The board of directors for the San Juan Water Conservancy District (SJWCD) voted unanimously on June 29 to accept an agreement regarding the loan restructuring for the Dry Gulch water storage project with the Colorado Water Conservation Board (CWCB), following a green light from the Pagosa Area Water and Sanitation District (PAWSD) last week.
According to a letter drafted by Rod Proffitt, president of the SJWCD, the district has limited water storage capacity to meet future water needs. The demands placed on the district for wildfire protection, drought and habitat are great and unsustainable. A situation worsened by state officials who used water from a tributary of the San Juan to offset the over-appropriation of the Rio Grande.
The water needs of the community led the district to partner with PAWSD, with the goal of building a water storage facility.
The Dry Gulch water storage project was halted due to the recession and changes occurring within PAWSD leadership, which then changed the direction of the project altogether.
Here’s Part II of Bill Hudson’s essay on the Colorado Water Plan. Here’s an excerpt:
One thing becomes very clear when you start trying to understand the politics of water in Colorado. It’s a complicated mess of competing priorities. Like many states in the arid West, Colorado has historically rejected the riparian water rights law that governs most of the eastern U.S. According to riparian doctrine, the water in a river or stream belongs to the land owner who owns property adjoining that waterway. This doctrine copies elements of English and Spanish common law; ownership of the water rights are attached to the related property and usually cannot be sold except with the sale of the adjoining land.
But when American and European settlers began populating Colorado, the most profitable industry was mining, and unlike a farm — the basic economic unit for land private ownership prior to 1850 — a mine is very often established some distance from the nearest river. Some the lawyers and judges of Colorado came up with the “prior-appropriation doctrine.” That doctrine grants superior water rights to whichever water user made the earliest use of the water source, historically speaking. In Colorado, it doesn’t matter if your own property adjoining the river; it only matters that you made historical use of a water source.
A water user who began pulling one million gallons a year from the San Juan River in 1892, for example, has — in Colorado — the legal right to pull a full one million gallons out of the river each year, even if he leaves no water at all for anyone with a later (“junior”) water right.
And in Colorado, the owner of an 1892 water right, for example, can sell that water right without selling the land on which that water has been historically used. (Which makes no logical sense to me, but that’s how the Colorado courts have ruled.)
This is known as the Colorado doctrine, and it was adopted by many of the other states west of the Great Plains. It has worked reasonably well, apparently… so long as we had more water in the rivers than we needed each year.
But a couple of things have changed. Back when the Colorado doctrine was established, most people in Colorado made their living by farming, ranching or mining. They used water mainly to produce useful and necessary items. Today in Colorado, most of us use water to flush our toilets and water our lawns. Not exactly the production of useful items in the same sense. The Pagosa Daily Post, for example, uses not a drop of water in its production process (unless La Plata Electric Association happens to be buying hydro power.) We can certainly question whether any useful products are created.
The other thing that’s changed is the population of the West. In 1950, Colorado had about 1.3 million residents; the number today is 5.3 million.
If you take into account the seven Western states that signed the Colorado River Compact of 1922 — allocating each states’ water rights to the mighty Colorado River — we can see that the total population of the seven states in 1950 was about 14.5 million. (US Census.)
The total population today is 58.6 million.
The amount of water available to serve all these new residents has not increased. In fact, it may have decreased. Substantially.
As I mentioned, about two dozen people attended the Southwest Basin Roundtable presentation on November 17, and brought with them a range of concerns. Some were concerned about federal control or Colorado’s water. But mostly, I think, we talked about the pending water diversions by Colorado’s larger Front Range community’s — diversions that might draw water out of various West Slope watersheds and pipe it over the Continental Divide to water lawns and flush toilets in Denver and Colorado Springs. That’s a potent issue. The West Slope generates most of the water in Colorado, but most of the state’s population lives on the eastern side of the Rockies…
The users of Colorado’s water are varied, and their level of concern about water resources reflect the manner in which they use water. Families. Ranchers. Farmers. Industries. Fishermen. Boaters. These are the human users — the users that we normally include in water conversations. But we can also, if we so choose, consider other users of Colorado’s water: wild game animals, trees, grasses, fish, birds.
Mice. Earthworms. Ladybugs.
If we stop and consider, for a moment, how these other, non-human users interact with Colorado’s water resources, we can easily see a natural, conservative approach. Animals and trees use only what they need, and not a drop more.
