Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/18/2003 - RESOLUTION 2003-035 ESTABLISHING RENTAL RATES TO B AGENDA ITEM SUMMARY ITEM NUMBER: 19 FORT COLLINS CITY COUNCIL DATE: March 18, 2003 STAFF: Dennis Bode SUBJECT: Resolution 2003-035 Establishing Rental Rates to Be Charged for the City's Surplus Water for the 2003 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 $50,000 for 2003. 7 EXECUTIVE SUMMARY: This Resolution approves rates for the rental of the City's surplus raw water in 2003. Although the City is not expected to have any surplus raw water available this year due to the drought, the Water Utility uses these rates to assess charges for various contractual raw water obligations and for raw water deliveries to other City departments. 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. The Board discussed the rental rates at its February 27,2003 meeting. The proposed rental rate for each type of water is based on several factors including assessment rates and anticipated supply and demand conditions. ACKGROUND: The City is a shareholder in several local irrigation companies. The water available from these companies is normally in excess of the City's immediate needs and prior obligations. Due to the on-going severe drought situation, the City is not expected to have any surplus raw water available for rental this year. However, the Water Utility uses its annual rental rates set by City Council for the purpose of charging for various contractual raw water obligations. In addition,it uses these rates to assess charges to other City departments that use raw water. Because of this, it is necessary to establish rental rates for most of the City's raw water supplies. DATE: ITEM NUMBER: 19 The proposed rental rates for 2003 are based primarily on current market rental rates in the area or the 2003 assessments that are charged to shareholders of the various irrigation companies. With the exception of water from the Colorado Big Thompson Project (CBT), Joe Wright Reservoir and Reusable Effluent, water cannot be rented from one irrigation company system into another. Therefore,for these systems,the rental market is limited to individuals under each ditch system and the rental price is largely dependent upon assessments as well as the supply and demand within each irrigation system. This results in considerable variation in prices per acre-foot among the various supply sources. Competition for CBT water has increased dramatically this year due to the drought and the record- setting low yields that have been projected by the Northern Colorado Water Conservancy District (NCWCD). The proposed rental rate of$400 per acre-foot reflects the prevailing market rate for CBT water and the approximate cost to secure additional CBT supplies to meet treated water needs. Most of the raw water demand for the City's "Southside Ditches" is for City and Poudre School District facilities and to meet the contractual obligations to a few homeowners associations. This water includes shares of Pleasant Valley&Lake Canal,New Mercer,Larimer County No.2,Warren Lake, Arthur, Sherwood Reservoir, and Sherwood Irrigation. As in other years, rental prices for these shares are based primarily on the assessment rates that have been set by the companies to recover operational and maintenance expenses. The City normally rents some of its Joe Wright Reservoir water and reusable effluent to satisfy state requirements for substitute supply plans. Although the City has not renewed any annual substitute supply plans for 2003,there are ongoing obligations for this water,primarily for City facilities. Joe Wright Reservoir water and Reusable Effluent from the City's water reclamation facilities are the only sources the City has available which can be used to fulfill these. It is proposed that the rental price for these sources be $750 per acre-foot in 2003 to reflect the unique and increasing value of this water. The City's shares of North Poudre Irrigation Company and Water Supply and Storage Company (WSSC)will not be available for rental this year. Although there is usually a strong rental demand for shares under these systems,the City plans to utilize its shares to strengthen its water supply and to offset some of the City's other obligations to the irrigation companies. No rental price will be established for these shares for 2003. For 2003 it is especially important that the City maintain flexibility with its water supplies because of rapidly changing supply and market conditions. Therefore,some adjustments to rental rates may be needed as the irrigation season approaches and water supply projections become firmer. At its February 27, 2003 meeting, the Board unanimously recommended that the following rental rates be adopted: DATE: ITEM NUMBER: March 3 Type of Water Proposed 2003 Rental Charge* NCWCD Water(CBT) - Ag $ 400.00/ac-ft NCWCD Water(CBT)-M&I $ 400.00/ac-ft Pleasant Valley&Lake Canal Co. $ 250.00/share New Mercer Ditch Co. $ 250.00/share Latimer County Canal No. 2 $ 300.00/share Arthur Irrigation Co. $ 35.00/share Warren