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Water Conservation Grant Application - Part 3 1. Project description: a) Introduction There Is Increasing recognition of the importance of cooperation between the aglicultural and municipal sectors to attain the most efficient use of Colorado's scarce water resources. One way in which such cooperation can be achieved Is through the use of arrangements, often called "dry-year options," under which municipalities can call on water from the aglicultural community in shortage conditions. Hlstolically, municipalities needing additional water supply sources have purchased aglicultural lights outright. Although the cities typically do not expect to use the additional water for many years, the need to secure dependable supply has forced them to spend large sums of money to buy and maintain the lights until the water Is actually required. Agricultural areas have been taken out of production, with concomitant disruption to the local economy and environment. Dry-year options offer a way to preserve the state's important agricultural sector while meeting urban water needs. They also enable cities to ensure adequate water supply at a lower cost than through purchasing water lights. Dry-year options result in the efficient allocation and use of scarce water resources. b) The Northern Colorado Water Conservancy District agricultural options program The Northern Colorado Water Conservancy District. which operates the Colorado-Big Thompson (C-BT) Project and (through its Municipal Subdistrict) the Windy Gap Project. is developing a program for aglicultural-munlcipal water sharing through the use of option contracts. The C-BT Project was designed and built by the federal Bureau of Reclamation as a supplemental source of water supply for agricultural and municipal use In northern Colorado. The project's service area includes Boulder. La1imer. Logan. Morgan, Sedgwick and Weld Counties. In the 1970s. the Municipal Subdistrict was formed to develop the Windy Gap Project. an additional water supply for the participating municipalities. Six cites -- Boulder. Broomfield, Estes Park, Greeley. Longmont and Loveland -- currentiy participate in the Subdistrict. Like many Colorado cities. the Subdistrict members are concerned about seculing adequate water for their growing populations. The District's aglicultural options program would help assure municipal supply in dry peliods through the use of option contracts with holders of C-BT allotments. When the options were exercised. the fanners would forego use of their C-BT water for that year. with the water instead being delivered to the municipalities through the Windy Gap Project. The Subdistrict entered into a Carriage Contract in 1990 with the District and the United States to carry Windy Gap water and also to allow the Subdistrict to borrow water from the C-BT Project. As an integral part of this Carriage Contract, the Subdistrict was required to develop a basic operating clitelia to protect the C-BT water users from injury due to the (WFS]ENGINEE:RING SCOIT .474 I