In some places in the world, humans approach water in the same manner. They use only what they absolutely need and not a drop more. How much water, then, does a human social group need? Say, for example, a social group that grows food and operates industries and hosts tourists and raises families?
Colorado’s Water Plan sums up the primary challenges facing us, with this language:
“Colorado faces a financial gap in addressing future environmental, recreational, agricultural, and communal needs. Without adequate investment, Colorado cannot effectively address the above-listed challenges.”
Sometimes what appears to be a crisis is merely a lack of imagination, or an unreasonable attachment to an expectation.
According to a 2010 report by the The Food and Agriculture Organization of the United Nations, it requires about 1,122 gallons of water per day to supply the average American with his or her daily needs. This includes the water used to produce the food we eat, and the myriad other products we consume.
A person living in the Netherlands meets all his or her needs with about 465 gallons per day, less than half what we use here in America.
The same report notes that the average Israeli — living in a desert climate very similar to regions of the American West — meets his or her water needs with 204 gallons a day… less than one quarter the water used by a typical American.
If Colorado is truly facing water shortages of some kind — which is a story we hear regularly from people who run water districts and from people who profit from building massive water projects — how will we prioritize the use of our ever-more-precious water? Agricultural uses? Recreational uses? More suburban lawns?
“If we’re going to use taxpayer money to store more water, then I think the taxpayers ought to get a say in what that water gets used for. I don’t want to save water on the West Slope so there’s more water to irrigate golf courses in Denver. So I think, if you’re going to use taxpayer money, you have an obligation to the taxpayers.
“And I don’t think the taxpayers are going to say, ‘Yes, more golf courses.’ The taxpayers might say, ‘More food,’ or they might say, ‘More jobs.’ I’m not suggesting that we change the [prior-appropriation doctrine]; private water is private water. I get that. But public money makes the water public.”
Good comment. If we are going to use taxpayer money to store more water, here in Archuleta County, how will that water be used?
We might even ask a more direct question. If we are going to use taxpayer money to someday build Dry Gulch Reservoir — one of the four projects currently listed in the draft Southwest Basin Implementation Plan — shouldn’t the taxpayers have some say in how the reservoir’s stored water gets utilized?
The voters of Archuleta County have expressed their desires pretty clearly over the past three years, regarding the Dry Gulch Reservoir. They have elected five anti-Dry Gulch candidates to the five-member Pagosa Area Water and Sanitation District (PAWSD) board of directors, and the board currently does not show any additional reservoirs in their 25-year Capital Improvement Plan.
So then… why is the Dry Gulch boondoggle currently part of Colorado’s Water Plan? I believe the answer is pretty simple. The voters do not elect the members of the San Juan Water Conservancy District (SJWCD); they are appointed by Judge Greg Lyman, the same judge who approved the original water rights for Dry Gulch back in 2004. And it’s the SJWCD board that has somehow inserted a glaringly unpopular water project into a statewide planning document.
The SJWCD owns only a 10 percent interest in the Running Iron Ranch property northeast of downtown Pagosa, but it might require years of legal wrangling to separate PAWSD’s 90 percent interest in the property from SJWCD’s interest. Another alternative for partitioning the two water districts’ ownership of the reservoir site was proposed last winter by SJWCD president Rod Proffitt.
Following a contentious meeting with the PAWSD board, the SJWCD board had voted to continue moving forward with building an 11,000 acre-foot reservoir: “to give the project a chance to succeed,” as Mr. Proffitt once put it. Mr. Proffitt began talking to the Colorado Water Conservation Board (CWCB) — the state board that had provided PAWSD and SJWCD with the $10 million to buy the Running Iron Ranch — about giving PAWSD “some breathing room” on their loan, so PAWSD wouldn’t press to sell the land to reduce its debt. (PAWSD has a lot of debt at the moment.)
Suspension of payments, debt forgiveness and lower interest rates were all discussed, with Mr. Proffitt pitching ideas to both CWCB and PAWSD. Mr. Proffitt also approached the Southern Ute Tribe about them buying out PAWSD’s interest and becoming partners in the project.
The PAWSD board’s lead negotiator, Allan Bunch, continued to stress ‘partition’ as the best solution to the problem of joint ownership — an action that would likely force the sale of the ranch and drive a final stake into the heart of the zombie reservoir. But Mr. Proffitt was able to get the PAWSD board to consider a trade: $4.6 million in loan forgiveness from CWCB — if PAWSD would assign its Dry Gulch ownership to CWCB.
