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8 - Recommendation to City Council regarding an agreement with the Town of Nederland for use of storage space in Barker ReservoirCITY OF BOULDER WATER RESOURCES ~DVISORY B4ARD AGEND~ ITEM 1!'IEETING DATE: December 17, 2007 t~GENDA TITLE: Recommendation to City Cauncil regarding an agreement with the Toi~vn of Nederlancl for use of storage space in Barker Reservoir PRESENTERiS: Ned ~~t~illiams, Director of Public VVorks for Utilities Carol Ellinghouse, «~ater Resources Coordinator EYECLTTI~~ E SLTNII~~7~RY: The t~'ater Resources Advisory Board (WRAB} is asked to approve a motion recommending to City Council the approval of an ordinance to implement a Water Stoi•age Agreement between the City of Boulder and the Town of Nederland regarding the town's use of storage space in Barker Reservoir. The city purchased the Boulder Canyon Hydroelectric Project, including Barkei• Reser~~oir, from Xcel Energy in 2001. The city had used Bai•ker Reservoir, located just east of Nederland, for storage of the city's municipal water supplies since the 1950s under a series of lease agreements with Zcel. The Town of Nederland had also entered into a storage agY•eement with Xcel. The town's agreement was not binding on the city and ~-as not transferred to the city at the time of the Barker system sale. The town has continued to use othei-~~vise ernpty Barker Reservoir stoi•age space on an informal basis since the city's purchase. Nederland operates its u~ater system based on a water court decree that requires all water consumed by the to~~n to be replaced, or augmented, at times ~-hen more senior water rights are entitled to the water. The town owns a water ribht which is part of this augmentation plan that originally was used for in•igation. A condition within the water court decree approving the change in use of this irrigation ~~~ater right ri~as that ~nunicipal diversions under the right can only be made during the iri~igation season. However, Nederland requires augmentation of its i~~ater use yrear-round, so a pai-t of the «~ater available to the town must be stored during the irrigation season for later use. The proposed intergovernmental agreement between the city and the town (Attachment A) allows Nederland to use the same amount of storage space in Barker Reservoir that i~vas available to it under its prior agreement with Xcel, which is about 4t~ acre-feet. The agreement does not require the City of Boulder to provide any ~~vater to the town, but only to allow use of reservoir storage space for storage of water owned by the town. In practice, Nederland's water will most likely use storage space in Barker Reseivoir that AGENDA ITE11~i # PAGE 1 would otherwise be empty at that time of year. Terms in the agreement assure that Nederland's storage use will affect Boulder's municipal water operations and ater rights yields, minimally, if at all. Key Issue Identification: This agreement furthers intergovernmental cooperation with neighboring communities, increases the benefits gained from existing facilities, and does not jeopardize the city's municipal water supply. STAFF RECOMMENDATION: Staff recommends approval by the WRAB of a motion to recommend to City Council approval of an ordinance to implement an Intergovernmental Agreement between the City of Boulder and the Town of Nederland regarding Nederland's use of approximately 40 acre-feet of storage space in Barker Reservoir. COMMUNITY SUSTAINABILITY ASSESSMENTS AND IMPACTS: • Economic: Nederland requires use of reservoir storage space to operate the augmentation plan that is essential to its ability to provide municipal water supply. It would be very costly for the town to pursue another alternative to use of the Barker Reservoir storage space it had used for decades. The terms of the agreement are sufficiently strict that it should result in no additional cost to the city or its water customers. The city gains a right of first refusal for purchase of Nederland's Farmers Ditch share should the town ever choose to sell. • Enviromnental: Nederland's continued use of storage space in Barker Reservoir will negate the potential need for Nederland to construct reservoir storage space on its own and prevent the associated environmental impacts. • Social: This intergovernmental agreement will further a good relationship with the Town of Nederland by restoring formal use of storage space previously available to the town prior to the purchase of the Barker system by the City of Boulder from Xcel Energy in 2001. OTHER IMPACTS: • Fiscal: No additional city expenditures are required. • Staff time: City staff already tracks Nederland's water use under its augmentation plan, so no additional staff time would be required. ANALYSIS: Nederland owns various water rights which are part of an augmentation plan that was approved by the water court in 1980. Operation of Nederland's municipal water system is dependent on this augmentation plan. The court decree states that water from a 5/8 share of the Farmers Ditch Company may be stored in Barker Reservoir up to an annual maximum amount of 39.6 acre-feet. This water can only be diverted during the irrigation season because it was derived from a water right originally decreed for agricultural use. In order to make replacement water available to Boulder Creek under its augmentation plan, Nederland requires reservoir storage space. At the time of the court decree, AGENDA ITEM # PAGE 2 Nederland had an agreement with the Public Service Company of Colorado (now Xcel Energy) to use storage space in Barker Reservoir. The city purchased Barker Reservoir from Xcel in 2441, but Nederland's agreement with Xcel for use of Barker storage space was not transferred to the city. Anew agreement between the city and the town is required in order for Nederland to continue to have its water stored and released from Barker Reservoir by the city. Within the proposed agreement, the city allows Nederland to store, on an annual basis, up to 39.6 acre feet of water in Barker Reservoir and to release the water during those times when Nederland is making out-of-priority diversions under its augmentation plan. Nederland's use of the city's reservoir storage is further limited because water that the town may store can only be derived from the 5/8 share of Farmers Ditch Company that is included in Nederland's augmentation plan. Water stored by Nederland in prior years can be carried over into succeeding years, but at no time can the total amount of water stored by Nederland in Barker Reservoir exceed 39.6 acre feet. The Water Storage Agreement will terminate in 2426. The city retains flexibility for operation of its municipal water system because it has full rights to substitute and exchange for Nederland's stored water and the city may satisfy the water delivery obligations of the agreement with any water available to the city. The point of delivery of the stored water is solely at the discretion of the city so long as it satisfies the requirements of the Division Engineer and Nederland's water decree. The city has the right to make its own exchanges of water under city-owned water rights for purposes of management of its water system before making water releases for Nederland. Under Nederland's court decree, the town projected the amount ofwater that the town's service area would consume through at least the year 2010. The decree requires Nederland in 2410, or sooner, to return to water court for a review of its augmentation plan. If any modifications are made to the decree that result in a need for additional water to be stored for augmentation purposes, a new agreement a-~ith the city will lie required for any additional storage. Nederland agrees that it shall continue to own a minimum of 5/8 of a share of Farmers Ditch Company. If Nederland sells all or part of the Farmers water, thereby decreasing the amount of direct flow water available to Nederland, then the agreement may be terminated by the city if it chooses. Within the agreement, Nederland grants the city a right of first refusal of any Farmers water that it chooses to sell or lease during the term of the agreement City staff recommends approval of the Water Storage Agreement. City staff will present the proposed agreement between the city and the town, along with WRAB's recommendation, to the City Council for evaluation. ATTACHMENTS: Attachment A: Water Storage Agreement (City of Boulder/Town of Nederland) AGENDA ITEM # PAGE 3 Attachment A WATER STORAGE AGREEMENT (City of Boulder/Town of Nederland) This t~'ater Storage Agreement ("Agreement") made this day of , 200$, is by and between the City of Boulder, a Colorado Municipal Corporation {the "City") and the Town of Nederland, a Colorado Municipal Corporation ("Nederland"). RECITALS A. The City owns the Barker Meadow Reservoir (the "Reservoir"), located in the N'/z, Section 18, Township 1 South, Range 72 West, 6t1i P.M., and the S '/z NE '/4 and the N'/z N'/z SE'/4, Section 13, Township 1 South, Range 73 West, 6~` P.M., all in Boulder Bounty, Colorado; and B. Nederland owns various water rights which are part of a Plan for Augmentation adjudicated in Case No. W-$485-77 ("Plan for Augmentation"). As part of said Plan for Augmentation, Nederland agreed to make available to the State Engineer's Office Division Engineer for Water Division No. 1(the "Division Engineer") that amount of water which is expected to equal the consumptive use associated with the projected needs of its service area through at least