AGENDA ITEM SUMMARY February 21, 2017 City Council

Transcription

1 Agenda Item 21 AGENDA ITEM SUMMARY February 21, 2017 City Council STAFF John Stokes, Natural Resources Director SUBJECT Resolution Directing the City Manager or His Designees to Meet with the Northern Colorado Water Conservancy District to Engage in Discussions and Negotiations Regarding the Northern Integrated Supply Project. EXECUTIVE SUMMARY The purpose of this item is to consider a resolution that would direct the City Manager and/or his designees to discuss and explore the City s and Northern Colorado Water Conservancy District (Northern Water) Water s mutual interests pertaining to the Northern Integrated Supply Project (NISP). Staff would meet with Northern Water to discuss the City s key goals and issues related to NISP, while regularly reporting to City Council. If mutual interests can potentially be met, staff would be authorized to negotiate and prepare draft agreements that would be presented to Council for its review and possible approval. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION NISP, a proposed water supply and storage project serving 15 communities and water districts in northern Colorado (including the Fort Collins-Loveland Water District that serves portions of southeast Fort Collins) has been in the federal permitting process for 12 years. The City has participated in the federal permitting process as a stakeholder, in particular making comments on the U.S. Army Corps of Engineers (Corps) Draft Environmental Impact Statement in 2008, and again in 2015 with respect to the Supplemental Draft Environmental Impact Statement. Currently, the Corps is drafting a Final Environmental Impact Statement expected for release in late In June 2016, City Council had a work session about NISP and at that time staff suggested that it would be beneficial to enhance the City s direct communications with Northern Water regarding NISP. Councilmembers expressed support for staff to engage in direct communications with Northern Water - but generally did not express support for discussions that would lead to negotiated outcomes. Councilmembers noted that if there were to be negotiations, they would have to be authorized by Council. Since that time, staff has met with Northern Water on several occasions to discuss NISP. The main topic of discussion has been peak-flow mitigation possibilities. NISP will reduce Poudre River peak flows in May, June, and July by diverting up to 1,200 cubic feet per second (CFS) of those peak flows near the canyon mouth for storage in Glade Reservoir. If Council were to adopt the staff recommendation to enter into discussions and explore mutual interests pertaining to NISP that could lead to agreements with Northern Water, staff believes there may be benefits to the City. However, as with any such discussions regarding complex matters and potential agreements, there are no guarantees of success. Furthermore, the approach will depend on Northern Water s willingness to participate. Preliminary conversations with Northern Water have been positive and staff believes Northern Item # 21 Page 1

2 Agenda Item 21 Water would be willing engage in the manner described in this agenda item summary. Staff s recommendation is based on these key observations: The City s best alternative to a negotiated agreement (commonly referred to as a BATNA) is to rely on federal and state agencies to impose mitigation requirements. Based on what staff has gleaned to date from the Corps, Colorado Parks and Wildlife and other projects in Colorado, it does not appear likely that those mitigation requirements will meet Fort Collins needs or expectations. The opportunity to influence NISP is dwindling as the various permitting processes begin to wind down. There are two other large water projects in Colorado that require federal permits wherein agreements were reached outside of the federal permitting process to advance and protect local interests. From staff s perspective, these examples are not perfect analogues; nor were the results of these negotiations perfect. Nevertheless, the participants in these agreements believe they represent an improvement over what would likely have been developed in their absence. Both of these projects are awaiting their final permit issuance from the federal government, which is expected in The projects are: a. The City of Denver Moffat Collection System Project (which includes the Gross Reservoir Expansion Project) and its associated Grand County Mitigation and Enhancement Coordination Plan. b. The Windy Gap Firming Project and various agreements that the project proponent, Northern Water, has entered into with Grand County. The City recently formed a Regional Water Collaboration Steering Committee with the Fort Collins- Loveland Water District and the East Larimer County Water District. A key focus of the committee is to investigate the development of additional water supplies for the Fort Collins s Growth Management Area. NISP would provide the Fort Collins - Loveland Water District 3,000 acre-feet of water a year. About 1,400 acre-feet would service a southern portion of the City s Growth Management Area. Reaching agreement with Northern Water on various issues could facilitate the provision of water to Fort Collins residents. If Council were to approve the proposed approach to NISP, staff recommends focusing on the following issues, as outlined in the Resolution: (a) (b) (c) (d) (e) (f) A reduction of adverse impacts to water quality and the City s water supplies that are used by the City to meet treated and untreated water demands; A reduction of adverse impacts to the City s wastewater treatment facilities; A reduction of adverse impacts to the ecology of the Cache la Poudre River and associated biological resources from the point of diversion for NISP to the location where the river crosses Interstate 25; A reduction of adverse impacts to the capacity of the Cache la Poudre River to adequately convey storm and flood waters; A reduction of adverse impacts to the aesthetic and recreational attributes of the Cache la Poudre River from the point of diversion for NISP to the location where the river crosses Interstate 25; and A reduction of NISP s diminishment of peak flows in the Cache la Poudre River from the point of diversion for NISP to the location where the river crosses Interstate 25. Staff also would be guided by the City s two sets of more comprehensive comments from 2008 and 2015, and would not be precluded from discussing matters not expressly listed above. The recommendations in this memo do not change staff s previous recommendations for the City to continue to monitor and participate in the public permitting processes as a stakeholder. Furthermore, they do not change the City s position regarding NISP as set forth in Resolution (attached). As part of the federal permitting process, the Corps must evaluate a range of alternatives to meet the needs of the NISP participants, and then from that range select the least environmentally damaging practicable alternative (or LEDPA ). Corps guidance specifically precludes considering mitigation in making the LEDPA determination. Consequently, if, hypothetically, Northern and the City were to reach agreement on certain Item # 21 Page 2

