HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/09/2016 - FIRST READING OF ORDINANCE NO. 016, 2016, APPROPRIAgenda Item 10
Item #10 Page 1
AGENDA ITEM SUMMARY February 9, 2016
City Council
STAFF
Kevin Gertig, Utilities Executive Director
Mike Beckstead, Chief Financial Officer
SUBJECT
First Reading of Ordinance No. 016, 2016, Appropriating Prior Year Reserves in the Water Fund for a Project
to Repair a Piped Section of the Michigan Ditch Tunnel Project.
EXECUTIVE SUMMARY
The purpose of this item is to appropriate funds for the repair of a piped section of the Michigan Ditch near
Cameron Pass in eastern Jackson County. The Ditch experienced a catastrophic failure in June, 2015, when
the mountainside on which the Ditch is constructed slid downhill several feet. As a result, the Ditch is currently
not able to deliver the majority of the decreed water to Joe Wright Reservoir, which are released to meet City
water supply needs either directly or by exchange. Repairing the Ditch and restoring deliveries to Joe Wright
Reservoir is essential to ensure that the City fully utilizes its valuable Michigan Ditch supplies. Engineering
assessments have been completed with the recommended mitigation being a tunnel. The total mitigation cost
is $8.25M of which $700K has already been spent on the assessment and preliminary design. The 2015-16
Budget process appropriated $1.25M toward the Michigan Ditch based on previous smaller landslides and
additional funds for general source of supply and water production replacement projects of which $766,695
was allocated to this project. This appropriation ordinance is for the remaining $6,300,000 of necessary funds
to build the tunnel.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
The capital project under consideration is the repair of the Michigan Ditch, located near Cameron Pass in
eastern Jackson County. The Ditch (which includes both open and piped sections and is approximately six
miles long), captures water from the upper part of the Michigan River basin. The Ditch transports water over
Cameron Pass and into the Poudre River basin. Michigan Ditch diversions are stored in Joe Wright Reservoir
for future release.
Use of Michigan Ditch Supplies
The Ditch is a critical component of Fort Collins Utilities’ raw water supply delivery system. Michigan Ditch
water supplies are utilized to fulfill the City’s obligations related to a reuse agreement (Reuse Plan) that also
includes the Water Supply and Storage Company (WSSC) and Platte River Power Authority (PRPA).
Approximately 2,500 acre-feet (AF) of reusable water from the Michigan Ditch and Joe Wright Reservoir
system is needed each year to meet the City’s requirements for the Reuse Plan. This water is used through
the City and the reusable effluent it generates at the Drake Water Reclamation Facility is provided to PRPA for
power plant cooling. In turn, PRPA provides Windy Gap water to the City which is used to support a large
commercial customer. Through the provisions of the Reuse Plan, the City essentially gets a second use of the
Michigan Ditch supplies that result in an additional 2,300 AF of available supplies each year. In most years, an
Agenda Item 10
Item #10 Page 2
additional 2,000 to 3,000 AF of water yield is typically available for City uses from the Michigan Ditch/Joe
Wright Reservoir system.
Michigan Ditch supplies are also utilized to meet obligations related to a Joint Operations Plan (JOP) between
Fort Collins, Greeley, and WSSC. This plan obligates the City to release approximately 900 AF at 3 cubic feet
per second (cfs) per day from November through March, with releases made from Joe Wright Reservoir and
Chambers Lake. The JOP was implemented by involved parties to enhance the aquatic environment in the
Poudre River below the high mountain reservoirs of the involved parties.
The reusable water from the Michigan Ditch/Joe Wright Reservoir system is extremely valuable to the City.
The market value of the Michigan Ditch/Joe Wright Reservoir system supplies are approximately $180M. While
short periods of no supply from the Michigan Ditch would likely not have a great impact (unless there are
severe drought conditions), multi-year outages could have serious consequences and liabilities. If the Ditch
cannot divert water, the Utilities would need to rely on other reusable sources, if and when available. If not
available, the City would be unable to fulfill its obligations under the Reuse Plan and would not be able to
receive an additional 2,300 AF of water to meet City demands.
