HomeMy WebLinkAbout2011-04-12 WSB AGENDAWATER & SEWER BOARD
AGENDA
Tuesday, April 12, 2011
5:00 P.M.
COMMUNITY DEVELOPMENT CONFERENCE ROOM
ENGLEWOOD CITY HALL
1. MINUTES OF THE MARCH 8, 2011 MEETING. (ATT. 1)
2. GUEST : JOHN GALLAGHER -RED OAK CONSULTANTS
RE: WATER & SEWER CONNECTION FEES . (ATT. 2)
3. COUNCIL REQUEST #11-051 & WATER PRESSURE RESULTS FROM
LIPAN & QUINCY. (ATT. 3)
4 . WATER RIGHTS UPDATE FROM DAVID HILL DATED MARCH 8, 2011.
(ATT . 4)
5. WATER RELATED ARTICLES. (ATT. 5)
6. OTHER.
WATER AND SEWER BOARD
MINUTES
March 8, 2011
The meeting was called to order at 5:10 p.m.
Members present:
Members absent:
Also present:
Burns, Clark, Higday, Cassidy, Wiggins,
Woodward, McCaslin, Habenicht
Olson
Stewart Fonda, Director of Utilities
1. MINUTES OF THE FEBRUARY 9, 2011 MEETING.
The Englewood Water and Sewer Board received the minutes of the February 9, 2011
meeting.
Mr. Wiggins moved;
Mr. Habenicht seconded:
Ayes:
Nays:
Absent:
Motion carried.
To approve the minutes of the February 9,
2011 meeting.
Bums, Clark, Higday, Cassidy, Wiggins,
Woodward, McCaslin, Habenicht
None
Olson
I
2. GUEST: BRIAN EWERT -SUPT. OF ENGLEWOOD SCHOOLS .
Mr. Brian Ewert, Superintendent of Englewood Schools, appeared to discuss the existing
state of Englewood Public Schools and projected long-range improvements . Grants,
bonds and mill levy increases were discussed . Mr. Ewert outlined his planned technology
and facilities improvements for Englewood Schools.
3. WATER METER PURCHASE.
The Utilities Department purchases water meters for an entire year by requesting one
large bid proposal for cost savings . The metering system is being converted to the
ITRON Automatic Meter Reading System, and all meters and registers purchased will be
compatible with this system. Some of the meters will be resold to Englewood customers
for new installations as part of the flat-rate-to meter conversation and some will be used
to replace inactive or poorly function meters.
A portion of the 2011 order is for electronic remote transmitters (ER Ts) for updating
existing residential meters, which will enable meter readers to obtain readings using radio
frequencies. This improves accuracy and is a labor saving device.
Englewood's order is being placed in conjunction with Denver Water Board's order for
the best quantity price. The meters and ERTs will be purchased from National Meter &
Automation for $69,145.00 . Of this amount , approximately $20,000 will be resold to
Englewood customers .
Mr. Habenicht moved ;
Mr. Cassidy seconded :
Ayes:
Nays:
Absent:
Motion carried.
To recommend Council approval , by
motion, for the purchase of water meters and
electronic remote transmitters from National
Meter and Automation, Inc. in the amount of
$69,145.00.
Bums, Clark, Higday, Cassidy, Wiggins,
Woodward, McCaslin, Habenicht
None
Olson
I ... 2.
4. NOTICE OF CONTRACT CANCELLATION FOR CHERRYRIDGE &
CHERRYMOOR SANITATION DISTRICTS.
The Utilities Department staff has recommended that the maintenance contracts with
Cherryridge and Cherrymoor Sanitation Districts not be renewed for sanitary sewer
cleaning services. Originally in 1995, Cherry Hills Village was going to take ownership
of the private sanitary sewer districts served in their jurisdiction, with the City of
Englewood providing sewer maintenance services.
This did not happen and Cherry Hills Village contracted with Cherry Hills Sanitation
District to provide this service for all but the 120 customers that the City of Englewood
has been serving. Cherry Hills Village is arranging to contract all maintenance services
the Cherry Hills Sanitation District. Cherry Hills Village residents will then have one
contact number in the event of a sewer back-up or emergency.
Mr. Wiggins moved:
Mr. Habenicht seconded:
Ayes :
Nays:
Absent:
Motion carried .
To recommend Utilities staff send letters to
Cherryridge and Cherrymoor Sanitation
Districts giving notice that the City of
Englewood will not be renewing the
maintenance contract for sanitary sewer
cleaning services .
Burns, Clark, Higday, Cassidy, Wiggins,
Woodward, McCaslin, Habenicht
None
Olson
5. WATER RIGHTS UPDATE FROM DA YID HILL DATED 2-7-11 .
The Board received an update from Mr. David Hill dated February 7 , 2011 on
de velopments in water litigation cases in which Englewood is involved .
I -3
6. REQUEST FOR FUNDS FROM PUREIGREENW A Y FOUNDATION.
The Board discussed the request from Jeff Shoemaker for the PURE Project to study trash
that pollutes the South Platte River. Discussion ensued about the subject of the study,
various river frontages and the amount requested.
Mr. Wiggins moved;
.9 v R>«S'
Mr. ~y seconded :
Ayes:
Nays:
Absent:
Motion carried.
The meeting adjourned at 6:23 p.m.
To approve a $2,000 donation to Jeff
Shoemaker for the PURE Project regarding
trash infiltration in the S. Platte River
Bums, Clark, Higday, Wiggins, Woodward,
McCaslin, Habenicht
Cassidy
Olson
The next Englewood Water Board meeting will be April 12, 2011 in the Community
Development Conference Room.
Respectfully submitted,
Isl Cathy Burrage
Recording Secretary
6149004
C it y of Englewood
Water and Sewer
Connection Fees
March 31 , 2011
Report Prepared By :
· : : • RE JJnAK •••• ·. • • • CONSULTING
• • " A DtVl510N OF MALCOLM PIRNll:
Table of Contents
Contents
1. Executive Summary 1-1
1.1. Introduction ................................................................................................................... 1-1
1.2. Assumptions .................................................................................................................. 1-1
1.3. Proposed Wa ter Connection Fees ................................................................................ 1-1
1.4 . Proposed Sewer Collection System Connection Fees ................................................. 1-2
1.5. Proposed Wa stewater Treatment Plant Connection Fees ........................................... 1-3
1.6. Proposed Mixed Use Connection Fees ........................................................................ 1-3
2. Water Connection Fees 2-1
2.1. Methodology .................................................................................................................. 2-1
2 .2. Calculation Pro cedure ................................................................................................... 2-1
2.3. Water System Value ..................................................................................................... 2-1
2.4 . System Capacity ........................................................................................................... 2-2
2.5 . Fee Calculation ............................................................................................................. 2-3
3. Sewer Collection System Connection Fee 3-1
3.1 . Methodology .................................................................................................................. 3-1
3.2 . Calculation Procedure ................................................................................................... 3-1
3.3 . Sewer Collection System Value .................................................................................... 3-1
3.4 . System Capac ity ........................................................................................................... 3-2
3.5. Fee Calculation ............................................................................................................. 3-3
4. Wastewater Treatment Plant Connection Fee 4-1
4 .1. Methodology .................................................................................................................. 4-1
4 .2. Calculation Procedure ................................................................................................... 4-1
4.3. Wastewater Treatment Plant Value .............................................................................. 4-1
4.4 . System Capacity ........................................................................................................... 4-2
4 .5. Fee Calculation ............................................................................................................. 4-3
5. Mixed Use Connection Fees 5-1
5.1. Background ................................................................................................................... 5-1
5.2. Proposed Fees .............................................................................................................. 5-1
.: ; • : REI1> "1 ' , · .°• •• ·. CONSULTING
City of Englewood , Colorado
2 009 Water and Sewer Connection Fee Study
6149004
Table of Contents
List of Tables
Table 1-1 Comparison of Existing and Proposed Water Connection Fees ................................. 1-2
Table 1-2 Comparison of Existing and Proposed Sewer Collection System Connection Fees .. 1-2
Table 1-3 Comparison of Existing and Proposed Wastewater Treatment Connection Fees ...... 1-3
Table 2-1 Water System Value ..................................................................................................... 2-2
Table 2-2 Water Treatment Plant Capacity .................................................................................. 2-3
Table 2-3 Development of Water Connection Fee per Capacity Unit .......................................... 2-3
Table 2-4 Comparison of Exist ing and Proposed ......................................................................... 2-4
Table 2-5 Comparison of Existing and Proposed Mu ltifamily Water Connection Fees ............... 2-4
Table 3-1 Sewer Collection System Value ................................................................................... 3-2
Table 3-2 Sewer Collection System Capacity .............................................................................. 3-3
Table 3-3 Development of Sewer Collection System Connection Fee per Capacity Unit. ........... 3-4
Table 3-4 Comparison of Existing and Proposed ......................................................................... 3-4
Table 3-5 Comparison of Existing and Proposed Multifamily Sewer Collection System
Connection Fees ........................................................................................................................... 3-5
Table 4-1 City Portion of Wastewater Treatment Plant Value ...................................................... 4-2
Table 4-2 Wastewater T reatment Plant Capacity ......................................................................... 4-3
Table 4-3 Development of Wastewater Treatment Plc:mt Connection Fee per Capacity Uni t... .. 4-4
Table 4-4 Compa rison of Existing and Proposed ......................................................................... 4-4
Table 4-5 Comparison of Existing, Proposed and Alternative Mu ltifamily Wastewater Treatment
Plant Connection Fees ................................................................................................................. 4-5
Table 5-1 Range of Un its Served By Meter Size ......................... , ... ' ............................................. 5-1
Table 5-2 Comparison of Existing and Proposed ......................................................................... 5-2
Table 5-3 Proposed Commercial Mixed Use Connection Fee ..................................................... 5-2
Table 5-4 Mixed Use Connection Fee Examples ......................................................................... 5-3
Table 5-5 Mixed Use Connection Fee Examples ......................................................................... 5-3
: ; ; : REIIDJ\ I\.
·:···· CONSULTING
City of Englewood, Colo rado
2009 Water and Sewer Connection Fee Stud y
6149004
1. Execut ive Summary
1.1. Introductio n
The City of Englewood, Colorado (City) provides water and sewer service to 8,400 and
43 ,000 customer accounts , respectively. About 75% of sewer accounts are located
outside the City. The City 's water and sewer utilities are funded primarily from rates and
connection fees.
The connection fee is a one-time charge that allows new users to pay for their
proportionate share of capacity in the City's water treatment plant and distribution
system, sewer collection system, and wastewater treatment plant. The City authorized
Red Oak Consulting to update the City's water and sewer connection fees. This report
summarizes study assumptions , procedures, findings and recommendations .
1.2 . Assumpti o ns
This connection fee study is based on numerous assumptions. Changes in these
assumptions could have a material effect on the study findings. Red Oak made the
following assumptions in this study:
• The buy-in methodology is the best method to calculate the connection fees
• Capacity requirements of a 3/4-inch meter represent the requirements of one
capacity unit
• Water and sewer mains smaller than 12 inches are contributed by developers
• Replacement cost of water and sewer mains are based on estimated rehabilitation
cost
• Replacement cost of water and wastewater treatment plants are based on original
cost trended to current cost using the 20-city Engineering New s Record
Construction Cost Index
1.3 . Proposed Water Connection Fees
• Red Oak calculated water connection fees using four standard valuation
approaches: original cost, original cost less depreciation, replacement cost, and
replacement cost less depreciation .
• Table 1-1 compares existing and proposed inside City water connection fees .
Existing fees ha ve been in effect since 1982. Proposed connection fees for each
meter size are the product of the connection fee per capacity unit (3 /4-inch meter)
multiplied by the meter capacity ratio.
: :;: REJ]))AK
...... · CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
Meter Existing
Size Fees
3/4" 1,000
1" 1,800
1%" 4,000
2" 7 ,200
3" 16,000
4" 28,800
6" 64,000
Table 1-1
Section 1
Executive Summary
Comparison of Existing and Proposed
Water Connection Fees
AWWA Proposed Fees
Meter Original Replacement
Capacity Original Cost Less Replacement Cost Less
Ratios Cost Depreciation Cost Depreciation
1.00 1,570 1, 120 4,360 3,320
1.67 2,620 1,870 7,270 5 ,530
3.33 5,200 3,700 14,500 11,100
5 .33 8,400 6,000 23,300 17,700
10 .67 16,700 11,900 46,500 35,400
16.67 26,200 18,700 72,700 55 ,300
40.00 62,800 44,800 174,400 132,800
1.4. Proposed Sewer Collection System Connection Fees
• Red Oak calculated sewer collection system connection fees using four standard
valuation app ro aches: original cost, original cost less depreciation , replacement
cost, and replacement cost less depreciation.
