MANAGER’S REPORT
8 January. 2008
As
one year ends and a new year begins it is always useful to have some reflection
on the past, but be thoughtful and oriented for the future. There are a number of challenges and
opportunities for the District heading into 2008 that will require attention,
energy and resources that go beyond just delivering water to the headgates. While the District may seemingly be the same kind
of operation as in the past, the increased pace of urban and rural development,
increasing administrative and environmental regulations, the politics and
emotions of water in the arid West, and changing values of the area’s growing
population is dramatically impacting the business. The District must recognize the changing landscape
in which it operates and prepare itself to adapt for a future likely very
different than its past. Failure to
assess the future and proactively adapt and plan will over time decrease the
opportunities available to the District and its patrons, and increasingly place
the District in a reactive and less fortunate position.
OPPORTUNITIES
The
good news is that the District is in relatively good shape in a number of ways
as we head further into this new century.
A primary factor of benefit is the relative large size of the acreage
and patron base. COID is the 3rd
largest irrigation district in Oregon
with over 44,000 irrigated acres, and it has the state’s largest patron base of
over 3,600 deliveries. The large amount
of acreage and size of the patron base allows for a solid foundation to deal
with change due to the financial benefits of economies of scale. Both operational and administrative costs are
spread over a large base so that impact to the District from the changes
mentioned above has a limited impact to a single patron. This is not the case with the smaller
irrigation districts. The projected
population increases over the next 25-50 years in Central
Oregon is estimated to ultimately impact up to 6,000 irrigated
COID acres representing approximately 15% of the District. The same population forecasts translate into
a much larger negative impact of 30-60% of the acreage base for the smaller
districts. This could ultimately force
the question of their sustainability as increasing costs in running their
district burden a decreasing number of patrons to the point it is not cost
effective to do so.
COID
is also blessed with a number of significant assets that if utilized wisely can
be used for present and future benefit.
The most valuable District asset at present is the hydroelectric
generation facility called the Siphon Power Project (SPP). Since hydroelectric production started in
1989, several millions of dollars of revenue have been provided to the District
that has significantly offset the need to increase the assessments to the
patrons. In 2007 alone, the surplus
revenue provided by SPP to the District’s operational and maintenance expenses
was in excess of $400,000 or equivalent to $9.39+ per acre of assessment. An equivalent surplus was also generated
during 2007 to be used for the 2008 budget also. In addition, SPP surplus revenue has also paid
for a number of capital projects that have benefited the District facilities
over the years. While the SPP does not
generate a surplus every year, its bond will be paid off in 2013 and the
surplus would be more dependable. In
addition, the District is evaluating additional hydroelectric opportunities
within its canal network. Additional
revenue generated from sources other than the patron assessment is an area receiving
Board focus.
Additional
assets include a sizable amount of acreage owned by the District. This acreage was mostly conveyed to the
District during the great Depression in the 1930s from failure to pay the
District assessment. A lot of the
acreage carries no meaningful market value at present, but could become
valuable over time. There are however a
few individual pieces of COID owned property that could provide significant
value and cash to the District. One such
parcel is located in east Redmond
and part of this parcel is under an option to buy with a developer for $10
million. It has been envisioned by the
Board that proceeds of this sale, as with other past land sales, will go to the
Endowment Fund. The Endowment Fund balance
is currently at $1.5 million and generates annual investment income in excess
of $70,000. The Board’s stated objective
is to continue to fund the Endowment and utilize the investment income to
offset future assessment increases. It
must be mentioned that recent years have also been years of relatively low
inflation. If this trend continues then
pressure on assessments will be moderate, but if inflation accelerates then the
pressure on moderate assessment levels will increase.
CHALLENGES
The
challenges that present themselves to the District as it looks towards its
future are many. Earlier discussion in
this report mentioned urban and rural development and its potential negative
ramifications to the District assessment base.
While development can be forecasted with reasonable accuracy and numbers
for planning purposes, the additional challenges below do not carry defined
numbers and are more difficult to forecast.
These include the increasing impact of administrative and legal
regulations on operations including the Endangered Species Act and the Clean
Water Act in particular. Additional
operational requirements include noxious weed control, pesticide/herbicide free
waters, water right beneficial usage monitoring, and increasing involvement in
local, state and federal legislative efforts.
All of these items drive costs up to the District and are anticipated to
only increase over time.
