 350.00 New Mercer($/sh) 325.00 425.00 475.00 600.00 Pleasant Valley & Lake Canal ($/sh) 150.00 175.00 175.00 175.00 Warren Lake ($/sh) 350.00 300.00 300.00 300.00 Sherwood Reservoir ($/sh) 7.00 7.00 7.00 7.00 Sherwood Irrigation ($/sh) 855.00 855.00 600.00 600.00 Reusable Sources ($/ac-ft) n/a n/a n/a n/a ATTACHMENT 3 Table 3 Water Rental Rates/Charges Source 2007 2008 2009 2010 Surplus Water Rental Rates CBT Agriculture ($/ac-ft) 30.00 35.00 35.00 35.00 CBT Municipal/Industrial ($/ac-ft) 52.00 54.00 54.00 54.00 NPIC Early Ag ($/ac-ft) 12.00 14.00 14.00 14.00 NPIC Agriculture ($/ac-ft) 30.00 35.00 35.00 35.00 NPIC Multiple Use ($/ac-ft) 30.00 35.00 35.00 35.00 Water Supply & Storage Co. ($/sh) 3,200.00 3,200.00 3,200.00 3,200.00 Reusable Sources ($/ac-ft) 400.00 500.00 500.00 500.00 Raw Water Delivery Charges CBT Agriculture ($/ac-ft) 30.00 35.00 35.00 35.00 Arthur Irrigation Co. ($/sh) 10.00 17.00 17.00 15.40 Larimer County Canal 42 ($/sh) 420.00 . 420.00 540.00 385.00 New Mercer ($/sh) -360.00 510.00 570.00 660.00 Pleasant Valley & Lake Canal ($/sh) 180.00 210.00 210.00 192.50 Warren Lake ($/sh) 360.00 360.00 380.00 330.00 Sherwood Reservoir ($/sh) 8.40 8.40 8.40 7.70 Sherwood Irrigation ($/sh) 900.00 900.00 720.00 660.00 Reusable Sources ($/ac-ft) 100.00 100.00 100.00 100.00 Notes: (1) Rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. (2) Charges for those who have satisfied the City's raw water requirements are set at approximately 110% of the assessments charged by that company. ORDINANCE NO. 018, 2010 OF THE COUNCIL OF THE CITY OF FORT COLLINS ESTABLISHING RENTAL RATES AND DELIVERY CHARGES FOR THE CITY'S RAW WATER FOR THE 2010 SEASON WHEREAS,each year prior to the irrigation season,the City staff and the Water Board(the "Board")make a recommendation to the City Council regarding rental rates and delivery charges for the use of the City's raw water; and WHEREAS, the Water Utility uses these rates to assess charges for agricultural rental water, for various contractual raw water obligations and for raw water deliveries to other City departments; and WHEREAS, on February 25, 2010,the Board discussed the rental program and the use of raw water and recommended rates for the 2010 irrigation season as follows: 2010 Rental Rates/Charges Type of Water Surplus Rental Rates NCWCD Water(CBT)-Ag $ 35.00/ac-ft NCWCD Water(CBT)—M&I $ 54.00/ac-ft North Poudre Irrigation Co.—Early Ag Use $ 14.00/ac-ft North Poudre Irrigation Co. -Ag Use $ 35.00/ac-ft North Poudre Irrigation Co.—Multiple Use $ 35.00/ac-ft Water Supply and Storage Co. $ 3,200.00/share Reusable Sources $ 500.001 ac-ft Raw Water Delivery Charges NCWCD Water(CBT)—Ag $ 3 5.00/share Arthur Irrigation Co. $ 15.40/share Larimer County Canal No. 2 $ 385.00/share New Mercer Ditch Co. $ 660.00/share Pleasant Valley& Lake Canal Co. $ 192.50/share Warren Lake Reservoir Co. $ 330.00/share Sherwood Res. Co. $ 7.70/share Sherwood Irrigation Co. $ 660.00/share Reusable Sources $ 100.00/ac-ft Notes: (1) Rental rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. (2) Charges for those who have satisfied the City's raw water requirements are set at approximately 110% of the assessments charged by that company. NOW,THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the rental rates and charges as set forth above are hereby approved as the City's raw water rates for 2010 and the Utilities Executive Director is authorized to rent or deliver such raw water at said rates. Introduced, considered favorably on first reading, and ordered published this 2nd day of March, A.D. 2010, and to be presented for final passage on the 16th day of March, A.D. 2010. Mayor ATTEST: City Clerk Passed and adopted on final reading on the 16th day of March, A.D. 2010. Mayor ATTEST: City Clerk