Michigan Ditch Slide
An active landslide on a piped section of the Michigan Ditch moved several feet since summer 2014 and has
separated joints in the 54 inch ductile iron pipeline that delivers flows to Joe Wright Reservoir. The pipeline
cannot be repaired in its current location as the active landslide will continue to impact its alignment.
The pictures attached show the extent of the damage caused by the slide.
Utilities staff and its consultants evaluated three potential options for a long term mitigation of the slide utilizing
a Multi-Criteria Decision Analysis (MCDA). Evaluation criteria included cost, constructability, longevity,
operation and maintenance requirements, permitting feasibility, and public perception. The results of the
MCDA indicated that a tunnel is the preferred mitigation option. The tunnel will be placed in stable bedrock
behind the landslide, which increases its longevity and lowers risk of failure. This is also the preferred option of
the State Land Board, the permitting authority for the project.
Risk Management
The proposed tunneling option carries inherent risks, in part due to the nature of tunneling operations and also
due to the remote and high altitude location of the Michigan Ditch. In order to identify and mitigate potential
risks, the project team developed a risk register. The risk register documents identified risks and options for
mitigating those risks. In addition, the team conducted a robust geotechnical investigation (a test bore was
drilled behind the landslide to determine the location and composition of the hard rock behind the slide) to
minimize risks specifically associated with tunneling operations. This approach significantly reduces but does
not eliminate risks associated with the repair project.
CITY FINANCIAL IMPACTS
The estimated cost of the proposed tunnel and all associated construction activities is $8,247,931. Prior
appropriations in the amount of $2,016,695 have been made to fund maintenance and repair of the section of
the Ditch impacted by the landslide. As the table shows, of these funds $1.3M remains available for the
tunnel’s construction leaving the need for an additional appropriation of $6.3M before construction can
commence on the tunnel.
Agenda Item 10
Item #10 Page 3
As of the end of 2014 the Water Enterprise Fund had $65.5M in working capital of which $4.7M was
unappropriated in excess of the minimum required reserves. During the 2015-16 budget process it was
expected that an additional $3.0M would be added to the reserves in 2015. While operating revenues through
November 2015 were $1.2M under budget, one-time revenues exceeded the budget by $3.1M and operating
expenses were below budget by $2.4M. Based on this data through November it is expected that
unappropriated reserves will increase by $4.5M in 2015 resulting in the Fund having more than $9M of working
capital available for appropriation.
The Council Finance Committee discussed the project and funding options at the November 2015 meeting.
CFC was fully supportive of the need to repair the ditch and restore the City’s ability to use the Michigan ditch
water asset. Two alternatives for funding were discussed, 1) debt financing using water revenue bonds or 2)
using available working capital currently within the water fund.
The 10 year capital improvement plan (CIP) and the subsequent strategic financial plan (SFP) are the basis for
debt issuance and rate increase recommendations. Costs associated with annual maintenance and repair of
the section of Ditch impacted by the landslide have been included in the CIP, however a catastrophic failure
was not anticipated and therefore was are not included in the current CIP. Staff is working to update both the
CIP and SFP but this work will not be completed until later this year. Given that staff cannot address long term
questions on the impact on rates of all water capital and borrowing requirements over the next 10 years until
Project Costs
Preliminary Analysis and Test Boring (Actual) $707,931
Tunnel Construction and Project
Management (Estimated)
$7,540,000
$8,247,931
Previous Appropriations
2015 Budget $500,000
2016 Budget $750,000
Source of Supply $666,695
Water Production Replacement $100,000
$2,016,695
Expenses to date
Preliminary Analysis and Test Boring $707,931
Available Balance $1,308,764
Additional Funding Required $6,231,236
Appropriation Request $6,300,000
Agenda Item 10
Item #10 Page 4
these plans are updated, CFC recommended use available working capital for Michigan ditch repairs and then
evaluating funding options for future needs after the CIP and SFP have been updated.
BOARD / COMMISSION RECOMMENDATION
At its January 21, 2016 meeting, the Water Board voted unanimously to support this appropriation.
