NEWS

Water delivery costs to rise as population grows

Kevin Duggan
kevinduggan@coloradoan.com

Growth in Fort Collins and Northern Colorado has always been contingent on the availability of water.

And that will be the case for decades as the city fills its growth management area, or GMA, with houses, businesses, schools and parks. Less certain is where the additional water needed to serve that growth will come from and how it will be managed.

A single entity could conceivably provide water rather than the five entities now serving Fort Collins proper and portions of its GMA. It might be an authority composed of representatives of the area’s major providers: Fort Collins Utilities, the Fort Collins-Loveland Water District and East Larimer County Water District, or ELCO.

All three have supplied treated drinking water to customers within their designated service areas for decades. Although they have a history of collaborating on projects, the city utility and the districts have differing policies and practices when it comes to acquiring water and planning for long-term needs of customers.

Those differences have become more evident as Fort Collins’ residential and commercial growth reaches into the districts’ service areas.

Developers accustomed to Fort Collins Utilities’ relatively inexpensive water service face the other districts’ unfamiliar requirements and exponentially higher costs — as much as $32,000 per lot — that some say will drive up the city’s already escalating housing prices.

And water delivery costs in Colorado are expected to rise as Front Range population growth further taxes systems that provide the lifeblood of Colorado industry, agriculture, recreation and modern living.

Combining forces to focus on the water supply needs of the GMA — land that is expected to eventually be within Fort Collins city limits — would be a departure from long-standing practices. But such an approach is “absolutely the way to go” to manage the area’s water resources, said Mike DiTullio, general manager of the Fort Collins-Loveland Water District, which serves much of the southern third of Fort Collins.

“We’ve got to figure out a method in which we can get water where it’s needed without jeopardizing the ownership of it,” he said. “We need to wield it around like you do electricity.”

But DiTullio, who has managed Fort Collins-Loveland for 34 years, said interest in taking a new approach to managing local water resources will take time to develop.

“The political will comes only when there is a crisis,” he said. “We don’t have a crisis yet.”

Platte River Power Authority was formed by its four owner municipalities — Fort Collins, Loveland, Longmont and Estes Park — to generate and supply wholesale electricity to the cities’ utilities. It buys, sells and moves around electricity as it is needed, both locally and along the broad Western power grid.

Fort Collins Utilities staff have been discussing water supply and planning issues with City Council members for several months in work sessions. So far, staff has not been directed by a majority of council to explore an “authority” model like that of PRPA, said Carol Webb, water resources and treatment operations manager.

Instead, staff has been directed to collaborate with the districts where possible. That includes identifying opportunities to address the water supply for the entire GMA and how to provide more “seamless” service delivery, Webb stated in an email to the Coloradoan.

Talk of a water authority is “interesting for the purposes of long-range planning” but not something the city is advocating, said Mayor Wade Troxell. Fort Collins is not looking to “take over” the districts, which are autonomous governmental bodies with elected boards of directors.

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Mike Scheid, general manager of ELCO, said a single-provider model “could be done,” but it would be a complex solution given all that it would entail, such as divvying up responsibilities, staff and resources among the city and districts.

And then there’s the question of how the concept — and the current issue surrounding differences in how much the city and districts charge in water development fees — ties back to ELCO’s singular purpose; providing treated water to its service area.

“What is our mission? Is it to encourage development and help the city to generate that tax base and that revenue?” he said. “Or is it to react to the land use planning that others put out there and ensure that we can meet that demand and take care of existing customers and new customers as they come online?”

Different philosophies

The districts were formed in the early 1960s because the city did not want to expand the service area for its water and wastewater utilities out of concern about costs. Developers and residents of semi-rural areas outside city limits wanted access to treated water rather than relying on well water.

Today, demand for treated water from Fort Collins and the districts is reflective of their sizes: For the city, its about 25,000 acre feet of water a year. For ELCO, demand is about 3,000 acre feet, while demand for Fort Collins-Loveland is about 5,900 acre feet, according to city calculations.

An acre foot of water is about 326,000 gallons, or enough to meet the annual needs of three to four single-family households.

By 2040, demand on the city utility is expected to be about 35,200 acre feet a year; ELCO will need about 6,900 acre feet, and Fort Collins-Loveland will need 7,200 acre feet, according city estimates.

The city and districts have different philosophies for acquiring the water needed to meet increased demand from a new development. Fort Collins requires developers to either bring water rights, which are bought and sold like any market commodity, and dedicate them to the city or buy into its system by paying cash-in-lieu of rights.

