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I. Town of Paonla - Water Rights Purchase November 25-26, 2002 Agenda Item 201 I. the 317 unused water taps, and with subsequent steps intended to provide additional storage for water that is currently lost through collection system spills. Upon finalization of the report, CWCS will provide the $10,000 in grant funding. The 317 unused water taps were committed to future land development as part of a 1976 agreement in which the Town exchanged 400 out-of-town water taps in return for water rights on German Creek. The land and associated water taps are now owned by the Ark Land Company, a subsidiary of Arch Coal, InC. For the past two years, the Town has been working with The Conservation Fund, a national non-profit land and water conservation organization, to re-acquire control of the 317 unused water taps through the purchase of the 770 acre Ark Land Property (ALP), south and east of the Town. In acquiring the ALP, the Town would relieve itself of a significant potential strain on its water supply system due to development pressures, and would mitigate the necessity of immediate construction of a major water storage project. It would also reap the added benefit of preserving a significant amount of developable land in agriculture. After acquisition, the Town's plan is to sell the land to an adjacent ranching operation with a conservation easement, thereby preserving a significant portion of the land in open space and agricultural production. (The Town anticipates selling the Ark Land Property for $800,000 or more which would reduce the net cost of tap acquisition to $1.1 million). tit The Town of Paonia The Tovv'n of Paonia Is located along the North FOik of the Gunnison River in Delta County.. The Town's annual budget is approximately $1.5 million, and the Town's Water Fund is an enterprise fund that has annual operating revenues of approximately $320,000, notinciuding tap fees. The Water Fund currently has a balance of about $400,000 for system improvements with $229,000 earmarked for water storage. There are no outstanding debts to the Town's Water Fund, as a loan for a new water treatment plant was paid off in ;1001. tit Paonia's water system service area includes all of the incorporated lands within the Town and a considerable amount of land outside the Town boundaries. Over the past 10 years, the Town has averaged about 4 new taps per year (in-town) and 10 per year (out-of-town). The Town has a current policy of no more than 25 taps per year sold outside of the Town limits. Tap fees in-town are $3,500 per tap, and in May 2002, the Town raised the out-of-town tap fees from $6,500 to $8,500. Current basic water rates for in-town and out-of-town customers are $10.50 and $12.50 per month, respectively, for water use less than 50,000 gallons per month. Also in May 2002, the Town Council approved new increased out-of-town water rates to promote water conservation by excessive users. Water System - The Town of Paonia obtains its raw water from a complex network of springs located above the Town. The water supply system includes 14 spring collection units with a total water right of 9.9 cfs, approximately 20 miles of raw water supply pipelines, Todd Reservoir (capacity of 200 ac.ft.), two small water treatment plants and three treated water storage tanks, and a metered distribution system. Todd Reservoir has limited value due to the small amount of inflow and its location. The peak production months of the springs are April-June and the peak demand months are June-August, making the Town potentially vulnerable and in need of storage for summer month demand. Growth - Water tap sales and census data over the period 1991 to 2001 indicate an overall .. weighted average growth rate for the system of 1.3 percent per year (in-town and out-of-town). . Based upon this information, the Town is planning that the future growth of Paonia's system would be in the range of 1..0 to 2.0% per year with1.5 percent as the most likely average system growth rate. These numbers are consistent with the State population growth projections for Delta County (2.3% - 2000-05; 2.0% 2005-15; 1.5% - 2015-25). Page 2 of 8