Title
Discussion and Possible Approval of a Project Development Agreement between the Incorporated County of Los Alamos and Pajarito Recreation, LP for the Jemez Mountain Fire Protection Project and Related Budget Revision 2024-28 in the Amount of $14 Million
Recommended Action
I move that Council approve the Project Development Agreement as presented in attachment A and authorize the County Manager to execute the agreement and also approve the related budget revision 2024-28 in Attachment B in the amount of $14 million.
County Manager’s and Utility Manager's Recommendation
The County Manager and Utility Manager recommend that Council approve the Project Development Agreement as presented in Attachment A and authorize the County Manager to execute the agreement and also approve the related budget revision 2024-28 in Attachment B.
Board, Commission or Committee Recommendation
The BPU approved budget revision 2024-28 at their regular meeting of November 15, 2023 and recommends that Council approve it as presented.
Body
The proposed Project Development Agreement provides the terms under which the County and Pajarito Recreation, LP (Pajarito) will partner on the Jemez Mountain Fire Protection Project (the Project) and also includes Pajarito's subsequent ski hill improvement commitments.
The Project will convey water from the existing potable water system in Los Alamos to Pajarito Mountain to provide domestic water to the Pajarito Mountain ski facilities, Pajarito 10-million-gallon Reservoir, Camp May campground and provide a reliable water supply for regional fire protection and snow making. The existing 240,000-gallon non-potable water tank located in the vicinity of the Ski Lodge will be re-purposed to a potable water tank. It will be able to be refilled as needed to provide domestic water, fire protection to the Pajarito Mountain ski facilities, and to refill the 10-million-gallon mountain top Pajarito Reservoir available for fire protection. Currently, the existing water tank and reservoir configuration is only filled with snowmelt runoff and never reaches its capacity because of drought conditions and lack of runoff. With this new waterline, the existing 10-million-gallon reservoir will remain full year-round as a water resource for firefighting in the Jemez Mountain region. This will be a valuable fire-fighting resource and improve response times, as opposed to further away water resources located at Cochiti Lake and Abiquiu. The new water system will also provide a reliable water source for the Pajarito Ski hill snow making operation. This will allow the ski hill to have a consistent opening date with man-made snow and operate every year within a scheduled season which will help with recruitment and retention of ski area employees. Finally, the community will benefit from the thousands of skier visits contributing to the local economy.
The Project will include a new 500,000-gallon water tank, four water booster stations and 23,000 feet of 10" waterline that will be constructed along Camp May Road. The existing overhead power line will be replaced with a new underground system that will eliminate the risk of fires resulting from downed power lines, which is a concern in the arid west as a cause for a number of recent forest fires. The new underground power line will not only support the four booster stations, it will support planned ski hill upgrades which include new quad lifts, additional snow making, and base area improvements. The project design is nearly complete, the easements on DOE property are finalized and the environmental clearance is complete on U.S. Forest Service property. The special use permit from the U.S. Forest Service is the last outstanding authorization required for the project and it is in review. The project will be bid for construction in early 2024 with multiple bid packages to speed up the construction by having the resources of multiple contractors working concurrently and allow flexibility of phased bid awards to accommodate grant and funding coordination if needed.
Summary of Major Agreement Terms
Funding
The project will be funded as follows:
1st - $3.5 million from the State Grant
2nd - $1.0 million from Pajarito
3rd - $3.5 million from the State Grant
4th - $1.0 million from Pajarito
5th - $2.0 million from the County
6th - Any additional grant funds
If no additional grant funds are awarded, up to $7 million remaining to be split equally between the County and Pajarito
Construction
The County will be responsible for bidding and constructing the Project. If bids exceed $18 million, either party may terminate, or the parties may agree to share the additional cost on an equal basis.
Pajarito Development Obligations
Pajarito will:
- Invest no less than $5 million and at a minimum;
- Install an updated snow making system;
- Install a high-speed ski lift; and
- Make additional improvements to Pajarito Mountain's infrastructure and amenities.
These obligations are to be completed no later than 4 years after the Project is completed. In the event on non-performance or delay, there is a provision for liquidated damages.
Operational Commitments
In terms of ongoing operations, the agreement also provides terms for:
- Maintenance of the water systems;
- Access for firefighting; and
- Amount of water supplied.
Alternatives
Council could choose to not approve the development agreement and related budget revision and not pursue the project. Council could also direct staff to return with an amended agreement.
Fiscal and Staff Impact/Planned Item
The purpose of the budget revision is to establish a project budget and increase the revenue and expenditure budgets for Water Production for the Jemez Mountain Fire Protection Project.
The FY2024 adopted budget includes $4 million in capital expenditures for the Jemez Mountain Fire Protection Project. The sources in the FY2024 adopted budget are $2 million from the County and $2 million from Pajarito Recreation LP.
The requested budget revision is funded by $7 million in a State of New Mexico Capital Appropriation (Special Appropriation Project SAP 23-H2437-GF), $3.5 million transfer from the General Fund and $3.5 million from Pajarito Recreation LP for a total of $14 million. The budget revision results in an additional $14 million in expenditure authority. If this budget revision is approved, the total project budget will be $18 million.
Attachments
A - Project Development Agreement
B - Budget Revision 2024-28
C - Executed Term Sheet 3-10-2023