• Table 1-2 compares existing and proposed sewer collection system connection
fees. Existing fees have been in effect since 1982.
Meter Existing
Size Fees
3/4" 500
1" 833
1%" 1,677
2" 2,667
3" 5,333
4" 8,333
6" 16,667
Table 1-2
Comparison of Existing and Proposed
Sewer Collection System Connection Fees
AWWA Proposed Fees
Meter
' Original
Capacity Original Cost Less Replacement
Ratios Cost Depreciation Cost
1.00 170 70 1,200
1.67 280 le 120 2,000
3.33 600 200 4,000
5 .33 900 400 6,400
10.67 1,800 700 12 ,800
16.67 2,800 1,200 20 ,000
40.00 6,800 2,800 48,000
: ; :: RE l3D1\ r-,_
·. ·.·.-, CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
Replacement
Cost Less
Depreciation
530
880
1,800
2,800
5,700
8,800
21,200
Section 1
Executive Summary
1.5. Proposed Wastewater Treatment Plant Connection Fees
• Red Oak calculated wastewater treatment plant connection fees using four
standard valuation approaches: original cost, original cost less depreciation,
replacement cost, and replacement cost less depreciation.
• Table 1-3 compares existing and proposed wastewater treatment plant connection
fees. Existing fees have been in effect since 1982.
Meter Existing
Size Fees
3/4" 1,400
1" 2,333
1%" 4,667
2" 7,467
3" 14,932
4" 23,332
6" 46,667
Table 1-3
Comparison of Existing and Proposed
Wastewater Treatment Connection Fees
AWWA Proposed Fees
Meter Original
Capacity Original Cost Less Replacement
Ratios Cost Depreciation Cost
1.00 890 739 1,140
1.67 1,480 1,220
,.
1,900
3.33 3,000 2,400 3 ,800
5.33 4,700 3,900 6,100
10.67 9,500 7,800 12,200
I" '··
16.67 14,800 12,200 ,., 19 ,000
40.00 35,600 29,200 45 ,60 0
1.6. Proposed Mixed Use Connection Fees
Replacement
Cost Less
Depreciation
860
1,430
2,900
4,600
9 ,200
14,300
34,400
Red Oak developed connection fees for developments that include a mix of multifamily
and commercial establishments: Proposed mixed use connection fees produce connection
fees designed to approximate the proposed meter size-based connection fees for the
midrange of the number of dwelling units or fixture units served by that meter size.
Section 5 shows the proposed mixed use connection fees.
: ; :: REJ]J\K
· ... • • CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
2 . Water Connection Fees
2 .1. Methodol og y
Connection fees are usually based on one of the following industry-standard evaluation
methods:
• Equity buy-in
• Incremental co st
• Hybrid
The equity buy-in me thod bases connection fees on the value and capacity of existing
facilities . This method is best suited for existing facilities with excess capacity.
The incremental cost method bases connection fees on the value and capacity of future
facilities . This method is best suited for utilities that have limited unutilized capacity in
and have prepared detailed growth -related capital project plans.
The hybrid method bases the connection fee on the combination of the value and capacity
of existing and future facilities. This method is appropriate for utilities that have some
unused capacity in ex isting facilities and capacity expansion planned in the near future .
Red Oak used the equity buy-in method to calculate the water connection fees. This is
considered an appropriate method to use for the City's water utility since it has ample
capacity in its existing facilities to serve future growth.
2.2. Calculation Pro.cedure
Red Oak calculated water connection fees using the following step s:
• Identify water system assets
• Estimate value of assets under four different valuation methods
• Determine capacity requirements of one capacity unit
• Determine number of capacity units that can be served by existing facilities
• Calculate connection fee per capacity unit
2.3. Water System Value
Red Oak Consulting calculated the value of the City water system for each of the
following standard va luation approaches:
• : • • REJ])1\K ... ·. ·. • • CONSULTING
City of Englewood, Colorado
2009 Water an d Sewer Connecti o n Fee Study
6149004
• Original Cost
• Original Cost Less Depreciation
• Replacement Cost New
• Replacement Cost Less Depreciation
Section 2
Water Connection Fees
Original cost values are historic costs of purchasing and installing assets. Original cost
less depreciation values are the book value of the assets. Replace,ment cost values are
present-day estimated costs to purchase and install existing assets. Replacement cost less
depreciation takes into consideration physical depreciation and obsolescence of existing
assets.
Original cost and original cost less depreciation are values based on City asset records.
Replacement cost values for water line assets are based on estimates by line size.
Replacement cost values for all other assets are based on original costs trended to present
day value using the 20-City ENR-CCI. Table 2-1 compares water system asset values for
the four valuation approaches.
Table 2-1
Water System Value
. ·.·· ; .....
Original Cost Replacement
Line Less Replacement Cost Less
No. Fixed Asset Original Cost Depreciation Cost Depreciation
1 Treatment Plant $ 20,542,812 $ 15,300,384 $ 34,600,504 $ 24,284,849
2 Pumps and Storage 4,396,834 1,586,681 12,927,468 2,856,956
3 Mains 15,089, 114 7,995,125 4,626,418 2,451,356
4 General Plant 11,551,563 9,884,451 62,161,229 57,413,563
5 Total System Value $ 51,580,323 $ 34,766,641 $114,315,619 $ 87,006,724
2.4. System Capacity
Red Oak assumed the capacity requirements of a 3/4-inch meter represent the capacity
requirements of one capacity unit. The 3/4-inch meter is commonly used for new single
family residential connectors and represents the majority of water meters in service.
Capacity units for all other meter sizes are a product of the number of customers for each
meter size and capacity ratios of the respective meter sizes.
The City's water treatment plant peak day capacity is 28 million gallons per day (mgd)
and is sufficient to serve the projected build-out population of the water service area.
Red Oak assumes the number of capacity units that can be served by the water system is
commensurate with treatment plant capacity.
•• REI1U /\ t
: ·.·: CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
Section 2
Water Connection Fees
Red Oak estimated peak day demand per capacity unit using City billing data and peak
day demand data. The peak day demand per capacity unit of 1,070 gallons per day (gpd)
is the product of 483 gpd average day demand for a 3/4-inch meter and the water
system 's peak day to average day demand ratio of 2.22.
Table 2-2 shows the calculation of the number of capacity units of the water treatment
plant. System capacity of 26,200 is the quotient of peak day capacity of the water
treatment plant and peak day demand of one capacity unit.
Table 2-2
Water Treatment Plant Capacity
Line
No. Description Calculation
1 Peak Day Capacity of Water Treatment Plant (GPO) 28,000,000
2 Peak Day Demand of One Capacity Unit (GPO) 1,070
3 Water System Capacity (Capacity Units) 26,200
2.5. Fee Calculation
The proposed water connection fee for a capacity unit is the quotient of the total system
value and the capacity units of the system. System value is the value of existing assets
less developer contribution. Red Oak assumed water mains 12-inches and smaller were
contributed by developers . Table 2-3 shows the water connection fee calculation for a
capacity unit.
Table 2-3
Development of Water Connection Fee per Capacity Unit
Original Cost Replacement
Line Less Rep lacement Cost Less
No. Fixed Asset Original Cost Depreciation Cost Depreciation
1
2
3
4
5
Existing Assets $ 51,580,323 $ 34,766,641 $ 114,315,619 $ 87,006,724
Less Contributions (10,321,094} (5,468, 7 40} (O} (O}
System Value $ 41,259,229 $ 29,297,901 $ 114,315,619 $ 87,006,724
System Capacity Units 26,200 26,200 26,200 26,200
Connection Fee, per $ 1,570 $ 1,120 $ 4,360 $ 3,320 Capacity Unit
Table 2-4 compares ex isting and proposed single family and nonresidential water
connection fees. Exi sting fees have been in effect since 1982 . Proposed connection fees
for each meter size are the product of the connection fee per capacity unit (3 /4-inch
meter) and meter capacity ratio.
: :;: REIT!)\~
·. •••• · CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Stud y
6149004
Table 2-4
Section 2
Water Connection Fees
Comparison of Existing and Proposed
Single Family and Nonresidential Water Connection Fees
AWWA Proposed Fees
Meter Original Replacement
Meter Existing Capacity Original Cost Less Replacement Cost Less
Size Fees Ratios Cost Depreciation Cost Depreciation
3/4" 1,000 1.00 1,570 1, 120 4,360 3,320
1" 1,800 1.67 2,620 1,870 7,270 5,530
1W' 4,000 3.33 5,200 3,700 14,500 11 , 100
2" 7,200 5 .33 8,400 6,000 23,300 17,700
3" 16 ,000 10 .67 16,700 11,900 46,500 35,400
4" 28,800 16.67 26,200 18,700 72,700 55,300
6" 64 ,000 40 .00 62,800 44,800 174,400 132,800
Table 2-5 compares ex isting and proposed multifamily water connection fees . Existing
fees have been in effect since 1982 and consist of a $1,000 fee for the first unit and a
$500 fee per unit for all additional units . Proposed multifamily connection fees use
replacement cost asset values and consist of a base fee per connection and a three-tier
dwelling unit fee .
Table 2-5
Comparison of Existing and Proposed
Multifamily Water Connection Fees
Existing Proposed
Fee Structure Fee Fee
Base Fee
(per connection) $0 $2,620
Dwelling Un it Fee
(per dwelling unit)
Fi rst unit $1,000 $580
Next 11 units 500 $580
Next 22 units 500 450
Over 34 units 500 275
Proposed multifamily fees produce connection fees designed to approximate the proposed
meter size-based connection fee for the midrange of the number of dwelling units served
by a particular meter size . For example, a 3/4-inch meter can serve two to four
multifamily dwelling units. The proposed water connection fee for the midrange of this
meter size (three dw ell ing units) is $4 ,360 which matches the propo sed fee for the 3/4-
in ch meter.
: ; : : REIJD J\ K
·.•••••. CONSULTING
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
Section 2
Water Connection Fees
Red Oak recommend s the City annually review and adjust its water connection fees to
reflect changes in co st inflation, system capacity, and capacity unit service
characteristics.
,:.:.;: REI]),;. •
· • • CONSULTING
City of Eng lewood , Colorado
2009 Water and Sewer Connection Fee Stud y
6149004
3. Se w er Collection System Connection Fee
3.1. Methodo log y
Connection fees are usually based on one of the following industry-standard evaluation
methods :
• Equity buy-in
• Incremental cost
• Hybrid
The equity buy-in method bases connection fees on the value and capacity of existing
facilities. This meth od is best suited for existing facilities with excess capacity.
The incremental cost method bases connection fees on the value and capacity of future
facilities. This metho d is best suited for utilities that have limited unutilized capacity in
and have prepared detailed growth-related capital project pl ans.
The hybrid method bases the connection fee on the comb ination of the value and capacity
of existing and future facilities. This method is appropriate for utilities that have some
unused capacity in existing facilities and capacity expansion planned in the near future .
Red Oak used the equity buy-in method to calc ulate the sewer collection system
connection fees . This is considered an appropriate method to use since it has ample
capacity in its existing facilities to serve future growth .
3.2 . Calculation Procedu re
Red Oak calculated sewer collection system connection fees using the following steps:
• Identify sewer collection syst em assets
• Estimate value of assets under four different valuation methods
• Determine capacity requirements of one capacity unit
• Determine number of capacity units that can be served by existing facilities
• Calculate connection fee per capacity unit
3.3 . Sewer Collection System Value
Red Oak calculated the value of the City sewer collection system for each of the
following standard valuation approaches:
·: '· REI]), \K ....
· • • CONSULTING
City of Eng lewood, Colorado
2009 Water an d Sewer Connection Fee Study
6149004
Section 3
Sewer Collection System Connection Fee
• Original Cost
• Original Cost Less Depreciation
• Replacement Cost New
• Replacement Cost Less Depreciation
Original cost values are the historic costs of purchasing and installing assets. Original
cost less depreciation is book value of assets. Replacement cost values are present-day
estimated costs to purchase and install existing assets . Replacement cost less
depreciation takes physical depreciation and obsolescence of existing assets into
consideration.
