HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/15/2016 - SECOND READING OF ORDINANCE NO. 026, 2016, ESTABLIAgenda Item 2
Item # 2 Page 1
AGENDA ITEM SUMMARY March 15, 2016
City Council
STAFF
Susan Smolnik, Water Resources Engineer
SUBJECT
Second Reading of Ordinance No. 026, 2016, Establishing Rental Rates and Delivery Charges for the Use of
the City's Raw Water for the 2016 Irrigation Season.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on March 1, 2016, approves the rates and charges for
the rental and delivery of the Utilities raw water supplies for the 2016 irrigation season. These rates are used
to invoice agricultural, contractual, and other water users.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, March 1, 2016 (w/o attachments) (PDF)
2. Ordinance No. 026, 2016 (PDF)
Agenda Item 6
Item # 6 Page 1
AGENDA ITEM SUMMARY March 1, 2016
City Council
STAFF
Susan Smolnik, Water Resources Engineer
SUBJECT
First Reading of Ordinance No. 026, 2016, Establishing Rental Rates and Delivery Charges for the Use of the
City's Raw Water for the 2016 Irrigation Season.
EXECUTIVE SUMMARY
The purpose of this item is to obtain City Council approval of rates and charges for the rental and delivery of
the Utilities raw water supplies for the 2016 irrigation season. These rates are used to invoice agricultural,
contractual, and other water users.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
The City is a shareholder in several local irrigation companies and also holds allotment contracts for the
delivery of Colorado Big-Thompson Project (CBT) water. The main use for these raw water sources is in the
treatment and delivery of potable water for the Utilities’ ratepayers. There are also delivery obligations to
provide raw water for use by HOAs, the Poudre School District, and several City departments. After these
treated and raw water demands have been met, in most years there is surplus water that can be rented to
other water users.
Staff is again proposing two categories for pricing raw water. The first category, rental rates, is used to set
prices for surplus water. Typically, there is demand for most of the City’s raw water rental sources and there
are active rental markets. The second category, delivery charges, sets prices for sources where the Utilities
has an on-going obligation to provide raw water that is used to irrigate some Home Owner Association
greenbelts, the Poudre School District’s fields, and the City’s parks, golf courses, and cemeteries.
Each year, prior to the irrigation season and after irrigation companies have established their annual
assessment, City Council approves the rental rates and delivery charges for the use of the Utilities’ raw water.
Staff then uses these rates and charges for invoicing purposes. The attached tables show the assessment
rates as set by the irrigation companies and the raw water rates charged by the Utilities for 2013 through 2015
as well as proposed rates for 2016.
ACTIVE RENTAL MARKETS FOR SURPLUS RAW WATER
North Poudre Irrigation Company (NPIC)
Rental Rates
The Utilities expects to have surplus NPIC water that can be made available for rent. Each NPIC share has an
agricultural (Ag) component and a multiple use (MU) component. The amount of each component varies
annually and is set in April by the NPIC Board of Directors based on the company’s water supply availability.
ATTACHMENT 1
Agenda Item 6
Item # 6 Page 2
Due to current legal constraints, the Ag component can only be used on land served by the NPIC system and
is rented to shareholders under that system. The MU portion of each NPIC share is available for the Utilities'
use and is largely comprised of NPIC-owned CBT water. When users in the NPIC system rent either Ag or MU
water, both components are delivered through the system in the same manner. Therefore, it is proposed that
both types of water be rented at the same rate per acre-foot.
Starting last year, a formula was used that incorporates the NPIC assessment and the share allocation to set
the rental rate to ensure that the cost of the NPIC assessment was fully paid by the renter. This same method
is proposed for this year. The rental rate per acre-foot will be equal to the assessment divided by the sum of
the April allocation of MU and Ag water plus a $2.00 per acre-foot administration fee and then rounded up to
the nearest dollar. The actual rate will not be known until the after the allocation is made in early April. In some
years there is a special class of NPIC water available for agricultural users for a very limited time early in the
irrigation season, which has a limited rental market and thus warrants a significantly lower rate. If this Early Ag
water is available in 2016, staff proposes a rental rate of $15 per acre-foot to reflect its limited use.
Table 4A (Attachment 4) compares the calculated rates to rates approved by City Council for the years 2011
through 2014. In most years, the two rates differ by only a few dollars. The exception is 2013 where the
calculated rate would have been $42.00 and the Council-set rate was $30.00. It should be noted that in 2013
not many NPIC rentals were made due to the City being on water restrictions related to the water quality
impacts of the High Park fire, coupled with low storage levels in the CBT system. Table 4B (Attachment 4)
provides a possible range of calculated 2016 rental rates using the 2016 assessment of $200.00 with different
potential allocations.
