HomeMy WebLinkAboutMemo - Mail Packet - 11/8/2016 - Memorandum From Adam Jokerst Re: Halligan Water Supply Project Status Update, Third Quarter 2016Utilities
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Fort Collins, CO 80522
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utilities@fcgov.com
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M E M O R A N D U M
DATE: November 1, 2016
TO: Mayor Troxell and Councilmembers
FROM: Adam Jokerst, Water Resources Engineer
THRU: Darin Atteberry, City Manager
Kevin R. Gertig, Utilities Executive Director
RE: Halligan Water Supply Project Status Update, Third Quarter 2016
Bottom Line
The purpose of this Third Quarter 2016 Status Update is to inform City Council on progress
related to the Halligan Water Supply Project (“Halligan Project”) and to provide an update on
project schedule and costs. Adjustments to the Halligan Project’s timeline and budget have
occurred in the third quarter 2016, and are summarized below:
As a result of additional work required on water quality studies, the date of release for the
Halligan Project’s draft Environmental Impact Statement (“EIS”) has been delayed,
extending the overall schedule by approximately 5 months; the draft EIS is now
scheduled to be released in late-2017. Approximately $1.1 million in additional funding
is required to finalize the draft EIS. Additional funds are needed primarily to address
various issues raised in comments on the Northern Integrated Supply Project (“NISP), to
complete the water quality studies referenced above, and to address numerous out-of-
scope analyses and study revisions requested by the Corps and other permitting agencies.
Additional details on schedule and budget are provided below.
Additional permitting costs and updates to construction costs have increased the overall
project budget from $44.5 million1 to $46.2 million.
Substantial progress continues towards development of a draft EIS despite recent delays and cost
increases. The publication of the draft EIS will be a significant milestone in the completion of
the Halligan Project. Public comment on the draft EIS will give the City clarity as to which
water supply alternative will be permitted, the degree of future permitting needs, and what public
opposition the project may face. Furthermore, current efforts on water quality studies are likely
to reduce the future costs and timeline to receive water quality permits needed for the project.
1 Staff last reported the projected budget of $44.5 million to City Council via a July 27, 2016 memorandum. City
Council was provided an update of project costs during a May 12, 2015 Work Session indicating the total cost of the
Halligan Project would be $46 million. The project’s budget was revised to $44.5 million in early 2016 and reported
via a February 23, 2016 memorandum to City Council.
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Background
The Halligan Project proposes to enlarge Halligan
Reservoir from its existing capacity of 6,400 acre-
feet to an enlarged capacity of 14,525 acre-feet,
providing Utilities with 8,125 acre-feet of
additional storage capacity. The purposes of the
Halligan Projects are to:
Meet future water demands of the Fort
Collins Utilities service area;
Provide a storage reserve for emergency
water supply disruptions;
Increase drought security; and
Improve water system reliability and
flexibility.
In order to enlarge Halligan Reservoir, the City
requires permits from the U.S. Army Corps of Engineers (“Corps”) and other federal and state
agencies. Before issuing permits, the Corps will produce an EIS, which will be published for
public review and comment. The EIS will provide detailed analyses of the environmental
impacts of the project, along with impacts of other alternatives to enlarging Halligan.
Progress Update
City Staff, the Corps and its third-party consultants continued to make progress during the third
quarter of 2016. Key progress achieved during the period includes:
Continued analyses of the social, economic, and environmental impacts of the Halligan
enlargement and alternatives, which will be evaluated and compared in the EIS.
Finalized two additional draft technical reports, for a total of 17 completed draft reports
of the approximately 27 technical reports that form the basis of the draft EIS.
Continued writing the main body of the draft EIS, a major milestone in the permitting
process.
Progressed development of water quality and water temperature models, and met with
CDPHE and EPA staff to gather feedback.
Collected various water quality data and installed numerous water temperature probes in
Halligan Reservoir and the North Fork.
Finalized an agreement between the City and Northern Water to allow sharing of water
quality models used for both the Halligan Project and the Northern Integrated Supply
Project.
Halligan Reservoir
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Prepared a quitclaim deed to the City from
mining claimants on an 80-acre tract of
federally owned land lying under and adjacent
to the existing Halligan Reservoir.
Negotiated an interim recreational lease to the
Landowners Association for Phantom Canyon
Ranches, as discussed in an August 30, 2016
memorandum to City Council.
Provided outreach to senior EPA staff on the
Halligan Project, particularly related to the
evaluation of greenhouse gas emissions and
climate change in the federal permitting
process. Staff also recently provided a
presentation of the project to the Colorado
Water Conservation Board’s South Platte
Basin Roundtable and Metro Roundtable.