(Attachment 4)
ATTACHMENTS
1. Site map (PDF)
2. Photos (PDF)
3. Sustainability Assessment Summary and Tool (PDF)
4. Water Board minutes (draft), January 21, 2016 (PDF)
5. Powerpoint presentation (PDF)
ATTACHMENT 1
Michigan Ditch Photos
ATTACHMENT 2
Michigan Ditch Photos
Piped section of the Michigan Ditch at the landslide location while repairs were being made in 2014 and after the slide in 2015
SUSTAINABILITY ASSESSMENT SUMMARY
DATE: 01/26/16
SUBJECT: Sustainability Assessment (SA) Summary for Michigan Ditch Appropriation
Key issues identified:
Reliable water supply is a key need for our community. The raw water supplies from the Ditch
are critical in ensuring a reliable water supply is available.
The Michigan Ditch provides a reusable water supply that is diverted from the Michigan River to
the Poudre River. The increased flow in the Poudre River provides environmental benefits. This
is a gravity system and is not pumped, which greatly reduces greenhouse gas emissions. In
addition, the construction associated with the Ditch repair generates spoils, however those spoils
will be reused on site.
A reliable water supply is key to supporting the local economy, and Michigan Ditch is a critical
component of the City’s water supply portfolio.
The proposed repair of the Michigan Ditch is necessary to return the Ditch to service.
Suggested mitigation actions:
The repair of the ditch is the mitigation to ensure a reliable water supply for the community.
• The project will make use of local materials and local companies to minimize environmental
impacts and to support the local economy.
• The project will beneficially reuse waste onsite.
• The project will restoring the ditch to operation as a gravity system.
Economic , 1.0 Social , 1.0
Environmental
1.0
Rating Average,
1.0
‐4.0
‐3.0
‐2.0
‐1.0
0.0
1.0
2.0
3.0
4.0
Sustainability Rating
Rating without mitigation Rating with mitigation
ATTACHMENT 3
*The Fort Collins SAT was developed by modifying the Triple Bottom Line (TBL) Analysis Tool developed by Eugene, Oregon, July 2009. 1
City of Fort Collins SUSTAINABILITY ASSESSMENT TOOL (SAT)
(January 26, 2016)
Creating a sustainable community
Plan Fort Collins is an expression of the community’s resolve to act sustainably: to systemically, creatively, and thoughtfully utilize environmental,
human, and economic resources to meet our present needs and those of future generations without compromising the ecosystems upon which we
depend.
How to use the tool
The Sustainability Assessment Tool (SAT) is designed to inform a deeper understanding of how policy and program choices affect the social
equity, environmental health and economic health of the community. The City of Fort Collins has developed a Sustainability Assessment
Framework that describes the purpose, objectives, and guidelines to assist City Program/Project Managers to determine:
• The process for cross-department collaboration in using the SAT
• Timing for applying a SAT
• When to apply a SAT
• How to document the results of the SAT and present at City Council Work Sessions and Regular Council Meetings
Further detailed guidance is available at: http://citynet.fcgov.com/sustainability/sustainabilityassessments.php
The SAT does not dictate a particular course of action; rather, the analysis provides policy makers and staff with a greater awareness of some
of the trade-offs, benefits and consequences associated with a proposal, leading to more mindful decision-making.
Brief description of proposal
The project being proposed is the appropriation of funds for the repair of a piped section of the Michigan Ditch near Cameron Pass. The Ditch experienced a
catastrophic failure in June, 2015, when the mountainside on which the Ditch is constructed slid downhill several feet. As a result, the Ditch is currently not able to
deliver the majority of the decreed water to Joe Wright Reservoir, which are released to meet City water supply needs either directly or by exchange. Repairing the
Ditch and restoring deliveries to Joe Wright Reservoir is essential to ensure that the City fully utilizes its valuable Michigan Ditch supplies. The total mitigation cost
is $8.25M, $1.25M of which has already been appropriated. This appropriation ordinance is for the remaining $6,300,000 of necessary funds to build the tunnel.
Staff lead(s):
Carol Webb
Lance Smith
2
Social Equity
Described: Placing priority upon protecting, respecting, and fulfilling the full range of universal human rights, including those pertaining to civil,
political, social, economic, and cultural concerns. Providing adequate access to employment, food, housing, clothing, recreational opportunities, a
safe and healthy environment and social services. Eliminating systemic barriers to equitable treatment and inclusion, and accommodating the
differences among people. Emphasizing justice, impartiality, and equal opportunity for all.