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Fort Collins-Loveland accepts only cash, preferring to line up water rights on its own from good sources. ELCO only accepts cash-in-lieu of water rights for single-lot developments. Any development of two or more lots must bring its own raw water to the system, and even then only from acceptable sources.

That requires a developer to take on the risk of finding and buying water shares rather than the district, Scheid said. The district’s policy that development must “pay its own way” has been in effect since at least the 1970s.

An issue at the moment is the sizable difference between what Fort Collins Utilities and the water districts charge developers to tap in to water services.

If a developer wants to pay cash-in-lieu of water rights, Fort Collins would charge $6,500 for a single-family home on a 6,000-square-foot lot. Fort Collins-Loveland, would charge $25,000 for the same house. ELCO would charge $32,857 as its raw water requirement.

The districts base their prices on the cost of a single unit of water from the Colorado-Big Thompson project, or C-BT, which comes out of Horsetooth Reservoir and is considered the “Cadillac” of water supplies available in Northern Colorado, said Scheid said.

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The difference is Fort Collins has long-held shares of C-BT water and other senior water rights that were comparatively inexpensive to acquire, while the districts are relative newcomers — as in just more than 50 years — to the water game.

The districts must pay the going rate for C-BT units when they can be found. Sellers might be farmers who have water rights tied to their land.

The current market rate for a single share of C-BT water, which translates to a yield of about .7 acre feet a year, is about $26,000, according to ELCO.

As the city builds into its growth management area, the number of Fort Collins households and businesses served by the districts is expected to increase. City planners project Fort Collins’ population will be between 236,000 and 255,000 by 2040, depending on the rate of growth.

In 2012, Fort Collins Utilities provided water to 81 percent of households within city limits; Fort Collins-Loveland served 15 percent and ELCO served about 4 percent.

By 2040, the city’s utility is projected to serve 70.7 percent of households within city limits while ELCO would serve 14.7 percent and Fort Collins-Loveland about 14.6 percent, according to city estimates.

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A misconception is that ELCO does not “have” enough water to meet its future needs, Scheid said. The district has plenty to meet the needs of current customers, he said, and will have more for future customers as developers provide additional water rights as required by district policy.

The district has options for developers to explore in finding water, including a “bank” where credits for dedicated rights may be kept until they are needed. The bank brings together buyers and sellers of water rights while the district takes on the responsibility of taking a change-of-use for a right, typically from agricultural to municipal, through the lengthy water court process.

“We’re not closed minded and we’re not turning a deaf ear on all of this,” he said. “We still have to keep our current customers’ interests in mind.”

Storage matters

Officials from Fort Collins and the districts say additional water storage is critical for protecting supplies during dry years and for meeting future water needs. But they are following their own courses in acquiring that storage.

The Tri-Districts — ELCO, Fort Collins-Loveland and the North Weld County Water District — are partnering with the city of Greeley on a project west of Taft Hill Road near the Poudre River that is converting mined-out gravel sites into water storage facilities.

Fort Collins is going through a long and expensive Environmental Impact Statement process to expand Halligan Reservoir on the North Fork of the Poudre River. The Tri-Districts were part of the project for several years, but backed off because of increasing costs and uncertainty about whether the project would ever be permitted.

Fort Collins-Loveland is also a participant in the Northern Integrated Supply Project, or NISP, which would build Glade Reservoir and draw from the Poudre River using a junior water right.

Fort Collins and the water districts have worked together on projects over the years, including construction of the Pleasant Valley Pipeline. The project went online in 2005 and carries water from the Poudre River to the city’s and the Tri-Districts’ water treatment plants, which sit across the street from each other on Laporte Avenue.

A few years ago, the districts and the city combined forces to study the possibilities for sharing resources to create a single system for treating water. But the project lost momentum amid concerns about water rights and system connectivity, Webb said.

Similar difficulties would face any effort to unify water service to Fort Collins as a whole given that the districts’ service areas stretch well beyond the GMA boundaries, she said.

“We thought the treatment plant would be low-hanging fruit,” Webb said. “It turned out to be a lot more complex than we expected and we were not able to get there.”

Kevin Duggan is a Coloradoan senior reporter covering local government. Follow him on Twitter, @coloradoan_dugg.

At a glance

Fort Collins Utilities

Organized – 1883

Service area – 53 square miles

Population served – 133,000

Water taps – 34,500

East Larimer County Water District – ELCO

Organized – 1962

Service area – 49 square miles

Residents – 17,000

Water taps – 8,000

Fort Collins-Loveland Water District

Organized – 1961

Service area – 38 square miles

Population served – 40,000

Water taps – 16,300

Source: City of Fort Collins