C150237 Increase Approval Letter

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Penrose Water District Consent Agenda Item 4a. November 19-20,2014 Board Meeting(Updated November 21, 2014) Page 2 of 4 Background The District is located in Fremont County about 35 miles southwest of Colorado Springs and 20 miles west of Pueblo and currently provides domestic water to approximately 4000 people with 1870 Equivalent Residential Units (ERUs) in and around the unincorporated town of Penrose. The existing demand is 489 acre-feet per year and projected future buildout demand by 2040 is projected to be 2,100 acre-feet for about 8000 residents and 4286 ERUs. The District water supply is obtained by a lease with Beaver Park Water Inc (BPW) a Colorado non-profit mutual ditch and reservoir company that owns and operates Brush Hollow Reservoir. The 1990 lease has a 30-year term and provides an increasing amount of water each year, 751 acre-feet in 2006, leveling out at 1000 acre-feet in 2020. The District has the option to renew the lease. Delivery to the District is by the Brush Hollow Reservoir Supply Canal owned by BPW. The reservoir has a dual purpose: primarily to provide irrigation water to local agriculture, and secondarily to serve as an alternate raw water supply for the District. The District receives most of its raw water by direct diversion from the canal, with a limited amount taken from Brush Hollow Reservoir. Raw water is passed through settling ponds and is treated at the District's 2 MGD water treatment plant. In drought years, the amount available to the District is reduced below the lease contract amount. When the BPW water supply, physically or legally available under their water rights, becomes inadequate to allow them to fully meet the District's water service commitment, the water allocation to the District may be reduced. Such reductions occurred in 2002 and 2003 and in years preceding the 2002 drought. Subsequently, based on a previous 1999 water availability study, the impacts of the 2002 drought, and a 2003 water demand study, the District concluded that Beaver Creek is not a reliable source of raw water supply and that diversification in the system through alternative water supplies is vital. It was also determined that the District demand for water would exceed the maximum BPW lease contract table amount of 1,000 acre feet per year by the year 2023. In July 2005, the District acquired the Goodwin Ranch, consisting of 456 acres of ranch land and water rights near Howard, for $3M. The acquisition is expected to yield 339 acre-feet of water. Project Update The ongoing Project includes the now-completed acquisition of water rights from the ranch purchase, 10/12 of the Pleasant Valley Ditch, with a change in use and change in point of diversion approximately 6 miles downstream to Sec 13 T19S R69W. Water will be diverted through the completed construction of 6 shallow alluvial wells immediately north of the Arkansas River, which is under construction. Water will be pumped approximately 6 miles through a 12-inch transmission line to Brush Hollow Reservoir. The Project was bid on July 17, 2014. The low responsive bidder was Pate Construction Co. out of Pueblo, Colorado. The District's Board moved to award the project to Pate Construction for the Base Bid and Alternate Nos. 4 and 5 in the amount of $4,139,377.50. The District reserved within the award process the option to incorporate into the project Alternate Nos. 2, 6 and 7 as bid. Their incorporation would be made subsequent to the CDPHE's approval of the diversion of water to the District's water treatment plant and securing adequate financing. Construction activities started on August 18, 2014. Through the end of September, construction activities consisted of survey and site layout, shop submittals, mobilization, coordination with property owners, and materials delivery. Installation of pipe and foundation work for the tank and booster station started on October 6, 2014. Since that time, over 8,000 lineal feet of pipe have been installed, along with foundation work and pipe penetrations at the tank and booster station sites. Clearing and grubbing of the pipeline alignment from the well sites to the booster station has also been undertaken. Layout of the piping into Brush Hollow has also commenced. Work activities are programmed into March of 2015 and may extend further based on additional work added and weather delays.