Goal/Outcome: It is our priority to support an equitable and adequate social system that ensures access to employment, food, housing, clothing,
education, recreational opportunities, a safe and healthy environment and social services. Additionally, we support equal access to services and
seek to avoid negative impact for all people regardless of age, economic status, ability, immigration or citizenship status, race/ethnicity, gender,
relationship status, religion, or sexual orientation. Equal opportunities for all people are sought. A community in which basic human rights are
addressed, basic human needs are met, and all people have access to tools and resources to develop their capacity. This tool will help identify how
the proposal affects community members and if there is a difference in how the decisions affect one or more social groups. Areas of consideration in
creating a vibrant socially equitable Fort Collins are: basic needs, inclusion, community safety, culture, neighborhoods, and advancing social equity.
Analysis Prompts
• The prompts below are examples of the issues that need to be addressed.
They are not a checklist. . all prompts and issues will be relevant for any
one project. Issues not covered by these prompts may be very pertinent to a
proposal - please include them in the analysis.
Is this proposal affected by any current policy, procedure or action plan?
Has advice been sought from organizations that have a high level of
expertise, or may be significantly affected by this proposal?
1. Meeting Basic Human Needs
• How does the proposal impact access to food, shelter,
employment, health care, educational and recreational
opportunities, a safe and healthy living environment or
social services?
• Does this proposal affect the physical or mental health of
individuals, or the status of public health in our community?
• How does this proposal contribute to helping people achieve
and maintain an adequate standard of living, including housing,
or food affordability, employment opportunities, healthy families,
or other resiliency factors?
Analysis/Discussion
Michigan Ditch serves as a recreational amenity in the region.
The Ditch provides raw water supply which meets essential basic
human needs.
Reliable, cost effective water supply is important in maintaining
affordable housing, employment, and an overall healthy community.
The Ditch provides cooling water to Platte River Power Authority,
which generates power supply for the region.
2. Addressing Inequities and being Inclusive
• Are there any inequities to specific population subsets in this
proposal? If so, how will they be addressed?
• Does this proposal meet the standards of the Americans with
Disabilities Act?
• How does this proposal support the participation, growth
N/A
3
and healthy development of our youth? Does it include
Developmental Assets?
• If the proposal affects a vulnerable section of our community (i.e.
youth, persons with disabilities, etc.)
3. Ensuring Community Safety
• How does this proposal address the specific safety and
personal security needs of groups within the community,
including women, people with disabilities, seniors, minorities,
religious groups, children, immigrants, workers and others?
A reliable water supply is key to providing clean water for drinking, cleaning,
and fire protection (among others). These benefits are available to all
members of the community.
4. Culture
• Is this proposal culturally appropriate and how does it affirm
or deny the cultures of diverse communities?
• How does this proposal create opportunities for artistic and
cultural expression?
N/A
5. Addressing the Needs of Neighborhoods
• How does this proposal impact specific Fort Collins
neighborhoods?
• How are community members, stakeholders and interested
parties provided with opportunities for meaningful participation
in the decision making process of this proposal?
• How does this proposal enhance neighborhoods and
stakeholders’ sense of commitment and stewardship to our
community?
N/A
6. Building Capacity to Advance Social Equity
• What plans have been made to communicate about and
share the activities and impacts of this proposal within the
City organization and/or the community?
• How does this proposal strengthen collaboration and
cooperation between the City organization and community
members?
This proposal has been presented to Water Board, Council Finance
Committee, and will be presented to City Council.
The City provides numerous opportunities for the public, staff, and elected
officials to tour the Ditch in order to educate on its importance.
Social Equity Summary
Key issues: Reliable water supply is a key need for our community. The raw water supplies from the Ditch are critical in ensuring a reliable water
supply is available.
4
Potential mitigation strategies: Repairing the Ditch is critical to ensuring a reliable water supply for the community.
Overall, the effect of this proposal on social equity would be:
Please reach a consensus or take a group average on the rating, enter an “x” in one of
the following boxes and indicate the overall rating.
Rating represents group consensus X
Rating represents group average
+3 +2 +1 0 ‐1 ‐2 ‐3
Very
positive
Moderately
positive
Slightly
positive
Not
relevant
or neutral
Slightly
negative
Moderately
negative,
impact
likely
Very
negative,
impact
expected
XX
Environmental Health
Described: Healthy, resilient ecosystems, clean air, water, and land. Decreased pollution and waste, lower carbon emissions that contribute to
climate change, lower fossil fuel use, decreased or no toxic product use. Prevent pollution, reduce use, promote reuse, and recycle natural
resources.