Numerous twists and turns later, the CWCB came back with a rather different offer. They explained that, legally, CWCB can’t own reservoir sites, so trading loan forgiveness for a share of the Dry Gulch property was not feasible.
But CWCB might be willing, they said, to lower the interest rate on PAWSD’s $9 million loan — if PAWSD and SJWCD would hold onto the property for 20 years, and then consider whether to build a reservoir there. If they did not build the reservoir by 2035, PAWSD would have to pay the remaining $4.6 million, plus interest, in a nice big balloon payment.
SJWCD would assume management of the Dry Gulch project. We might note that SJWCD currently cannot afford to hire any paid staff; apparently CWCB is comfortable asking a board of well-meaning volunteers to manage a $100 million water project. (I am simplifying the actual proposal somewhat, to make this article more readable.
More Colorado Water Plan coverage here. More Dry Gulch Reservoir coverage here and here.
We’re lucky here in Colorado. When we grow weary of ordinary, everyday political controversies — federal immigration policy, perhaps, or governments collecting personal data on private citizens, or another federally mandated standardized test foisted on our children, or more locally, streets and roads slowly crumbling into asphalt dust — we always have one big controversy that can serve as a welcome diversion:
I attended a couple of diversionary discussions last month in Pagosa Springs, on the subject of Colorado water. The first discussion took place on November 17 at the Ross Aragon Community Center, in the South Conference Room, and was hosted by the Southwest Basin Roundtable.
The second meeting — related in a somewhat diversionary way — involved the elected board members of the Pagosa Area Water and Sanitation District (PAWSD) and resulted, after considerable discussion, in a closed-door executive session. More about that later… we’ll start with a summary of the Roundtable meeting .. which, interestingly enough, was attended by not a single member of the PAWSD board…
The November 17 meeting was sparsely attended — about 24 people, mostly members of various water boards or commissions — even though the subject matter may ultimately prove relatively momentous: namely, the impending Colorado Water Plan, and more specifically the portion of that plan known as the Southwest Basin Implementation Plan. We started the meeting by going around the room and introducing ourselves. I was struck by a comment from one of the non-governmental attendees.
“I’m Donna Formwalt, Pagosa Springs. We’re ranchers here. And I’m very interested in the water takeover by the Forest Service.”
The Colorado Water Plan is an initiative of Governor Hickenlooper’s office, begun as the result of an executive order issued in May 2013. A press release posted on the Governor’s website states:
Gov. John Hickenlooper today directed the Colorado Water Conservation Board (CWCB) to begin work on a draft Colorado Water Plan that will support agriculture in rural Colorado and align state policy to the state’s water values.
“Colorado deserves a plan for its water future use that aligns the state’s many and varied water efforts and streamlines the regulatory processes,” Hickenlooper said. “We started this effort more than two years ago and are pleased to see another major step forward. We look forward to continuing to tap Colorado’s collaborative and innovative spirit to address our water challenges.”
But as Ms. Formwalt hinted with her comment about the Forest Service, Colorado’s innovative and collaborative spirit will be challenged, in the coming months and years, by officials serving non-Colorado governments. The U.S. Forest Service, for one. And the governments of the “Lower Basin States” for another.
Are we preparing well enough for that conflict?
From the Colorado Water Plan website:
Colorado’s Water Plan will provide a path forward for providing Coloradans with the water we need while supporting healthy watersheds and the environment, robust recreation and tourism economies, vibrant and sustainable cities, and viable and productive agriculture.
Of course, no one — not even Governor Hickenlooper — can actually “provide Coloradans with the water we need.” Only Mother Nature can actually provide water, last I looked. But what the Governor and the Colorado Water Conservation Board mean to provide is a generally accepted plan for portioning out the limited water Mother Nature provides, in a state where supposedly conflicting interests want to preserve the status quo. History has taught us, you can preserve the status quo for only so long — and then people start fighting.
In the case of an ever-more-precious resource like water, the key battles might be between Rural Colorado and Urban Colorado, or they might be between this state where so many American rivers find their source — Colorado — and the several states where those rivers end up in water taps, a thousand miles away.
The Colorado Water Plan is, I assume, an attempt to keep both types of battles from getting too nasty.
The Southwest Basin — a geographic area defined by the Colorado Water Conservation Board — is located in the southwest corner of Colorado and covers an area of approximately 10,169 square miles. The largest cities are Durango (pop. 15,213) and Cortez (pop. 8,328). The region also includes three ski areas: Telluride, Wolf Creek, and Durango Mountain Resort.