Original cost and original cost less depreciation values are b ased on City asset records.
Replacement cost valu es for sewer collection main assets are based on estimates by main
size. Replacement cost values for all other assets are based on original costs being
trended to a present day value using the 20-City ENR-CCI. Table 3-1 compares sewer
collection system ass et values for the four valuation approaches.
Table 3-1
Sewer Collection System Value
Original Cost Replacement
Line Less Replacement Cost Less
No. Fixed Asset Original Cost Depreciation Cost Depreciation
1 Sewer Mains $ 5,078,528 $ 2,327,874 $ 27,116,907 $ 9,234,583
2 General Plant 1,236,475 389,243 2,358,608 1,206,237
3 Total System Value $ 6,315,003 $ 2,717,117 $ 29,475,515 $ 13,009,236
3.4. System Capacity
Red Oak assumed tha t the capacity requirements of a 3/4-inch meter represent the
capacity requirements of one capacity unit. The 3/4-inch meter is commonly used for
new single family resi dential connectors and represents the majority of water meters in
service . Capacity uni ts for all other meter sizes are the product of number of customers
for each meter size multiplied by each meter size's respective capacity ratio.
The existing collection system is sufficient to serve projected population at build-out
without any additiona l expansions. Red Oak assumes the number o f capacity units that
can be served by the sewer's collection system is commensurate with the wastewater
treatment plant capacity to serve those inside city customers.
The City owns 50% (2 5 mgd) of the L ittleton/Englewood wastewater treatment plant
capacity. The City's collection system serves only inside City customers and requires
about 25% (6.25 mgd) of the City's treatment plant capacity.
: ; ;: RE11DAK
·. •• •. •. CONSULTING
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
Section 3
Sewer Collection System Connection Fee
Red Oak estimated wastewater flow per capacity unit using City planning data from the
2003 Wastewater Treatment Plant Utility Plan and Site Application Report . Wastewater
flow per capacity uni t of 255 gpd is the product of 85 gallons per capita per day for a 3/4-
inch meter and 3 perso ns per household .
Table 3-2 shows the calculation of the number of capacity units that can be served by the
sewer collection system . The system capacity of 24,500 is the quotient of the capacity of
the sewer collection system and the demand of one capacity unit.
Table 3-2
Sewer Collection System Capacity
Line
No. Description Calculation
1 Capacity of Wastewater Treatment Plant Serving City
Sewe r Collection System (gpd) 6,250,000
2 Wastewater Flow per Capacity Unit (gpd) 255
3 Sewer Collection System Capacity (Capacity Units) 24,500
3.5. Fee Calcu lation
The proposed sewer collection system connection fee for a capacity unit is the quotient of
th e total system value and the capacity units of the system . System value is the value of
existing assets less developer contribution. Red Oak assumed sewer mains 12-inches and
smaller were contributed by developers. Table 3-3 shows the sewer collection system
connection fee calculation for a capacity unit.
: ; ': REI]),\ K.
·. •• •. CONSULTING
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
Section 3
Sewer Collection System Connection Fee
Table 3-3
Development of Sewer Collection System Connection Fee per Capacity Unit
Original Cost Replacement
Line Less Replacement Cost Less
No. Fixed Asset Original Cost Depreciation Cost Depreciation
1 Existing Assets $ 6,315,003 $ 2,717,117 $ 29,475,515 $ 13,009,236
2 Less Developer
(2.250,594) (928.732) (0) (0) Contributions
3 System Value $ 4,064,409 $ 1,788,385 $ 29,475,515 $ 13,009,236
4 System Capacity
24,500 24,500 24,500 24 ,500 Units
5 Connection Fee, $170 $ 70 $ 1,200 $ 530 per Capacity Uni t
Table 3-4 compares existing and proposed single family and nonresidential sewer
collection system co nnection fees. Existing fees have been in effect since 1982 .
Proposed connection fees for each meter size are the product of the connection fee per
capacity unit (3 /4-inch meter) and meter capacity ratios.
Meter Existing
Size Fees
3/4" 500
1" 833
1 Y.," 1,677
2" 2,667
3" 5,333
4" 8,333
6" 16,667
Table 3-4
Comparison of Existing and Proposed
Sewer Collection System Connection Fees
AWWA Proposed Fees
Meter Original
Capacity Original Cost Less Rep lacement
Ratios Cost Depreciation Cost
1.00 170 70 1,200
1.67 280 120 2,000
I
3.33 600 200 \ 4,000
5.33 ,900 400 6,400
10.67 1,800 700 12,800
16.67 2,800 1,200 20,000
40 .00 6,800 2,800 48,000
Replacement
Cost Less
Depreciation
530
880
1,800
2,800
5,700
8,800
21,200
Table 3-5 compares existing and proposed multifamily sewer collection system
connection fees. Existing fees have been in effect since 1982 and are $500 per unit.
Proposed multifamily connection fees use replacement cost asset values and consist of a
base fee per connection and a three-tier dwelling unit fee.
: ; ; : RETh1\ ~
·."···'. CONSULTING
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
.
Section 3
Sewer Co ll ection System Connection Fee
Table 3-5
Comparison of Existing and P roposed
Multifamily Sewer Collection System Connection Fees
Existing Proposed
Fee Structure Fee Fee
Base Fee
(per connection) $0 $720
Dwelling Unit Fee
(per dwelling unit)
First 12 units 500 160
Next 22 units 500 125
Over 34 units 500 75
Proposed multifamily fees produce connection fees designed to approximate the proposed
meter size-based connection fee for the midrange of the number of dwelling units served
by a particular meter size. For example, a 3/4-inch meter can serve two to four
multifamily dwelling units . The proposed fee for the midrange of this meter size (three
dwelling units) is $1 ,200 which matches the proposed sewer collection system connection
fee for the 3/4-inch meter.
Red Oak recommends the City annually review and adjust its sewer collection system
connection fees to reflect changes in cost inflation, system capacity, and capacity unit
service characteristics .
: ; ; : RE11D '\ K-
.. •• •• •. CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
4. Wastewater Treatment Plant Connection Fee
4 .1. Metho dolo gy
Connection fees are usually based on one of the following industry-s tandard evaluation
methods:
• Equity buy-in
• Incremental cost
• Hybrid
The equity buy-in method bases the connection fee on tl}e value and capacity of existing
facilities. This method is best suited for existing facilities with excess capacity .
The incremental cost method bases connection fees on the value and capacity of future
facilities. This method is best suited for utilities that have limited unutilized capacity in
and have prepared detailed growth-related capital project plans.
The hybrid method ba ses the connection fee on the combination of the value and capacity
of existing and future facilities. This method is appropriate for utilities that have some
unused capacity in existing facilities and capacity expansion planned in the near future.
Red Oak used the equi ty buy-in method to calculate the wastewater treatment plant
connection fees . This is considered an appropriate method to use since there is ample
capacity in existing facilities to serve future growth.
4.2. Calculation Procedure
Red Oak calculated wastewater treatment plant connection fees using the following steps:
• Identify wastewater treatment plant assets
• Estimate value of assets under four different valuation metho d s
• Determine capacity requirements of one capacity unit
• Determine number of capacity units that can be served by existing facilities
• Calculate conn ection fee per capacity unit
4 .3. Wastewate r Treatmen t Plant Value
Red Oak calculated the value of the City wastewater treatment plant assets for each of the
following standard val uation approaches:
• : ; • REDD A I\.
:_-.•:CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Stu dy
6149004
Section 4
Wastewater Treatment Plant Connection Fee
• Original Cost
• Original Cost Less Depreciation
• Replacement Cost New
• Replacement Cost Less Depreciation
Original cost values are the historic costs of purchasing and installing assets. Original
cost less depreciation values are the book value of assets. Replacement cost values are
the present-day estimated costs to purchase and install existing assets. Replacement cost
less depreciation takes into consideration physical depreciation and obsolescence of
existing assets.
Original cost and original cost less depreciation values are based on City asset records.
Replacement cost values are based on original costs trended to present day value using
the 20-City ENR-CCI. The City owns 50% of the Littleton/Englewood (LIE) wastewater
treatment plant capacity . Table 4-1 compares the City portion of wastewater treatment
plant asset values for the four valuation approaches.
Table 4-1
City Portion of Wastewater Treatment Plant Value
Original Cost Replacement
Line Less Replacement Cost Less
No. Fixed Asset Original Cost Depreciation Cost Depreciation
1 L/EWWTP $ 43,629,042 $ 19,745,680 $ 87,829,825 $ 32,658,581
2 L/EWWTP
Expansion 56,500,000 56,500,000 56,500,000 56,500,000
3 Subtotal $ 100, 129,042 $ 76,245,680 $ 144,329,825 $ 89,158,581
4 Less WWTP
Replacement ($11,871,209) ($11,871,209) ($11,871,209) ($11,871,209)
5 Less Grants (9,209,268} (721,000} (28,902,051} (721,000}
6 Total Value $ 79,048,565 $ 63,653,471 $ 103,556,565 $ 76,566,372
4.4. System Capacity
Red Oak assumed the capacity requirements of a 3/4-inch meter represent the capacity
requirements of one capacity unit. The 3/4-inch meter is commonly used for new single
family residential connectors and represents the majority of water meters in service.
Capacity units for all other meter sizes are the product of number of customers for each
meter size and each meter size's respective capacity ratio .
The wastewater treatment plant capacity is sufficient to serve projected population at
build-out without any additional expansions. The City owns 50% (25 mgd) of the
Littleton/Englewood wastewater treatment plant capacity.
· ; : • RE DD,\ 1"
:.·.·.·. CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
Section 4
Wastewater Treatment Plant Connection Fee
Red Oak estimated wastewater flow per capacity unit using City planning data from the
2003 Wastewater Treatment Plant Utility Plan and Site Application Report. The
wastewater flow per capacity unit of 255 gpd is the product of 85 gallons per capita per
day for a 3/4-inch me ter and 3 persons per household.
Table 4-2 shows the calculation of the number of capacity units that can be served by the
wastewater treatment plant. System capacity of 98,000 is the quotient of the capacity of
the wastewater treatment plant and the demand of one capacity unit.
Table 4-2
Wastewater Treatment Plant Capacity
Line
No. Description Calculation
1 Capaci ty (City portion) of Wastewater Treatment Plant(gpd) 25,000,000
2 Wastewater Flow per Capacity Unit (gpd) 255
3 Wastewater Treatment Plant Capacity (Capacity Units) 98,000
4.5. Fee Calculation
The proposed wastewater treatment plant connection (ee for a capacity unit is the
quotient of the total sys,tem value and capacity units of the system. Financing costs are
included in the total system value and are equal to the net present value of growth-related
interest payments related to the 2004 CWRPDA loan. Table 4-3 shows the wastewater
treatment plant connection fee calculation for a capacity unit.
: ~ ~: REED;\ K
-. •• •• '. CONSULTING
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
Line
No.
1
2
3
4
5
Section 4
Wastewater Treatment Plant Connection Fee
Table 4-3
Development of Wastewater Treatment Plant Connection
Fee per Capacity Unit
Original Cost Replacement
Less Replacement Cost Less
Description Original Cost Depreciation Cost Depreciation
Total WWTP Value $ 79,048,565 $ 63,653,471 1
' $103 ,556,565 $76,566,372
NPV of Ex isting
Debt Service 8,084,272 8,084,272 8,084,272 8,084,272
Interest Payments
Total System Value $ 87' 132,837 $ 71 ,73 7,743 $111,640,837 $ 84,650,644
Existing System
Capacity -Capacity 98,000 98 ,000 98,000 98,000
Units
Connection Fee, $ 890 $ 730 $ 1, 140 $ 860 per Capacity Unit ,,,
Table 4-4 compares existing and proposed single family and nonresidential wastewater
treatment plant connection fees. Existing fees have been in effect since 1982. Proposed
connection fees for each meter size are the product of the connection fee per capacity unit
(3 /4-inch meter) and the meter capacity ratio. Since the proposed fees are less than
existing fees, consideration should be given to contin,uing the existing wastewater
treatment plant connection fees at this time.