The
Endangered Species Act (ESA), Clean Water Act (CWA) and changing values with
the growing urban populations of Central Oregon are all driving the need for
the irrigation districts to improve their water efficiencies and leave more
water in the Deschutes
River. This means projects to conserve water,
primarily piping, where the water that is lost through seepage in the canals is
no longer “lost” in transport to the headgates and can be kept instream. Conserved water projects are desirable
because it does not reduce the water right at the headgates and places
water instream to meet the environmental requirements for habitat and species. The
ESA carries the heaviest penalties and consequences if not addressed. Earlier manager reports have commented on
this situation with the reintroduced Steelhead above the Pelton-Round Butte
Complex. The Habitat Conservation Plan
(HCP) process will begin in 2008 and when completed in a few years will provide
COID with the numeric targets of water it must place instream. COID has been very active in identifying high
water loss areas of the irrigation system and will begin prioritizing these
conservation projects for funding. COID
will continue to seek out federal and state grants to accomplish these
projects, but will likely need to use its own funds also.
The
evolving requirements under the CWA are in process and will likely require increased
instream water levels also. The coming
establishment by the Oregon Department of Environmental Quality (DEQ) of water
pollution standards on the Deschutes
River will place
additional pressure on District operations.
The primary pollution standard of notice is with temperature. The lower flows in the Middle Deschutes
River due to irrigation
district diversions do increase the water temperature above the preliminary
levels set by DEQ. Coordinated studies
are currently being conducted by a number of federal and state agencies with
local stakeholder participation to evaluate these standards, but it is not
known at present to what level river flows will need to be maintained to meet
the temperature standard.
The
possibility exists that mandated environmental requirements will compete for
limited operational and maintenance assessment dollars in the future to a
greater degree than today. It is the
Board’s and Manager’s perspective and position that wisely utilizing the assets
mentioned above will enable the District to accomplish the requirements of
above while still maintaining moderate assessment levels.
________________________________________________________________________
Winter
stock runs were completed last month with the next runs scheduled, weather
permitting, for the CO Canal January 2 – 5 and the Pilot Butte
Canal January 7 – 11. The snow pack has increased well over the
last few weeks of December and the projected La Nina weather appears to be
holding true. Reservoirs are still
filling close to last year, but if the precipitation of the past few weeks
continues as expected then perhaps increased winter flows in the Deschutes will materialize.
The
opportunities pursued this past month include, but are not
limited to:
·
COID is participating in the Technical Advisory
Committee (TAC) formed to discuss and work with the City of Bend
and Deschutes County
on Bend’s UGB
and URA expansion process.
·
Both the NUID and Deschutes River Conservancy
legislative bills have been introduced in the US Senate and US House. Other
federal efforts pertaining or impacting irrigation districts are monitored by
COID through its participation in the OWRC and the National Water Resources
Association (NWRA).
· The
2007 Farm Bill activity in Washington,
DC continues. While the House of Representatives has passed
their version of the Farm Bill, the US Senate is still working on their
version. The latest version has now
passed the Senate Agriculture Committee.
It is anticipated that a final version will not be voted on by the Senate
until early 2008. COID in conjunction
with the Oregon Water Resource Congress is heavily involved with making its
views known for expanded provisions for irrigation districts under the proposed
Regional Watershed Enhancement Program as part of the established EQIP program.
· A
Master Agreement with Crook
County is underway to
address both entities’ authorities and requirements for road development and
improvement projects.
·
Reinitiated discussions with PacifiCorp regarding
the expiration of the lease on the Cline
Falls land and evaluation
of COID taking over the small hydroelectric facility already on site. Several steps need to be evaluated with
regards to the facility including state and federal licensing requirements and
costs of upgrade. To date the evaluation
of licensing requirements on the state side are minimal, and a formal
determination application to FERC for federal licensing is in process. Once the
licensing issues are resolved then a more formal evaluation of upgrade and
transfer of facilities costs will be undertaken.
The
challenges presenting themselves:
·
The State of Oregon has filed a petition for review of
the Oregon Court of Appeals Ft Vannoy decision to the Oregon Supreme
Court. The next step is to wait and see
if the Supreme Court decides to accept the petition. This will likely be known within a few
months.
·
A report on the Deschutes Basin
Mitigation Program will be presented to the Oregon Water Resource Commission in
January 2008. This report will provide
data and information on instream flows in the Deschutes River. The instream flows that will receive
particular attention will be the flows at the Culver Gauge as these flows are
to be protected from “excess” ground water withdrawal. While not on the Commission’s agenda but is
being discussed amongst basin stakeholders is the issue of the cap on
mitigation permits to be issued by OWRD.