Goal/Outcome: Protect, preserve, and restore the natural environment to ensure long-term maintenance of ecosystem functions necessary for
support of future generations of all species. Avoid or eliminate adverse environmental impacts of all activities, continually review all activities to identify
and implement strategies to prevent pollution; reduce energy consumption and increase energy efficiency; conserve water; reduce consumption and
waste of natural resources; reuse, recycle and purchase recycled content products; reduce reliance on non-renewable resources.
Analysis Prompts
• The prompts below are examples of issues that need to be addressed.
They are not a checklist. Not all prompts and issues will be relevant for
any one project. Issues not covered by these prompts may be very pertinent
to a proposal - please include them in the analysis.
• Is this proposal affected by any current policy, procedure or action
plan? Has advice been sought from organizations that have a high level
of expertise, or may be significantly affected by this proposal?
1. Environmental Impact
• Does this proposal affect ecosystem functions or
processes related to land, water, air, or plant or
animal communities?
• Will this proposal generate data or knowledge related to the
use of resources?
• Will this proposal promote or support education in
prevention of pollution, and effective practices for
reducing, reusing, and recycling of natural resources?
Analysis/Discussion
The Ditch allows for increased flows through the wild and scenic portions of
the Poudre River, which is partially administered through a Joint Operations
Plan with other entities in the basin.
The Ditch diverts flows from the Michigan River, which can have a negative
impact on its ecosystem (which has occurred for over a century).
The water from the Ditch is a reusable source of water that is used in the
5
• Does this proposal require or promote the continuous
improvement of the environmental performance of the City
organization or community?
• Will this proposal affect the visual/landscape or aesthetic
elements of the community?
of the repair options considered (as compared to a bridge or an anchor
wall).
2. Climate Change
• Does this proposal directly generate or require the
generation of greenhouse gases (such as through
electricity consumption or transportation)?
• How does this proposal align with the carbon reduction goals for
2020 goal adopted by the City Council?
• Will this proposal, or ongoing operations result in an
increase or decrease in greenhouse gas emissions?
• How does this proposal affect the community’s efforts to reduce
greenhouse gas emissions or otherwise mitigate adverse climate
change activities?
If the Ditch is not repaired with a gravity system and the City continues to
need the water supply it will need to be pumped which will create GHG
emissions.
The raw water supplies from the Ditch play a critical component in the City’s
water supply reliability, which increases resilience to climate change
impacts, including severe and more frequent droughts and earlier runoff.
3. Protect, Preserve, Restore
• Does this proposal result in the development or modification
of land resources or ecosystem functions?
• Does this proposal align itself with policies and procedures
related to the preservation or restoration of natural habitat,
greenways, protected wetlands, migratory pathways, or the
urban growth boundary
• How does this proposal serve to protect, preserve, or restore
important ecological functions or processes?
The Ditch allows for increased winter flows through the wild and scenic
portions of the Poudre River, which is partially administered through a Joint
Operations Plan with other entities in the basin.
4. Pollution Prevention
• Does this proposal generate, or cause to be generated,
waste products that can contaminate the environment?
• Does this proposal require or promote pollution prevention
through choice of materials, chemicals, operational practices
and/or engineering controls?
• Does this proposal require or promote prevention of
pollution from toxic substances or other pollutants
regulated by the state or federal government?
• Will this proposal create significant amounts of waste or
pollution?
Soil spoils created by tunneling activities will be reused onsite for road
maintenance and stabilization of the landslide.
6
5. Rethink, Replace, Reduce, Reuse, Recirculate/Recycle
• Does this proposal prioritize the rethinking of the materials or
goods needed, reduction of resource or materials use, reuse of
current natural resources or materials or energy products, or
result in byproducts that are recyclable or can be re-circulated?
Soil spoils created by tunneling activities will be reused onsite for road
maintenance and stabilization of the landslide.
The water from the Ditch is a reusable source of water that is used in the
City’s water system and then reused by PRPA for cooling.