Table 4-4
Comparison of Existing and Proposed
Single Family and Nonresidential
Wastewater Treatment Plant Connection Fees
AWWA Proposed Fees
Meter Original
Meter Existing Capacity Original Cost Less Replacement
Size Fees
3/4" 1,400
1" 2,333
11".i'' 4,667
2" 7,467
3" 14,932
4" 23,332
6" 46,667
: : • : REI]}\ K
·. •• •. · CONSULTING
Ratios Cost Depreciation
1.00 890 730
1.67 1,480 1,220
3.33 3,000 2,400
5.33 4,700 3,900
10.67 9,500 7,800
16.67 14,800 12,200
40.00 35,600 29,200
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
Cost
1,140
1,900
3,800
6,100
12,200
19,000
45,600
Replacement
Cost Less
Depreciation
860
1,430
2,900
4,600
9,200
14 ,300
34,400
Section 4
Wastewater Treatment Plant Connection Fee
Proposed multifamily wastewater treatment plant connection fees use replacement cost
asset values and consist of a base fee per connection and a three-tier dwelling unit fee.
Proposed fees produce connection fees designed to approximate the proposed meter size-
based connection fee for the midrange of the number of dwelling units served by a
particular meter size. For example, a 3/4-inch meter can serve two to four multifamily
dwelling units. The proposed wastewater treatment plant fee for the midrange of this
meter size (three dwelling units) is $1,140 which matches the proposed sewer collection
system connection fee for the 3/4-inch meter.
Red Oak also developed alternative multifamily wastewater treatment plant connection
fees based on existing meter size-based fees. Alternative fees consist of a base fee per
connection and a three-tier dwelling unit fee . The alternative fe.es produce connection
fees designed to approximate the existing meter size-based connection fee for the
midrange of the number of dwelling units served by a particular meter size. For example,
a 3/4-inch meter can serve two to four multifamily dwelling units. The alternative
wastewater treatment plant fee for the midrange of this meter size (three dwelling units)
is $1,400 which matches the existing wastewater treatmen.t plant connection fee for the
3/4-inch meter.
Table 4-5 compares existing, proposed and alternative multifamily wastewater treatment
plant connection fees. Existing fees have been in effect since 1982 and are $1,400 per
unit. Both the proposed and alternative multifamily connection fees consist of a base fee
per connection and a three-tier dwelling unit fee based on the number of dwelling units.
Table 4 -5
Com pa rison of Exi sting , Proposed and Alternative
Multi fam ily Wastewate r Treatment Plant Connect ion Fees
Proposed Al tern ati ve
Fee St ructure Exi sti ng Fee Fee <•l Fe e (bl
Base Fee
(per connection) $0 $690 $845
Dwelling Unit Fee
(per dwelling unit)
First 12 un its $1,400 $150 $185
Next 22 units 1,400 120 150
Over 34 units 1,400 70 85
(a) Con sistent with proposed meter size-based connection fees .
(b) Consistent with existing meter size -based connection fees.
Red Oak recommends the City annually review and adjust its wastewater treatment plant
connection fees to reflect changes in cost inflation, system capacity, and capacity unit
service characteristics.
: ;;: REJ3DAK
·.•••••. CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
5. Mixed Use Connection Fees
5.1. Background
Mixed use developments have multiple intended purposes within a single structure and
typically include a combination of multifamily residential and commercial customers.
Although the City presently has few mixed use customers, future growth in this type of
development is likely .
The City's current mixed use connection fee structure is based on meter size, which may
not equitably assess new mixed use connectors for their capacity requirements . Table 5-1
illustrates the ranges o f multifamily dwelling units and commercial fixture units for each
meter size which coul d produce a wide variety in capacity requirements within a given
meter size .
Table 5-1
Range of Units Served By Meter Size
Multifamily Number of
Meter Size Dwelling Units Fixture Uni ts
3/4" 2 to 4 0 to 50
1"
,,,
5 to 12 51 to 125
1W' 13 to 34 126 to 375
2" 35 to 63 376 to 700
3" 64 to 203 701 to 2,225
4" 204 to 455 2,226 to 5,000
The proposed mixed use fees will equitably tailor the connection fee to the individual
requirements of each new connector by using the combination of the number of
multifamily dwelling units and commercial fixture units to represent the capacity
required by mixed use customers.
5.2. Proposed Fees
Proposed mixed use fe es use replacement cost asset values and produce connection fees
that are in the midrange of the proposed meter size-based connection fees . The proposed
mixed use connection fees consist of three components :
• Base fee per connection
• Multifamily fee based on number of dwelling units
·: •. REDfr\K
:.-.·: ~ CONSULTING
City of Englewood, Colorado
2009 Water and Sewer Connection Fee Study
6149004
Section 5
Mixed Use Connection Fees
• Commercial fee based on the number of fixture units
Table 5-2 compares existing and proposed multifamily connection fees. Existing fees
include a unit fee based on the number of dwelling units. Proposed fees consist of a base
fee per connection and a three -tier dwelling unit fee based on the number of dwelling
units.
Fee Structure
Dwelling Unit Fee
(per dwelling unit)
First unit
Each Additional unit
Base Fee
(per connection)
Dwelling Unit Fee
(per dwelling unit)
First 12 units
Next 22 units
Over 34 units
Table 5-2
Comparison of Existing and Proposed
Multifamily Connection Fees
Sewer Wastewater
Water Collection Treatment
Existing Fees
$1,000 $500 $1,400
500 500 1,400
Proposed Fees •.
$2,620 $720 $690
$580 $160 $150
450 125 120
275 75 '· 70
·i• c
Total
$2,900
2,400
' '
$4,030
$890
695
420
Table 5-3 shows the proposed commercial mixed use connection fees that consist of a
three-tier fixture unit fee.
Fee Structure
First 125 fixture units
Next 250 fixture units
Over 375 fixture units
: ; :: RECT1J1,~
·.·.·.·.CONSULTING
Table 5-3
Proposed Commercial
Mixed Use Connection Fee
Sewer
Water Collection
per fixture unit per fixture unit
$83 $23
35 10
26 7
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
Wastewater
Treatment
per fixture unit
$22
9
7
Total
per fixture unit
$128
54
40
Section 5
Mixed Use Connection Fees
The proposed mi x ed use connection fee is the greater of the following:
• Sum of calcul ated mixed use multifamily and commercial connection fees or
• Meter size based connection fee
Tables 5-4 and 5-5 sh ow s examples of the proposed mixed use connection fee calculation
for typical small , med ium , and large connectors. Table 5-4 shows the detailed
calculations for multifamily and commercial mixed use fees , and Table 5-5 summarizes
the total fee amount. In all cases the sum of calculated mixed use multifamily and
commercial connection fees is greater than the meter size based connection fee.
Table 5-4
Mixed Use Connection Fee Examples
Mixed Use Multifamily Fee
Mixed Multifamily First 12 Next 22 Over34
Use Meter Dwelling Base Dwelling Dwelling Dwelling
Customer Size Units Charge Units Units Units Total
·•• $890 $695 $420
per unit 'per unit per unit
Small 1" 4 $ 4,030 $ 3,560 $ -$ -$ 7,590
Medium 2" 20 $ 4,030 $ 10,680 $ 5,560 $ -$ 20,270
Large 3" 60 $ 4,030 $ 10,680 $ 15,290 $ 10,920 $ 40,920
Mixed Use Commercial Fee
Mixed Commercial First 125 Next 250 Over 375
Use Meter Fixture Base Fixture Fixture Dwelling
Customer Size Units Charge Units Units Units Total
$128 $54 $40
,. per unit per unit per unit
Small 1" 40 $ -$ 5,120 $ -$ -$ 5,120
Medium 2" 200
h $ -$ 16,000 $ 4,050 $ -$ 20,050
Large 3" 600 $ -$ 16,000 $ 13,500 $ 9,000 $ 38,500
Table 5-5
Mixed Use Connection Fee Examples
Mixed Multifamily Commercial Total Calculated Proposed
Use Meter
Customer Size
Small 1"
Medium 2"
Large 3"
: ;;: RE]]J\K.
·. •• •. •. CONSULTING
Mixed Use Mixed Use Mixed Use
$
$
$
Fee Fee Fee
7,590 $ 5,120 $ 12,710
20,270 $ 20,050 $ 40,320
40,920 $ 38,500 $ 79,420
City of Englewood , Colorado
2009 Water and Sewer Connection Fee Study
6149004
Meter Size Mixed Use
Fee Fee
$ 11, 170 $ 12,710
$ 35,800 $ 40,320
$ 71,500 $ 79,420
TO:
FROM :
DATE:
RE:
MEMORANDUM
Stu Fonda, Director of Utilities
Bill McCo r mick, Utilities Supt. ~
March 11, 2011
Council Request Item 11-051
Council requested, per Council Request #11-051, that Utilities staff investigate residents'
complaints about pressure problems in their homes near the proposed Englewood Estates PUD
at Quincy and S. Lipan St . On March 11, 2011 staff obtained pressure and flow readings at
various locations at W. Qu incy Ave . and S. Lipan Street and W. Radcliff Ave. and S. Lipan St .
The findings were as follows:
Address
4350 S Lipan
1211 W Radcliff
4301 S Kalamath
4305 S Lipan
1210 W Radcliff
Static
Pressure
72psi
73psi
72psi
72psi
73psi
** psi = Pounds per square inch
**gpm =Gallons per minute
Gals per
Minute
Outside Spigot
13 .65gpm
6.77gpm
6.71gpm
9.61gpm
13 .02gpm
Fixtures Turned on in house
Residual
Pressure
70psi
50psi
67psi
51psi
68psi
Gals per
Minute
Outside Spigot
11 .60gpm
2.64gpm
2.83gpm
5.84gpm
9 .94gpm
The static pressure of 72 psi is excellent and should provide good flows to homes in the area .
This is true of the home at 4350 S Lipan where the flow was measured to be 13.65 gpm. The
homes at 1211 W Radcliff and 4301 S Kalamath have flows of 6.77 gpm and 6 .71 gpm
respectively, which are about half of the flow at 4350 S Lipan. These differences would indicate
potential service line problems in the homes with low flows.
Static pressure is determined before any flows are turned on within the structure. Residual
pressure is determined after water is turned on at a fixture.
Since the proposed development plan has minimal landscaping and lawns, this development
should have minimal effects on pressure and flows during the high demand periods in the
summer. Englewood Uti lities Department will investigate water lines at the individual homes in
this area to determine if service lines modifications would be advantageous to the homeowner.
Homeowners should call John Bock at 303-762-2643 to schedule appointments.
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BERG HILL GREENLEAF & RUSCITTI LLP
ATTORNEYS & COUNSELORS AT LAW
1712 Pearl Street • Boulder, Colorado 80302
Tel: 303.402.1600 • Fax: 303.402.1601
bhgrlaw.corn
David G. Hill
Partner
dgh@ bhgrlaw.com
Daniel L. Brotzman, Esq .
City of Englewood
1000 Englewood Parkway
Englewood , CO 80110-0110
Re: February Invoice
Dear Dan:
March 8, 2011
RECEIVED
MAR l 1 2011
ENGLEWOOD, CO
OFFICE OF THE CITY A ITORNEY
Enclosed please find our invoices for professional services on water matters for February 1,
2011, through February 28, 2011, in the amount of $86,673.96, with a total for the year of
$205,809.48.
The amount for this billing cycle on major cases of particular significance is listed below:
I Name I Amount I No. I
FRlCO (02CW404 and 03CW442) Change $ 64 ,316.50 504
Denver (01CW286) South /North Complex Reservoirs 3,594.00 511
Denver 404 Permits 12,110.46 720
Stu Fonda has asked us to provide brief descriptions of the reasons for Englewood's
involvement in all cases which appear on our bills each month, as well as a brief summary of the
work performed by this firm during the month. The following paragraphs contain these descriptions
with respect to the matters reflected on the enclosed invoices:
Introduction. Please understand that this letter is a confidential attorney-client
communication. Please keep it confidential.
The bill has been written down by $11,037.50, in the interest of the budget.
Daniel L. Brotzman
March 8, 2011
Page 2
The largest bill , again, is for work on the latest (and probably last) effort of
FRI CO/United/East Cherry Creek to take a huge amount of water from the river. If you will recall
from earlier letters , this case began as a scheme to take 100,000 acre feet of water from the river
under a new appropriation. (Bear in mind that Denver, the state's largest diverter, takes a total of
some 365 ,000 acre feet, more or less, from the eastern and western slope combined.) The water was
to be taken by filling "recharge ponds" with water during wet years , to allow the water in the ponds
to seep into the groundwater. The water was to be pumped back out during normal and dry years.
The proposed "pump back" scheme was so loose that it amounted to an unlimited right to pump
water from the alluvium of the South Platte river, which would severely diminish flows in the river
and increase calls.