Lake Reservoir Co. $ 350.00/share Sherwood Res. Co. $ 10.00/share Sherwood Irrigation Co. $ 450.00/share Joe Wright Reservoir Water $ 750.00/ac-ft Reusable Effluent $ 750.00/ac-ft * Rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. City of Fort Collins Water Assessments and Rental Rates Conversion Yield Source (Ac-Ft/Sh) 2000 2001 2002 2003 $/Ac Ft NCWCD (CBT) 1 Assessment Rate ($/unit) 17.64 18.52 19.44 20.30 Ag Rental Rate ($/ac-ft) 19.00 21.00 25.00 400.00 400.00 Municipal Use Rental Rate ($/ac-ft) 34.00 35.00 38.00 400.00 400.00 Pleasant Valley &Lake 30 Assessment Rate ($/sh) 150.00 150.00 120.00 150.00 Rental Rate ($/sh) 200.00 200.00 200.00 250.00 8.33 New Mercer 30 Assessment Rate ($/sh) 0.00 200.00 200.00 200.00 Rental Rate ($/sh) 200.00 250.00 250.00 250.00 8.33 Latimer County#2 43 Assessment Rate ($/sh) 200.00 400.00 300.00 200.00 Rental Rate ($/sh) 300.00 450.00 400.00 300.00 6.97 Arthur 3.5 Assessment Rate ($/sh) 10.00 10.00 11.50 26.00 Rental Rate ($/sh) 16.00 17.00 20.00 35.00 10.00 Warren Lake 7 Assessment Rate ($/sh) 0.00 0.00 100.00 300.00 Rental Rate ($/sh) 130.00 140.00 150.00 350.00 50.00 DATE: ITEM NUMBER: March 4 19 Conversion Yield Source (Ac-Ft/Sh) 2000 2001 2002 2003 $/Ac Ft Joe Wright Reservoir 1 Rental Rate ($/ac-ft) 60.00 75.00 100.00 750.00 750.00 Sherwood Reservoir Co. Assessment Rate ($/sh) 4.00 4.00 4.00 7.00 Rental Rate ($/sh) 6.00 6.00 6.00 10.00 Sherwood Irrigation Co. Assessment Rate ($/sh) 400.00 400.00 400.00 400.00 Rental Rate ($/sh) 400.00 450.00 450.00 450.00 Reusable Effluent 1 Rental Rate ($/ac-ft) 60.00 75.00 100.00 750.00 750.00 Note: Rates maybe adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. RESOLUTION 2003-035 OF THE COUNCIL OF THE CITY OF FORT COLLINS • ESTABLISHING RENTAL RATES TO BE CHARGED FOR THE CITY'S SURPLUS WATER FOR THE 2003 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, the Water Utility uses these rates to assess charges for various contractual raw water obligations and for raw water deliveries to other City departments; and WHEREAS, on February 27, 2003, the Board discussed the rental program and recommended the following rates for the 2003 irrigation season: Type of Water Proposed 2003 Rental Charge NCWCD Water(CBT) -Ag $ 400.00/ac-ft NCWCD Water(CBT)—M&I $ 400.00/ac-ft Pleasant Valley &Lake Canal Co. $ 250.00/share New Mercer Ditch Co. $ 250.00/share Larimer County Canal No. 2 $ 300.00/share Arthur Irrigation Co. $ 35.00/share Warren Lake Reservoir Co. $ 350.00/share . Sherwood Res. Co. $ 10.00/share Sherwood Irrigation Co. $ 450.00/share Joe Wright Reservoir Water $ 750.00/ac-ft Reusable Effluent $ 750.00/ac-ft Rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. 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 2003, subject to adjustment by the City Manager to reflect significant changes in the remaining yield or the prevalent market price of the water stock being rented, and the City Manager 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 18th day of March, A.D. 2003. Mayor ATTEST: • City Clerk Excerpt from Water Board Meeting Minutes February 27, 2003 Proposed Surplus Water Rental Rates Dennis Bode, Water Resources Manager explained that each year the Water Board forwards to City Council recommended rental rates for the City's surplus raw water. Due to the on-going severe drought situation, the City is not expected to have any surplus raw water available for rental this year. However,the Utility uses its annual rental rates for the purpose of charging for various contractual raw water obligations. In addition, it uses these rates to assess charges to other City departments that use raw water. Because of this, it is necessary to establish rental rates for most of the City's raw water supplies. The proposed rental rates for 2003 for Colorado Big Thompson Project (CBT),Joe Wright Reservoir and Reusable Effluent are based primarily on market rental rates. The rates for most of the "southside" irrigation companies are based primarily on the assessment rates that have been set by the companies to recover operational and maintenance expenses. Because of the need for the City to use, either directly or by exchange, all of its North Poudre Irrigation Company shares and its Water Supply and Storage Company shares this year, there is not a need to set rental rates for these two sources. Board member Bill Fisher made a motion to recommend the proposed rental rates to Council for adoption. Type of Water Proposed 2003 Rental Charge* NCWCD Water(CBT)—Ag $ 400.00/ac-ft NCWCD Water(CBT)—M&I $ 400.00/ac-ft Pleasant Valley& Lake Canal Co. $ 250.00/ac-ft New Mercer Ditch Co. $ 250.00/ac-ft Larimer County Canal No. 2 $ 300.00/ac-ft Arthur Irrigation Co. $ 35.00/ae-ft Warren Lake Reservoir Co. $ 350.00/ac-ft Joe Wright Reservoir Co. $ 750.00/ac-ft Sherwood Reservoir Co. $ 10.00/ac-ft Sherwood Irrigation Co. $ 450.00/ac-ft Reusable Effluent $ 750.00/ac-ft *Rates may be adjusted to reflect the remaining yield or the prevalent market price of the water stock being rented. The motion was seconded by Ted Borstad and passed unanimously.