6. Emphasize Local
• Does this proposal emphasize use of local materials,
vendors, and or services to reduce resources and
environmental impact of producing and transporting
proposed goods and materials?
• Will the proposal cause adverse environmental effects
somewhere other than the place where the action will take
place?
Hydro Construction, one of the contractors engaged in the project, is a local
company.
Every effort will be made to use construction materials from within the local
region.
Environmental Health Summary
Key issues:
The Michigan Ditch provides a reusable water supply that is diverted from the Michigan River to the Poudre River. The increased flow in the Poudre
River provides environmental benefits. This is a gravity system and is not pumped, which greatly reduces greenhouse gas emissions. In addition,
the construction associated with the Ditch repair generates spoils, however those spoils will be reused on site.
Potential mitigation strategies:
Using local materials
Using waste onsite
Restoring the ditch to operation as a gravity system
Overall, the effect of this proposal on environmental health would be:
Please reach a consensus or take a group average on the rating, enter an “x” in one of
the following boxes and indicate the overall rating.
Rating represents group consensus XX
Rating represents group average
+3 +2 +1 0 ‐1 ‐2 ‐3
Very
positive
Moderately
positive
Slightly
positive
Not
relevant
or neutral
Slightly
negative
Moderately
negative,
impact
likely
Very
negative,
impact
expected
XX
Economic Health
7
Described: Support of healthy local economy with new jobs, businesses, and economic opportunities; focus on development of a diverse economy,
enhanced sustainable practices for existing businesses, green and clean technology jobs, creation or retention of family waged jobs.
Goal/Outcome: A stable, diverse and equitable economy; support of business development opportunities.
Analysis Prompts
• The prompts below are examples of the issues that need to be addressed.
They are not a checklist. Not all prompts and issues will be relevant for any
one project. Issues not covered by these prompts may be very pertinent to a
proposal - please include them in the analysis
• Is this proposal affected by any current policy, procedure or action plan? Has
advice been sought from organizations that have a high level of expertise, or
may be significantly affected by this proposal?
1. Infrastructure and Government
• How will this proposal benefit the local economy?
• If this proposal is an investment in infrastructure is it designed
and will it be managed to optimize the use of resources
including operating in a fossil fuel constrained society?
• Can the proposal be funded partially or fully by grants, user
fees or charges, staged development, or partnering with
another agency?
• How will the proposal impact business growth or operations
(ability to complete desired project or remain in operation), such
as access to needed permits, infrastructure and capital?
Analysis/Discussion
Water being an essential need for everyday living, having a reliable water
supply is key to supporting the local economy. As a result of past planning,
the Utilities water supply has been reliable for many years which has
attracted some water intensive industries (e.g., breweries and certain
manufacturing) to Fort Collins. Michigan Ditch will continue to provide a
continued reliable water supply that supports business growth. In addition,
the Ditch provides a reusable water supply to PRPA for cooling.
Reusing the spoils onsite prevents trucking the materials to a disposal site,
thus reducing the use of fossil fuels.
The project is funded by Fort Collins Utilities ratepayers and development
fees.
2. Employment and Training
• What are the impacts of this proposal on job creation
within Larimer County?
• Are apprenticeships, volunteer or intern opportunities
available?
• How will this proposal enhance the skills of the local workforce?
N/A
3. Diversified and Innovative Economy
• How does this proposal support innovative or
entrepreneurial activity?
• Will “clean technology” or “green” jobs be created in this
proposal?
• How will the proposal impact start-up or existing businesses or
development projects?
N/A
8
4. Support or Develop Sustainable Businesses
• What percentage of this proposal budget relies on local services
or products? Identify purchases from Larimer County and the
State of Colorado.
• Will this proposal enhance the tools available to businesses
to incorporate more sustainable practices in operations and
products?
• Are there opportunities to profile sustainable and socially
responsible leadership of local businesses or educate
businesses on triple bottom line practices?
The majority of the budget for this project will be paid to Colorado based
companies.
5. Relevance to Local Economic Development Strategy
Economic development in Fort Collins is dependent upon having reliable water
supplies.
Economic Prosperity Summary
Key issues: A reliable water supply is key to supporting the local economy, and Michigan Ditch is a key component of the City’s water supply portfolio. In addition,
the majority of the budget for repairs will be paid to local companies.