A good deal of water flows through the Southwest Basin, and a good number of people want to get their hands on a share of it — including the people who will likely move into the region over the next 30 years or so. The Southwest Basin is projected to increase in municipal and industrial (M&I) water demand between 17,000 acre feet (AF) and 27,000 AF by 2050, according to Roundtable projections.
From the Roundtable web page:
Southwest Basin’s Major Projects and Programs
Dry Gulch Reservoir
Animas-La Plata Project
Long Hollow Reservoir
La Plata Archuleta Water District
It’s confounding, how that Dry Gulch Reservoir keeps showing up… like a bad penny.
More Colorado Water Plan coverage here. More Dry Gulch Reservoir coverage here.
In the regularly scheduled meeting of the San Juan Water Conservancy District (SJWCD) on Oct.14, board chairman Rod Proffitt discussed the progress and tour of the Dry Gulch Water Storage Facility (Dry Gulch Project), concerns of the Colorado Water Conservation Board (CWCB) and the appraisal value of the Running Iron Ranch.
In a letter of intent dated Sept. 10 between SJWCD and the Pagosa Area Water and Sanitation District (PAWSD), each party agreed to work toward finalizing a satisfactory agreement that both relieves PAWSD of its financial obligations to the Dry Gulch Project and acknowledges efforts by SJWCD to develop the Dry Gulch Project on a more practicable basis with a broader group of interested partners.
The letter of intent stated that an exchange of PAWSD equity in the ranch to the CWCB for substantial debt relief is to both parties’ mutual advantage.
The letter of intent also states that if the principal outstanding on the loan cannot be reduced by the amount equal to the appraisal value of the ranch or $4.6 million, whichever is more, PAWSD may seek other means to reduce its debt to the CWCB. The letter of intent further states that the annual interest rate may be reduced to no more than 1.75 percent and a full term for payment of 30 years.
SJWCD agreed to provide an appraisal of the ranch to the CWCB, which would establish the fair market value of the 660-acre ranch, shared water rights directly and indirectly related to the Dry Gulch Project, and long-term debt obligations to the CWCB incurred in the purchase of the ranch…
Proffitt went on to explain that the problems with comparables done on similar ranches which sold for more was the fact they had more buildings and structures in place, as well as more riverfront on the properties than those of the ranch that was appraised.
Proffitt told the board he had completed a tour of the Dry Gulch Project with CWCB Commissioner James Eklund, Jeff Robbins, legal council for PAWSD, and Kent Holsinger, legal council for SJWCD.
Eklund was impressed with the site, Proffitt explained…
Proffitt told the SJWCD board Tuesday evening that steps should be taken in order to satisfy the CWCB concerns that the board stayed focused on the Dry Gulch Project and did not wane.
“Due diligence is needed to keep the Dry Gulch Project moving forward. Hopefully, the courts will see we are exercising due diligence,” he said.
In an email, CWCB Deputy Director of Resource Management Tim Feehan stated other items CWCB would like to see as part of an agreement going forward: “SJWCD would retain an equitable interest in the Dry Gulch Project and its fee interest in the property. SJWCD would be able to move forward with land exchanges to further the Project.”
Other items for consideration mentioned in the email were that SJWCD would be provided with adequate funding to move the project forward and would take the lead in discussions with the Southern Ute Indian Tribe and other potential partners in the project.
The email went on to state that the CWCB would like to see SJWCD considered as manager/coordinator for the project once it is built and it also needs closure to be on the loan/grant agreement. The correspondence also pointed out a new operating agreement needs to include a forgiveness provision on the loan side of the existing agreement.
With the ushering in of a new Pagosa Area Water and Sanitation District (PAWSD) board, the Dry Gulch project and PAWSD’s relationship with the San Juan Water Conservancy District (SJWCD) are once again being defined.
Below is a recap of the current Dry Gulch situation as it relates to both PAWSD and SJWCD.
Rod Proffitt, president of the SJWCD board, was authorized to act of behalf of PAWSD in matters concerning Dry Gulch through May 5.
Proffitt emailed copies of a letter of intent and memorandum sent to PAWSD, regarding Dry Gulch, to The SUN.
In his April 28 memorandum, Proffitt stated, “Because my authority to act on behalf of PAWSD ends May 5th, everything that can be done has been done. For efforts to continue toward fruition, I will need the PAWSD board show its renewed confidence in the process through a vote to extend the existing resolution.”
