Title
Approval of Services Agreement No. AGR 22-961 with Rio de Chama Acequia Association, Inc, in the amount of $80,000.00, plus Applicable Gross Receipts Tax, for the Purpose of Bulk Water Purchase
Recommended Action
I move that the Board of Public Utilities approve Services Agreement No. AGR 22-961 with Rio de Chama Acequia Association in the amount of $64,850.00 and a contingency in the amount of $15,150.00, for a total of $80,000.00, plus applicable gross receipts tax, for the Purchase of the 2022 Allocation of San Juan-Chama Project Water, and forward to Council for approval.
Staff Recommendation
Staff recommends approval of the purchase contract as presented.
Body
In the past, since we have not initiated beneficial use within Los Alamos County, we have contracted the lease back of our San Juan - Chama (SJ-C) Water Project water to the Bureau of Reclamation to help augment stream flows in the Rio Grande. This has been accomplished via an annual contract between the Bureau and the County. The full volume of SJ-C water for Los Alamos County is 1,200 acre-feet (AF). This is the second year we are doing something a little different. The Rio Chama Acequia Association (RCAA) has procured funding through the New Mexico Legislature to purchase a 1,080.83 AF portion of the County's SJ-C allocation; with an option to purchase the full volume allocation dependent on future funding and allocation availability. The RCAA will put their purchased water to beneficial use through the irrigation of crops within the RCAA.
This purchase contract was developed in cooperation with the Bureau of Reclamation staff and attorneys for both the RCAA and the County. This contract helps strengthen the County's water right claim for SJ-C Project water by utilizing a portion (or all) of it's SJ-C Project water for beneficial use through agricultural irrigation. The price offered by the RCAA is in line with recent historic prices developed by the Bureau; which includes a 10% additional for administrative costs incurred by the County.
The Department of Public Utilities has developed a cost effective plan to develop facilities and use the County's allotment but until those facilities are put in place to actually divert the water we cannot claim it for direct beneficial use. We have leased storage space in Abiquiu Reservoir to store slightly less than one year's allocation of water but that space is currently subleased to the City of Santa Fe. Contractually, the water can only be released to a downstream user, so merely letting it go down the river is not a legal option for the County. The Bureau in the recent past has offered $60.00 per AF for the water which totals $72,000 for the entire 1,200 AF allocation for 2022. The per AF payment offered by the Bureau is based on previous years' costs for operation and maintenance of the system with previous annual payments varying between $47.00 and $60.00 per AF.
There is an option in the proposed contract with the RCAA for the purchase of more than the originally funded 1,080.83 AF, up to the full County allotment of 1,200 AF, if additional funding is acquired by the RCAA. If the RCAA does not purchase the entire allotment then the Bureau has agreed to lease back any remaining allotment portion for their typical Rio Grande flow augmentation use. A separate contract with the Bureau of Reclamation very similar to the typical annual contract that has been agreed upon over previous years is available to be developed and brought forward for approval in the event that is necessary. The County will be under no obligation to provide more water than is made available by the Bureau through the SJ-C Project, in the event that any year's supply is less than the full amount. Last year only 785 AF of the 1200 AF allotment was available to lease and give the draught continues this year, Los Alamos County anticipates about the same amount this year.
Alternatives
The County could deny this approval and continue the typical contractual relationship with the Bureau. There would be no monetary or administrative gain in doing this and the farmers of the RCAA would lose the opportunity of an increased supply of irrigation water for their crops. The Bureau of Reclamation has the first right of refusal for any third party use of SJ-S Project water, plus the Bureau must approve any such contract. The County is also not allowed to make a profit from leasing its allotment of SJ-C Project water to a third party. The practical alternatives are that the County must either put our 2022 allocation into storage at Abiquiu Reservoir, which would require a renegotiation with the City of Santa Fe and the elimination of the annual storage fee the City pays to the County for that storage (average = $2,200), or lease to the Bureau if we do not elect use by the RCAA. Not leasing back to the Bureau and not providing this water to the RCAA would result in the loss of the lease back payments pursuant to this contract while still being contractually required to pay the Bureau for the allotment of water released in 2022.
Fiscal and Staff Impact
Unbudgeted income of between $64,850 (1,080.83 AF allotment) and $80,000 (full 1,200 AF allotment plus contingency). No additional burden on staff time or resources is anticipated.
Attachments
A - AGR22-961_RCAA Bulk Water Purchase