the year 2010. The decree in Case No. W8485-77 (the "Decree") provides that water attributable to a 518 share of the Farmers Ditch Company ("Farmers")may be stored in Barker Reservoir (the "Storable Water"). Annual diversions of the Storable Water are limited to a maximum amount of 39.6 acre-feet. C. In order to make replacement water available to the stream system pursuant to its Plan for Augmentation, Nederland requires water storage. At the time of the adjudication of its Plan for Augmentation, Nederland had an agreement with the Public Service Company of Colorado to use storage space in Barker Reservoir for that purpose. D. The City has purchased Barker Reservoir from the Public Service Company of Colorado and this Agreement is required in order for Nederland to continue to have its Storable Water stored and released from Barker Reservoir by the City. AGREEMENT NOW THEREFORE, inconsideration of the premises and of the mutual promises and covenants of the parties hereto, it is agreed as follows: 1. Use of Reservoir Storage Space. a. The City agrees to allow Nederland to store, on an annual basis, up to 39.6 acre feet of the Storable tk'ater in the Reservoir and to release the Storable Water only during those times when Nederland is making out of priority diversions of the other rights which are subject to the terms of the Plan of Augmentation. The Storable Water shall be derived only from the 5/8 share of Farmers available to Nederland under its Plan for Augmentation. Water stored by Nederland in prior years shall be allowed to be carried over into succeeding years, but at no time shall the total amount of water stored by Nederland in the Reservoir exceed 39.6 acre feet. Nederland shall comply with all terms and conditions of the Decree in Case No. W8485-77. b. The Decree requires Nederland u12010, or sooner, to submit a petition for review of the Plan for Augmentation. Based on that petition, if any modifications are made to the Decree that result in a need for additional sources of water to be stored for augmentation purposes, that additional storage water shall require a new agreement with the City and the City makes no representations concerning the availability of such additional storage at this time. Should any modifications of the Decree result in a requirement that AGENDA ITEM # PAGE 4 Nederland shall store amounts less than the 39.6 acre-feet, then this agreement shall be modified to reflect said decrease. 2. Releases. a. As consideration for the right to annually store up to 39.6 acre feet of the Storable Water, Nederland agrees that releases from the Reservoir of its augmentation water shall be made according to the normal operational procedures of the City's water system in a manner which does not interfere with those operations. The City will use its best efforts to satisfy this Agreement and Nederland's requirements under the terms of its Plan for Augmentation, given the operational difficulties associated with the location and diversity of the City's water system. b. The City acknowledges the importance of the storage and release of water from Barker Reservoir to Nederland's ability to provide water to its residents, and the City shall release water when requested by Nederland, but only when it does not interfere with the City's operation of its water system and when the administration of Nederland's Plan for Augmentation by the Division Engineer requires said release. Any exchanges of water that the City engages in for the management of its water system shall be satisfied prior to satisfying any request for water releases by Nederland. c. The City shall have full rights to substitute and exchange for the Storable Water and the City may satisfy the water delivery obligations of this Agreement with any water that is available to the City subject only to the terms and conditions of Boulder's exchange right decreed in Case No. W-7$52-74. The point of delivery of the Storable ?dater shall be at the sole discretion of the City so long as it satisfies the requirements of the Division Engineer and Nederland's Plan for Augmentation. d. Nederland acknowledges that there may be times when it is not operationally feasible to release the Storable Water from the Reservoir or elsewhere within the City's water system. However, whenever possible and to the extent that the efficient operation of its facilities would not be adversely affected, the City agrees to coordinate any releases of the Storable Water with requests by Nederland or the Division Engineer. e. In the event that Nederland is required to make delivery of any portion of the Storable Water at a location other than at a point of delivery available to the City, the City shall not be obligated to deliver the Storable Water requested. f. Any