Procedures
The Utilities will continue to use a proportionate allocation method based on the requester’s acreage, as has
been used since 2008. This allocation method uses information provided by renters about their total land
holdings served under the NPIC system. These requesting acreages are then added together and are divided
into the total volume of City-owned NPIC water available for rent in a given year. This acre-foot per acre ratio
is then applied to each of the requesters’ land holdings to determine the maximum amount of rental water
available for each requester. NPIC renters have asked that the City employ an allocation method that provides
some water for all requesters each year. This method distributes rental water throughout the NPIC system.
Colorado Big Thompson Water (CBT)
Rental Rate
The Utilities receives CBT water through allotment contracts with the Northern Colorado Water Conservancy
District (Northern) and through its ownership of NPIC shares. To use the CBT water from its NPIC shares, the
MU portion of the share is transferred as CBT water into the Utilities’ CBT account. Utilities typically holds
some of the NPIC MU water for potentially high summer demands, then rents it to other (non-NPIC) renters
later in the year if it was not needed. In the past, Utilities did not pay any fees on this type of transfer. However,
beginning in 2015, Northern began assessing transfer fees for this type of operation which can vary based on
the CBT allocation that year. The 2015 fee for this particular transfer was $41.43 per acre-foot. This year,
depending on the CBT quota, the fee for this transfer is likely to be closer to $50 per acre-foot. Last year
transfer fees if assessed were added to the cost of the rental. This resulted in a reduction in the number of
CBT rentals made. This year staff again recommends that rentals of CBT water be made at a rate equal to the
calculated NPIC MU rate plus the cost of any transfer fees associated with the rental.
Procedures
Utilities will first meet the CBT delivery obligations to City departments and other entities with delivery
agreements. Any available surplus CBT water will then be offered to water users on the ditches that run
through town. These ditches, known collectively as the “Southside Ditches”, include the Arthur, New Mercer,
Larimer No. 2, and Warren Lake Reservoir. The Pleasant Valley Lake and Canal (PVLC) is also included in
Agenda Item 6
Item # 6 Page 3
this tier. Surplus CBT water will next be made available to other Poudre Basin water users. Finally, in the
event that any surplus CBT water remains, it will be offered to others within the entire Northern District.
Water Supply and Storage Company (WSSC)
Rental Rates
Water Supply and Storage Company shares can only be rented to water users under that system. This has
been an active rental market and the typical rental rate of a WSSC share is $1,000 over assessments. It is
recommended that this formula be used to calculate the WSSC share rental rate. Using this formula in 2016,
the resultant rental rate is $3,900 per share.
Procedures
Shares will be offered via lottery as in past years.
Reusable Sources
The Utilities occasionally has rental demand for reusable sources to satisfy State requirements for substitute
water supply and augmentation plans. The Utilities’ primary reusable sources are Joe Wright Reservoir water
and reusable effluent from the Utilities’ water reclamation facilities, but may also include water from the newly
constructed Rigden Reservoir. It is proposed that the rental rate for these sources be set at $600 per acre-foot
for 2016.
RAW WATER DELIVERY CHARGES
Pleasant Valley Lake and Canal (PVLC) and the Southside Ditches Delivery Charges
This category sets charges for water used on City facilities, such as parks and golf courses, or water used by
other entities that have met the Utilities’ raw water requirements. Non-City entities with raw water delivery
agreements are mostly HOAs and the Poudre School District. It is proposed that the charges be set at 10%
above the irrigation companies’ annual assessments per share. This is to help offset the Utilities’
administrative costs.
Reusable Water Delivery Charges
The Utilities has delivery obligations for reusable water where the Utilities’ raw water requirement has been
met. For these obligations it is proposed that a fee of $120 per acre-foot be charged to help offset operational
and administrative costs.
CITY FINANCIAL IMPACTS
The revenue from the Utilities’ rental and delivery of raw water is expected to be approximately $500,000 for
2016. The revenues generated by the rentals helps off-set the annual cost of raw water ownership.
BOARD / COMMISSION RECOMMENDATION
The Water Board discussed the proposed rates and charges at the February 18, 2016 meeting and
unanimously voted to recommend adoption of the formulas and fixed rates for the 2016 rental rates and
delivery charges.
PUBLIC OUTREACH
Announcements were made at NPIC and WSSC annual meetings regarding the availability of rental water and
the processes for making requests.
