SUBJECT: RESOLUTION
A Resolution Authorizing the acquisition of Windy Gap Units
Title
Body
DEPARTMENT: Public Works
PRESENTER: Gary Behlen, Public Works Director
FISCAL INFORMATION:
Cost as Recommended: $9,000,000
Balance Available: $0
Budget Line Item Number: 500.70.110.603500.000000 - Water Fund
Fund Water
New Appropriation Required: Yes
STAFF RECOMMENDATION: Approving the Resolution to purchase six (6) Windy Gap Units from Platte River Power Authority (“PRPA”), authorizing the appropriate Town officer to execute said contract, complete the design, and finalize construction documents. Authorize Staff to expend contracted funds and contingency funds.
Recommendation
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SUMMARY AND BACKGROUND OF SUBJECT MATTER: The acquisition of 6 Windy Gap Units from PRPA has been discussed with the Board at its October 20, 2016 Board Meeting and its January 16, 2017 Study Session. As explained in those presentations, Windy Gap Units are an essential component of the Town’s water rights. They are fully reusable and are deliverable through the Town’s existing infrastructure from the Colorado Big Thompson Project (“CBT Project”). The Town has been seeking additional Windy Gap Units for many years, but there have been none for sale. The Town has been presented with an opportunity to purchase additional Windy Gap Units from PRPA; Town Staff and the Town’s Water Attorney highly recommend that those Units be purchased pursuant to the attached Agreement. Following is a brief summary of the current status.
The Town currently owns 14 Windy Gap Units, which provide the reusable water for the Town’s non-potable water system. The NWRF Reservoir was built to store reuse water, and the Town has always contemplated owning 20 Windy Gap Units. The Town is also participating in the Windy Gap Firming Project (“WGFP”) at a level of 6,000 acre feet, which will firm the yield of 20 Units. Staff had been considering a recommendation to decrease the Town’s participation in the WGFP due to the unavailability of additional Windy Gap Units. However, PRPA recently made a decision to sell Windy Gap Units to assist in its efforts to acquire additional storage in the WGFP.
The attached Agreement with PRPA, includes the following elements:
§ Purchase of six (6) Windy Gap Units at $1.5 million per Unit for a total cost of $9 million. This price has been arrived at after significant negotiation with PRPA
§ Assignment of the Town’s pro-rata share in the unsubscribed storage in the WGFP to PRPA. There were 3,820 acre feet of the permitted storage in the WGFP, which Participants had not committed to purchase. Now that most of the permits have been issued for the WGFP, most Participants have elected to purchase their pro-rata share of this unsubscribed storage, and Erie would be entitled to buy an additional 301 acre feet. The assignment of this 301 acre feet of unsubscribed storage to PRPA is a critical component of the Agreement because PRPA is selling Windy Gap Units primarily to acquire additional storage in the WGFP. From Erie’s perspective, the assignment would not affect the firm yield of the 20 Windy Gap Units to be owned by the Town and it would save the Town in future construction costs and assessments for the additional 301 acre feet. The Town would retain its current level of participation of 6,000 acre feet in the WGFP, which would fully firm 20 Windy Gap Units.
§ Provide a First Right of Refusal to PRPA to lease surplus water available under the Town’s CBT Units until the WGFP is constructed. This is important to PRPA to firm its water supply until such time as the WGFP is built and the water would only be made available when the Town has a surplus supply.
The bidding for the Windy Gap Units was very competitive. Town Staff and the Town’s Water Attorney have met with PRPA numerous times, and believe that the Agreement outlined above will be beneficial to the Town and to PRPA.
Based on the terms of the Agreement, the water would be purchased for approximately $17,500 per acre foot. For comparison purposes, CBT Units which provide the majority of the Town’s current water supply, are currently selling for approximately $52,000 per acre foot. The six (6) Windy Gap Units should yield approximately 510 acre feet which is enough water to supply 1,085 single family residences and an increased population of approximately 3,093 people.
Town Staff requests the Town Board to authorize the Mayor to execute an Agreement with PRPA in substantially the same form as the Agreement attached hereto, and all other documentation necessary to transfer said six (6) Windy Gap Units to the Town.
ATTACHMENTS:
a. Agreement for Sale and Purchase of Windy Gap Units