Potential mitigation strategies:
Using local companies
Restoring the Ditch to operation
Overall, the effect of this proposal on economic prosperity will be:
Please reach a consensus or take a group average on the rating, enter an “x” in one of
the following boxes and indicate the overall rating.
Rating represents group consensus XX
Rating represents group average
+3 +2 +1 0 ‐1 ‐2 ‐3
Very
positive
Moderately
positive
Slightly
positive
Not
relevant
or neutral
Slightly
negative
Moderately
negative,
impact
likely
Very
negative,
impact
expected
XX
Excerpt from Unapproved Water Board Minutes, January 21, 2016
Michigan Ditch Tunnel Appropriation
(Attachments Available Upon Request)
Utilities Financial Strategic Planning Manager Lance Smith summarized the project, which must
be completed in 2016 during the short construction season to ensure adequate water supplies
exist for all obligations in 2017. Funds are required for repair of a piped section of the Michigan
Ditch near Cameron Pass in eastern Jackson County, on state land. The Ditch is a critical part of
the City’s water portfolio. It includes both open and piped sections, is approximately six miles
long, and captures water from the upper part of the Michigan River basin. The Ditch transports
water over Cameron Pass and into the Poudre River basin. Michigan Ditch diversions are stored
in Joe Wright Reservoir for future release.
The Ditch experienced a catastrophic failure in June 2015, when the mountainside on which the
Ditch is constructed slid downhill several feet. As a result, the Ditch is not able to deliver the
majority of the decreed water to Joe Wright Reservoir, which are released to meet City water
supply needs either directly or by exchange. Repairing the Ditch and restoring deliveries to Joe
Wright Reservoir is essential to ensure that the City fully utilizes its valuable Michigan Ditch
supplies (value of $180 million in water rights). Engineering assessments have been completed;
recommended mitigation is to construct a tunnel because it has the lowest risk of failure than
other options.
Cost of construction and associated activities is $7,540,000. Some money was appropriated in
2015 and 2016 for Michigan Ditch repairs with a remaining balance of $1.25 million to be
applied toward construction. This appropriation ordinance is for the remaining $6.3 million of
necessary funds. Tunnel boring is scheduled to begin in mid-June and will last approximately 40
days, to prepare for installation of a 60-inch carrier pipe. Staff recommends that the Water Board
support this appropriation ordinance to be presented to the City Council for first reading on
February 2, 2016.
Discussion Highlights
Board members inquired about various aspects of the project, including the cost of renting the
tunnel boring machine ($1 million to rent, compared to $1.8 million to purchase a machine the
City would not use again), and staff explained Water Fund Reserves appropriations. Staff
clarified that many discussions have occurred among City leaders about where the project funds
should come from. Board members also inquired about the future outlook for Water Funds
Reserves and concerns about how future projects would be paid for (possibility of issuing bonds)
and how they would affect customers’ utility bills.
Board Member Phyllis Ortman moved that the Water Board recommend this appropriation
ordinance be adopted by City Council for the construction of the Michigan Ditch tunnel.
Board Member Lori Brunswig seconded the motion.
Vote on the motion: It passed unanimously, 11-0.
ATTACHMENT 4
1
Michigan Ditch Tunnel Project
Kevin R. Gertig
Mike Beckstead
2-2-16
• Trans-basin water, fully reusable
• Ability to store water in Joe Wright Reservoir
• Supports the City’s Reuse Plan with Platte River Power Authority
• Additional yield of 2,000 to 3,000 acre-feet of water
• Michigan Ditch supplies estimated to be worth at least $183M.