exchanges of water under City-owned water rights that the City engages in for the management of its water system, shall be satisfied prior to satisfying any request for water releases by Nederland. g. Nederland shall request water releases by giving notice to both of the following at least 24 hours prior to the desired time of delivery: Craig Skeie, Water Resources Facilities Manager 35465 Highway 72 Nederland, CO 80466 303-258-3446 skeiec aa'~,bouldercolorado.gov Tim Creek, Water Source Manager 156 Shady Hollow Nederland, CO 80466 303-258-3259 creek] @bouldercolorado.gov AGENDA ITEM # PAGE 5 3. Augmentation. Nederland shall first satisfy its augmentation obligations pursuant to the Plan of Augmentation with the water sources available to Nederland under Paragraph 7 of the Decree and with any portion of the Storable t~~ater that is available on a direct flow basis at the time that the augmentation obligation is to be satisfied. Nederland may then request release of the Storable Water in the Reservoir. Nederland agrees that it shall continue to own a minimum of 5/8 of a share of Farmers water. Should Nederland decrease its ownership of Fanners water below the level of 5,'8 of a share, thereby decreasing the amount of Farmers direct flow water available to Nederland, then this agreement may be unilaterally terminated by the City. 4. Right of First Refusal. Nederland grants to the City a right of first refusal of any Farmers water that it chooses to sell, lease, or otherwise alienate during the term of this Agreement 5. Previous Agreements. The parties agree that City assumes no obligations pursuant to the Water Storage Agreement dated 7uly 9, 1979 between Public Service Company of Colorado and Nederland. 6. Termination. This Water Storage Agreement shall terminate on April 1, 2026. 7. Binding Effect. This Agreement shall inure to the benefit of, and be binding upon, the Parties, and their respective legal representatives, successors, and assigns. 8. Assignment. This Agreement or a signed written agreement of the Parties or their successors in title shall not be assigned by either Party without the prior approval in writing of both Parties. Any assignees or successors to the rights set forth in this Agreement shall be liable and bound under all of the provisions of this instrument to the same extent as the Parties. 9. Entire Agreement. This Agreement represents the complete agreement of the Parties and no oral modification shall be recognized. Any amendments, additions or any other notices shall be in writing by the Parties and sent to the following addresses or at such other addresses as may be specified in writing by the party to whom notice is to be given: City of Boulder, Public Works/CTtilities Water Resources Coordinator, Carol Ellinghouse Box 791, Boulder, Colorado 80306 City of Boulder, Office of the City Attorney City Attorney Box 791, Boulder, Colorado 80306 Town of Nederland Town Administrator P.O. Box 396 Nederland, CO 80466 Vranesh and Raisch, LLP Attn: Paul J. Zilis, Esq. P.O. Box 871 Boulder, CO 80306 11. Remedies. This Agreement may be enforced by specific performance, including mandatory injunctive relief and damages, together with reasonable attorney's fees to the prevailing party, except that any action which requires the expenditure of funds shall be subject to city council appropriation of both Nederland and the City. AGENDA ITEM # PAGE 6 CITY OF BOULDER, COLORADO By: Frank W. Bruno, City Manager 1777 Broadway Boulder, CO 80302 Telephone (303) 441-3090 Fax (303)441-4478 Attest: City Clerk on behalf of the Director of Finance and Record Approved as to form: Jerry P. Gordon Acting City Attorney TOWN OF NEDERLAND By: Mayor ATTEST: Town Clerk STATE OF COLORADO ) ss. County of Boulder ) Subscribed under oath before me on this day of , 2007, by as Mayor, and , as Town Clerk of the Town of Nederland My commission expires: AGENDA ITEM # PAGE 7 I~ WATER STORAGE AGREEMENT (City of Boulder/Town of Nederland) This Water Storage Agreement ("Agreement") made this day of , 2007 is by and between the City of Boulder, a Colorado Municipal Corporation (the "City") and the Town of Nederland, a Colorado Municipal Corporation ("Nederland"). RECITALS A. The City owns the Barker Meadow Reservoir (the "Reservoir"), located in the N %2, Section 18, Township 1 South, Range 72 West, 6th P.M., and the S '/z NE 1/4 and the . N % N 1/2 SE 1/4, Section 13, Township 1 South, Range 73 West, 6th P.M., all in Boulder Bounty, Colorado; and ~ B. Nederland owns various water rights which are part of a Plan for Augmentation adjudicated in Case No. W-8485-77 ("Plan for Augmentation"). As part of said Plan for Augmentation, Nederland agreed to make available to the State Engineer's Office Division Engineer for Water Division