| Orchard City agrees to buy more water held in Little Gem Reservoir |
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| Written by Hank Lohmeyer | |||
| Wednesday, 07 January 2009 03:00 | |||
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The Orchard City Town Board, during a special meeting on Dec. 10, voted unanimously to accept a chance to purchase 72.9 acre-feet of water in the Little Gem Reservoir in exchange for cash and other water shares.
The town trustees also declined an offer to purchase Trio Reservoir. Both reservoirs are located on Grand Mesa. The town already owns half of the water that Little Gem Reservoir holds at any one time. If the approved purchase goes through as expected, the town will own all but one-sixth of the reservoir, and the town is going to try and buy that, too. “I think we should try and get the whole reservoir,” said Trustee Marsha Thomas. The town trustees authorized the mayor and town administrator to begin discussions with the owner of the last one-sixth of Little Gem for possible purchase. The Little Gem Reservoir holds what is considered high quality surface runoff water from the mesa snowpack that is suitable for treatment and domestic use. The reservoir is already part of the town’s water system, so accessibility of the water to the town’s treatment facilities is not considered a problem. The water would be used as a backup supply should the town’s springs run low, and for additional insurance against drought. The town currently owns a maximum 109.5 acre-feet of the reservoir’s 219 acre-foot total capacity. The level of the reservoir can vary, and so the town is entitled to one-half of the water in the reservoir at any time. There should be no problem with using the total reservoir’s capacity under a municipal water decree, said trustee Jimmie Boyd. Mayor Don Suppes, who negotiated the long-sought-after water for the town, explained, “The deal at first was for $185,000 cash. Now the seller wants water, too.” The asking price in a few weeks’ time had increased from an original figure of $185,000 to $45,000 cash plus six of the town’s shares of Surface Creek Ditch and Reservoir Company — a total amount that could be valued as high as $225,000. Some at the meeting thought the asking price for the water was higher than actual market price. Trustee Cherrie Gilliam said, “It’s above the going price, really.” Trustee Gale Doudy agreed. Former mayor Tom Huerkamp said, “It is a little excessive for what you are getting. Five shares of Surface Creek would be an adequate, if hefty price. But it could be justified.” Huerkamp also advised the board members to consider an economic opportunity they may now have for doing capital construction on water projects, and to consider using available funds for that instead. The trustees agreed to value the six shares of Surface Creek water at $30,000 each. This, plus the $45,000 cash would make the per-acre-foot cost of the water just over $3,086 — a deal totaling $225,000. The amount of water in one share of Surface Creek can vary, but it is said to average around 5.5 cubic feet per second (cfs). One cfs of water flow for 24 hours yields two acre-feet. For the past several years, under its water conveyance policy the town has paid $18,000 for many of the Surface Creek Ditch and Reservoir water shares it owns. Under Orchard City’s water conveyance policy, a policy that is still in effect, developers and builders both inside and outside of the town must give usable raw water supply to the town in order to qualify for purchase of a new water tap and water service. To meet that requirement, the town, under its water conveyance rules, has not accepted fractional shares of Surface Creek. So, if less than a full share of Surface Creek is needed to meet the conveyance requirement, the town will take an entire share and pay the conveyor for the difference, but only at the rate of $18,000 per share even if it cost the conveyor $30,000 per share to acquire the water. So, for the trustees, if they are taking water they purchased at $18,000 per share and trading it for a value of $30,000 per share it would look like a good deal. The $18,000 maximum price the town would pay was established with the thought it would prevent the town from “competing” with agricultural water users and “bidding up the price of water.” In fact, some members on the town board and the mayor now believe the town’s water conveyance policy has accomplished what it was supposed to prevent – they believe that by forcing builders to enter the water market to buy water for developments, the price of the water shares has had support rising to its present $30,000 level. Others disagree, pointing out that other domestic water providers serving the valley have water conveyance rules of their own. There has been discussion among board members recently about dropping or modifying the water conveyance policy because some believe it is discouraging construction, and choking off water tap fee revenue needed to keep the water utility running right and making improvements to it. While under the policy the town receives water shares, its current need is for cash to make water system improvements. The town could sell water shares it owns, but there seems little willingness to do that among the town board members. The town has mostly used its shares acquired under the conveyance policy to purchase land for the water utility and, in the case of Little Gem, to trade for other usable domestic water. At the Dec. 10 special meeting, the trustees also declined an offer to buy Trio Reservoir in a deal that would have valued the water and storage at $400,000 – approximately the same per acre-foot cost as the Little Gem deal, said Trustee Doudy. Trustee Jimmie Boyd put the Trio deal under a cloud at the meeting’s outset when he reported the reservoir’s owner must pay a special use permit assessment to the Forest Service each year of over $4,000. “You could probably make it work as a municipal source without that special use permit fee,” Boyd said. Trustee Len Johnson said, “It’s just too much to pay for a reservoir that will cost at least an additional $80,000, and possibly a lot more, for dam repairs.” Trustee Cherrie Gilliam said, “It’s really not the good deal it appeared at first to be.” Doudy added, “It’s probably not the right move at this time.”
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