Over the course of the last year or so, Englewood and others have forced the Applicants to
make dramatic reductions in their scheme. At this point, in a very rough sense, the remaining claims
consist in essence of an effort to pump roughly 6,000 acre feet per year from the Beebe Draw
alluvium above Milton Reservoir. The pumping will reduce historic flows into Milton Reservoir
from the Beebe Canal, which drains Beebe Draw and flows into Milton Reservoir. Milton Reservoir
fills from both the Beebe Canal and the river, through the Platte Valley Canal. If the flows from the
Beebe Canal are reduced, the Reservoir will take more water from the river, which will increase calls
against Englewood's McLellan Reservoir right and other junior rights . The Englewood efforts, at
this point, are directed toward assurances that pumping in Beebe Draw will not increase Milton
diversions from the river.
There are two efforts to protect the Beebe Canal flows . The first is determining whether
there is indeed a legal right to preserve those flows. The second is an effort to correct errors in the
Applicants' computer models which determine the amount by which the well pumping will reduce
the flows , and when the reductions will occur.
The question of whether there is a legal right to preserve the Beebe Canal flows arises
because the Milton Reservoir decree is not clear as to whether those flows may be taken under the
decree which granted Milton a 1909 storage right. The testimony before the Referee who entered
the decree was that FRI CO intended to take the seepage flows into Milton under the decree, and had
previously done so But the decree itself, as noted, is unclear. It does not expressly grant a right to
the seepage flows.
If the Milton decree is interpreted to include the seepage flows, then the water law results
logically flow: wells above Milton cannot reduce the Beebe Canal flows unless the reductions are
replaced , either to the canal itself or to Milton. There is a good legal position that the Water Court
Judge should be bound by the testimony before the Referee . In addition, in a case numbered
84CW090, former Water Court Judge Behrman ruled that wells above Milton could not reduce the
flows in the Beebe Canal.
Daniel L. Brotzman
March 8, 2011
Page 3
On the other hand, if the decree is interpreted as not including the Beebe Canal flows, the
possible results are confused indeed. Undecreed flows into a reservoir should be released to the
river. But Milton Reservoir, which was completed in 1912, has no outlet to the river, and the dam
is some 12 miles from the river, without any natural stream channel to the river. There is simply no
effective way to get the seepage inflows from the reservoir to the river, even though there is
(arguably) no decree which allows for their capture. (They have in fact been captured and used for
irrigation since 1912.)
At this point, the negotiating positions are chaotic. Englewood takes the position that the
1909 decree includes the seepage flows , but is willing to negotiate if Milton can be prevented from
taking more water from the river. Apparently the Applicants would take somewhat the same
position. The State Engineer takes the position that the decree does not allow for capture of the
seepage flows, and wants them replaced to the river. But there is no way to get them to the river.
The State Engineer's position has changed many times with respect to whether the decree allows
capture of the seepage. North Sterling Reservoir takes the same position as the State Engineer now
takes. Lower Latham Reservoir wants the seepage flows kept in Milton, because the only feasible
way to get the flows to the river is through Lower Latham's private canal system, which already runs
at capacity. There is no legal right to put the seepage into the Lower Latham canals, and Lower
Latham does not want some sort of eminent domain proceeding which would force the Beebe
seepage into the already full Lower Latham system. Lower Latham wants the Applicants to replace
the undecreed flows into Milton at the river, so the seepage could stay in the reservoir, but
Applicants have no water with which to do that, and refuse. The Division of Wildlife does not want
the flows put into an intermittent prairie stream called Box Elder Creek, at the end of Milton's outlet
canal, because the flows would cause a gully to erode on DOW property. Box Elder Creek in turn
does not reach the river, if it indeed flows. It ends by discharging into a canal owned by the Bijou
system (if Box Elder actually flows), and Bijou refuses to accept the seepage flows. Aurora wants
the whole issue put off until there is an express attempt to change Milton Reservoir shares from
agricultural to municipal; but putting off the issue leaves many questions unanswered. Aurora and
Greeley and Northern Colorado take the position that the decree does not allow seepage capture, and
take differing positions on what should happen to undecreed flows.
We are still attempting to resolve this . The issue may yet go to trial. If it goes to trial, the
result should depend upon the Water Court's view as to use of the testimony before the Referee and
Judge Behrman's ruling in 84CW090.
We are also still negotiating the modeling issues, along with other opposers. Progress is to
be hoped for, but has not yet been achieved.
We have been only inches away from settlement, for a long time, and many issues have been
resolved (hence the huge reduction in the initial claim). But we may yet go to trial on the Beebe
Canal flows and the modeling questions.
Daniel L. Brotzman
March 8, 2 011
Page4
Our efforts during February included innumerable settlement meetings (some productive ,
some unproductive), review of numerous versions of the decree proposed by Applicants , review of
motions by Applicants to dismiss many of their claims, reviewing expert reports and model studies ,
a Judicial Status Conference , reviewing discovery responses , answering discovery requests , setting
depositions, and research of legal treatment of Beebe Canal inflows if the decree does not allow
capture of seepage inflows, among other things.
The other two major cases are very closely related. The frrst is Denver's attempt to exchange
water from its new gravel pit reservoirs to Chatfield. The new reservoirs are downstream of
Brighton. Denver hopes to exchange over 30,000 acre feet per year from those reservoirs into
Chatfield, by adding the new exchange to its existing exchange to Chatfield, which has a 1977
priority date. If that happens , two bad results occur: 1) Englewood's exchange of Bear Creek water
from its McBroom headgate rights to Chatfield would be eliminated, and 2) the Chatfield outlet gates
would be closed a great deal more often. The exchange from Bear Creek to Chatfield, which has a
1990 priority date , gets soft water to Englewood (down City Ditch) and provides water for sale to
Centennial Water and Sanitation District (Highlands Ranch).
There is a strong position that Denver is not entitled to a 1977 priority date for its exchange ,
and ifthat were to be the Water Court's ruling, Englewood's exchange from Bear Creek to Chatfield
would be preserved. And ifthat were the ruling, Denver would have a lot of problems with getting
the gravel pit water upstream by ex change, because Denver would get a 2001 priority for its
exchange, and an exchange with that priority date would be junior to a number of other exchanges
(including the Englewood exchange).
The related case is Englewood's claim that Denver failed to get required permits under
Section 404 of the federal Clean Water Act. The permits were necessary for expansion of the Fulton
Ditch headgate and Denver's new pumping plant which takes water from the river above Chatfield.
The Fulton Ditch headgate was expanded to get Denver's water to its gravel pit reservoirs . The new
pumping station above Chatfield enables Denver to take enough water out of the river to prevent
Chatfield from obtaining a complete fill and consequent gate openings. It presently appears that
Denver indeed failed to get the requisite permits , but the process of getting redress for that failure
is complex and uncertain.
Denver seems to be anxious to settle these issues , and negotiations are ongoing. The gravel
pit exchange case is set for trial in August ofthis year.
The remainder of the cases are described below.
1. General (#001): This matter is our general file for work not attributable to specific
cases. In some instances , the work is not specific to a particular matter. In other instances , the time
spent on any individual matter is not large enough to justify a separate b ill , but the time on the group
of matters is significant. This includes charges related to general calendaring, reviewing various
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den .. v· er··~·o· s··t c·o·m·· . ·_.·· I . , . . ; , . , .·· .. -. . .· . ·.I
T 11 E DEN VER Prnrr
business
Colorado farmland
goes dry as
suburbs secure
water supplies
By Bruce Finley
The Denver Post
Posted: 03/13/2011 0 1 :00 :00 A M MST
Colorado farmers still own more than 80 percent
of water flowing in the state, but control is
rapidly passing from them as growing suburbs
move to secure supplies for the future .
The scramble is intensifying as aging farmers
offer their valuable water rights to thirsty cities,
drying up ag land so quickly that state overseers
are worried about the life span of Colorado's
agricultural economy .
"The status quo has been going to agriculture
(interests) and buying and drying . That's not
good," said John Stulp , a cattle rancher and
former state agriculture commissioner who is
Gov . John Hickenlooper's special policy adviser on
water. "We need to do it in a smarter way ."
Since 1987, Colorado farmers and ranchers have
sold at least 191,000 acre-feet of water to
suburbs , according to a review of water
transactional data . (That's enough water to fill
Chatfield Reservoir nine times-and enough to
sustain 382 ,000 families of four for a year .)
The shift has been especially abrupt north of
Denver, where farmers sold water to suburbs at
a rate of 2 to 5 percent of available water each
year, according to the Northern Water
Conservancy District.
State water courts in the South Platte River
Basin , which includes Denver and Weld counties,
approved farm-to-urban change-of-use
pet itions in 41 different cases between 2002 and
2007, state records show.
In the process, about 400 ,000 acres in Colorado
dried up between 2000 and 2005, according to U.
S . Geological Survey data. And Colorado natural
resources planners anticipate losing another
500,000 to 700 ,000 acres of irrigated cropland by
2050 .
Officials worried
Trading farmland for suburban lawns worries
officials.
"Water and agriculture are critical for the rural
economy to flourish," Hickenlooper said. "Unlike
many other states, and even some nations, we
have the potential in Colorado to provide a
sustainable food supply that is local and not
imported. That's an asset. we need to recognize
and support."
Yet nothing is stopping the ownership shift .
Long-envisioned cooperative transfers , with
farmers leasing water to suburbs while retaining
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Tm: DENVER Posr
control, have not materialized.
Instead, suburban water managers -and their
agents -are venturing as far as mountain
valleys 100 miles away to acquire new water
supplies, sometimes backed by state government
agencies .
"It's a good time to acquire water rights," said
veteran water broker Jerry Kessel.
Two Rivers, a company traded on the New York
Stock Exchange and run by Colorado Springs real
estate and water broker Gary Barber, recently
purchased two old reservoirs and significant
senior water rights from Arkansas River Basin
farmers .
Barber said he aims to save farming by trapping
water flowing off the Spanish Peaks and using it
for its court-decreed purpose of irrigating crops .
Southern Colorado farming communities that
died could now come back to life, Barber said,
because booming nations such as China soon will
be looking for new sources of grain.
"Look at the price of corn now," he said. "It's
going up faster than the price of gold."
Water for suburbs
State natural resources officials backed Two
Rivers by granting a $9.9 million low-interest
loan to support reservoir rehabilitation .
But farming groups immediately identified Two
Rivers' buy-up ·as a stealth move to shift more
water to suburbs .
"You get kind of nervous when you have people
who are on the New York Stock Exchange saying
they're going to put agriculture back into
production," said Jay Winner, manager of the
Lower Arkansas Valley Water Conservancy
District, devoted to retaining farming water
rights across a five-county area .
"I'm skeptical," Winner said , "because from the
amount of money they're sticking into this
project, it looks like it's a big agriculture-
municipal transfer."
When pressed, Two Rivers' Barber acknowledged
that the $27 million deal was indeed done with
an eye toward eventually selling water to
suburbs .
The stealthy and not-so-stealthy shifting of
control over Colorado water has continued
despite economic doldrums and may be gaining
momentum. Farmers often are willing
participants, cashing in as relative scarcity
makes water more valuable.
Among recent deals:
• Pueblo bought the Bessemer agricultural canal.
• Aurora, Thornton, Brighton and Adams County
invested in the Fulton Ditch northeast of Denver.
• Cherry Creek and Arapahoe County water
authorities , though still facing court scrutiny,
have staked claims to water once allocated for
farming .
Also , in the Colorado Springs area, the Donala
Water and Sanitation District, which bought a
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711-acre ranch near Leadville for its water
rights, now is pursuing a change-of-use ruling in
state court so that farming water could be
harnessed for Front Range housing and lawns.
Similarly, satellite cities Fountain and Widefield
spent $3.5 million to acquire developer Mund
Shaikly's 480-acre H20 Ranch at the base of the
Sangre de Cristo mountains. The plan is to
sustain an anticipated military housing boom by
using mountain creek water that once irrigated
hayfields .
Fountain will let the creek water flow into the
Arkansas River, then trap it in Pueblo Reservoir,
said Fountain water engineer Curtis Mitchell.
"Certainly we're not in the land business."
North of Colorado Springs, Woodmoor's new
1,900-foot-deep municipal wells appear
uncertain enough that suburban leaders are
mobilizing to buy water rights from farmers in
the Arkansas River Valley and plan to construct a
delivery pipeline.