No. 1(the "Division Engineer") that amount of water which is expected to equal the consumptive use associated with the projected needs of its service area through at least the year 2010. The decree in Case No. W8485-77 (the "Decree") provides that water attributable to a 5/8 share of the Farmers Ditch Company ("Farmers") maybe stored in Barker Reservoir (the "Storable Water"). Annual diversions of the Storable Water are limited to a maximum amount of 39.6 acre- feet. C. In order to make replacement water available to the stream system pursuant to its Plan for Augmentation, Nederland requires water storage. At the time of the adjudication of its Plan for Augmentation, Nederland had an agreement with the Public Service Company of Colorado to use storage space in Barker Reservoir for that purpose. D. The City has purchased Barker Reservoir from the Public Service Company of Colorado and this Agreement is required in order for Nederland to continue to have its Storable Water stored and released from Barker Reservoir by the City. AGREEMENT NOW THEREFORE, in consideration of the premises and of the mutual promises and covenants of the parties hereto, it is agreed as follows: 1. Use of Reservoir Storage Space. a. The City agrees to allow Nederland to store, on an annual basis, up to 39.6 acre feet of the Storable Water in the Reservoir and to release the Storable Water only during those times when Nederland is making out of priority diversions of the other rights which c:\documents and settings\jims\local settings\temporary Internet filgs\oIk53\water storage agreement 10.07.doc I - ' are subject to the terms of the Plan of Augmentation. The Storable Water shall be derived only from the 5/8 share of Farmers available to Nederland under its Plan for Augmentation. Water stored by Nederland in prior years shall be allowed to be carried over into succeeding years, but at no time shall the total amount of water stored by Nederland in the Reservoir exceed 39.6 acre feet. Nederland shall comply with all terms and conditions of the Decree in Case No. W8485-77. b. The Decree requires Nederland in 2010, or sooner, to submit a petition for review of the Plan for Augmentation. Based on that petition, if any modifications are made to the Decree that result in a need for additional sources of water to be stored for augmentation purposes, that additional storage water shall require a new agreement with the City and the City makes no representations concerning the availability of such additional storage at this time. Should any modifications of the Decree result in a requirement that Nederland shall store amounts less than the 39.6 acre-feet, then this agreement shall be modified to ~ reflect said decrease. 2. Releases. a. As consideration for the right to annually store up to 39.6 acre feet of the Storable Water, Nederland agrees that releases from the Reservoir of its augmentation water shall be made according to the normal operational procedures of the City's water system in a manner which does not interfere with those operations. The City will use its best efforts to satisfy this Agreement and Nederland's requirements under the terms of its ~ Plan for Augmentation, given the operational difficulties associated with the location and diversity of the City's water system. b. The City acknowledges the importance of the storage and release of water from Barker Reservoir to Nederland's ability to provide water to its residents, and the City shall release water when requested by Nederland, but only when it does not interfere with the City's operation of its water system and when the administration of Nederland's Plan for Augmentation by the Division Engineer requires said release. Any exchanges of water that the City engages in for the management of its water system shall be satisfied prior to satisfying any request for water releases by Nederland. c. The City shall have full rights to substitute and exchange for the Storable Water and the City may satisfy the water delivery obligations of this Agreement with any water that is available to the City subject only to the terms and conditions of Boulder's exchange right decreed in Case No. W-7852-74. The point of delivery of the Storable Water shall be at the sole discretion of the City so long as it satisfies the requirements of the Division Engineer and Nederland's Plan for Augmentation. d. Nederland acknowledges that there may be times when it is not operationally feasible to release the Storable Water from the Reservoir or elsewhere within the City's water system. However, whenever possible and to the extent that the efficient operation of its facilities would not be adversely affected, the City agrees to coordinate any releases of the Storable Water with requests by Nederland