2
Value of Michigan Ditch
3
Pipeline Before and After Latest Landslide
4
Pipeline Before and After Latest Landslide
• Evaluated three mitigation options
• Wall anchored in bedrock to prevent further movement of slide
• Aerial bridge to convey the flow around the active section of the slide
• Tunnel through bedrock to convey flow behind the active slide to the
downstream portion of the Ditch
• Considered multiple criteria in evaluation, including
cost, constructability, operation, and maintenance
• Analysis resulted in selection of tunnel
• Low risk of failure
• Preferred option of State Land Board
• Limited ongoing maintenance
5
Mitigations Considered
• September 2015
- Request/Receive Temporary Access Permit from State Land
Board
• October 2015
- Geotechnical Analysis
- Confirm selected repair alternative
• January 2016
- Tunnel Boring Machine and materials ordered
• June 2016
- Commence construction of selected alternative
• Spring 2017
- Resume ditch operations
6
Project Timeline
7
Project Costs
Project Costs
Preliminary Analysis and Test Boring
(Actual)
$707,931
Tunnel Construction and Project
Management (Estimated)
$7,540,000
$8,247,931
8
Project Costs
Previous Appropriations
2015 Budget $500,000
2016 Budget $750,000
Source of Supply $666,695
Water Production Replacement $100,000
$2,016,695
9
Project Costs
Project Costs $8,247,931
Previous Appropriations $2,016,695
Expenses to date $707,931
Less Available Balance $1,308,764
Additional Funding Required $6,231,236
Amount being requested for construction $6,300,000
1% Art in Public Places $63,000
Appropriation Request $6,363,000
10
Project Funding Considerations
Two options were considered for funding:
• Debt Issuance
• Cash Reserves
Updates to Capital Improvement Plan and Strategic Financial
Plan in process.
• Difficult to assess rate impacts of long term capital needs
and associated borrowing needs
• Timing of ditch repairs requires immediate appropriation
Recommendation - Cash Reserves
11
Water Fund Reserves
Council Discussion
12
-1-
ORDINANCE NO. 016, 2016
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE WATER FUND FOR A PROJECT
TO REPAIR A PIPED SECTION OF THE MICHIGAN DITCH TUNNEL PROJECT
WHEREAS, the City owns the Michigan Ditch and certain water rights associated
therewith, by which the City conveys water tributary to the Michigan River and the North Platte
River Basin across Cameron Pass and into Joe Wright Creek and the Cache la Poudre River
Basin for the City’s use, storage, reuse, and subsequent use, including in conjunction with the
City’s partners, such as the Platte River Power Authority; and
WHEREAS, the Michigan Ditch is a critical component of Fort Collins Utilities’ raw
water supply delivery system; and
WHEREAS, a piped portion of the Michigan Ditch has experienced a significant failure
resulting from the mountainside on which the ditch is constructed being the location of a
landslide; and
WHEREAS, the City has consequently not been able to utilize the Michigan Ditch and
certain water rights associated therewith to their full capacity, which may have various and
significant adverse impacts on the City if not addressed in a timely and comprehensive manner;
and
WHEREAS, Fort Collins Utilities has reviewed various potential methods to address the
issued faced at the Michigan Ditch, with the input from the Colorado State Board of Land
Commissioners, which is the permitting authority, and has determined that the construction of a
tunnel to the repair the Michigan Ditch is the preferred option; and
WHEREAS, the estimated cost of the proposed tunnel and all associated construction
activities is $8,247,931; and
WHEREAS, previous appropriations of funds in the amount of $2,016,695 have been
made to fund maintenance and repair of the potion of the Michigan Ditch impacted by the
landslide; and
WHEREAS, the remaining funding required for the estimated cost of the proposed tunnel
and all associated construction activities is approximately $6,300,000, to be appropriated out of
Water Fund prior year reserves; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council to
appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be
available from reserves accumulated in prior years, notwithstanding that such reserves were not
previously appropriated; and
-2-
WHEREAS, Article V, Section 10, of the City Charter authorizes the City Council to
transfer by ordinance any unexpended and unencumbered appropriated amount or portion
thereof from one fund (project) to another fund (project), provided that the purpose for which
the transferred funds are to be expended remains unchanged; and
WHEREAS, City staff have determined that the appropriations as described herein are
available and previously unappropriated in the Water Fund.
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 there is hereby appropriated for expenditure from prior year reserves
in the Water Fund the sum of SIX MILLION THREE-HUNDRED THOUSAND DOLLARS
($6.300,000.00 ) for the Michigan Ditch Tunnel Project.
Introduced, considered favorably on first reading, and ordered published this 9th day of
February, A.D. 2016, and to be presented for final passage on the 16th day of February, A.D.
2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 16th day of February, A.D. 2016.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
City’s water system and then reused by PRPA for cooling.
The selected repair option (the tunnel) was the most aesthetically pleasing