Along the Arkansas River, state records indicate
suburbs petitioned courts at least 116 times over
the past decade to convert agricultural water for
municipal use .
State court administrators say they didn't track
outcomes in those cases . However, the impact in
the Arkansas basin has been clear: One in six of
the 450 ,000 acres that was irrigated in 1970 no
longer produces crops.
Colorado has reached a turning point , some
water authorities say, because there's no longer
enough water available to sustain both farming
and an expanding suburban population .
"It's a big mistake"
State planners project a shortfall of up to 1
million acre-feet of water by 2050 if Colorado's
population of 5 million doubles as expected .
"It's a big mistake to be do ing massive transfers .
We've got to produce food ," said Pat O'Toole,
president of the Colorado-based Family Farm
Alliance . "Denver's going to double, and so is
India and China and everybody else . What are we
going to do to feed people if we keep taking
agricultural land out of production?"
One solution Stulp and Hickenlooper are pushing
is so-called "alternative transfers." The idea is
that farmers who still own water band together
and lease some of that water to suburbs each
year . A few fields would have to remain
unplanted each year.
The sticking point has been that suburban water
suppliers contend they must own water outright
to guarantee supplies sufficient to sustain
population growth .
"If the farmers own it, and you have to rely on
getting the water from farmers, what security do
you have?" said Rod Kuharich, director of the
South Metro Water Supply Authority , which
represents 15 Denver-area suburbs that
currently draw 60 percent of their water from
groundwater wells.
"You would need to own the water and lease it
back to the farmers ," Kuharich said . "Then, you
know water is there when you need it."
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So the upshot is that suburbs and water brokers
are scrambling, offering willing farmers up to
$15,000 per acre-foot of water.
Sometimes brokers must be persuasive. But
sometimes farmers and ranchers in their 70s ,
seeing no children poised to take over their
operations, are the ones proposing to sell out.
Regardless of who initiates the deals, "we're
drying up agriculture," said T . Wright Dickinson, a
northwestern Colorado ranche r and former
Moffatt County commissioner.
Dickinson pointed to the example of Arizona,
which had 500,000 acres of irrigated cropland
after World War II but today -after using water
to enable suburban development -has one
tenth that acreage to grow food .
"I don't believe that it was a good or sustainable
choice, because it's important to be able to feed
and clothe people in this world," Dickinson said.
"The people of Colorado get this ."
Bruce Finley: 303-954-1700 or
bfinle y@denverpost.com
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3/28/2011
Developer s pl an r eservoir -without water to fill it -The Denver Po st Page 1of2
denver and the west
Developers plan . reservo1r-
without water to
fill it
By Bruce Finley
The Denver Post
Posted : 03/16/2011 01 :00 :00 AM MDT
Updated : 03/16/2 011 07 :30 :20 AM MDT
Developers citing the need to deal with loom ing
water shortages propose to build a massive
reservoir in the foothills southwest of Denver.
But they don't have water to fill it.
On Tuesday , Penley Water Co . called the
reservoir essential for weaning Front Range
suburbs from wells , which produce less and less
water as underground aquifers are depleted .
The proposed $105 million reservoir would
inundate about 306 acres west of Sedalia and
hold up to 22 ,500 acre-feet of water. That's
slightly larger than Denver Water's Marston
reservoir.
It would be the second major new reservoir in
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the Denver area for which little or no water has
been acquired . Parker Water & Sanitation District
is building the $230 million Rueter-Hess
reservoir to store up to 72 ,000 acre-feet of
water .
"Colorado's Front Range , most particularly
northwest Douglas County , is in desperate need
of a renewable , sustainable solution that will
necessarily include substantial water storage ,"
said Chris Fellows , senior principal of Penley
Water.
Douglas County commissioners are reviewing
engineering documents and a staff
recommendation that they approve the project -
with or without water to fill it.
"It's up to the developer if they want to take the
expense of moving the earth before they have
the water lined up ," plann ing supervisor Curt
Weitkunat said .
Building before buying water reflects a need for
storage capacity , said Ralf Topper, senior
hydrologist for the Colorado Geological Survey .
"The available water storage systems on streams
and rivers are few and far between , because all
the water rights have been previously allocated .
So one of the options is to create these off-
channel reservoirs ," Topper said . "The challenge
is to get water to them ."
State records show 18 pipeline companies have
been formed to move water in and out of Penley
reservoir. These would connect Penley to
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Developers plan reservoir -w ithout water to fill it -The Denver Post
denverJ?9~,~.~£0m
Colorado Springs, Castle Rock, Highlands Ranch
and other Front Range locations.
Penley reservoir would be carved from a 1, 179-
acre ranch owned by Midwest Heritage Inn of
Oklahoma City .
The project has set off a storm of opposition
from residents of the area along Indian Creek, a
seasonal tributary of the South Platte River.
They've organized as Stop Penley Dam and cite
concerns about safety, property value and
potential pipelines in and out of the private
reservoir.
Other complications include past uranium mining
in the area and a federal designation of "critical
habitat" for the endangered Preble's meadow
jumping mouse .
Across the Front Range , water woes are
intensifying because developers in the past built
subdivisions on semi-arid land and counted on
wells, some drilled as deep as 2,700 feet into
Denver Basin aquifers, which a Colorado
Foundation for Water Education study shows are
dropping by an inch a day in some areas.
About 60 percent of residents in 15 suburbs
depend on groundwater wells, said Rod Kuharich ,
director of the South Metro Water Supply
Authority. The authority , however, remained
neutral on the Penley project.
"It's an engineering question ," Kuharich said .
"You'd have to find out if there's water to put
into it."
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Bruce Finley: 303-954-1700 or
bfinley@denverpost.com
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' .
Arapahoe County paying top dollar for water that isn't yet approved for municipal use -T ... Page 1 of 10
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11J:E 08'!-VE RPosr
denver and the west
Arapahoe County
paying top dollar
for water that isn't
yet approved for
municipal use
By Karen E. Crummy
The Denver Post
Posted: 03/20/2011 01 :00:00 AM MDT
Updated: 03/21/2011 10:59:22 AM MDT
ACWWA board meeting in Centennial. (Joe Amon, The
Denver Post)
Arapahoe County water officials are paying the
top-dollar price of $153 million for water, but no
one knows when -or if -they will see a drop.
The contract between the Arapahoe County
Water and Wastewater Authority, known as
ACWWA, and a unique special district is for
water not legally approved for municipal use .
That the water is years from flowing out of a
spigot is just one of many problems in the
ACWWA Flow Project, a Denver Post investigation
found.
While there isn't a one-size-fits-all method of
putting together a project of this scope and
complexity, critics and water experts say the
deal raises questions .
Not only did the authority take the unusual step
of paying market price,
upfront, for water not approved for residential
use, it picked a water broker -United Water
and Sanitation District -that failed to deliver all
the water it promised to another special district.
Nonetheless, officials did not seek alternative
sources and put the deal together in about four
months with virtually no public scrutiny.
Additionally, a company headed by one ACWWA
board member has already profited from the
deal. A former county commissioner involved in
the negotiations received a $95,000-a-year job
with the water authority . And another board
member and the authority's lawyer have
represented both the interests of ACWWA and
entities that stand to benefit from a new water
supply.
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Most of the $153 million tab has been shelled
out or is sitting in escrow. Ratepayers' bills have
already shot up to cover the price of the project,
and if something goes wrong, both the water
users and district payers could face further costs.
Water law professor Tom Romero said the
contract doesn't include any escape clauses and
lacks any forceful legal remedies.
"ACWWA is on the hook. All the risk is on them,"
said Romero, who teaches at the University of
Denver Sturm College of Law and reviewed
~ ·--~
Breaking News Tips
The Denver Post is interested in
your tips and thoughts about
problems with your local
government. You can reach our
investigative reporters at send
us an e-mail at
TIPS@denverpost.com .
Or call us at 303-893-
TIPS (8477).
Coming Monday Offered the
same deal as ACWWA,
Castle Rock had a very
different response .
the contract at The Post's request. "Either
someone dropped the ball or (the contract) was
intentionally written that vague ."
Gary Atkin, the authority's general manager, said
he is confident United will deliver the water. The
project, he said, was too unique to entertain
other offers.
United, together with another district -the East
Cherry Creek Valley Water & Sanitation District
-offered what he called a "turnkey deal."
"The project at the end of the day was able to
give us a delivered product at a guaranteed price
through infrastructure that was already in place
and constructed," he said, pointing to a critical
waterline already built by ECCV.
The authority, which serves about 25,000
customers, has paid or pu t into escrow $41 .6
million for using the waterl ine but also to build
more infrastructure, including a reservoir, a
pipeline and a treatment plant.
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. . 'Ii!E DENVER lmT
Price tag
$94 million
fo r wa ter fights and
1c 1 imino/~t <rn1oe/dotiv.ery fac.i litie10
$19 million
caseme nts m we ll fields •. storage
ol nd dcli~r)' plpl!lincs
$,16 million
storage resc(Y()Jr an d ou tl et
struc:turc:-s by Scuth Chambers
Road and E·47o
$10 million
c:a p.a(ity in t.he Cast Cheey C rnet.
Vatley wat r t reatment plat'lt
$9 million
capacity in the ECt V nort~m
pi~line .an d pump slatfons
$2.5 mill.ion
in t erconne cti119 line from 'the
ECCV northetn li nr-to JJCWWA
~Ni(e a tea
$2 million
.$500 act~1~t northern s t orao~
TOT Al
$153 million
(The denver Post)
It's also paid out $65 million for agricultural
water rights so far -a price typically paid for
water already adjudicated for municipal use -
desp ite the fact that the change-of-use case
will take several years and hundreds of
thousands of dollars to litigate . And in
December, the board amended its budget to pay
for "higher than anticipated expenditures for
water acquisition" and "unforeseen expenses"
associated with the project , according to board
minutes .
In the special district
ACWWA, considered a local government,
encompasses an 8-sq uare-mile district,
scattered with office complexes , commercial
buildings and single-fam ily dwellings and newer
construction of multi-family residences. Also
home to the Denver Broncos training facility, the
district serves part of Arapahoe County as well
as part of northern Douglas County.
Water here is already expensive. Resident Lea
Olmsted's water bill , for example , has jumped
500 percent in five years.
Part of her $152 water bill from February
included a $26.50 monthly fee that she and other
district residents started paying a year ago for
the project.
"We're just seeing the bills increasingly go up ,"
she said .
Other developments in the district are strugg ling
with similar problems , includ ing the fact that
their high monthly bills don't include the water
for small lawns and common areas. Harry Allen,
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the homeowners' association treasurer for
Windmill Creek Reserve II in Aurora, said the
development's 31 homeowners paid $22,500 -
about $726 each -last year for irrigation.
The district is only 40 percent built out. There is
little question it needs water to meet future
demand .
Enter United , one of the many special water
districts that have popped up over the years to
respond to growing populations . Special districts
run much like private businesses but enjoy
governmental protections .
"We've incentivized private companies to get
involved under the guise of private-public
partnerships," Romero said. "There's a lot of
money to be had, and it's resulted in almost no
public oversight of a public resource ."
Robert Lembke created United's district without
residents to potentially serve people statewide,
unlike with traditional special districts that
provide a service to a specific group of residents.
Its headquarters is a 1-acre rural piece of
property in Elbert County.
Lembke , an attorney and certified public
accountant, emerged in recent years as a
controversial figure in the state water
community . Known for pushing the legal limits of
special districts , Lembke has control or financial
stake in 38 entities and special districts.
United never submitted a written proposal to
ACWWA, and ACWWA didn't conduct an in-house
or independent analysis of the plan . ACWWA also
did not seek bids or competing proposals and
contracted with United in December 2009.
Other water suppl iers were ava ilable . Alan Leak,
the board's engineer, when asked by a lawyer in
December if "United was the only game in town,"
replied : "For planning purposes , no," according to
the deposition transcript in a related case.
Atkin said the regional South Metro Water Supply
Authority , of which ACWWA is a member, had
reviewed projects brought to South Metro over
the years so the ACWWA staff already "knew
what was out there ." United , he said, had a way
to get the water and deliver it to ACWWA.
Water rights get convo luted
But buying water rights doesn't mean you can
use the water any way you want. In Colorado, a
farmer who uses water to irrigate crops can sell
a water right to a municipality, which wants to
use it for drinking water and sewer. A water
court, however, must first determine that the
new use won't hurt another person's recognized
water right and that the amount of water being
sold matches up with its historical consumptive
use .