The cap is at 200 cfs cumulative for any groundwater permits as a
condition of the Mitigation Program.
OWRD has received applications in excess of the 200 cfs cap and there
are questions arising from this condition and how is OWRD going to address the
issue. At this point, applications
received above the 200 cfs cap are being accepted but not acted upon by
OWRD. There will likely be pressure in
the coming months for the Commission to address the mitigation cap to increase
the cap.
STATUS REPORT
Deschutes
Water Alliance
· Deschutes
Water Alliance Water Bank is continuing to allocate urbanized water rights from
the COID and Swalley irrigation districts to the cities of Bend
and Redmond,
Avion Water and the DRC. COID 2007
targets were met by COID. Bank members met
near the end of November for discussion of 2008 targets of supply and demand. The COID Board will review and take action on
the 2008 targets in the January Board meeting.
The Water 2025 grant for the bank is now finished and a final report was
sent to the Bureau of Reclamation.
·
Discussions are underway to prepare and
formalize an Inter-Governmental Agreement between the governmental parties
associated with the Bank.
Status – On going
David Evans & Associates
· Assisting
District on Juniper Ridge hydroelectric project
Status – Preliminary pipeline design and hydro facility
completed
· Assisting
District on evaluating retention structures in Dry Canyon
Status – Landowner contacted COID regarding potential
crossing of Dry Canyon in Powell Butte area and transfer of water rights to
west side of canyon. Opportunity may
exist to build small retention structure and eliminate any tailwater flows
continuing down canyon towards the Crooked
River. Grant sources being researched for project.
· Assisted
District in evaluation of excavation work being done along North Canal Blvd in Redmond. Will be involved in the
development of standards for electrical utilities.
Status – Standard Operating Procedures in development.
Follow up discussion with PacifiCorp to be scheduled.
·
Cooperative evaluation of potential 50-100 acre
re-regulating structure on Central
Oregon Canal
with Audia-Gordon LLC. Geotechnical work
and elevation specifications are underway.
Status – On Hold, No
progress
Real
Estate
· A
Quiet Title action was successfully resolved in COID’s favor on the partitioned
40-acre parcel near Deschutes
Market Road and Hwy 97 and a few other parcels
along the Pilot Butte
Canal in Bend. The
Real Estate Committee after consultation with Steve
Scott requested an updated appraisal from the September 2005
report. The Board will then evaluate
options after receipt of the updated appraisal.
Status – In Process
· DesertScape
and COID executed a new option agreement for acreage in east Redmond.
DesertScape, COID and the Redmond
School District are proceeding on
filing for rezoning changes of the 250-acre parcel in east Redmond. The draft Redmond TSP has been received
but only included the COID 250 acre parcel under its current OSPR zoning. A second TSP is being pursued to assess the
traffic loading with the COID 250 acre parcel under its proposed zoning as
filed with the City of Redmond
under the Master Plan.
Status – In Process
·
Surveying
and Conditional Use permitting is being pursued for COID owned lands along Teal Road. Once completed the Board will evaluate for
declaring surplus depending on market conditions and financial requirements of
the District.
Development
· Coordination
agreements with Deschutes County and the City of Bend are required under Oregon Revised
Statute (ORS) Chapters 195 & 197 for the establishment of new Urban Reserve
and Growth Boundaries. Both entities have begun the conversations with
likely effected irrigation districts and other special districts. City of Bend
legal counsel has filed testimony that an agreement with COID is not necessary,
but COID and Deschutes
County legal counsels
have filed testimony that an agreement is necessary and required. COID and Swalley have committed to City of Bend planning staff a
first draft of the 195 agreement desired.
Status – Discussions held and ongoing
· Direct
communication with City of Bend and Redmond public works and planning staff on
resolving issues of canal safety and impacts of development that will require
piping.
Status – In Process.
Preliminary discussions held, issues ongoing, no resolution expected for
some time. Redmond and COID met in December and agreed
to schedule regular coordination meetings going forward, likely on a semi-annual
basis.
ON
THE RADAR SCREEN
· Bull
Trout Critical Habitat Final Rule amendments
· Funding
for the Habitat Conservation Plan work associated with the Steelhead
reintroduction.