Castle Rock council approves amendment to Sedalia sewer agreement; amendment includes option to cover potential county funding gap

Castle Rock’s Town Council voted unanimously to approve the first amendment to the intergovernmental agreement with Douglas County that governs sewer collection and treatment along the Highway 85 corridor, including service to Sedalia.

The amendment passed as Resolution 2025-087 after a staff presentation that explained the county has dedicated $14 million of American Rescue Plan Act (ARPA) funds to the Sedalia sewer project but the town’s contractor’s 30% design estimate shows a possible gap. Town staff told council the project’s 30% estimate was roughly $4.84 million above the ARPA allocation and that the amendment offers a local option to avoid delay.

Why it matters: Town officials said the project would bring sewer to properties currently on septic systems, remove aging septic tanks near waterways, and enable planned commercial and residential development. The Plum Creek Water Reclamation Authority would be the plant receiving wastewater; Castle Rock Water would own and operate the new collection system after construction.

Key details discussed: Castle Rock staff proposed an option under which the town’s wastewater enterprise could provide up to $4,840,000 to cover a funding gap if one remains at final pricing. If the town provides that funding, the amendment would direct system development fees (SDFs) collected from the project to Castle Rock Water first to repay the loan. While repaying, an additional 25% surcharge on applicable SDFs tied to the loaned amount would apply; staff also proposed a 5% annual interest charge on any outstanding balance. Once repaid, the 25% surcharge would remain in place to fund further Sedalia sewer reinvestment per the amended terms.

Council members asked how the SDFs and potential assessments would affect small homeowners in Sedalia. Town staff and council said the amendment does not force property owners to connect; homeowners may remain on septic systems. Staff described potential options similar to prior town programs that can spread SDFs over time or otherwise reduce up-front costs for homeowners, and noted the county could use the SDFs that ultimately flow back to it to help offset connection costs for residents.

Douglas County has not yet acted on the revised terms. Town staff said the amendment provides Douglas County an option and that the amendment is intended to preserve momentum so the county can spend ARPA funds before federal deadlines and avoid delaying construction. Staff stated the town anticipates final guaranteed maximum price (GMP) proposals in September 2025 and that the town’s Castle Rock Water Commission had unanimously recommended approval of the amendment.

Outcome and next steps: Council approved the amendment unanimously. Town staff said they will continue design work toward 60% and 100% design milestones, continue easement acquisition, and coordinate with Douglas County on final project funding and schedule. The town emphasized the amendment is intended to protect the ARPA commitment and to provide an option — not an automatic expenditure — should a funding shortfall remain at final pricing.