When a farmer irrigates his field , for instance,
some of the water eventually returns to the river
basin. A water owner can usually sell only the
part that is consumed and doesn't return to the
source.
"You can't sell what you don't own," said Doug
Kenney, director of the Western Water Policy
Program at the University of Colorado Law S
chool. "In a lot of cases , (change of use) is not a
big content ion. But in some cases it is."
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In September 2008, a water court ruled that
United couldn't deliver all of the water it
promised to the East Cherry C reek Valley Water
& Sanitation District . Some of United's water
suppliers, the court found, had wrongly
expanded their consumptive water use over the
years, and therefore the judge awarded "United
and ECCV less than 40 percent of the water they
requested" from certain shares, said Steven 0 .
Sims , a lawyer involved in the case .
The case , originally filed seven years ago, is now
before the Colorado Supreme Court.
David Kaunisto, the district manager of ECCV,
said the undeliverable water was only a portion
of what United owes the district, and there is
another change-of-use application for different
water shares pending in court.
And Lembke said that while the water court
decision was not "as positive as one would like,"
the water he has promised ACWWA doesn't have
the same problems as water he bought
previously.
"Many of the rights we have are more standard,
conservative rights ," he said.
Changing water uses is "very fact-specific," said
Denver water attorney Peter Nichols, and there
isn't a quick and easy way of predicting a water
court's ruling . But relying on a broker that fai led
to deliver on even part of another project could
signal a potential problem.
"It would be a red flag for me ," he said .
Additionally, unlike ACWWA's contract, change-
of-use contracts generally have phased-in
payments, which are conditional upon various
factors. For instance, a buyer pays upfront the
going rate for agricultural water -typically
about one-third the cost of municipal water -
and pays for the rest when the water is
adjudicated for municipal use.
"A portion of payment is often delayed due to
uncertainty of the exact amount of water that
will be available after t he water court
proceeding," said Marjorie Sant, a Boulder water
lawyer.
It's pretty rare, she said, to pay upfront for water
before its use has been changed .
Atkin said ACWWA has rejected water blocks
that appeared too risky and only pays United
when title to the agricultural rights is delivered .
If something goes wrong, he said , ACWWA can
sue and "there are remedies in that contract for
breach ."
Except there aren't, said DU law professor
Romero . There isn't a default provision, such as
contract termination fees, various types of
damages, remedies for delays or opt-out
provisions, he said.
"It's conspicuous by its absence," Romero sa id .
"They're buying water at a premium ... but don't
have a remedy in case something goes wrong."
If the other United case is an indicator, ACWWA
will spend the next several years in litigation and
the authority must pay half of those legal fees,
according to the contract.
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To finance the deal with United, ACWWA issued
about $150 million in bonds and will use existing
cash to cover the additional costs . The debt will
be repaid by district taxpayers and ratepayers ,
including the county itself, wh ich is one of the
top water customers , according to bond
documents.
If something goes wrong , such as the
adjudication of water rights, ratepayers face
more increases because they are "required to
pay rates and charges sufficient to pay debt
service on the bonds," documents show .
The authority is banking on the slow economy to
turn around and construction to return to normal
levels by 2013. An increase in revenue is
expected to keep water users from having to pay
more than the $26 .50 a month fee they pay now ,
Atkin said .
But new lot development has come to a
"screeching halt," and developers are finding it
difficult to plan out even two years , said John
Covert, director of Metrostudy, which provides
market information about Front Range
communities to the housing industry.
"There's so much risk in the marketplace today
because of lack of demand for new housing ," he
said, noting that the majority of Arapahoe
County lots are still in the conceptual phase.
"Until we see existing lots absorbed , we won't
see new development."
Deal's progress clouded
There are few details about the evolution of
ACWWA's deal with United, and what has
emerged is murky because most of the
discussions were done in secret.
Lembke said he approached ACWWA in July 2009 .
And Atkin said the deal was hammered out that
fall.
"We literally had 20 people in a conference room
once or twice a week for three to four months,"
Atkin said . "It was open for any board member to
attend whenever they wanted . The only caveat I
had was to keep reminding them that we
couldn't have more than two of them in the room
at the same time or it would constitute a board
meeting ."
Board meetings are lega ll y required to be open
to the public.
On Sept. 30, 2009, Atkin sought approval from
the county commission for the sale of about $53
million in bonds for infrastructure .
The commission was informed that district
taxpayers would be on the hook to pay off the
debt but was not told the water had yet to be
approved for drinking and sewer, according to
minutes and those attending the meeting.
"If I had known that, it might have raised some
concerns," said Commissioner Frank Weddig, who
asked Atkin during the hearing whether anything
raised a red flag.
The commission gave ACWWA permission to
move ahead with the financing . The authority
isn't required to bid water projects . But water
experts say it's customary to compare sellers.
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"The best practice is to look at any alternatives
that are feasible," said David Hallford, a water
and natural-resources lawyer in Glenwood
Springs .
When asked what ACWWA's standard protocol is
for entering into deals such as this, Atkin
answered: "This is really the only water project
of this magnitude we've been involved in."
Oddly, on the same day Atkin asked the
commission for financing for the United deal,
water resources manager Steve Witter put
together a one-page "confidential draft" memo
showing other companies had available water .
Atkin said the memo was a "cursory summary" of
four water groups South Metro had looked at for
possible regional projects, although not
specifically the ACWWA project. United was not
included. Atkin said the board wanted to see
how United stacked up against others, but he
didn't know if the members used it in the
decision-making process .
The summary showed some water prices similar
to United's and some much higher. Some water
was already decreed for municipal use but
lacked infrastructure for delivery or treatment.
There was no analysis of the infrastructure costs
to compare with United's proposal.
Others had "good" or "high-quality water" but
noted the "seller has not secured water rights
yet" or there were "concerns about seller's ability
to deliver." Although both of those issues also
applied to United, they weren't mentioned in the
memo .
On Nov. 12, 2009, the authority unanimously
voted to add a fee increase of $26 .50 on
ratepayers and authorized the issuance of
another $96 million in bonds to pay United for
water rights, according to board minutes.
On Dec. 16 , the bonds closed.
Aurora resident Don Smi th isn't happy about the
prospects of paying higher water bills . His
January bill was $176.41 for 6,000 gallons of
water. That's less than the average monthly
usage of 10 ,600 gallons, according to the
nonprofit American Water Works Association .
"It's not that I expect not to pay for water; I just
want to pay a reasonable amount," he said .
Karen Crummy: 303-954-1594 or
kcrummy@denverpost.com
Alan Leak
Leak has been a board member since 2007 and is
president of WRC Engineering Inc . His firm was
paid $855,811 by ACWWA between Jan . 1, 2008 ,
and Dec. 31, 2010, for engineering work . His firm
is doing the due-diligence review of United's
water acquisitions for the ACWWA deal. In May,
Leak also went on United's payroll as an expert.
He was paid $14,463 .
Leak said his work for United was related to
municipal storage needs, which would benefit
both ACWWA and Un ited.
"There was a short deadline to complete this
work and given my knowledge of ACWWA's
storage needs, WRC was able to complete this
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work in the time needed to meet the deadline,"
Leak said in an e-mail. "This is the only work
WRC has done for United."
Leak also noted that he filed his potential
conflicts of interest with the secretary of state's
office as required. And he said he has recused
himself from voting on contracts and payments
ACWWA has awarded to his firm . ACWWA
general manager Gary Atkin defended Leak,
noting that WRC provided consulting services
before Leak's appointment to the board . WRC,
however, billed ACWWA only $6,858 the year
before Leak came onto the board .
Jim Dyer
Dyer is a former Arapahoe County commissioner
who, as a member of the ACWWA board, helped
negotiate the deal with United . He began
working for ACWWA shortly after his term ended .
When he decided not to seek re-election to the
commission, Dyer told The Post he's a "private-
sector person" at heart. Days later,
ACWWA announced he would be its new board
chairman . Two months later, Dyer filed a
potential conflict of interest statement with the
state, which disclosed he was negotiating for a
position with ACWWA.
abilities."
Dyer declined to answer questions about his job.
Rick Kron
Kron is ACWWA's attorney and also represents
Compark Business Campus Metropolitan District.
The entities are involved in negotiations, with
ACWWA seeking
pipeline capacity from Compark and Compark
seeking water from ACWWA.
"A conflict does exist in this instance," Kron said
at a March 3 board meeting, referring to
negotiations involving capacity in a pipeline not
part of the ACWWA Flow Project. He said it was a
"waivable conflict" agreed to by both parties .
Kron told The Post he complied with the state's
professional conduct rules during his
representation of both parties .
At that board meeting, the board approved a
resolution retroactively stipulating that Kron had
verbally disclosed the conflict just before the
board's approving the agreement Feb. 9.
Rod Bockenfeld voted against the resolution.
"I couldn't support that because I didn't have that
On Jan . 12, Dyer took the unadvertised, newly
created position of public affairs and
governmental relations director with ACWWA.
Among other things, Dyer is to negotiate water-
purchase agreements and serve as a committee
member on the
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ACWWA Flow Project. His pay is $95,000 a year
plus benefits .
Hiring Dyer was ACWWA general manager Gary
Atkin's decision.
"No, we didn't solicit candidates," Atkin said. "We
were looking for a particular type of person with
a certain set of skills with a certain type of
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recollection," he said .
Bockenfeld's request to have an independent
third party review the conflict was ignored by the
board. One commissioner said it would be a
waste of the ratepayers' money .
Ray Wells
Wells has been a board member since 2009 and
has managed a number of Robert Lembke's
special districts, although not United, he said .
Wells does work for Compark development
companies, which he disclosed in his potential
conflict of interest statements filed with the
state . At least one of those companies had a
financial interest in the real estate transactions
surrounding the reservoir ACWWA is building,
according to records .
Additionally , Compark Business Campus
Metropolitan District is negotiating with ACWWA
for water service, according to its board minutes.
Wells said the water for that development is
expected to come from the water secured by
United.
Until this month , when a board member, County
Commissioner Rod Bockenfeld , suggested Wells
sit out a private session involving Compark
properties, Wells never recused himself on these
issues .
"Everyone knows it's my client. There's nothing
secret about it. In 40 years, no one has ever
asked me not to sit in on a meeting . This isn't
atomic bomb stuff," Wells said .
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opinion
Lines drawn over
Sterling Ranch
By Mary Winter
Posted ; 03/20/20 11 01 :00 :00 AM MDT
Douglas County planning commissioner Marvin
Taxar said, "I can't talk to you ."
Wendy Holmes, county public information officer,
said she'd like to say more, but it might "harm
the integrity of the process ."
And from assistant planning director Steve
Koster : "I am not comfortable answering
questions on behalf of the Planning Commission
II
So what was the hush-hush project I was asking
Douglas County officials to help me understand?
A nuclear reactor near Chatfield Reservoir? A
landfill at Waterton Canyon?
In fact, my inquiries were about Sterling Ranch, a
proposed community of 12,050 homes and
31, 700 people in the sleepy Chatfield Basin
south of Denver. It's been planned for 10 years,
the subject of reams of documents on file with
the county . But as Sterling Ranch approaches the
final stages of zoning approval, what once was a
simmering controversy is now a steaming hot
potato .
On one hand, the project could create 9,000 jobs
and generate millions of dollars in tax revenues
for Douglas County. On the other, critics say the 3
,400-acre project will turn pastoral Chatfield
Basin into a swamp of traffic, pollution and
noise .
In November, the planning commission voted 6-3
against giving Sterling Ranch the rezoning it
needs to start building, citing concerns about
traffic and density. Bu t the final say is up to
county commissioners in hearings beginning
April 4 .
After a few days of research, it's not clear to me
how commissioners s hould vote. With so many
moving parts on this project, it would take m
onths to get an accurate picture . But while
Sterling Ranch developers impress me as
thoughtful, visionary and well-intentioned,
longtime residents who complain the rules are
changing halfway through the game also have a
powerful case.
What I do know is the Sterling Ranch story would
make a good TV docudrama : On one side are the
developers -a former Coors executive with a
banking background, his wife and her brother, all
third-generation Coloradans steeped in 'tne· land
and real estate business. In 1990, they buy a
Civil War-era cattle and wheat ranch (which
apparently never produced much of either) with
dreams of building a smartly planned, sprawl-
resistant, nature-preserving community that will
write the book on 21st century water
conservation in Colorado .