Agenda Item 6
Item # 6 Page 4
ATTACHMENTS
1. Proposed Rental Rates and Delivery Charges (PDF)
2. Water Assessments (PDF)
3. Raw Water Rates and Charges 2013-2016 (PDF)
4. NPIC Rental Rate Comparison (PDF)
5. Water Board minutes, February 18, 2016 (draft) (PDF)
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ORDINANCE NO. 026, 2016
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ESTABLISHING RENTAL RATES AND DELIVERY CHARGES
FOR USE OF THE CITY’S RAW WATER FOR THE 2016 IRRIGATION SEASON
WHEREAS, pursuant to Article XII, Section 4 of the City Charter, if at any time the
water supply is greater than the immediate needs of the City and its inhabitants, the City Council
may authorize the City Manager to permit the use of such surplus water by consumers outside
the City at such rates as the City Council may prescribe, provided that no vested right shall
accrue under such permits; and
WHEREAS, pursuant to Article XII, Section 6 of the City Charter, the City Council shall
by ordinance from time to time fix, establish, maintain, and provide for the collection of such
rates, fees, or charges for water furnished by the City as will produce revenues sufficient to pay
the cost of operation and maintenance of the City’s utilities in good repair and working order and
to provide and maintain an adequate working capital fund for the day-to-day business operations
of the utilities; and
WHEREAS, the Water Board discussed the rental program and the rates on February 18,
2016, and recommended that the rental rates and delivery charges set forth herein be prescribed;
and
WHEREAS, City staff and the Water Board have made a recommendation to City
Council regarding rental rates of surplus raw water for the 2016 irrigation season, as set forth in
the following table, to be made available to persons outside the City or persons which have not
been deemed to have satisfied the City’s raw water requirements:
RATES FOR RENTALS OF SURPLUS RAW WATER
Type of Water Rate Per Acre Foot
North Poudre Irrigation Company (NPIC):
Early Agricultural Use Water
$15.00 per acre foot
NPIC: Seasonal Agricultural Use and Multiple
Use Water
(Annual Assessment for 2016 of $200.00 per
share / (Sum of Allocation of Seasonal
Agricultural Use and Multiple Use Water per
share)) + $2.00 per acre foot
Colorado-Big Thompson Water from the
Northern Colorado Water Conservancy District
(NCWCD)
Rate for NPIC: Seasonal Agricultural Use and
Multiple Use Water + any NCWCD transfer
fees calculated at the time of transfer
Reusable Sources $600.00 per acre foot
Type of Water Rate Per Share
Water Supply and Storage Company Annual Assessment for 2016 + $1,000.00 share
; and
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WHEREAS, City staff and the Water Board have made a recommendation to City
Council regarding raw water delivery charges for the 2016 irrigation season, as set forth in the
following table, to be made available to persons deemed to have satisfied the City’s raw water
requirements:
RAW WATER DELIVERY CHARGES
Type of Water Rate Per Share
Arthur Irrigation Company 110% of Annual Assessment for 2016
Larimer County Canal No. 2 Irrigating
Company
110% of Annual Assessment for 2016
New Mercer Ditch Company 110% of Annual Assessment for 2016
Pleasant Valley and Lake Canal Company 110% of Annual Assessment for 2016
Warren Lake Reservoir Company 110% of Annual Assessment for 2016
Sherwood Reservoir Company 110% of Annual Assessment for 2016
Sherwood Irrigation Company 110% of Annual Assessment for 2016
Type of Water Rate Per Acre Foot
Reusable Sources $120.00 per acre foot
; and
WHEREAS, the rental rates and delivery charges will be rounded up to the nearest dollar,
when necessary; and
WHEREAS, the rental rates and delivery charges will be adjusted by City staff, as
necessary, to reflect the remaining yield or the prevalent market price of the water or shares
being rented in order to prevent undue economic loss to the City; and
WHEREAS, City Council finds that the rates set forth herein are appropriate and will
provide revenues sufficient to pay the cost of operation and maintenance of the City’s utilities in
good repair and working order and to provide and maintain an adequate working capital fund for
the day-to-day business operations of the utilities.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That the rental rates and delivery charges set forth above are hereby
approved as the City’s rental rates and delivery charges for the 2016 irrigation season.
Section 3. The City Manager and the Utilities Executive Director are authorized to
rent or deliver such raw water at the rental rates and delivery charges set forth above, provided
that the rental rates and delivery charges set forth above may be adjusted by the Utilities
Executive Director as he determines necessary to reflect the remaining yield for the prevalent
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market price of the water or shares being rented in order to prevent undue economic loss to the
City.
Introduced, considered favorably on first reading, and ordered published this 1st day of
March, A.D. 2016, and to be presented for final passage on the 15th day of March, A.D. 2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 15th day of March, A.D. 2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk