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HomeMy WebLinkAbout10073RESOLUTION NO. 10073 A RESOLUTION APPROVING AN INTERGOVERNMENTAL AGREEMENT AMONG THE CITY OF PUEBLO, THE CITY OF COLORADO SPRINGS, AND THE BOARD OF WATER WORKS OF PUEBLO, COLORADO, AND AUTHORIZING THE PRESIDENT OF THE PUEBLO CITY COUNCIL TO EXECUTE SAID AGREEMENT WHEREAS, the City of Pueblo, the City of Colorado Springs, and the Board of Water Works of Pueblo, Colorado, have negotiated an Intergovernmental Agreement approving an Arkansas River Flow Management Program and matters relating to City's recreational in- channel diversion (RICD) water right, and WHEREAS, in an effort to maintain and protect flows in the Arkansas River and obtain the RICD water right, the City Council finds and determines that the Intergovernmental Agreement is in the best interest of the City and furthers the health, benefit, and welfare of its citizens. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, THAT: SECTION 1 The Intergovernmental Agreement among the City of Pueblo, the City of Colorado Springs, and the Board of Water Works of Pueblo, Colorado, a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. Section 2 The President of the City Council is hereby authorized to execute and deliver the Intergovernmental Agreement in the name of the City, and the City Clerk is directed to affix the Seal of the City thereto and attest same. INTRODUCED February 11, 2004 BY Robert Schilling Councilperson APPROVED: PRESI ENT OF CITY COUNCIL ATTESTED BY: CITY CLERK INTERGOVERNMENTAL AGREEMENT AMONG THE CITY OF PUEBLO, THE CITY OF COLORADO SPRINGS AND THE BOARD OF WATER WORKS OF PUEBLO, COLORADO THIS INTERGovERNmENTAL AoREEMENT ( " Agreement ") is entered into as of the 1" day of March, 2004, among the City of Pueblo, Colorado ("Pueblo "), the Board of Water Works of Pueblo, Colorado ("Board ") and the City of Colorado Springs, on behalf of its utility enterprise known as Colorado Springs Utilities ("Colorado Springs "). The three entities together are referred to as "the Parties." RECITALS A. This Agreement is entered into pursuant to sections 29 -1 -201 through 203, C.RS. Each of the Parties is a political subdivision of the State of Colorado within the meaning of section 29- 1- 202(2), C.R.S., and therefore each are governments within the meaning of section 29 -1- 202(1). Both Pueblo and Colorado Springs are home rule cities pursuant to Article XX, Section 6 of the Colorado Constitution. The Board is established by the charter of the City of Pueblo, which was adopted pursuant to Article XX of the Colorado Constitution. B. The conditions of this Agreement are based upon principles of comity and the long - standing mutual respect of and between the Parties. C. Pueblo Reservoir and its dam ("Pueblo Dam ") are features of the Fryingpan- Arkansas Project ( "Project ") constructed by the United States Bureau of Reclamation ("Reclamation ") pursuant to Congressional authorization. Public Law 87 -490. The Parties are each located within the boundaries of the Southeastern Colorado Water Conservancy District ("District"), established pursuant to 37 -45 -101 C.R.S. et seq., and the Parties, along with the residents of Colorado Springs and Pueblo, are beneficiaries of the Project and pay taxes and user fees to support the operation of the Project. D. The Parties acknowledge that the development and adoption into law of certain recommendations of the "Preferred Storage Options Plan" report relating to the Project, prepared for the District and dated September 21, 2000 ( "PSOP "), are important to many municipalities and agricultural interests in the Arkansas River Basin. E. Pueblo has begun implementation of the Arkansas River Corridor Legacy Project ("Legacy Project"), significant aspects of which have been developed and are being constructed in partnership with the United States Army Corps of Engineers ( "Corps "). The Legacy Project is intended to restore and improve the Arkansas River through the City of Pueblo. Among other goals, the Legacy Project will restore riparian habitat, and improve recreational opportunities in and along the Arkansas River, including through the construction of in- channel water diversion and control structures. To further the goals of the Legacy Project, Page 1 of 22 Pueblo desires to secure water rights under state law for recreational use, and to otherwise protect and enhance both the flows and the quality of the Arkansas River through Pueblo. F. In furtherance of the Legacy Project, Pueblo filed an application in Case No. OICW 160 (Water Division No. 2.) for a recreational in- channel diversion ( "RICD ") water right Various parties, including Colorado Springs, have opposed the requested RICD water right. If and when decreed, the RICD water right will be junior to the currently decreed water rights for the Project, and the currently decreed water rights of the Board and Colorado Springs. G. The existing decreed senior water rights of Colorado Springs and the Board, if exercised in accordance with their existing decrees, could impair Pueblo's ability to accomplish the purposes of the Legacy Project and the RICD water right. H. The Parties desire to work cooperatively to obtain agreement to the Arkansas River Flow Management Program and the RICD flows provided for in this Agreement by other owners of senior exchange water rights operating in the Arkansas River downstream of Pueblo Dam, including the District, the City of Aurora, the City of Fountain, and the Lake Henry Reservoir Company, the Lake Meredith Reservoir Company, and the Colorado Canal Company (collectively, the "Colorado Canal Companies ") the exercise of which could detrimentally diminish the flows in the Arkansas River in the Legacy Project reach. I. The Parties have agreed to the following goals and principles in the September 29, 2003 document entitled "Arkansas River Water Preservation Principles ": 1) Support reasonable efforts to maintain and improve the economy of the entire Arkansas River Basin from its headwaters to the State line with the understanding that protecting the quantity and maintaining a reasonable quality of the water in the Arkansas River available to water users for existing and future decreed beneficial uses is absolutely vital to that objective. 2) Support reasonable efforts to protect or improve the quantity and quality of the water in the Arkansas River Basin from the headwaters to the State line. 3) Support reasonable efforts to retain water originating in the Arkansas River Basin for use within the Basin while acknowledging the ability of water rights owners to sell their water rights and to support reasonable mitigation for the future loss of any water that is transferred out of the basin by sale, lease, or other device. 4) Support stream flows in the Arkansas River Basin sufficient to enhance and protect recreation, the environment, agriculture, economic development, and water quality. Page 2 of 22 5) Support efforts for development of agricultural and municipal water storage and delivery projects for the benefit of Arkansas River Basin users. 6) Support agreements, which will optimize and coordinate water storage and water exchanges within all reaches of the Arkansas River Basin (including recreational instream flows) with priority for such water exchanges directed to intra -basin water users. 7) Promote the vitality of the Arkansas River Basin communities by pursuing regional economic development, transportation, and other projects of mutual interest. 8) Consider water quality in all discussions, negotiations, agreements, and legislation related to the foregoing goals. 9) All of the foregoing goals shall be pursued in accordance with the doctrine of prior appropriation, federal law, local law, and the laws and regulations of the State of Colorado, while acknowledging the rights and obligations of certain of the parties under existing agreements, the right to continue utilizing existing decreed water storage rights and exchanges in order of priority, and the right of the parties to compromise such rights or interests and amend existing agreements. J. The Parties understand that other legislative agendas and initiatives exist, not directly related to the subject matter of this Agreement, which may be of general concern to southeastern Colorado including (1) funding for improved and expanded transportation infrastructure; (2) adequate funding for the continued successful operation of the Pueblo State Hospital and its various units; and (3) the continued operation of the Colorado State Fair in Pueblo. The Parties intend to work with their respective legislative delegations to the Colorado General Assembly to seek positive resolution of these issues. K. The Board requested and received from Reclamation contracts to connect a raw water pipeline to the South Outlet Works and Delivery Manifold ("South Outlet Works ") at Pueblo Dam and to install a pipeline across Reclamation lands. By an Intergovernmental Agreement dated August 15, 2000 ("2000 IGA" ), Colorado Springs and the Board agreed to the construction, financing, and operation of an enlarged pipeline from the South Outlet Works to be used jointly by the Board and Colorado Springs to deliver their respective water supplies from Pueblo Reservoir. The Board uses the pipeline to deliver raw water to its Whitlock Water Treatment Plant and then into its distribution system. The Board desired to construct the pipeline from Pueblo Dam as an alternative to its existing Arkansas River diversion structures in order to provide greater water supply security and increased operational efficiency and flexibility. Colorado Springs paid $3.6 million to oversize the Board's pipeline to secure the same benefits for its customers and to minimiz the environmental impacts that would have resulted from the construction and operation of multiple pipelines in the river Page 3 of 22 corridor. The 2000 IGA provides that the Board is entitled to utilize up to 180 mgd from this pipeline and Colorado Springs may utilize 68 mgd. L. Colorado Springs believes that, in order to serve its existing and future customers, it must construct a new pipeline from Pueblo Reservoir to Colorado Springs to deliver the water available under its decreed absolute and conditional water rights. The pipeline project, known as the "Southern Delivery System" ( "SDS "), is a regional water delivery project that will use a portion of the storage capacity of Pueblo Reservoir and deliver water to communities in El Paso County, including Colorado Springs, Fountain and Security. It will consist of an approximately 43 -mile long, and approximately 66" diameter water pipeline, beginning at either the "Y" in the Board's existing pipeline or at another location at Pueblo Dam and then running north to Colorado Springs. There will also be three pump stations located along the pipeline. These features constitute Phase I of Colorado Springs' long -term water supply project, and the SDS for purposes of this Agreement. AGREEMENT NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: I. Arkansas River Flow Management Program. A. Subject Water Rights Paragraphs I.B. through I.I. of this Agreement, establishing the Arkansas River Flow Management Program ( "Flow Management Program"), shall apply to (1) all exchanges of water rights regardless of when initiated or decreed, and (2) changes of water rights from points of diversion below the existing "Above Pueblo Gage" which changes are decreed after November 10, 1987, that reduce flows in the Arkansas River in the river segment between the Above Pueblo Gage and the confluence of the Arkansas River and Fountain Creek. Such exchanges or changes of water rights owned, used or operated by Colorado Springs or the Board are collectively referred to in this Agreement as the "Subject Exchanges." Colorado Springs and the Board shall operate the Subject Exchanges in accordance with the provisions of this Agreement. The Parties shall work together, cooperate and take such further actions as may be reasonably necessary to ensure that the Subject Exchanges are operated in accordance with the provisions of this Agreement, including if necessary, consultation with and administration by the Colorado Division of Water Resources. The terms "reduce" and "reduction" as used in this Agreement with reference to the Subject Exchanges may include the complete cessation of a Subject Exchange on a temporary basis, as may be necessary to satisfy obligations created under this Agreement. Page 4 of 22 B. Year -Round Flows. At times when the flow in the Arkansas River immediately below the fish hatchery located at Pueblo Dam is at or below 100 cubic feet per second ( "c.f.s. "), the Board and Colorado Springs shall reduce the Subject Exchanges as and to the extent necessary to attain a flow of not less than 100 c.f.s. at that point. Calculation of the flow at this point, the approximate location of which is shown on the map attached hereto as Exhibit 1, and referred to in this Agreement as the "Above Pueblo Location ", shall be the sum of the flow at the Above Pueblo Gage plus the fish hatchery return flows. Additionally, at tunes when flows at the point identified on Exhibit 1 and referred to in this Agreement as the "Combined Flow Location" are at or below 85 c.f.s., the Board and Colorado Springs shall reduce the Subject Exchanges as and to the extent necessary to attain a flow of not less than 85 c.f.s at the Combined Flow Location. C. Recreation Flows. During the period of March 16 through November 14 of each year, when the flow at the Above Pueblo Location is at or below the flow levels specified on the graph attached as Exhibit 2, the Board and Colorado Springs shall reduce the Subject Exchanges as and to the extent necessary to attain the flow levels specified on Exhibit 2 during the times prescribed in paragraph I.H. below. The "Average Year" flows shown on Exhibit 2 shall apply when the Natural Resources Conservation Service's Colorado Basin Water Supply Outlook Report "most probable" forecast (50% chance of exceedance) for flows on the Arkansas River at Salida ( "Forecast ") is 100% or more. The "Drier Year" flows shown on Exhibit 2 shall apply when the Forecast is less than 100% and equal to or more than 70 %. If the federal government ever stops providing these forecasts, then the Flow Management Committee established in Paragraph I.F. shall decide upon another objective measure that will fairly insure the continuation of the provisions of this Agreement. This new objective measure shall be incorporated into a written amendment of this Agreement, executed by the Parties. D. No Reduction Unless Flows Increase. Reduction of the Subject Exchanges under Paragraphs I.B. and I.C. shall not be required, unless such reduction will result in an increase in flows in the Arkansas River between the Above Pueblo Location and the Combined Flow Location and the increased flow resulting from the reduction of one or more of the Subject Exchanges is not being diverted by water rights with points of diversion above the Combined Flow Location. E. Dry Year Exception. Reduction of the Subject Exchanges under Paragraph I.C. above shall not be required when the most recently provided Forecast is less than 70 %. Page 5 of 22 F. Flow Management Committee, The Parties shall establish a Flow Management Committee consisting of up to two technical representatives from each party ("Flow Management Committee ") to regularly confer and coordinate concerning implementation of Section I of this Agreement. Each year the Flow Management Committee will meet no later than March 16` and, as frequently thereafter as it determines is necessary, through November 14` After the first meeting each year, subsequent meetings may be held by telephone or other electronic means if the Flow Management Committee so agrees. Matters to be addressed by the Flow Management Committee include consideration of means to replace storage reserves during storage restoration years (Paragraph I. G.); weekly schedules to balance periods of reduction and non - reduction for recreation flows (Paragraph I.H.); and implementation of the Cooperative Flow Management Program (Paragraph I.I.) The Flow Management Committee shall operate by consensus. If the Flow Management Committee is unable to reach consensus concerning any matter committed to the Flow Management Committee for determination by this Agreement, the matter shall be resolved in accordance with the dispute resolution provisions of Paragraph IX.M. at the request of any party. G. Storage Restoration. During the calendar year immediately following a year in which actual stream flows in the Arkansas River at Salida were less than 70% of average, as determined by the official streamflow gage records maintained by the State of Colorado for that location, the Flow Management Committee will determine based on relevant water storage levels; actual flow conditions; the overall objectives and intent of this Agreement; and other relevant factors, whether and to what degree reduction of the Subject Exchanges under Paragraph I.C. shall be modified for any portion of that calendar year to allow replacement of storage reserves to normal and acceptable operating volumes. The Parties anticipate that the alternatives to be considered may include protection solely of the flow levels required in Paragraph I.B.; percentage reductions of the flow levels required in paragraph I.C.; operation of the Subject Exchanges to maintain recreation flows for a specified number of days per week; or a reduced schedule of recreational flows, depending on the requirements for replacing storage reserves. These provisions for storage restoration are not intended to guarantee that the storage reservoirs of the Board and Colorado Springs will be fully restored by the end of the subject calendar year. H. Equitable Allocation of Operational Hours. The Flow Management Committee shall confer and agree upon weekly schedules of reduction under Paragraph I. C. so as to generally achieve on a monthly basis a 50/50 balance of time between periods of reduction of the Subject Exchanges and periods of no reduction of the Subject Exchanges. In general, the Parties intend that the reduction requirements under Paragraph I. C. shall be in effect during the day, and reduction under Paragraph Page 6 of 22 I. C. shall not be required during the night. The Parties will use their best efforts to make flow changes through the Pueblo Dam outlet structure to avoid adverse impact to fish and wildlife anticipated in the subject reach of the Arkansas River to the extent possible, while still fulfilling all the provisions of this Agreement. I. Cooperative Flow Management Program. The Parties shall participate in a voluntary flow management program intended to result in target flows of 600 to 1,000 c.f.s. through the Legacy Project reach for a goal of at least four separate weekend periods each year between May I" and the Labor Day holiday, if so requested by Pueblo and to the extent water supply conditions permit. The weekend periods will begin on Friday at 5:00 p.m., and run through Sunday at 5:00 p.m.; provided, however, that for weekends followed by a Monday designated as a national holiday, the weekend period under this paragraph shall run through Monday at 5:00 p.m. At its first meeting each year, the Flow Management Committee will agree upon the schedule of the weekend periods and the voluntary recreation flow targets for the Arkansas River below Pueblo Dam for the upcoming recreation season. Other interested parties, such as Reclamation, the District, and the Colorado Division of Water Resources may be asked to participate in the Flow Management Committee's meetings and in the Cooperative Flow Management Program established herein. The Parties shall work together cooperatively to manage, to the maximum extent of their ability and authority, Pueblo Reservoir storage and release rates with the goal of meeting or exceeding the voluntary targets. The Parties will work cooperatively with other entities to obtain flows that meet or exceed the voluntary targets. The Parties do not contemplate that Colorado Springs or the Board will release stored water for this purpose, although they may do so. J. Aquila Energy Diversion Dam /HARP. The Parties recognize that various entities, including the Board and Pueblo, have cooperated to develop the Historic Arkansas Riverwalk Project C HARP ") to reestablish water flows in the historical Arkansas River stream channel in downtown Pueblo. As a component of HARP, the Board developed and adjudicated a Plan for Augmentation in Case No. 93CW86 to augment injurious stream depletions resulting from the HARP. Pueblo and the Board shall regularly coordinate regarding issues relating to the possibly competing needs for water in the Arkansas River mainstem for the Legacy Project and under the HARP water right for water quality and other purposes. The Board will augment, pursuant to the decreed HARP Plan for Augmentation, or amendments or supplements thereto, all new depletions resulting from the HARP that exceed the current evaporative stream losses from 3.57 acres of open water surface area within the HARP area, and will ensure that replacement water for such depletions is delivered to the Arkansas River above the Combined Flow Location. Diversions under the HARP water right shall not be increased beyond Page 7 of 22 the point at which such diversions result in more than 90 acre feet ( "a.f. ") of depletions annually. The Board and Pueblo will work together with Aquila to attempt to prevent expansion of and, if feasible, to reduce historical diversions under the Southern Colorado Power Company ( "SCPC ") water right (as described in the decree dated October 13, 1932, Case No. 19693, District Court, Tenth Judicial District). If the Board supplies augmentation water to Aquila Energy Company, or any successor in interest, for augmentation of operations at the Aquila Energy Company plant, then when the flows specified in I.B. and I.C. above are not being met, such augmentation water shall be delivered to the Arkansas River above the Aquila Energy diversion dam. The reduction of Subject Exchanges by Colorado Springs under this Agreement shall not be required to be increased to meet the flows in Paragraphs I.B. and I.C. as a result of any decrease in flows at the Combined Flow Location resulting from increases in unaugmented depletions under the SCPC water right. K. Combined Flow Location. The Combined Flow Location was selected as one of the measuring points used in this Agreement based, in part, on the fact that flows from Runyon Lake, including the return flows from diversions at the Aquila Energy Diversion Dam, enter the Arkansas River above the Combined Flow Location. Pueblo and the Board will work cooperatively in attempting to prevent any change in the point of return flows from Runyon Lake and the Aquila Energy Diversion Dam. If a material change in the point of return flows from Runyon Lake and the Aquila Energy Diversion Dam occurs, then the Parties will work together to designate a new Combined Flow Location and to mitigate any adverse effects to the fair implementation of this Agreement. L. Diversions for Comanche Plant If the Board supplies water to the Comanche Pump Station as identified on Exhibit 1 in volumes exceeding: (a) the maximum monthly volume (a.f.) set forth in the table below for the applicable month; or (b) 10,200 a.f. in any calendar year, the Board shall ensure that the excess water delivered to the Comanche Pump Station is physically added to the flow that would otherwise pass the Above Pueblo Location before it is diverted at the Comanche Pump Station. Such excess water, however, shall be deducted from the actual flow at the Above Pueblo Location in order to determine the flow for the purposes of ascertaining any requirement to reduce the Subject Exchanges as described in Paragraphs I.B. and I.C. Jan. Feb. Mar. Apr. Ma June July Aug. Se t. Oct. Nov. Dec. 789 873 991 1006 1133 11006 1262 1110 925 1058 1 1082 11115 Pueblo and the Board will work together to explore and implement, feasible and Page 8 of 22 mutually acceptable alternatives to diversions of water above the existing Moffat Street Gage, as identified on Exhibit 1, for the delivery to the Comanche Plant, with the goal of increasing river flows to benefit the Legacy and HARP Projects. M. Federal Government Requirements. The obligations of Colorado Springs and the Board under this Section I shall not be altered or eliminated by the imposition of any additional or different requirements on releases from or exchanges involving Pueblo Reservoir that may be imposed by any agency of the federal government. Pueblo shall not support, sponsor, or encourage the imposition of any such requirements. H. Pueblo's RICD Water Right A. Stipulated Decree Colorado Springs and the Board shall stipulate to entry of a decree in Case No. O1CW160 (Water Division 2), that provides for the same flows and restrictions specified in paragraphs I.B., C., E., and H ("Stipulated Decree "), except that the Stipulated Decree shall provide for the decreed flows to be measured at the Moffat Street Gage. Pueblo shall provide a proposed version of the Stipulated Decree to Colorado Springs and the Board within 30 days of the Effective Date of this Agreement, and the Parties shall cooperatively work together to finalize the Stipulated Decree and to file it with the Court within 60 days thereafter. The Stipulated Decree shall (1) contain sufficient findings to make it clear that its terms and conditions result from the compromise of a variety of issues and concerns and, therefore, may not be used as precedent in other RICD water right cases; and (2) incorporate by reference this Agreement. The Stipulated Decree once entered by the Court shall remain in full force and effect and survive expiration or termination of this Agreement. B. Other Parties. The Parties shall work cooperatively in seeking the support and agreement to the Stipulated Decree by all objectors in Case No. 01CW160, including the Colorado Water Conservation Board. III. Pueblo's Lenacv Proiect A. Legacy Project Components The Legacy Project includes improvements to approximately 10 miles of the Arkansas River as it runs through Pueblo. The primary recreational and habitat improvement features of the Legacy Project are being undertaken in partnership with the Corps. The purposes of the Legacy Project include restoration of riparian habitat and enhancements, which will create and improve recreational opportunities in and along the Arkansas River. A major component of the Legacy Project is the creation of a whitewater boating park involving the construction of in- channel water diversion and control structures as Page 9 of 22 more particularly described in Pueblo's application in Case No. 01CW160. B. Support for the Legacy Project Colorado Springs and the Board shall support Pueblo's development of the Legacy Project, including providing support for (1) any current and future requests by Pueblo for state and federal funding and for any necessary funding legislation for the Legacy Project; and (2) the local, state, and federal certifications and permitting necessary to develop the Legacy Project, if any. To this end, Colorado Springs and the Board shall not knowingly take any actions to impair or impede Pueblo's ability to obtain the necessary permits, contracts and/or authorizations from any governmental entity or otherwise to complete the Legacy Project. Neither Colorado Springs nor the Board shall unreasonably withhold agreement for any easement or rights -of -way requested in favor of Pueblo for the Legacy Project subject to (1) the payment of just compensation, damages, and relocation expenses, and (2) the agreement of the grantee to conditions that will prevent unreasonable interference with the existing and future uses of the affected property. IV. Colorado Strings' SDS A. SDS Components. The components of the SDS for purposes of this agreement, include the following: (1) The capacity in the existing pipeline from the Southern Outlet Works at Pueblo Dam to the "Y" pipeline purchased by Colorado Springs. (2) An approximately 43 -m0e long and approximately 66 -inch diameter pipeline extending from either the "Y" in the pipeline at the Board's Northside Intake or some other location selected by Colorado Springs from Pueblo Dam to Colorado Springs with a maximum capacity between 68 mgd and 78 mgd. (3) Three pumping stations on the route of the pipeline. B. SDS Permits/Approvals. To implement the SDS, Colorado Springs needs permits, contracts or other approvals from various governmental entities including Reclamation and Pueblo County. The required contracts with Reclamation include a water storage contract for storage of water in Pueblo Dam and a conveyance contract for facilities from Pueblo Dam. In addition, prior to issuing said contracts Reclamation must make the investigations and determinations required by the National Environmental Policy Act ("NEPA"). Colorado Springs also must obtain approval from Pueblo County under its 1041 permitting regulations. Page 10 of 22 C. Support for SDS. Pueblo and the Board shall support Colorado Springs' development of the SDS, including (1) any current and future requests by Colorado Springs for legislation authorizing the SDS; and (2) the local, state, and federal certifications and permitting necessary to develop the SDS, if any. To this end, the Board and Pueblo shall not knowingly take any actions to impair or impede Colorado Springs' ability to obtain the necessary permits, contracts and/or authorizations from Reclamation, Pueblo County or any other governmental entity; provided, however, that nothing in this Agreement shall preclude Pueblo and the Board from submitting fair responses to requests from governmental entities, including identification of issues of concern unrelated to the Legacy Project and the quantity and quality of Arkansas River flows through Pueblo, and not in conflict with the spirit of this Agreement. Pueblo shall provide a supplementary comment letter to Reclamation, and to those persons and entities who were originally furnished copies by Pueblo at the time of transmission of the original letter to Reclamation, withdrawing Pueblo's written comments dated October 9, 2003 concerning the SDS, and advising Reclamation that it has entered this Agreement and of the benefits to Pueblo of this Agreement. Pueblo shall provide a similar letter to Pueblo County, and a similar timely notification to the general public. D. Rights -of -way. To construct the SDS, Colorado Springs needs to acquire rights - of -way and rights of access over lands owned by Pueblo and, potentially, the Board. Neither Pueblo nor the Board shall unreasonably withhold agreement for any easement or rights -of -way across property owned or controlled by Pueblo or the Board which is necessary for the SDS subject to (1) the payment by Colorado Springs of just compensation, damages, and relocation expenses to Pueblo or the Board, and (2) the agreement of Colorado Springs and any other grantee to conditions that will prevent unreasonable interference with the existing and future uses of the affected property, including rights and interests held by lessees and persons holding management agreements with either Pueblo or the Board. E. In -Basin Use Only. Colorado Springs shall not allow the SDS to be used for the purpose of providing water for use outside of the Arkansas River Basin, Water Division No. 2, Colorado. V. Preferred Storage Options Plan A. PSOP —Phase I. The District, by its Southeastern Colorado Water Storage Needs Assessment Enterprise, conducted a study to identify a plan to meet the long -tern water supply needs within the District's service area. The long -tern plan selected by the District is the PSOP. Phase I of the PSOP envisions providing Page 11 of 22 approximately 48,500 acre -feet of storage in Project storage space. This storage space would be made available by Reclamation through long -term contracts to store non - project water in excess capacity in Pueblo Reservoir as described in the PSOP. B. PSOP -Phase H. Phase H of the PSOP entails a study of the feasibility of enlarging Pueblo Reservoir and Turquoise Reservoir and the eventual permitting and construction of the enlargements to either reservoirs if physically, legally, financially and environmentally feasible. C. Support for PSOP. Subject to the terms of this Agreement, the Parties will support the adoption of federal legislation for the PSOP that accomplishes the same purposes identified in H.R. 3881, 107 Congress, 2d session, authorizing: (1) feasibility studies relating to enlarging Pueblo Dam and Reservoir, Sugar Loaf Dam, and Turquoise Lake; and (2) contracts for the use of excess storage and conveyance capacity of east slope facilities of the Project, for both Project and non - Project water, for municipal, water banking and other purposes. D. Incorporation of Flow Management Program. Colorado Springs and the Board will use their best efforts to ensure that the PSOP legislation (1) recites, as a basis for the support of the legislation by stakeholders in the vicinity of the project, the agreement of interested parties including Colorado Springs, Pueblo, and the Board to the Flow Management Program, and (2) authorizes the Secretary of the Interior to refuse to contract with any entity whose exercise of senior water rights with decreed points of diversion downstream of Pueblo Reservoir would diminish the water supply available to the Flow Management Program and who has not entered into a written agreement with the District to be bound by the Flow Management Program. VI. Future Cooperation in Arkansas River Basin Planning and Development A. Additional Cooperation/Agreement In addition to the goals and principles set forth in Paragraph I, the Parties agree to the following matters concerning the use and development of the waters of the Arkansas River. (1) Colorado Springs and the Board shall not enter into further agreements beyond those in existence as of the date of this IGA that permit the City of Aurora or any other municipal water supply entity or organization serving areas located outside of the Page 12 of 22 boundaries of the Arkansas River Basin to obtain additional water supplies for use outside the Arkansas Basin that would result in a net loss of native water to the Arkansas Basin downstream from Pueblo Dam. In interpreting this agreement, the Parties understand that Colorado Springs, the Board and the District have current and executory agreements with the City of Aurora that must be complied with, including all rights of renewal or extension under such agreements. In addition, Colorado Springs has existing and ongoing agreements with the City of Aurora to jointly maintain and operate the Homestake Project and is exploring the opportunity to jointly develop and operate the Eagle River Project. (2) The Parties do not intend this agreement to interfere with Colorado Springs' or the Board's ability to develop additional sources of water or to participate in projects to develop water supplies from river basins other than the Arkansas River in cooperation with others including the City of Aurora. Likewise, it is not the intent of this Agreement to prevent the Board or Colorado Springs from acquiring additional supplies of water from within the Arkansas River Basin. (3) Colorado Springs and the Board agree that Pueblo is entitled to acquire existing decreed water rights to increase and enhance the flow of water through Pueblo. Colorado Springs and the Board also agree that any increase in water flow attributable to such water rights acquired by Pueblo will be in addition to, and not in substitution for, the Parties' obligations concerning the year -round and recreation flows protected through this Agreement, so that such additional water flow provided by Pueblo is deducted from the actual flow at the Above Pueblo Location in order to determine the flows for the purposes of ascertaining any requirement to reduce the Subject Exchanges as described in Paragraphs I.B. and I.C. Pueblo agrees that Colorado Springs and the Board may participate in any change of water right case filed by Pueblo in order to ensure that adequate conditions are imposed to protect their water rights from injury. (4) Pueblo agrees that Colorado Springs and the Board are entitled to store water pursuant to the Subject Exchange decrees in any space now or hereafter made available in Pueblo, Twin Lakes or Turquoise Reservoirs to the full extent of the water available for exchange. Pueblo further agrees that it will not oppose applications Page 13 of 22 for findings of reasonable diligence or to make absolute the conditional appropriative rights of exchange of (1) Colorado Springs decreed in Cases No. 84CW202, 84CW203, 86CW118 and 89CW36 (both sewered and non - sewered phases); and, (2) of the Board decreed in Cases No. 84CW177, 84CW178, and 86CW1I I (both sewered and non - sewered phases). Colorado Springs and the Board agree not to oppose applications for findings of reasonable diligence or to make absolute the RICD water right to be decreed in Case No. O 1 CW 160. (5) The Parties shall support efforts to develop additional storage above and/or below Pueblo on the Arkansas River and its tributaries to the extent that such storage does not result in injury to the water rights of the Parties, including their rights under this Agreement. (6) The Parties shall support the proposed Arkansas Valley Conduit or Pipeline and related facilities to provide quality drinking water to communities downstream of Pueblo. Colorado Springs Utilities Board has previously passed Resolution UO3 -1 in support of this project. The nature and extent of future support will be determined by the respective governing bodies of each party. (7) The Parties shall request their respective Legislative delegations in the Colorado General Assembly to consider legislation that provides for the means to address the potential water quality impacts that could result from changes in water rights, in addition to exchanges, provided that the legislation: (1) will not restrict or reduce the ability of Colorado Springs and the Board to provide water supplies to their residents in accordance with their decreed water rights and charter responsibilities; and, (2) will not cause significant financial impact on the Parties' ability to store, treat and deliver such supplies or cause additional operating restrictions or significant upgrades to the Parties wastewater treatment plants. (8) Colorado Springs and Pueblo shall comply with federal and state stormwater regulations or requirements. In particular, Colorado Springs has recently negotiated a new Municipal Stormwater Discharge Permit ("MSDP ") with the Colorado Department of Public Health and Environment. The new MSDP permit is scheduled to become effective on February 26, 2004. Page 14 of 22 (9) Colorado Springs and Pueblo shall continue active collaboration with the Corps in the ongoing Fountain Creek Watershed Study and to seek mechanisms to mitigate adverse effects of both high flow conditions and sediment transport at all flows on Fountain Creek. (10) The Parties shall urge their United States Congressional delegations to support federal legislation for the control and eradication of non- native plant species in the Arkansas River Basin, including the Tamarisk or Salt Cedar. (11) The Parties shall seek to establish a framework for future communication and cooperation on regional economic development, highway and transportation improvement, air quality protection, and promotion of tourism. (12) Subject to applicable statutes and regulations, to provide a fair opportunity to contractors and businesses within El Paso and Pueblo Counties to participate in the purchasing, bidding, and contract award processes in connection with SDS. Colorado Springs will strive to advertise and provide public notice within Pueblo of such purchasing and contract opportunities, as permitted under the procurement regulations. In addition, periodic workshops will be conducted to assist businesses within the Pueblo community in responding to purchasing and contract opportunities for Colorado Springs Utilities' projects, including SDS. B. Recovery of Yield The Parties shall work cooperatively to mitigate the loss of water yield due to the reduced exchanges and will support water rights applications and/or projects designed to mitigate this loss of water yield, provided that any such mitigation measures do not materially injure or impair the Parties' water rights, nor any of the rights or interests of the Parties under this Agreement. VII. Amendment of Existing Agreement A. 1990 Agreement Colorado Springs and the Board are the parties to an agreement dated December 19, 1990 ("1990 Agreement "), by which they agreed to cooperate in the operation and management of their water resources including their decreed rights of substitution and exchange. Colorado Springs, the Board and Pueblo acknowledge that the 1990 Agreement must be modified in order for them to perform the actions set forth by the terms of this Agreement. Unless and until the 1990 Agreement is amended, the Board and Colorado Springs agree that this Agreement supercedes any inconsistent provisions of the 1990 Agreement. Page 15 of 22 B. 2000 IGA. Colorado Springs and the Board are the parties to the 2000 IGA which provides for the over sizing and operation of a municipal water delivery pipeline from the South Outlet Works of Pueblo Reservoir to the Board's Whitlock Water Treatment Plant. Colorado Springs may connect its SDS pipeline to the "Y" in this pipeline located near the Board's Northside Intake. The Board is willing to negotiate an amendment to the 2000 IGA in which the Board would retain the same benefits of the gravity flow through the pipeline that it would have enjoyed had Colorado Springs not elected to install a larger pipeline, while assuring Colorado Springs the capacity in the pipeline that results from the enlargement of the pipeline at low reservoir water levels, as further described in Alan Hamel's letter of March 25, 2003, to Phillip Tollefson. In addition, the Board and Colorado Springs agree that the 2000 IGA may be further modified to permit additional Arkansas River basin participants in the SDS. VIII. Effective Date and Related Matters. A. Effective Date and Term. Except as hereinafter provided in this Section VIII, this Agreement shall become effective as of the date first above written ("Effective Date "), and shall remain in effect until modified by the Parties in writing, commencing on the Effective Date. B. Pueblo's Support for SDS and PSOP. Pueblo's obligations under Sections IV and V shall become effective only upon the contractual agreement of the District, the City of Aurora, the City of Fountain, and the Colorado Canal Companies to the Flow Management Program within 90 days of the Effective Date. If any of the District, the City of Aurora, the City of Fountain, or the Colorado Canal Companies does not so agree, then any of the Parties may terminate this Agreement by providing written notice of such termination to the remaining Parties. If the Agreement is terminated by any of the Parties, all obligations of any kind herein contained are also terminated. Alternatively, the Parties may, by mutual written agreement, continue operating under the terms of this Agreement for a specified period of time. C. Interim Agreement on Recreation Flows. The requirements of Paragraphs I.C. through I.H. pertaining to reduction of the Subject Exchanges to maintain recreation flows ( "Recreation Flow Provisions ") shall become effective for an interim period upon substantial completion of the physical, in -river features of the whitewater boating park component of the Legacy Project, as generally described in Pueblo's application in Case. No. 01 CW 160, and any amended application. Pueblo shall provide notice to Colorado Springs and the Board of the date when this occurs. This interim period shall continue for a term of five years from the Page 16 of 22 date of Pueblo's notice of whitewater park completion. If at the end of such five year term, Colorado Springs is actively pursuing development of the SDS, the Recreation Flow Provisions shall continue in effect for an additional five years. However, if Pueblo is determined, through the dispute resolution process described in Paragraph IX.N, to be in material breach of this Agreement, the Recreation Flow Provisions will expire. If this interim agreement concerning recreation flows expires after either five or ten years due to Colorado Springs' cessation of active efforts to successfully complete the development of the SDS, the Recreation Flow Provisions applicable during the interim period shall automatically be revived upon the renewal by Colorado Springs of efforts to complete the SDS from Pueblo Dam so long as Pueblo has not been determined to be in material breach of this Agreement, or has not cured any breach so determined, as provided above, and shall remain in effect so long as such efforts continue. Upon completion of construction of Phase I of the SDS, the Recreation Flow Provisions shall become permanently effective, regardless of any previous expiration. D. Colorado Springs' Support for Flow Management: If, at any time, Colorado Springs is unable to reasonably construct the SDS from Pueblo Dam due to terms, conditions or requirements contained in any federal, state or local permit, permission, or license including Reclamation's Record of Decision or Pueblo County's 1041 permit, then Colorado Springs may terminate this Agreement by providing written notice of such termination to the other Parties. If the Agreement is terminated all obligations of any kind herein, other than the obligation to maintain recreation flows for any uncompleted portion of the period provided for in Paragraph VIH.C. for the Recreation Flow Provisions, are also terminated. E. Press Release on IGA: Upon execution of this Agreement by all Parties, each party shall issue a press release describing the Agreement and the interests served by entering into it. Page 17 of 22 IX. Other Provisions. A. Notices. All notices and other communications that are required or permitted to be given to the Parties under this Agreement shall be sufficient in all respects if given in writing and delivered in person, by telecopy, by overnight courier, or by certified mail, postage prepaid, return receipt requested, to the receiving party at the following address: If to Pueblo: City Manager 1 City Hall Place Pueblo, CO 81003 Telephone: 719-553-2655 Facsimile: 719 -553 -2698 and also to: Pueblo City Attorney 503 N. Main St., Suite 127 Pueblo, CO 81003 Telephone: 719- 545 -4412 Facsimile: 719-545-4301 and also to: Anne I Castle Holland & Hart LLP 555 17th St., Suite 3200, P.O. Box 8749 Denver, CO 80202 Telephone: 303 - 295 -8000 Facsimile: 303-295-8261 If to the Board: Executive Director Board of Water Works of Pueblo, Colorado P.O. Box 400 Pueblo, CO 81002 Telephone: 719 -584 -0250 Facsimile: 719 -584 -0222 and also to: William A. Paddock Carlson, Hammond & Paddock, LLC. 1700 Lincoln, Suite 3900 Denver, CO 80203 -4539 Telephone: 303-861-9000 Facsimile: 303-861-9026 Page 18 of 23 If to Colorado Springs: Chief Executive Officer Colorado Springs Utilities 121 South Tejon Street, Fourth Floor P.O. Box 1103, Mail Code 946 Colorado Springs, CO 80947 -0946 Telephone: 719- 668 -8000 Facsimile: 719- 668 -8020 and also to City Attorney /General Counsel City of Colorado Springs, Colorado 30 S. Nevada, Suite 501 P.O. Box 1575/MC 510 Colorado Springs, CO 80901 -1575 Telephone: 719-385-5909 Facsimile: 719-578-6209 or to such other address as such party may have given to the other by notice pursuant to this Paragraph. Notice shall be deemed given on the date of delivery, in the case of personal delivery, or telecopy, or on the delivery or refusal date, as specified on the return receipt in the case of certified mail or on the tracking report in the case of overnight courier. B. Assignment This Agreement may not be assigned by any party without the prior written consent of each of the other Parties. C. Injunctive Relief. No adequate remedy at law may exist for a breach of the terms contained in this Agreement, and any injured party may suffer irreparable harm as a result of any such breach. Therefore, in the event of a breach or a threatened breach of the terms of this Agreement, in addition to any other rights and remedies the Parties may have, the injured party shall be entitled to seek specific performance or injunctive relief restraining the breaching party from doing any act in violation, or compelling performance, of its obligations herein. D. Attorneys' Fees. If a party shall commence any action or proceeding against another party in order to enforce the provisions of this Agreement or to recover damages as a result of the alleged breach of any of the provisions of this Agreement, the prevailing party shall be entitled to recover from the other party all reasonable costs in connection therewith, including reasonable attorneys' fees. Page 19 of 23 E. Entire Agreement; Amendments This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof. All prior or contemporaneous agreements, whether written or oral, among themselves or their agents and representatives relating to the subject hereof are merged into this Agreement. This Agreement may be altered, amended, or revoked only by an instrument in writing signed by the Parties. Email and all other electronic (including voice) communications from any party in connection with this Agreement are for informational purposes only. No such communication is intended by any party to constitute either an electronic record or an electronic signature, or to constitute any agreement by any party to conduct a transaction by electronic means. Any such intention or agreement is hereby expressly disclaimed. F. Applicable Law. This Agreement shall be governed by and construed according to the internal laws of the State of Colorado. G. Waiver. The failure of one of the Parties to insist upon the strict performance of any provision of this Agreement or to exercise any right, power, or remedy upon a breach thereof shall not constitute a waiver of that or any other provision of this Agreement or limit that party's right thereafter to enforce any provision or exercise any right. H. Captions. All captions contained in this Agreement are for convenience only and shall not be deemed to be part of this Agreement. I. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. Parties Bound by Agreement This Agreement is binding upon the parties hereto and upon their respective, legal representatives and successors. K. Construction. All section, paragraph, and exhibit references used in this Agreement are to this Agreement unless otherwise specified. All exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein. L. Independent Governmental Entities Unless specifically agreed to in this Agreement or in other agreements, the Parties acknowledge one another's right and interest to proceed as independent governmental agencies. To this end each of the Parties is free to act in accordance with its best interests as is contemplated by paragraph nine of the Goals and Principles set forth in Recital I, unless a different specific course of conduct is required under this Agreement. M. Authorizations. The governing bodies of each of the Parties have authorized by resolution the execution of this Agreement. Page 20 of 22 N. Dispute Resolution. If a dispute relating to this Agreement arises between the Parties, the following procedure shall be followed: (1) The Flow Management Committee shall first consider any proposed decision item or disputed matter. If not resolved by agreement of the members the Flow Management Committee, the proposed decision item or disputed matter shall be referred to the Administrative Officers, as defined below. The Administrative Officers shall hold a meeting promptly, but in no event later than 20 calendar days from the referral of the dispute, attended by persons with decision - making authority regarding the dispute, to attempt in good faith to negotiate a resolution or cure of the dispute; provided, however, that no such meeting shall be deemed to vitiate or reduce the obligations and liabilities of the Parties or be deemed a waiver by a party hereto of any remedies to which such parry would otherwise be entitled under this Agreement unless otherwise agreed to by the Parties in writing. "Administrative Officers" collectively shall'mean the Chief Executive Officer for Colorado Springs Utilities, the City Manager of Pueblo, the Executive Director of the Board and the designated representative of any subsequent parties. If within 20 calendar days after such meeting, the Parties have not succeeded in negotiating a resolution of the dispute, they agree to submit the dispute to non - binding mediation and to bear equally the costs of the mediation. (2) The Parties agree to participate in good faith in the mediation and related negotiations for a period of 30 calendar days. The substantive and procedural law of the State of Colorado shall apply to the proceedings. If the Parties are not successful in resolving the dispute through mediation, then the Parties shall be free to pursue any other legal remedy. The Parties agree to reasonably expedite any legal proceedings brought hereunder in order to obtain a prompt resolution. O. No Third Party Beneficiaries, This Agreement is intended to describe the rights and responsibilities of and between the Parties and is not intended to, and shall not be deemed to confer any rights upon any persons or entities not named as parties, nor to limit in any ways the powers and responsibilities of the Parties or any other entity not a party hereto. Page 21 of 22 The Parties have executed this Agreement as of the date first above written. 1 Attest Cru�a tcher City erk Approved as to form: Thomas E. Jag r Pueblo City Attorney Att - 1 K i thryn oung Cty Cler Approved as tp form: Patricia Kelly Colorado Springs City Attest Treasurer City of Pueblo, Colorado B Randy Th ston President of the City Council City of Colorado Springs, Colorado B yh, Li el Rivera Mayor Board of Water Works of Pueblo, Colorado By: Kevin F. McCarthy President Page 22 of 22 HIMBIT 'I G rawgi P t CKFEL) 4W 4 OPDKNW—" Ptwp vp Pffs j lfo� ft 10 Eak le "OrrAT.. Rt.", % IU '1 7. k fl 7 4w 4r 11 "o 1 OiD "Atv Flow Protection Regimes CII 500 400 b LL U S 300 9 U. �1 100 IIIIIIIIIIIIIIIIIIIE 44 400 300 200 100 0 0 I - - -- - - - -- — — Oct 1 Nov 1 Dec 1 Jan t Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul t Aug 1 Sep Time Period -- &-Averape Year -0- Drier Year (from POW W ) EXHIBIT 2 (Page 2 of 2) Period Average Year Drier Year 1 -Oct 250 150 15 -Oct 250 150 16 -Oct 200 150 14 -Nov 200 150 15 -Nov 100 100 15 -Mar 100 100 16 -Mar 250 200 31 -Mar 250 200 1 -Apr 350 250 15 -Apr 350 250 16 -Apr 400 300 30 -Apr 400 300 1 -May 450 350 22 -May 450 350 23 -May 500 500 31 -May 500 500 31 -Jul 500 500 1 -Aug 450 350 15 -Aug 450 350 16 -Aug 300 300 7 -Sep 300 300 8 -Sep 250 150 30 -Sep 250 150