Loading...
HomeMy WebLinkAboutMemo - Mail Packet - 3/2/2021 - Memorandum From Liesel Hans Re: Follow Up Request From February 9, 2021 Work Session - Discussion Of Compensation In Draft Perpetual Augmentation Water Agreement With The Montava DeveloperUtilities electric · stormwater · wastewater · water PO Box 580 Fort Collins, CO 80522 970.212.2900 V/TDD 711 utilities@fcgov.com fcgov.com/utilities M E M O R A N D U M DATE:February 24, 2021 TO:Mayor Troxell and Councilmembers FROM:Liesel Hans, Interim Utilities Deputy Director THROUGH:Darin Atteberry, City Manager Carrie Daggett, City Attorney Theresa Connor, Interim Utilities Executive Director RE: Follow up request from February 9, 2021 Council Work Session Item: Discussion of Compensation in Draft Perpetual Augmentation Water Agreement with the Montava Developer This memorandum addresses questions raised at the February 9, 2021 work session regarding compensation in a draft augmentation water agreement (Draft Agreement) between Fort Collins Utilities (Utilities) and the Montava Developer. Additional information regarding the Draft Agreement is available on the City’s website for the December 15, 2020 meeting at fcgov.com/agendas. Based on feedback from City Council on February 9 th, the Draft Agreement currently is on hold. Bottom Line: The Draft Agreement outlines that, in exchange for cash payments, Utilities would annually deliver up to 25 acre-feet of augmentation water from the City’s Rigden Reservoir in southeast Fort Collins to the Poudre River for the Montava Developer’s benefit; it has been requested as a component of their proposed water supply approach. The cash payments are to compensate for the impact and ensures that the agreement is neutral or beneficial to Utilities. In terms of compensation, the Montava Developer also offered a portion of a share in the Water Supply and Storage Company (WSSC) and shares in the North Poudre Irrigation Company (NPIC) were also explored. At the time, however, staff suggested cash compensation for several reasons, including: it was easier to manage the complexity of the proposal having a cash payment approach, including that fractional components of water shares that is not facilitated by the irrigation companies; the water system is limited by storage capacity and cash would allow more flexibility to invest in the enlargement of Halligan Reservoir if that was determined to be most critical; additional Water Court and other transaction costs associated with the WSSC share; the Developer would need to acquire NPIC shares; lack of existing methodology or precedent to determine the amount of NPIC shares that would generate a benefit to offset the impact of the permanent lease; a preference for cash payments is in line with the Utilities Water Supply Requirements preference for new developments; the flexibility and certainty cash would provide to Utilities; and the simplicity of quantifying the value Utilities would receive from the Draft Agreement. Staff have discussed that the cash payment could be utilized to purchase NPIC shares or invest in the enlargement of Halligan Reservoir; whichever is the greatest need for at the time. The water available via Rigden Reservoir is at the “end” of the Utilities water system and is not available to directly meet treated water demands by customers. Acquiring NPIC shares would increase the water available to treated water customers. Acquisition of Colorado-Big Thompson (CBT) units is not an option as the City cannot outright acquire any more CBT units because of Northern Water’s rules around a single entity’s ownership limits. Staff is open to exploring different compensation options if City Council chooses to address this request in the future. Council discussed a desire to use “market rates.” With this particular type of water and delivery arrangement, it is very difficult to determine a market value. Augmentation water is different than water shares in local companies. Most entities that need augmentation water develop it themselves rather than purchasing from other entities. Most municipal utilities do not enter into permanent augmentation water agreements. As a result, there were very few comparable or relevant transactions to inform a market value for the Draft Agreement. The Montava Developer has also provided a letter (included) regarding this topic. Next steps related to the Montava Developer’s water supply proposal are: PDT and Utilities staff are meeting with the East Larimer County Water District (ELCO) staff about how to work together to understand and assess the Montava Developer’s proposed water supply approach. PDT staff are starting the initial steps of building the new water adequacy process, which includes working with City Purchasing and the Montava team, as City Council supported the Montava Developer paying for the services needed to build the new process and policy. CC:Kelly DiMartino, Deputy City Manager Caryn Champine, Director of Planning, Development and Transportation Paul Sizemore, Interim Director of Community Development and Neighborhood Services Rebecca Everette, Development Review Manager Eric Potyondy, Assistant City Attorney Donnie Dustin, Utilities Water Resources Manager Thank you for the opportunity to share our thoughts on the Council Workshop two weeks ago. We are always available to address any further questions and continue to honor the amazing legacy of this special place, Fort Collins. Addressing misunderstandings: Our preference is to dedicate water rights that can be used in the Fort Collins potable system, in exchange for water from Rigden that payers. We proposed dedicating 100% of the water up front, even though it will take many decades before Montava needs all the water from the City if ever providing Fort Collins with an additional water supply cushion in the meantime. As an alternative, staff preferred a financial payment which created more flexibility for the City. It can be used to buy various water supplies and/or storage. We are open to providing water, money or a combination of both. In Fort Collins we have the opportunity to be a leader in water resource management this is where things are moving. ort Collins wants to continue to be a great place to live, for all. We always proposed creating a solution that is better for current rate payers, not just neutral. Why are we here? Fort Collins faces systematic challenges in housing, water and the environment especially in growth areas. They are a crisis for many. When the water rights allocated to this land were transferred to be used in the city service area in 2012, this crisis did not exist. When the city included all NEFC land and future population growth in the Purpose and Need document supporting Halligan, this crisis did not exist. While cities bought vast amounts of surface water rights causing prices to skyrocket for everyone else, this crisis did not exist. Now, we face this crisis on several fronts ater rights for 10, 50 or 100 years. Approximately 50% of NEFC growth faces this water crisis requiring unaffordable water and drying up thousands of acres of farmland. The result is new home supply for the wealthy and too few homes to become a vibrant self-sustaining community. To: Fort Collins City Council From: Max Moss/Montava Development Team Date: February 22, 2021 Re: Addressing Misunderstandings 2 Thousands of existing NEFC residents have no services or meaningful places near their homes, and thousands of future residents must move to other communities and commute into Fort Collins by car. Traffic data shows we are now Where people live relative to the meaningful places in their lives has 5-10x the environmental impact of building code improvements. Instead, providing great, walkable neighborhoods with transit within our GMA is the most effective way for us to achieve Fort Collins environmental, sustainability and affordable housing goals. There are two options: Master planning a wonderful community with the density that supports vibrant self-sufficiency or Cobbling together a series of small, disconnected suburban housing developments which has been the development pattern in NEFC. We have attempted to create a water solution with the City and ELCO for years without success. We are now facilitating a creative alternative that solves 100% of the problems listed above. By leveraging 25 acre feet of augmentation water the City currently does not need, we can provide water service for the future Fort Collins residents in Montava. While we can do this on our own, we would prefer and continue to offer partnership with ELCO and the City. Benefits of our water solution: Provides a predictable high quality water supply for the entire project Is significantly Enables these savings to build great community, not making the community subject to the extortion of surface water rights Supports true affordable and attainable housing solutions. Will not use a drop of water more than was historically used to irrigate the farmland including every school, public building, park, commercial building and every home built, while substantially reducing depletions to the river. Enables reduction of 50% or more while conserving water resources. (Using the EPA Carbon Footprint Calculator, when my family moves to Montava from Windsor we will eliminate over 20,000 pounds of CO2 per year) Enables services, great places, transit and quality of life for thousands of existing and all future residents of NEFC. Augmentation and groundwater treatment plans are neither new nor novel in Colorado. Groundwater treatment has been used successfully in communities throughout Colorado, the US and the world.