Some Steamboat 700 water claims don’t float | SteamboatToday.com

Some Steamboat 700 water claims don’t float

Let’s Vote op-ed cites 2 markets; pro-700 plan inherently risky

Mike Lawrence

— The Let's Vote committee's claim Sunday that "the city gave Steamboat 700 a $32,191,275 discount" on water costs was disingenuous on several fronts.

But so was some of the Good For Steamboat committee's water supply message, which failed to acknowledge the inherent risks of water projects that would present significant financial and logistical hurdles.

Sunday marked the second installment of weekly opinion pieces from Let's Vote and Good For Steamboat, committees that oppose and support the proposed Steamboat 700 annexation, respectively. The articles will continue through March 7. That's the Sunday before March 9, when the city's all-mail election deciding the fate of Steamboat 700 ends. Ballots are scheduled for mailing to registered Steamboat Springs voters this week.

Sunday's opinion pieces addressed water and wastewater. Water issues run as deep as any in the West and often are subject to interpretation as people draw vastly different conclusions from the same data.

Both of Sunday's pieces took leaps in that regard.

Let's Vote

Much of the Let's Vote piece focused on Ginn Resorts' bid of more than $30.4 million for water rights to supply its formerly proposed 4,300-acre resort development and annexation on Battle Mountain in Minturn.

Recommended Stories For You

Minturn voters overwhelmingly approved the annexation in May 2008.

But in summer 2009, the city of Aurora and Climax Molybdenum matched the Ginn bid and purchased the water rights themselves.

Florida developer Bobby Ginn gave up his company's stake in the Battle Mountain project in September 2009, largely because of financial difficulties and an inability to secure water rights.

On Sunday, the Let's Vote committee compared the $30.4 million price to the $960,000 that Steamboat 700 would be required to give Steamboat Springs to firm up the city's existing water rights on the Elk River.

Extrapolating costs from the Ginn bid onto maximum future water demand at Steamboat 700, Let's Vote said the annexation should pay the city $33,151,275 for water rights.

"The city gave Steamboat 700 a $32,191,275 discount," the Let's Vote op-ed stated.

Let's Vote acknowledged the fluctuations in water costs and said that at the lower end of the spectrum, the Ginn bid could translate to a nearly $6 million payment, rather than $33 million, by Steamboat 700.

But local water attorney Tom Sharp said Monday that using the Ginn bid as a basis for comparison at all is unfair. Sharp has been involved in regional and state water law and policy since the '70s.

"The reason it is not a fair comparison is the Eagle River is over-appropriated and goes under administration at certain times of the year, whereas the Yampa River is not over-appropriated, except with respect to the city's (recreational in-channel diversion)," Sharp said.

Loui Antonucci put it in simpler terms.

"In the Vail Valley, water costs a lot more than it does in Steamboat, because there's not as much of it," he said. "(Ginn) had to go out and buy it on the open market, and that's what it costs. … In Steamboat because we've been looking at the future growth of our city for 25 years, we've been buying water rights so we could expand the boundaries of our city and have growth."

Antonucci was president of the Steamboat Springs City Council that approved the annexation agreement. He noted that unlike Ginn, Steamboat 700 would not be paying for raw water rights — rather, it would be paying for infrastructure to improve the water rights the city already possesses on the Elk.

Sharp said the situations would be similar only if Steamboat 700 had to develop an entirely new water supply from the Elk, with no water rights to begin with.

"I don't think it's fair to say Steamboat 700 should pay $30 million because Ginn was going to pay $30 million to basically create a raw water supply and treatment system out of scratch, from an over-appropriated river," Sharp said.

Sharp added that the city's water rights and supply "have for a number of years been studied to be sufficient for significant growth."

Good For Steamboat

But that doesn't mean everything is rosy for meeting future water supply and infrastructure needs to service the west of Steamboat area.

In its Sunday op-ed, Good For Steamboat didn't acknowledge the logistical hurdles associated with water projects of any kind, and the uncertainty of revenue sources — such as tap fees — that are directly tied to future development. Those uncertainties especially are poignant given the current economic recession and troubled real estate market.

Sharp noted that construction of a new reservoir to provide storage for city water obtained from the Elk River "is going to cost a lot of money and take a lot of time and permitting."

Development at Steamboat 700 would require $5 million to buy the 1,000-acre site for a reservoir and $7.5 million to build the reservoir, according to the study "Water and Wastewater Master Plan Updates" by McLaughlin Water Engineers, of Denver.

"The Elk River supply represents an excellent long-term asset and is necessary to provide adequate service to the West Steamboat Springs area," the study states.

The McLaughlin study said developing that service could cost $34 million.

Steamboat 700's annexation agreement with the city designates tap fees as a funding source for water and wastewater infrastructure expansions outside the annexation site.

The rates for those tap fees, assessed to future Steamboat 700 property owners, have not yet been determined. Neither has the way in which the city would utilize them.

The city's annexation attorney, Jerry Dahl, told City Manager Jon Roberts earlier this month that the city would have three options for using tap fee revenues: deposit them into the city's capital facilities expansion account — which is required by the annexation and funded by Steamboat 700 revenue streams — then spend the fees when needed for infrastructure; require developers to pre-pay tap fees in situations where infrastructure is needed in anticipation of growth; or, Dahl said, the city could choose to issue bonds to pay for infrastructure, then pay off the bonds with future tap fee revenues.

Steamboat 700 attorney Bob Weiss said the city has informed developers it could require pre-payment of tap fees.

Roberts said Monday that a "pay as you go" method is "really the preferable method of funding expansions to your water and wastewater treatment systems."

If the city needs to expand treatment systems to serve Steamboat 700 development before tap fees are collected, Roberts said, "we would then require the developer to pay those funds up front."

Roberts said the third option, issuing bonds to finance water and wastewater expansions, is "the most challenging method of funding the improvements, because when you finance it, you're financing it against future revenues."

"The schedule and rate of when those revenues come in is somewhat variable," he acknowledged. "Financing those tap fees would be the most challenging of the three options and the least preferable."

If you go

What: Community Forum about Referendum A and the proposed annexation of Steamboat 700, with moderator Cathleen Neelan

When: 5:30 to 7:30 p.m. Thursday

Where: Olympian Hall at Howelsen Lodge, 845 Howelsen Parkway

Sunday’s op-ed pieces

Read the Let’s Vote committee’s “Water = Vote no” here and the Good For Steamboat committee’s “The truth about water” here.