MEMORANDUM TO: Mayor and City Council FROM: Phil Overeynder, Utilities Engineer, Special Projects THRU: David Hornbacher, Utilities and Environmental Initiatives Director DATE OF MEMO: November 14, 2012 MEETING DATE: November 26, 2012 RE: Ruedi Reservoir Water Acquisition – Resolution #111, 2012 REQUEST OF COUNCIL: This request responds to an offer from the United States Bureau of Reclamation (USBR) to sell the remaining available water in Ruedi Reservoir. As such it will be Aspen’s last opportunity to acquire supplemental water supplies from this federally financed project. Staff requests that Council review alternative levels of water acquisitions from Ruedi and determine which level is most consistent with the City’s potential future water supply needs. Supplemental water from this source could be used to augment various projects contained in the City’s Water Management Plan. In making this determination, staff requests that City Council consider potential long term water needs. PREVIOUS COUNCIL ACTION: In 2001, City Council asked the USBR (as part of what was known termed “Round II Water Marketing”) to reserve 1000 acre-feet of Ruedi water for future municipal needs. The upfront costs involved in securing this supply were quite substantial. Aspen therefore chose not to move forward to complete the agreement and the reserved water returned to the “marketable pool”. BACKGROUND: The City’s Water Management Program (WMP) includes a number of short term and long range water supply projects. The shorter term projects are anticipated to be funded through the Asset Management Plan (AMP) in the next 20 years. The longer term actions have no current funding source to provide for implementation. Short term actions and their associated water needs are described in the attachments and include: Water Reuse System Ponds on open space and for stormwater treatment Studies prepared by Aspen conclude that the City’s water supplies are adequate to meet all currently-anticipated prospective needs within the urban growth boundary at buildout. However, there is the potential that future shifts in runoff patterns (including earlier spring runoff, which is already occurring to a degree) resulting from Climate Change would change the timing of Page 1 of 3 available water supplies, therefore requiring supplemental water supplies. Longer term plans and actions may be necessary if Climate Change results in a further shift of runoff patterns. Longer term actions include: Salvation Ditch Pumpback and Roaring Fork Supply New groundwater and Roaring Fork Supply New reservoir storage (absolute last option to be considered) (these alternatives and their water supply needs that may need to be addressed through acquisition of Ruedi supplies are also outlined in the attachment). DISCUSSION: The short term projects will require some water for “augmentation” purposes. In aggregate, staff estimates this volume at approximately 40 acre feet per year. Water for augmentation is necessary to avoid injury to senior downstream users. For example, water is lost through evaporation on recently constructed ponds and wetlands at the golf course and on City open space lands. In order to legally keep water in these ponds, the amount of water lost to evaporation must be provided to the senior downstream water rights. Likewise, expanded use and reliability of the water reclamation project require augmentation. Ruedi water obtained from USBR is a cost-effective way of providing water in the amounts and at the times needed to ensure that downstream uses such as the Cameo rights do not come up short as a result of the City’s operations. Similarly, longer term water supply options, also listed above, could also require augmentation. These longer term options may supply needs in the event Climate Change dictates the need for system changes. It is likely that expanded supply alternatives would require downstream augmentation. Staff estimates that the augmentation requirements for long range projects plus AMP projects, totals 400 acre feet per year. Once fully paid, Aspen would receive the water from the project in perpetuity, but must pay for on-going operating costs. FINANCIAL/BUDGET IMPACTS: Executing a Ruedi contract with USBR is expected to require either a lump sum payment (approximately $516,000 for the 400 acre foot purchase) plus an annual operating cost, or an annual payment that includes principal plus operating costs. With the annual payment option the anticipated interest rate is 3.046% with an 8 year payback period. It is anticipated that the annual cost for the 40 acre feet per year scenario would be $7,834 per year plus operation and maintenance costs (approximately $120 per year). For the 400 acre feet per year option (long term needs) the annual cost would be $78,336 plus operation and maintenance costs of approximately $1,200 annually. During the time period that USBR is completing required NEPA documents (see discussion in next paragraph) the city would reimburse approximately 2% cost of the environmental document (now estimated at $1,836 for the 400 af option) plus a payment of $28,760 which would be entirely applied against the principal amount due. Beginning in 2013, principal payments would increase to $78,336 and a portion of this would be applied to principal. Operation and maintenance costs apply after the water delivery contract is executed ENVIRONMENTAL IMPACTS: The environmental impacts of the Ruedi marketing program will be the subject of an environmental assessment by the USBR. Until this analysis is performed, it is not possible to define the impacts of contracting for additional Ruedi supplies. Page 2 of 3 The USBR has conducted and approved environmental assessments in connection with earlier Ruedi contracts. RECOMMENDED ACTION: Staff recommends that Council contract with USBR for 400 acre feet of Ruedi water to be used for augmentation purposes, to allow Aspen to respond to water supply needs in the event that Climate Change requires additional projects to meet the needs of future water customers. The higher level is recommended because it is believed this will be the last opportunity to acquire Ruedi supplies. ALTERNATIVES: Council could take no action to increase the supply of water for augmentation or reduce the amount to only needs identified in the absence of shifts in runoff patterns. NEXT STEPS: The proposed resolution will reserve an additional water supply from Ruedi Reservoir. Three agreements will be necessary to be approved by City Council. It is anticipated that a cost reimbursement agreement for NEPA compliance and financial agreement will be presented for action during December 2012. In addition following completion of the NEPA document it is anticipated Aspen will enter into an agreement with USBR for the water purchase. Suggested Motion: “I move to approve Resolution# . . .” CITY MANAGER COMMENTS: ATTACHMENTS: Attachment A – Alternative Short Term and Long Term Water Supply Alternatives and Associated Augmentation Requirements. Attachment B – Resolution # 111, Series of 2012 Page 3 of 3