or the Division Engineer. c:\documents and settings\jims\local settings\temporary Internet fil~\o1k53\water storage agreement 10.07.doc I e. In the event that Nederland is required to make delivery of any portion of the Storable Water at a location other than at a point of delivery available to the City, the City shall not be obligated to deliver the Storable Water requested. f. Any exchanges of water under City-owned water rights that the City engages in for the management of its water system, shall be satisfied prior to satisfying any request for water releases by Nederland. g. Nederland shall request water releases by giving notice to both of the following at least 24 hours prior to the desired time of delivery: Craig Skeie, Water Resources Facilities Manager 35465 Highway 72 Nederland, CO 80466 303-258-3446 skeiec(u,bouldercolorado. gov Jim Creek, Water Source Manager 156 Shady Hollow Nederland, CO 80466 303-258-3259 creek] @bouldercolorado. gov 3. Augmentation. Nederland shall first satisfy its augmentation obligations pursuant to the Plan of Augmentation with the water sources available to Nederland under Paragraph 7 of the Decree and with any portion of the Storable Water that is available on a direct flow basis at the time that the augmentation obligation is to be satisfied.. Nederland may then request release of the Storable Water in the Reservoir. Nederland agrees that it shall continue to own a minimum of 5/8 of a share of Farmers water. Should Nederland decrease its ownership of Farmers water below the level of 5/8 of a share, thereby decreasing the amount of Farmers direct flow water available to Nederland, then this agreement maybe unilaterally terminated by the City. 4. Right of First Refusal. Nederland grants to the City a right of first refusal of any Farmers water that it chooses to sell, lease, or otherwise alienate during the term of this Agreement 5. Previous Agreements. The parties agree that City assumes no obligations pursuant to the Water Storage Agreement dated July 9, 1979 between Public Service Company of Colorado and Nederland. 6. Termination. This Water Storage Agreement shall terminate on April 1, 2026 . 7. Binding Effect. This Agreement shall inure to the benefit of, and be binding upon, the Parties, and their respective legal representatives, successors, and assigns. ~ c:\documents and settings\jims\local settings\temporary Internet files\o1k53\water storage agreement 10.07.doc i i 8. Assignment. This Agreement or a signed written agreement of the Parties or their successors in title shall not be assigned by either Parry without the prior approval in writing of both Parties. Any assignees or successors to the rights set forth in this Agreement shall be liable and bound under all of the provisions of this instrument to the same extent as the Parties. 9. Entire Agreement. This Agreement represents the complete agreement of the Parties and no oral modification shall be recognized. Any amendments, additions or any other notices shall be in writing by the Parties and sent to the following addresses or at such other addresses as maybe specified in writing by the party to whom notice is to be given: City of Boulder, Public Works/Utilities Water Resources Coordinator, Carol Ellinghouse Box 791, Boulder, Colorado 80306 City of Boulder, Office of the City Attorney City Attorney, Ariel P. Calonne Box 791, Boulder, Colorado 80306 Town of Nederland Town Administrator P.O. Box 396 Nederland, CO 80466 Vranesh and Raisch, LLP Attn: Paul J. Zilis, Esq. P.O. Box 871 Boulder, CO 80306 11. Remedies. This Agreement maybe enforced by specific performance, including mandatory injunctive relief and damages, together with reasonable attorney's fees to the prevailing party, except that any action which requires the expenditure of funds shall be subject to city council appropriation of both Nederland and the City. CITY OF BOULDER, COLORADO By: Frank W. Bruno, City Manager 1777 Broadway Boulder, CO 80302 Telephone (303) 441-3090 Fax (303) 441-4478 c:\documents and settings\jims\local settings\temporary Internet fibs\o1k53\water storage agreement 10.07.doc i i I Attest: City Clerk on behalf of the Director of Finance and Record Approved as to form: i Jerry P. Gordon Acting City Attorney TOWN OF NEDERLAND B ~ ,r ~yor ~~~,~.1D, Cp~o/A tub z 1- \ ATTEST: ~ ~ , _ 1 t-,' / Town k tic A. D . 1~'~~ STATE OF COLORADO ) ss. County of Boulder ) Subscribed under oath before me on this '1~`~^day of ~~;~Jt,~,-X2007, by _ ~-~,~;~i•~j , as Mayor, and ~ ` ~ ~ as Town Clerk of the Town of Nederland My commission expires: .q- J®YCE Pt{~G!e_WESIBROOK NOTARY'P{~BLIC~. STATE OF.E~L_ QRLDO ~ ~ J Notarry~Pu 1' c:\documents and settings\jims\local settings\temporary Internet filSS\o1k53\water storage agreement 10.07.doc