On the other side are hundreds of Chatfield
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Basin residents, some who have lived on their 1-
to 5-acre lots for more than 20 years , who say
Sterling Ranch is the antithesis of everything
people cherish about the area : its peacefu lness ,
rural character , unspoiled beauty, views and
wildlife. They are outraged by the density
Sterling Ranch proposes, and say its traffic,
asphalt, noise and light pollution would destroy
their way of life.
In the wider publ ic relations war, Sterling Ranch,
which hopes to break ground next year on the
first of its seven villages , seems to have the
momentum . The project's public relations team
provides testimon ials from young moms , as well
as retirees in nearby Roxborough Village , who
love the idea of new stores , restaurants , schools
and the $120 mill ion youth sports complex
developers promise.
Reporters have praised Sterling Ranch's radical
wate r-saving agenda . "Think of grass as a throw
rug , not a carpet," Harold Smethills, one of the
three developers , told The Wall Street Journal. S
methills says residents will use one-third the
water most Coloradans do , mainly by embracing
landscapes with drought-tolerant plants and
grasses .
Whether Sterling Ranch can meet its ambitious
goal of just 0 .22 acre-feet of water annually per
household is up for debate.
"I think they are very optimistic ," said Frank
Jaeger of Parker Water and Sanitation , a district
where use averages 0.39 acre-feet.
"We view it as a curiosity ... a giant pilot study ,"
said Greg Baker of Aurora Water, where average
use is 0 .36 acre-feet. "Can it be done? Yes . Is it
going to be easy? Probably not."
Rod Kuharich , executive director of the South
Metro Water Supply Authority , believes Sterling
Ranch's goals are real istic "because they're
starting from scratch (with water-wise
landscaping), with significant controls on outdoor
water use."
But while writers have praised the water-
conservation plan , they've done less digging into
where Sterling Ranch wi ll get its water in the
first place . Groundwater , Douglas County's main
source , is fast being depleted and in some spots
has vanished .
Sterl ing Ranch's solu t ion: renewable surface
water brought from rivers and reservoirs -not
wells. It's "blisteringly expensive," said Smethills ,
but by working with othe r water districts , they
can share infrastructure and increase
efficiencies.
"There's water out there ," said Sterling Ranch
engineer Mary Kay Provasnik. "There's not as
much low-hanging fruit , but if we all work
together, then it's cheaper and easier to move
water from one place to another."
Such explanations don't satisfy critics like Dennis
Larratt , who suggests the vast majority Sterling
Ranch's supply is "paper water."
"Their plan relies on water supplies that have not
been obtained or shown to be reliable," said
Larratt, a former research and development
director for Johns Mansville who has lived on
land adjoining Sterling Ranch 18 years and
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represents the 400-member Chatfield Valley
Association.
"For example , when they say they have an
'option' on 5,000 acre-feet from Lost Creek,
what does that mean? Is it firm-yield water? We
don't really know what this water is . Sterling
Ranch is an appealing story , but when you get
into the deta ils , it doesn't hold" up .
Last week, in his office, Smethills responded by
saying he's focusing on three water sources :
"First, we're buying water on the Platte ." He owns
rights to 230 acre-feet annually (enough for 460
homes), to be diverted between Strontia Springs
and Chatfield Reservoir and piped 5 to 6 miles to
Sterling Ranch .
The second source is Denver Water and Aurora
Wate r. "Denver and Aurora, at certain times of
the year ... have excess water," says Smethills .
It can be stored by Aurora and , ultimately, up to
60 ,000 acre-feet could come south to Douglas
County through a pipeline to University and C-
4 70, Smethills said .
The third source is Lost Creek in Weld County ,
"where we have under option 5,000 feet -all
renewable , all in perpetu ity."
Kuharich, head of the South Metro Water Supply
Authority , confirms water is available from
Denver and Aurora . And aging Colorado farmers
are selling their water rights to thirsty cities at a
fast clip, The Denver Post reported March 13 .
But Bruce Lytle of Lytle Water Solutions, LLC ,
hired by Douglas County to study Sterling Ranch's
water plan , said he could not make a
recommendation because the plan was too
vague. "Since Sterling Ranch does not provide the
specifics of a water supply plan at this time, a
number of statements in the documents provided
.... simply cannot be substantiated," he wrote
on Oct. 22 .
Talk to the Smethills and Hoagland and you'll
come away convinced they've poured their
lifeblood into this project, which they say their
children will run someday . By all accounts, they
have done a superb job of getting to know the
community , even promising to provide Sterl ing
Ranch water to 700 well-dependent neighbors,
at cost.
Smeth ills bristles at the suggestion that 12 ,050
homes is too many . "Nearly 37 percent of this
project is open space . That's huge. If we were
going to do a classic kind of sea of rooftops , we
could [build] up to 20 ,000 homes . We invested
the land in open space."
He's quit trying to appease critics . "If we said
8,000 homes, they'd say 6 ,000 . If we said 4 ,000 ,
they'd say 2,000 .... If you want to deal with the
truth, we have slightly higher density -sl ightly
-than Highlands Ranch ."
Finally , Smethills insists Sterling Ranch will
increase Chatfield Basin's rural feel. "It will give
people much more rural alternatives to what
they have now: 30 miles of trails that don't exist
today, almost 2 square miles of open space,
wildlife corridors. So it will be much more rural
than it was before ."
Larratt remains a huge skeptic of everything
from Smethills' proj ect cost estimate ("$4.4
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billion? They're using the Ouija board") to what
would will happen in an economic downturn ("A
small family operation like Hoagland and
Smethills can't absorb shocks in the economy.")
Larratt says he would "happily support a
development compatible with the rural
residential zoning : 1-to 5-acre lots .... The
message I want to give Douglas County
commissioners is if the county follows its own
regulations, Sterling Ranch will not be built as
presented today ."
I know one thing about Sterling Ranch: I don't
envy county commissioners who must decide its
fate .
Freelance columnist Mary Winter (mwinte@aol.
com) of Denver works for PoliticsDaily.com.
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denver and the west
Arapahoe County
looks to get Castle
Rock in on costly
water-flow project
By Karen E. Crummy
The Denver Post
Posted: 03/2 1/201 1 01 :00:00 AM MDT
Updated : 03/21 /2011 10:34 :19 AM MDT
Arapahoe County water officials, already
criticized by experts for risks they took on a
$153 million water contract, are trying to entice
Castle Rock to get in on the deal.
Arapahoe County Water and Wastewater
Authority, known as ACWWA, proposes delivering
its excess water to Castle Rock, even though the
water isn't yet approved for residential use.
Castle Rock officials are wary.
"We're comparing projects . We're not rushing into
anything," said Ron Redd, the town's utilities
director. "We need to make sure we partner up in
a secure, long-term water deal. We can't afford
to make a mistake ."
A Denver Post investigation Sunday found that
ACWWA entered into a $153 million , no-bid
contract with United Water and Sanitation
District and another entity to deliver water to its
customers.
Although ACWWA has received only the
agricultural rights to the water, it paid the going
market price for water that has already been
adjudicated for municipal use. The court process
to change the use will likely take several years .
Even so, ACWWA and United have teamed up to
help Castle Rock. ACWWA proposes to lease
water to the town in the short term . Robert
Lembke, head of United, said he would secure
more permanent water rights for Castle Rock as
the town continues to develop .
"Given ACWWA's current surplus of treated and
untreated water capacity and Castle Rock's
future water demands, a joint solution involving
Castle Rock, ACWWA and United could be
advantageous for all parties," wrote Jim Dyer,
ACWWA's governmen t-relations director, in a
Feb . 11 letter to Redd .
ACWWA's contract w ith United gives it few , if
any, forceful legal remedies, according to Tom
Romero, a law professor at the University of
Denver Sturm College of Law.
That same contract was provided to Castle Rock
by ACWWA and United as an example of the deal
the three entities might hammer out.
Weighing the town's risks
Redd, who has estimated the ACWWA/ United
project would cost the town about $225 million,
has concerns about the sample contract.
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"It seems it would put all the risk on us," he said .
"It also asks for all the costs upfront, and we
have to rely on the performance happening
later."
Ten days ago , Redd gave the Town Council a
memo that outlined the proposed project: South
Platte River Basin water would be treated near
Barr Lake and conveyed south through a pipeline
to a delivery point near E-470 and Smoky Hill
Road. Castle Rock would then have to build
infrastructure to get the water to the Rueter-
Hess Reservoir in Parker and then to the town
service area.
Redd's memo points out his initial concerns,
which include the town's reliance on water that
must be changed from agricultural use to
municipal use .
Castle Rock considers options
If United's water projections are off, Redd wrote,
"a significant impact to the financial feasibility
of the project may result."
ACWWA, which signed its contract with United in
December 2009, has already run into
"unforeseen expenses" and "higher than
anticipated expenditures for water acquisition,"
according to its board minutes .
Redd and his staff are analyzing the
ACWWA/United proposal and another one from
WISE -Water, Infrastructure and Supply
Efficiency. WISE is a joint collaboration among
Denver Water, Aurora Water and the South Metro
Water Supply Authority (of which Castle Rock is a
member and Redd is board president).
The WISE plan doesn't include a lot of upfront
capital costs, but the fees would be rolled into
the water rates, Redd said . ACWWA and United's
plan would entail paying more money at the
outset but less in rates .
Karen E. Crummy: 303-954-1594 or
kcrummy@denverpost.com
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Arapahoe County commissioners to review policies in wake of water authority's dealings . .. Page 1 of 3
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arapahoe promises scrutiny of conflicts
Arapahoe County
commissioners to
review policies in
wake of water
authority's
dealings
By Karen E. Crummy
The Denver Post
Posted: 03/23/2011 01 :00:00 AM MDT
Updated: 03/23/2011 05:01 :32 PM MDT
Arapahoe County commissioners are considering
an overhaul of their policies and application
procedures to avoid the type of conflicts of
interest that were revealed in a recent water
deal.
The commission also intends to publicly question
Gary Atkin, general manager of the Arapahoe
County Water and Wastewater Authority, about
the $153 million project that experts have
criticized as mismanaged and risky .
The five-member county commission doesn't
control day-to-day operations of ACWWA, but it
does appoint members to its board. A change in
rules would affect not only ACWWA but all
county boards and commissions, said Andrea
Rasizer, spokeswoman for the commissioners.
Changes would also immediately apply to current
board members.
"It is the expectation of this board of county
commissioners that the people we appoint to our
boards and committees would not personally
profit from the activities of the entities to which t
hey are appointed," she said . "Furthermore, the
appointees to all our boards and committees
owe a fiduciary responsibility to the taxpayers of
Arapahoe County and to the entity that they
represent."
The ACWWA board is in charge of hiring and
firing the board attorney and the general
manager.
Rod Bockenfeld, chair of the commission,
declined to comment beyond saying that he
supports the commission's statement.
A Denver Post investigati on Sunday found that
ACWWA signed a no-bid contract with the United
Water and Sanitation District and another entity
to deliver water to its customers. The deal was
put together in about four months and out of the
public eye, despite the fact that ratepayers and
district taxpayers are on the hook for the bond
money .
Although ACWWA has received only the
agricultural rights to the water, it paid the going
market price for water that has already been
adjudicated for municipal use . The court process
to change the use will likely take several years .
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The Post also found conflicts of interest on the
ACWWA board . For instance, board member Alan
Leak is president of WRC Engineering Inc. His
firm was paid $855,811 by ACWWA between Jan .
1, 2008, and Dec. 31, 2010, for engineering work.
His firm is doing the due -diligence review of
United's water acquisitions for the ACWWA deal.
In May, Leak also went on United's payroll as an
expert.
Leak, who filed his potential conflicts of interest
with the state , said he has recused himself from
voting on contracts and paymen ts that ACWWA
has awarded his firm . And his work for United
was related to municipal storage needs, which
would benefit both ACWWA and United .
Board member Ray Wells, who also manages a
number of special districts, does work for
Compark development companies, which he
disclosed in his potential conflict-of-interest
statements filed with the state .
At least one of those companies had a financial
interest in the real estate transactions
surrounding the reservoir ACWWA is building ,
according to records . Additionally, Compark
Business Campus Metropolitan District is
negotiating with ACWWA for water service,
according to its board minutes . Until recently,
Wells , who said his associations were common
knowledge, never recused himself on issues
involving Compark . advertisement
Karen Crummy: 303-954-1594 or
kcrummy@denverpost.com
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