Consideration and Approval of Contract:  Agreement of Intent for a Direct Sale with the US Department of Agriculture, Forest Service, for the property underneath and adjacent to the Lake Mary Water Treatment Plant.

1. Approve the Agreement of Intent for a Direct Sale with the U.S. Department of Agriculture, Forest Service, concerning the lands underneath and adjacent to the Lake Mary Water Treatment Plant.
2. Authorize the City Manager to execute all necessary documents.

Flagstaff Water Services is interested in purchasing approximately 49 acres of land underneath and adjacent to our existing Lake Mary Water Treatment Plant, which currently sits on approximately 22 acres of Forest Service property.  Flagstaff Water Services has been working with the Forest Service to complete this purchase for over a decade.  The Agreement of Intent for a Direct Sale is a non-binding agreement for both the US Forest Service and City of Flagstaff to pursue the analyses, appraisals and reports necessary for a land purchase agreement, with Council approval, at a later time.  Flagstaff Water Services would like to purchase the property in order to continue the timely repair, maintenance and possible addition or upgrades of current and future infrastructure necessary for the potable water supply to the City of Flagstaff.  
 

This Agreement of Intent has approximate costs to the City of Flagstaff in the amount of $44,906 and approximate costs to the Forest Service in the amount of $16,500.  Budget funding for the purchase of property underneath and adjacent to the Lake Mary Water Treatment Plant for $3,000,000 is in account 202-08-370-3408-0-4431.

Priority Based Budget Key Community Priorities and Objectives.
Sustainable, Innovative Infrastructure:  1.  Deliver outstanding services to residents through a healthy, well maintained infrastructure system.  2.  Utilize existing long-range plan(s) that identify the community's future infrastructure needs and all associated costs. Carbon Neutrality Plan
CR-1:  Ensure all mitigation actions improve Flagstaff's ability to adapt to the future. 
CR-2:  Strengthen existing community systems to create resilience to both short-term shocks and long-term change.

Regional Plan
Goal WR.2.  Manage a coordinated system of water, wastewater, and reclaimed water utility service facilities and resources at the City level and identify funding to pay for new resources.  Policy WR2.2 Maintain and develop facilities to provide reliable, safe and cost effective water, wastewater and reclaimed water services.
Goal WR.4. Logically enhance and extend the City's public water, wastewater, and reclaimed water services including their treatment, distribution, and collection systems in both urbanized and newly developed areas of the City to provide an efficient delivery of services.

No.

1.  Approve the Agreement of Intent for a Direct Sale with the Forest Service, with approximate costs to the City of Flagstaff in the amount of $44,906; or
2.  Do not approve the Agreement of Intent for a Direct Sale with the Forest Service; and direct staff to cease pursuing the purchase of real property underneath and adjacent to the Lake Mary Water Treatment Plant. 

The City of Flagstaff’s Water Services Division has been operating the Lake Mary Water Treatment Plant (LMWTP) under a Special Use Permit from the Forest Service since 1941.   As the cities second major potable water supply, the LMWTP treats up to 8 million gallons of water per day (8 MGD) from Upper Lake Mary (ULM) and has been a critical water supply for the citizens of Flagstaff for nearly 81 years.  Additionally, the plant also serves as a treatment location and distribution point for the City’s groundwater supply from the Lake Mary Wellfield.  Today the LMWTP provides over half of the water supply for nearly 80,000 residents and is a critical component of our City’s water supply infrastructure. 
 
Flagstaff is located within the high desert ponderosa pine forest of northern Arizona where water supplies are often a challenge to locate and are critical to the economic growth and development of our mountain community.  The Forest Service, National Park Service and the City entered into a Stipulation in December 2001 (Civil No. 6417), that among other things, confirmed the City’s water rights of 15,653 acre-feet/year to be stored in ULM and treated at the LMWTP. 
 
The existing LMWTP is made of several buildings that house the operations control room and laboratory, storage for chemicals and anthracite/sand filters used in the treatment process, chlorine gas for disinfection, a clear well and booster pumps to deliver water to the community.  Additionally, the treatment plant has multiple sedimentation and flocculation basins for treatment, drying beds for sediment disposal and two (2) water storage tanks.  Given the age of the plant, the City has identified numerous major capital improvements that are necessary to upgrade over the coming years.  These types of significant upgrades often require pre-approval from the Forest Service which can create long, unnecessary delays.  In the past, this situation has led to significant impacts to the City’s ability to upgrade critical treatment plant infrastructure in a timely basis putting at risk a major water supply for our community.
 
Additionally, the City would like to acquire land adjacent to the existing treatment plant for possible planned expansions.  Specifically, 27 acres to the north, northwest, west and south of the treatment plant have been included with the Agreement of Intent for a Direct Sale.  The health of the ULM watershed has been compromised with small diameter, densely spaced ponderosa pine trees and there is a significant risk of a catastrophic crown fire within the watershed that would directly impact the quality of water to be treated at the LMWTP.  A mitigation technique the water production section could apply to damaged water quality from a catastrophic wildland fire would be the addition and use of pre-sedimentation basins, requiring additional acreage.  These pre-sed basins would be used to assist surface water production should ULM experience a water quality degrading forest fire surrounding ULM.  Additionally, Flagstaff Water Services has considered the possibility of direct or indirect potable reuse with the addition of infrastructure, requiring additional acreage, at the LMWTP that could enable these possible future water supplies.  To make these type of plant expansions happen in expedited fashions, the City would like to purchase the extra land adjacent to the water treatment plant as identified in the attached survey. 

In summary, the purchase of 49 acres the Lake Mary Water Treatment Plant currently resides on and is adjacent to from the Forest Service will allow Flagstaff Water Services to continue the timely repair, maintenance and possible addition or upgrades of current and future infrastructure necessary for the potable water supply to the City of Flagstaff.  Flagstaff Water Services has been working with the Forest Service on this property purchase for over a decade.  This Agreement of Intent with the Forest Service is one of many steps towards a final land purchase agreement.