Critics question Arapahoe County water deal
DENVER – Critics and water experts are raising questions about a contract that Arapahoe County water officials reached to pay $153 million for water that hasn’t yet been legally approved for municipal use.
The Denver Post reports that the Arapahoe County Water and Wastewater Authority reached its water project deal with United Water and Sanitation District in 2009 with little public scrutiny.
The water authority didn’t seek competing bids, but it wasn’t required to do so.
The Post reports a company headed by one water authority board member has profited from the deal, and a former county commissioner involved in the negotiations received a $95,000-a-year job with the water authority. Another board member and the authority’s lawyer have represented both the interests of the water authority and entities that could benefit from a new water supply, the Post reported.
A $26.50 monthly fee has been added to district residents’ water bills to pay for the project.
The water authority’s general manager Gary Atkin said the project was too unique to entertain other offers. It includes an existing water line and plans to build more infrastructure, including a reservoir.
“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,” Atkin said, pointing to the existing water line.
The water authority, which acts similar to a local government, covers an eight-square-mile area. It serves about 25,000 customers and will need more water to meet future demand.
In the United deal, it has paid or put into escrow $41.6 million for using the water line and to build more infrastructure, The Post reported.
It also paid $65 million for agricultural water rights so far – a price typically paid for water already adjudicated for municipal use. 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.
Buying water rights in Colorado doesn’t mean the buyer can use the water for any purpose. A water court first must determine that the new use won’t hurt another person’s recognized water right and that the amount of water being sold matches its historical consumptive use.
For instance, when a farmer irrigates a field, some of the water eventually returns to the river basin. A water owner can usually sell only what is used 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 School.
United has failed to deliver all the water promised in a separate deal with the East Cherry Creek Valley Water and Sanitation District. Water rights issues in that case are working their way through the courts. If that case is any indication, the Arapahoe County water authority could spend the next several years in litigation on change-of-use of water it wants to use, with the authority paying half of the legal fees, according to the contract.
Change-of-use water contracts generally have phased-in payments that are conditional upon various factors. So a buyer could pay the going rate upfront for agricultural water – typically one-third the cost of municipal water – and pay the rest when the water is adjudicated for municipal use.
Boulder water lawyer Marjorie Sant said it’s rare to pay upfront for water before its use has changed.
Atkin said the Arapahoe County authority rejected water blocks that appeared too risky and only pays United when title to the agricultural rights is delivered. He said the contract has remedies for breaches.
But water law professor Tom Romero of the University of Denver Sturm College of Law reviewed the contract at the Post’s request and said there isn’t a default provision, such as contract termination fees, various types of damages, remedies for delays or opt-out provisions.
Information from: The Denver Post, http://www.denverpost.com
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