3 Agenda Item 21 mitigation measures, these measures could not be used by the Corps in its selection of the LEDPA. Once the LEDPA has been selected, the Corps moves to the decision as to whether or not to permit the project. It is possible that if there were an agreement between the City and Northern Water regarding mitigation, it could speed the Corps permitting process by reducing the number of comments submitted to the Corps or by simply leading to a better mitigation package that is easier to permit by the Corps. These implications would only be applicable if an agreement between the City and Northern Water were ultimately approved, and would be evaluated if a proposed agreement were to be brought back to City Council and the public following negotiations. The present proposal to simply enter into discussions and negotiations does not by itself facilitate NISP. CITY FINANCIAL IMPACTS The fundamental financial impact to the City will be the staff time needed to engage in discussions and possibly negotiations with Northern Water. In addition, it is likely that staff will use outside consultants to inform those discussion/negotiations. Funds have been appropriated for that purpose. BOARD / COMMISSION RECOMMENDATION On January 11, 2017, the Land Conservation and Stewardship Board voted unanimously to oppose the staff recommendation. On January 18, the Natural Resources Advisory Board voted unanimously to oppose the staff recommendation. On January 19, the Water Board voted 7 to 1 to support staff s recommendation. PUBLIC OUTREACH Presentations were made to three Council advisory boards (see above) and to City Council on January 24. An open house was held on January 13, Comments from the open house will be made available prior to Council consideration on February 21. ATTACHMENTS 1. Frequently Asked Questions, NISP Open House, February 13, 2017 (PDF) 2. Powerpoint presentation (PDF) Item # 21 Page 3

4 ATTACHMENT 1 Frequently Asked Questions NISP Open House February 13, ) What is NISP? The Northern Integrated Supply Project ( NISP ) is a municipal water supply project designed and sponsored by the Northern Colorado Water Conservancy District ( Northern Water ) and fifteen municipalities and water districts, including the Fort Collins-Loveland Water District (FCLWD), a municipal water provider serving a portion of Fort Collins. At full build out and implementation, NISP would deliver 40,000 acre feet of water a year (for comparison, the Water Utility of the City of Fort Collins ( City ) currently delivers about 25,000 acre-feet a year). The project includes the construction of the 170,000-acre Glade Reservoir located north of Ted s Place on Highway 287. The highway would be rerouted to the east side of the hogback. 2) Is the City a participant in NISP? The City and its Water Utility is not a participant. The Fort Collins-Loveland Water District, which serves southeast third or so of Fort Collins Growth Management Area, is a participant. It would receive about 3,000 acre feet of water annually and ultimately about 1,400 acre feet would be delivered to Fort Collins residents. 3) What is the City s official stance on NISP? In 2015, City Council adopted Resolution The resolution states that the City Council cannot support NISP as it is currently described and proposed in the [Supplemental Draft Environmental Impact Statement, dated June 2015], with the understanding that City Council may reach a different conclusion with respect to a future variant of NISP if such variant addresses the City's fundamental concerns expressed in the City's comments to the [Draft Environmental Impact Statement] and comments to the [Supplemental Draft Environmental Impact Statement]. 4) Who decides if NISP can be built? In order to construct NISP, Northern Water must acquire several permits from federal and state agencies and from Larimer County. NISP requires no approvals from the City. The key permit that NISP needs is a Clean Water Act Section 404 permit from the U.S. Army Corps of Engineers ( Corps ). In order to issue this permit, the Corps must write an environmental impact 1

5 statement ( EIS ), which investigates the need for the project, evaluates alternatives, and studies environmental impacts. Results from the EIS are used for various other permitting processes. 5) History of NISP NISP s participants formally agreed in 2003 to pursue the project. Shortly thereafter NISP entered the federal permitting process, which is administered by the Corps. In 2008, the Corps published a Draft EIS. Based on public comments, including comments from the City, the Corps decided to issue a Supplemental Draft EIS, which was published in The City reviewed the Supplemental Draft EIS and submitted numerous comments to the Corps. The Corps currently is preparing the Final EIS, which is expected to be complete by the end of Concurrently, the State of Colorado is preparing to review a Fish and Wildlife Mitigation Plan that Northern Water will submit in In addition, the Colorado Department of Public Health and Environment is preparing a water quality model and report that will be issues with the Final EIS. 6) What is staff proposing to City Council? Staff has proposed a resolution that would authorize staff to discuss and explore mutual interests pertaining to NISP with Northern Water. Staff would meet with Northern Water to discuss the City s key goals and issues related to NISP, while regularly reporting to City Council. If mutual interests can potentially be met, staff would be authorized to negotiate draft agreements that would be presented to Council for its review and possible approval. 7) What is different about the staff proposal from past steps? In the past, the City has participated in the Corps permitting process as a stakeholder, submitting comments to the Corps when it published the EIS s in 2008 and Staff has never been authorized by City Council engage in direct negotiations with the project proponent. 8) What would the City expect to gain for negotiating? The City may gain better outcomes than it could by relying on the permitting agencies. The permitting agencies have their own criteria and are not focused on impacts to the City. Staff is concerned that relying on these agencies to protect the City s interests is risky and passive. By engaging Northern Water directly, the City s concerns may be better addressed. Key issues of concern to the City include peak and base flows; biological affects to the Poudre; potential affects to storm water conveyance; and, affects to recreation. These concerns are extensively documented in the City s 2008 and 2015 comments to the Corps. 2

6 9) What would the City give up by negotiating? The City would not give up anything by meeting with Northern Water to negotiate as proposed. It is not known at this time what the City may be ultimately requested to do to reach an agreement and to receive a benefit, although there a variety of potential scenarios. The City may maintain its lack of support for the project but agree not to comment on certain project elements. On the other hand, the City might adopt a position of neutrality. Although the City could adopt a support position staff considers this an unlikely outcome given the known negative impacts of NISP. The decision of whether the City should give up or commit to anything would be decided by City Council later if a draft agreement were brought back to City Council. 10) Why is staff proposing this approach now? Why not just wait and see what happens? From staff s perspective, the City faces a risk in relying solely on the permitting agencies to determine mitigation for impacts to Fort Collins. It is likely that the mitigation measures determined by agencies will be less rigorous than those desired by the City. Many state and federal agencies will be involved in the development of mitigation for NISP, each within their own regulatory arena. For example, mitigation of wetlands is overseen the Army Corps, mitigation of fish and wildlife is handled by CPW, and mitigation of endangered species is regulated by the U.S. Fish and Wildlife Service. Fort Collins interests are beyond a single resource and are focused on the overall ecological health of the Poudre River. This places the City in a unique position to advocate mitigation for NISP. While the permitting process is long and complex, the Final EIS is expected late this year. Further, the Fish and Wildlife Mitigation Plan will be finalized this year. The City s ability to influence the Final EIS as well as federal and state mitigation plans is modest and, as noted above, the agencies are not focused on impacts to Fort Collins. As the permitting processes continue to march forward, in staff s view, the City s window to directly influence mitigation with the project proponent diminishes. 11) Does negotiating mean that the City will facilitate the construction of NISP? As part of the federal permitting process, the Corps must evaluate a range of alternatives to meet the needs of the NISP participants, and then from that range select the least environmentally damaging practicable alternative (or LEDPA ). Corps guidance specifically precludes considering mitigation in making a LEDPA determination. Consequently, if, hypothetically, Northern and the City were to reach agreement on certain mitigation measures, these measures could not be used by the Corps in its selection of the LEDPA. Once the LEDPA has been selected, the Corps moves to the decision as to whether or not to permit the project. It is possible that if there were an agreement between the City and 3

7 Northern Water regarding mitigation, it could speed the Corps permitting process by reducing the number of comments submitted to the Corps or by simply leading to a better mitigation package that is easier to permit by the Corps. These implications would only be applicable if an agreement between the City and Northern Water were ultimately approved. They would be evaluated if a proposed agreement were to be brought back to City Council and the public following negotiations. The proposal to enter into discussions and negotiations does not itself facilitate NISP. 12) Will NISP harm the river? Flows, and in particular spring peaking flows, drive much of the overall condition on the Poudre River. NISP will take water out of the Poudre River primarily during the peak flow months of May, June, and July. If NISP is constructed, flows will be reduced on average 20% annually and 30% during the highest peak flow days. The reach from the NISP diversion near the canyon mouth through town will see the greatest reductions in flow. Under today s river management, these reaches receive flows that are greatly reduced from the native flows. Studies conducted by the City, such as the Ecosystem Response Model have enhanced understanding of current and possible future conditions on the Poudre. Poudre River flows (both in volume and in inter-annual patterns) continue to support many essential ecosystem functions, yet they are approaching critical thresholds below which the river s health and resilience will suffer. In sum, it is likely the health of the river will be negatively impacted by NISP, especially without well-planned and extensive mitigation actions. 13) Will the public get to weigh in on any mitigation proposals? How so? Yes. Staff would meet with Northern Water initially. If any concepts were generated by those discussions that would be of interest to the City, there would be outreach and discussion with City Council and citizen advisory boards such as the Natural Resources Advisory Board. In addition, there would be more general outreach with the public through, for example, open houses or web-based materials. Ultimately, it is up to City Council to make any final decision(s) about the City s NISP related interests. 4

8 ATTACHMENT 2 City Council, February Northern Integrated Supply Project Status and Proposed Approach 1

9 City Goals for the Poudre City Plan Principle ENV 24: The City will support a healthy and resilient Cache la Poudre ecosystem and protect, enhance and restore the ecological values of the River. 2

10 Public Lands in the river corridor 3

11 Josh Ames 4

12 Poudre River Downtown Project 5

13 6

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15 Permits National Environmental Policy Act (FEIS 2017) 404 Clean Water Act permit State of Colorado 401 Certification (2017) State of Colorado Wildlife Mitigation Plan (2017) Record of Decision 8

16 Fort Collins 2006 First presentations to Council 2008 Preliminary Report on Potential NISP impacts 2008 Comments on DEIS 2015 Comments on SDEIS Ecosystem Response Model River Health Assessment Framework State of the River Report 9

17 Issues of Concern Peak and base flows Source and wastewater quality impacts Aquatic and riparian habitat Recreation Air Quality and Climate 10

18 Fort Collins 2015 City Council cannot support NISP as it currently described and proposed in the SDEIS with the understanding that the City Council may reach a different conclusion with respect to a future variant of NISP.if such variant addresses the City s fundamental concerns As the entity most impacted by the Project, Fort Collins would welcome the opportunity to participate in mitigation-related discussion and efforts. 11

19 Recommendation to Council That the City Manager is hereby authorized and directed to meet on a regular basis with the Northern Water regarding NISP and to discuss and explore the City s and the Northern Water s mutual interests in order to ascertain whether those interests can be met, including through potential agreements between the City and Northern Water regarding the City s and the Northern Water s goals and issues related to NISP. The City Manager may designate certain qualified staff members for such discussions. 12

20 Risk Assessment and BATNA Likelihood of achieving or influencing outcomes Do nothing Oppose NISP Comment Negotiate Not mutually exclusive Best Alternative to a Negotiated Outcome BATNA 13

21 RESOLUTION OF THE COUNCIL OF THE CITY OF FORT COLLINS DIRECTING THE CITY MANAGER OR HIS DESIGNEES TO MEET WITH THE NORTHERN COLORADO WATER CONSERVANCY DISTRICT TO ENGAGE IN DISCUSSIONS AND NEGOTIATIONS REGARDING THE NORTHERN INTEGRATED SUPPLY PROJECT WHEREAS, the Northern Colorado Water Conservancy District ( Northern Water ) is pursuing the Northern Integrated Supply Project ( NISP ), a water storage and supply project that would divert significant amounts of water from the Cache la Poudre River upstream of Fort Collins; and WHEREAS, to move forward with the necessary federal permitting for NISP, the Northern Water is required by the National Environmental Policy Act ( NEPA ) to complete an environmental impact review process, conducted in this case by the U.S. Army Corps of Engineers ( Corps ) as the permitting agency under the federal Clean Water Act; and WHEREAS, as part of the review process, on April 30, 2008, the Corps issued a draft Environmental Impact Statement ( DEIS ), and the City timely submitted comments to the DEIS on September 10, 2008 pursuant to Resolution ; and WHEREAS, as part of the review process, on June 19, 2015, the Corps issued a supplemental draft Environmental Impact Statement ( SDEIS ), and the City timely submitted comments to the SDEIS on September 2, 2015 pursuant to Resolution ; and WHEREAS, the Northern Water has recently made public modifications to the preferred alternative for NISP that would affect the amount of water flowing in the Cache la Poudre River through portions of Fort Collins, which raises various issues for the City; and WHEREAS, it will be to the benefit of the City to have designated staff members meet on a regular basis with the Northern Water regarding NISP and the City s concerns, and to explore the City s and the Northern Water s mutual interests in order to ascertain whether those interests can be met, including through potential agreements between the City and Northern regarding the City s and the Northern Water s goals and issues related to NISP; and WHEREAS, such meetings and discussions will not change the City s position regarding NISP, as currently set forth in Resolution , and will not bind the City without subsequent action from City Council. NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. -1-

22 Section 2. That the City Manager is hereby authorized and directed to meet on a regular basis with the Northern Water regarding NISP and to discuss and explore the City s and the Northern Water s mutual interests in order to ascertain whether those interests can be met, including through potential agreements between the City and Northern Water regarding the City s and the Northern Water s goals and issues related to NISP. The City Manager may designate certain qualified staff members for such discussions. Section 3. That the discussions of the City Manager and his designees with Northern Water regarding NISP shall focus on the following key goals and issues, which are listed in no particular order: (a) (b) (c) (d) (e) (f) A reduction of water quality and other adverse impacts to the City s water supplies that are used by the City to meet treated and untreated water demands; A reduction of water quality and other adverse impacts to the City s wastewater treatment facilities; A reduction of adverse impacts to the river health and ecology of the Cache la Poudre River and associated biological resources from the point of diversion for NISP to the location where the river crosses Interstate 25; A reduction of adverse impacts to the ability of the Cache la Poudre River to adequately convey storm and flood waters; A reduction of adverse impacts to the aesthetic and recreational attributes of the Cache la Poudre River from the point of diversion for NISP to the location where the river crosses Interstate 25; and A reduction of NISP s diminishment of peak flows in the Cache la Poudre River from the point of diversion for NISP to the location where the river crosses Interstate 25. The City Manager and his designees shall be guided by the concerns are more fully expressed in the comments provided pursuant to Resolution and Resolution , in addition to such other information and investigations that are prudent and further the purposes of this resolution. The above list shall not preclude the City Manager and his designees from discussing related matters that further the purposes of this resolution. Section 4. That the City Manager and his designees shall report back to City Council regarding such discussions at regular intervals. -2-

23 Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 21st day of February, A.D ATTEST: Mayor City Clerk -3-