SUBJECT:
Resolution of the Title
A Resolution of the Town Council of the Town of Erie Approving the Amendment and Partial Termination of Improvements Acquisition, Water System and Operations Agreement; of Agreement to Proceed; and of Common Interest and Confidentiality Agreement
Department
DEPARTMENT: Utilities
Presenter
PRESENTER(S): Todd Fessenden, Utilities Director
Pete Johnson, Town Water Attorney
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Time
TIME ESTIMATE: 0 minutes
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For time estimate: please put 0 for Consent items.
Fiscal
FISCAL SUMMARY:
Cost as Recommended: $(322,000)
Balance Available: N/A
Fund Water Fund
Line Item Number: 500-75-110-605000-100438
New Appropriation Required: No
Policy
POLICY ISSUES:
The Town strives to provide a robust and reliable water infrastructure. While the infrastructure to be conveyed to the Town as part of this project was not up to our standards and therefore will not be conveyed, the other aspects of the project remain in the Town’s interest. Approving this item allows for the negotiated changes to the project to take affect and reimbursement of a half of the costs expended back to the Town.
Recommendation
STAFF RECOMMENDATION:
Approve the Resolution
Body
SUMMARY/KEY POINTS
Approving this item allows for the negotiated changes to the project to take affect and reimbursement of a half of the costs expended back to the Town.
BACKGROUND OF SUBJECT MATTER:
The Town of Erie has been evaluating the Filly Lake Well Project since approximately 2020, when the Town first entered into an agreement to acquire the Filly Lake Well, a dewatering well intended to be converted into a municipal water supply well. The agreement also provided that the Town would receive a Court-approved augmentation plan and certain changed water rights that would be used to replace depletions from the Filly Lake Well, in exchange for water credits that the Town would provide for water taps within Town developments. Among other components of the transaction, the Town also agreed to provide sewer service to the Shores on Plum Creek Development in Frederick (the development is located on the property surrounding Filly Lake), at the Town’s standard rate for out-of-Town sewer (double the in-Town sewer tap fee), and the Town would receive certain wastewater infrastructure easements. After initial testing and due diligence related to the well system, it appeared as though the well system could provide significant yield of raw water to the Town and consisted of adequate infrastructure, so the Town entered into an Agreement to Proceed in 2022 and began preliminary design work for the conversion of the well system into a municipal water supply system. This design work required additional testing of the well system performance and ground water modeling; this additional information revealed the well would not sustainably yield the annual volume of water originally contemplated. Staff also discovered the well infrastructure was not constructed according to the standards for municipal water supply systems.
Due to these issues, the Utilities staff and consultants have recommended the Town not pursue the water supply component of the project. Staff and legal counsel met with the other parties to the agreement in late 2025 and negotiated an amendment and partial termination of the project agreements. The primary portions of the project agreement that will remain in place are the Town’s agreement to provide sewer service to the Shores on Plum Creek Development at the standard out-of-Town sewer rates, and the conveyance of utility easements to the Town, which have already been conveyed.
A key aspect of these negotiations was the payment of legal and engineering costs related to the project. The agreements originally required that Erie pay such costs during the due diligence period and the other parties pay these costs after the due diligence period. However, the parties disagreed about whether certain of these costs were related to due diligence even though the costs were incurred after the due diligence period. Utilities staff and water counsel negotiated with the other parties and counsel to agree to share these costs equally. Each party will be responsible for $322,000 in such costs, with a payment in that amount due to the Town. These terms are reflected in the attached Amendment and Partial Termination agreement.
priorities
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attachments
ATTACHMENT(S):
1. Resolution
2. Agreement