Permitting Schedule
The date of release for the draft EIS has been delayed approximately five months; the draft EIS
is now scheduled to be released in late 2017. This delay is the result of water quality studies
requested by federal and state agencies requiring more time, more resources, and more
coordination with other regional permitting projects than originally anticipated. In addition, the
water quality studies require approval from multiple permitting agencies including the Corps, the
Environmental Protection Agency (“EPA”), and the Colorado Department of Public Health and
Environment (“CDPHE”). Some delays have been caused by a lack of coordination among the
various agencies.
Fort Collins will require permits from the CDPHE (with oversight from the EPA) specific to
water quality in order to enlarge Halligan Reservoir. Staff intend to utilize the water quality
studies being developed for the draft EIS for the CDPHE permits. Therefore, although the
studies are presently delaying the draft EIS, it is likely that the timeframe and cost of CDPHE
permitting will be reduced.
Staff is taking steps to speed the water quality study process where achievable. This past
August, City Council approved a plan to share water quality models developed for the NISP
permitting process. Sharing of water quality models will speed the overall water quality study
schedule, as well as reduce costs and improve study defensibility. In addition, Staff is
proactively collecting additional water quality data in the Halligan Reservoir and the North Fork
of the Poudre River. The additional data is being collected should the validity of the water
quality models be questioned in the future.
As a result of the delay to the draft EIS, the overall project schedule has been extended. In
particular, issuance of the Record of Decision (i.e., final permit approval by the Corps) is now
expected in 2019 and completion of the project is anticipated for 2021. Other project milestones
are shown in the chart below. Federal and state agencies ultimately set the permitting schedule,
and thus, other delays beyond the City’s control could arise in the future. Staff will continue to
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monitor and encourage timely execution of the permitting process to the extent allowable, and
will keep City Council apprised of any future shifts in timeline.
The most recent Front Range Water Supply Report from the Corps (attached) indicates that the
draft EIS will be delivered in September 2017. This report is based on outdated information; the
Corps’ third-party contractors have recently released a schedule indicating the draft EIS will be
released in late-2017.
Schedule Delays
The federal permitting timeline for the Halligan Project has been extended multiple times over
the past decade. When the City first began the project, federal permitting was expected to take
just two years. Ten years after the permitting process began, the City has yet to receive a draft
EIS. Specific reasons for the delays are numerous, but can be condensed to just a couple broad
causes:
Federal permitting has been a moving target. Permitting is not controlled by the City;
rather it involves numerous federal and state agencies, whose permitting requirements
have expanded over time. Revisions to permitting requirements have been caused by
public scrutiny and legal challenges to other national and state water supply projects,
expanded scientific understanding of various resources over the past decade, and
turnover among agency staff. In some cases, the length of permitting has required that
certain studies completed early in the process be redone with newer data. Furthermore,
permitting studies are sequential, meaning that revising a study early in the sequence
causes many other studies to require revisions as well.
There are three water supply projects in the Poudre River basin undergoing federal
permitting (the Halligan Project, NISP, and Greeley’s Seaman Reservoir enlargement).
Federal and state agencies desire that permitting requirements and methodology remain
consistent between the projects, despite that the fact that scale of the projects are vastly
different (by most measures, the Halligan Project is 1/20th the size of NISP).
Maintaining consistent studies is difficult since each project is on its own timeline,
which has led to study delays and revisions to studies already completed for the Halligan
Project.
Despite the past delays on the Halligan Project, Staff is strongly optimistic that a draft EIS will
be produced in 2017. Well over half the studies and EIS text have been written, and the
permitting agencies are in consensus on the methodology for the remaining studies that need to
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Federal Permitting ‐ Draft EIS
Federal Permitting ‐ Final EIS
Federal Permitting ‐ Permit Decision
Preliminary and Final Design
Construction
Enlarged Halligan Operations
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be completed. Furthermore, there appears to be much more political pressure on the various
permitting agencies, especially among state agencies, to speed and finalize the permitting
process. Release of the draft EIS will be a major milestone for the project. It will give the City
clarity as to which water supply alternative will be permitted, the degree of future permitting
needs, and what public opposition the project may face.
Project Budget
Recently the Corps’ third-party contractors have requested an additional approximate $1.1
million to finalize the Halligan Project’s draft EIS. There are several reasons additional funds
are needed. These include:
The third-party contractors’ current budget was developed in February 2015, prior to the
NISP supplemental draft EIS being released. Comments on the NISP supplemental draft
EIS required that several out-of-scope studies and revisions to completed studies be
performed for the Halligan Project. Some examples include preparation of a flushing
flows analysis for the North Fork of the Poudre River, and revisions to a previously
completed aquatic resources technical report. Staff previously acknowledged the
potential for delays to the Halligan Project as a result of comments on NISP2.
Since February 2015, the Corps and other cooperating agencies have requested numerous
out-of-scope analyses, EIS format changes, and large-scale revisions to past studies. For
example, the EPA and CDPHE have requested substantial revisions to water quality
mass-balance modeling, and the Corps has mandated revisions and reformatting of EIS
materials for compliance with Section 508 of the Rehabilitation Act.
When written, the third-party contractors’ current budget anticipated completing the draft
EIS in mid-2016. Given the new scheduled release date of late-2017, extra funds are
needed to cover an additional 15 months of administrative duties.
This budget request results in an 8% increase to the projected final cost of permitting the
Halligan Project. In addition to revising permitting costs, Staff has updated construction costs for
enlarging Halligan Dam using standard dam construction cost indices; a full update to the dam’s
opinion of probable cost was not performed. Rising construction costs have driven up the
estimated construction cost by nearly $500,000.
As a result of the additional budget required to complete the draft EIS as well as the update to
construction costs, the overall project budget has been increased from $44.5 million to $46.2
million. The table below provides an accounting of past, future, and total project costs.
Uncertainty exists for several line items. For example:
Construction costs are based on preliminary designs. Detailed site investigations and
final design may require additional contingency, and material and labor prices could rise.
Mitigation costs are assumed to be 10% of construction costs; mitigation efforts will not
be finalized until permitting is complete.
2 As stated in the Agenda Item Summary for Resolution 2015-082 (September 1, 2015) regarding City comments on
the NISP supplemental draft EIS, “Please note that the comments provided on NISP to the Corps could lead to
potentially significant delays and increased costs to the City’s Halligan Water Supply Project, since changes to the
analysis of NISP as a result of these and other comments will likely be required for both projects.”
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Permitting costs assume that a permitting decision will be made in 2019, that the EIS will
require minor to moderate revisions between the draft and final versions, and that EIS
will generate all information needed for other federal and state permitting requirements.
Expenses ($M)
To Date1 Future Total
Acquisition $3.3 $0.5 $3.8
Permitting & Mitigation $10.5 $6.7 $17.2
Construction - $23.3 $23.3
Debt Service2 $1.9 - $1.9
Total $15.7 $30.5 $46.2
Estimated Final Ratepayers Cost ($M)
To Date Future Total
Project Costs $15.7 $30.5 $46.2
Less Reimbursements3 ($4.5) ($0.1) ($4.6)
Total4 $11.2 $30.4 $41.6
Appropriations ($M)
To Date Future Total
Past Appropriations $37.4 - $37.4
Required Future Appropriation - $8.8 $8.8
Total $37.4 $8.8 $46.2
1) Costs through September 2016.
2) Debt service payments from 2004 to 2014 were allocated as Halligan project expenses. All future debt
service payments will not be accounted as a project cost.
3) Reimbursements were received from former project partners (NPIC and the Tri-Districts) between 2005
and 2014; miscellaneous reimbursements will be collected from the City of Greeley and from rents in the
future.
4) Final ratepayer cost includes debt service and deducts reimbursements.
The table above indicates the need for an additional $8.8 million in new appropriations for the
Halligan Project. Future appropriations for the Halligan Project, if approved, will be sourced
from Water Enterprise Fund reserves. Revenue for the Water Enterprise Fund is sourced from
water rates and development fees. In particular, revenue collected from cash-in-lieu payments
for raw water requirements and commercial water surcharges are accrued to the Water Rights
Reserve Fund. The Water Rights Reserve Fund is a component of the Water Enterprise Fund,
and funds water supply development projects such as the Halligan Project.
Staff does not anticipate increasing rates or fees specifically for the Halligan Project. However,
as presented in the Utilities’ Strategic Financial Plan to the Council Finance Committee in April
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and June, rate increases and debt issuances will be necessary to fund future capital
improvements. The $8.8 million of additional appropriation for the Halligan Project will be
included among the future capital improvements identified in the Utilities’ Strategic Financial
Plan. In addition, Staff is presently investigating updates to raw water requirements, and intends
to present proposed changes to City Council in 2017.
CC: Water Board
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