Proffitt will present a Dry Gulch report to the PAWSD board during its June meeting and will seek agreement on different aspects of the project to continue moving forward.
The memorandum noted that progress has been made this year between the two districts, particularly during a Feb. 17 meeting out of which a letter of intent was prepared and sent to state officials regarding the future of Dry Gulch…
Several “principles of agreement,” dated April 4, were presented to both districts and the state. The proposals are still being discussed and none of the agreements have officially been adopted. The agreements are expected to be formalized on or before Sept. 2.
The SUN was provided with a copy of the April 4 agreements, which propose the following:
• The districts will request that the state forgive half of the $9.2 million loan taken out in 2007 by PAWSD. If the loan restructure is accepted, PAWSD would begin making payments Jan. 1, 2015.
• SJWCD would “exchange its ownership interest in the Ridge Parcel for the Park Ditch water rights associated with the Project …”
• PAWSD would “transfer all right, title and interest in and to the remainder of the Running Iron Ranch to SJWCD by Special Warranty Deed,” except the Ridge Parcel, outlined in a follow-up letter of intent by Proffitt.
• “SJWCD would agree to mortgage its fee simple ownership to the Running Iron Ranch to the State for the amount of $5 Million; said amount to be forgiven if the SJWCD begins work on the Property by December 31, 2024. If work does not commence by that time, SJWCD would agree to sell the property, sign it over to the State, or begin making payments on the outstanding balance at the option of SJWCD.”
• “SJWCD would agree to immediately assume all forthcoming costs and expenses associated with the Project, and will absolve PAWSD of any further or additional obligations under the agreement(s) terminated March 22, 2014.”
Agreements proposed also include protecting the future interests of both districts in purchasing and providing water, attracting different partners to replace PAWSD’s role in the project, and others…
The Colorado Water Conservation Board (CWCB) has been a major player in the Dry Gulch discussions.
According to Proffitt, the CWCB “financed property needed for the development of Dry Gulch to this point … [and] is critical to resolving how PAWSD exits this project and SJWCD moves Dry Gulch forward.”
In an email sent to state officials April 24, Proffitt wrote, “The State has not decided definitively Dry Gulch is a project they want to get behind and support by making it possible for PAWSD to get out of the project without making it impossible for SJWCD to move the project forward.”
Originally, it was believed that CWCB would discuss taking on the project during a closed session in May and then during a public session in July. However, as of May 13, the CWCB has delayed putting Dry Gulch on the agenda. The public meeting will now likely not take place until September.
Proffitt informed The SUN that a meeting with the CWCB is scheduled for June 3 to further refine the Dry Gulch project proposal. Updates on the project will continue to be made available as they occur.
Commissioner John Ranson expressed that, while he was disappointed that the time and effort given to the MoU did not pay off, he believes the withdrawal of the agreement was the right move. “I think it’s exactly the right thing they should have done,” Bunch said in a Wednesday interview. “It gets things back on the basis it should have been on since day one … We are two separate managerial agencies that need to take care of our business.”
A rift between the BoCC and PAWSD began in the fall of 2009, when the BoCC began requesting financial documents from PAWSD, expressing concerns over PAWSD’s spending, Dry Gulch Reservoir assumptions, service plan and more. The rift then deepened last March, when the BoCC began requesting that PAWSD provide the county with an annual report.
The two boards met in a public meeting in March 2010, where the idea of an agreement or memorandum of understanding between the two boards was mentioned by PAWSD Attorney Jim Collins.
The local chapter of TU brought forth litigation in 2004 over concerns that the then 35,000 acre-foot reservoir and accompanying rights for diversion and refill amounted to a water grab on the part of PAWSD. Six years later, the [Pagosa Area Water and Sanitation District] and SJWCD[San Juan Water Conservancy District] boards voted to allow their lawyer, Evan Ela, of the Denver law firm Collins Cockrel & Cole, to prepare a final decree to be submitted to and approved by District Court Judge Greg Lyman, hopefully closing the case.
The two boards made the decision following an executive session with Ela and water engineer Steve Harris at a joint meeting held on Dec. 1. Following the executive session, the boards made the decision and voted to release a letter between Ela, Sen. Bruce Whitehead and Trout Unlimited’s attorney, Andrew Peternell, which outlines the terms of the agreement…
Though litigation with Trout Unlimited should soon cease, it is still unclear whether or not Dry Gulch Reservoir will be built, when or by whom.