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It's almost certainly iron being oxidized by the chlorine.
Getting water from another source is the best option by far. Even pumping it from a pond or stream is better in the long run than dealing with that much iron.
Sequestrants based on HEDP, phosphonic acid, or phosphonic acid derivatives are the most effective. ProTeam's Metal Magic and Jack's Magic The Pink Stuff (regular), The Blue Stuff (fresh plaster), and The Purple Stuff (salt) are some of the top sequestrants. You can also find many other brands with similar active ingredients, some of which are noticeably less expensive.
It will need to be added frequently as it breaks down over time.