COUNCIL

DATE 4/15/08
AGENDA ITEM 4G

CITY COUNCIL MEETING

Olympia, Washington
April 15, 2008

Acquisition of Water Rights in Lake St. Clair Area

__________________________________________________________________
CITY MANAGER’S
RECOMMENDATION: Move to authorize City Manager to sign Purchase and Sale
Agreement for purchase of a surface water right from Jacob and
Wendy Schoepfer.

STAFF CONTACT: Rich Hoey, P.E., Director of Water Resources, (360) 753-8495,
rhoey@ci.olympia.wa.us

ORIGINATED BY: Public Works Department

PRESENTERS AND
OTHERS NOTIFIED: Jacob and Wendy Schoepfer

ATTACHMENTS: 1. Purchase and Sale Agreement

2. Memo of Purchase Sale Agreement

BUDGET IMPACT/
SOURCE OF FUNDS: Greater of $3,000 per acre-foot or $80,000. The source of funds is the
Drinking Water Utility. Staff proposes to use funding allocated for
water rights acquisition in the Drinking Water Capital Fund 461, Source
of Supply Program #9700. Adequate funding exists in the program for
this acquisition.

PRIOR COUNCIL/
COMMITTEE REVIEW: None.

BACKGROUND: The City of Olympia’s primary source of drinking water is McAllister

Springs, located at the headwaters of McAllister Creek in northeastern
Thurston County. McAllister Springs has served the City effectively
since the 1940s.

Since the mid 1990s, the City of Olympia has pursued the development
of an alternate water source that is more protected from potential
water quality problems. The City determined that the best solution
was to move the water production site from McAllister Springs to
groundwater wells at an upgradient location, known as the McAllister
Wellfield.

Over the past seven years, the City has spent considerable time and
money to develop a sophisticated groundwater model to better
understand the effects of pumping at the McAllister Wellfield. The
model is a powerful tool to use in assessing potential impacts of
 pumping on groundwater levels and on nearby lakes, streams and
rivers.

The most recent model results predict that moving the water source
from McAllister Springs to the McAllister Wellfield will result in
significantly higher flows in McAllister Creek. At the same time,
pumping at the wellfield may cause relatively small depletions of flow
in other surface water bodies in the Nisqually and Deschutes
Watersheds.

One of these surface water bodies is Lake St. Clair, approximately one
mile south of the McAllister Wellfield. In order to offset any potential
impact to Lake St. Clair and other water bodies, the City has been
developing a mitigation plan as part of its water right application for
the McAllister Wellfield.

ANALYSIS AND OPTIONS: In developing the mitigation plan for the McAllister Wellfield, City staff
evaluated several potential alternatives for mitigating impacts of
pumping on Lake St. Clair. These included pumping groundwater and
putting it back in the lake, recharging the lake with reclaimed water,
purchasing and retiring water rights and habitat improvements. Staff
determined that purchasing and retiring water rights was the most
effective and least costly option for mitigation.

In 2007, the City hired Westwater Research to inventory existing water

rights in the Lake St. Clair area, screen them based on selection
criteria, and begin making contacts with water right holders.
Westwater Research has represented the City in discussions with water
right holders, including Jacob and Wendy Schoepfer, the owners of
Whispering Firs Farms. Through these discussions, the Schoepfer’s
expressed their willingness the sell one of their water rights used for
irrigation.

The surface water right held by the Schoepfer’s (certificate # S2-

*10249CWRIS) authorizes withdrawal of 0.20 cubic feet per second for
irrigation of 20 acres of land. The water right is from a small lake that
is in continuity with Lake St. Clair and therefore valuable for
mitigation. The water right has also been put to beneficial use in
recent years.

Staff proposes to purchase the Schoepfer water right through a

purchase price that is based on the number of acre-feet of water right
successfully transferred by Department of Ecology, $3,000 per acre-
foot, or$80,000, whichever is greater.This price is in line with other
comparative sales of similar water rights in areas with few active water
rights and growing municipal water demand. Staff estimates the
transferable volume of the Schoepfer water right to be 27 acre-feet per
year. Other key elements of the proposed purchase and sale
agreement (Attachment 1) include:

• A non-refundable payment of $1000 due at closing for 30 day

due diligence review of the water right by the City. This
payment is not credited to the purchase price.

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 • A non-refundable “Transfer Application Payment” of $7000 due
at end of the due diligence period (unless the agreement is
terminated), which amount will be credited against the
purchase price at closing.
• From the end of the due diligence period, the City has 90 days
to obtain water right transfer approval by Department of
Ecology. If there is a delay in the transfer process, the City
and seller may negotiate a longer transfer period.
• The agreement outlines the various conditions for closing.

Option 1: Authorize City Manager to sign purchase and sale agreement for
purchase of a surface water right from Jacob and Wendy Schoepfer.

Implications
1. The City will be able to address its McAllister Wellfield mitigation
requirements in the Lake St. Clair area, provided that the
Department of Ecology approves the water rights transfer as
expected.
2. The Drinking Water Utility will expend capital funding totaling
approximately $81,000 plus legal and other costs associated with
the water rights transfer.

Option 2: Do not authorize City Manager to sign purchase and sale agreement
for purchase of a surface water right from Jacob and Wendy
Schoepfer.

Implications:
1. The City will be challenged to address its McAllister Wellfield
mitigation requirements in the Lake St. Clair area due to limited
water right availability and high cost of other mitigation
alternatives.

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