New numbers are in, the reservoir is shrinking and a related, controversial fee will likely decrease. Nevertheless, revised cost estimates of the entire Dry Gulch project have risen dramatically.
A crowd gathered at the Vista Clubhouse Monday evening, as engineering, financial and legal consultants joined two local water districts in presenting an updated public overview of area growth projections, water demand and storage needs. The two-hour program centered on the proposed Dry Gulch Reservoir, to be located two miles northeast of Pagosa Springs.
Staff, board members and representatives of the Pagosa Area Water and Sanitation District and San Juan Water Conservancy District were among an estimated 70 people that included town and county officials, private citizens and members of the business community. Folks listened, as various speakers described the applied rationale and methodology that ultimately advocated a smaller reservoir and reduced fee to help pay for it.
Some years ago, as planning for additional water storage heated up, the districts analyzed more than a dozen possible locations, before identifying Dry Gulch as the most feasible site. At the time, engineers determined that it would accommodate a maximum impoundment of 35,300 acre feet, roughly estimated at $150 million. That estimate, however, considered only the cost of developing additional raw water storage at Dry Gulch.
The latest estimate considers a smaller reservoir, of just 19,000 acre feet — plus all related infrastructure — as well as a new treatment plant and transmission pipelines that will provide potable water service to meet increased demand resulting from growth. Though the comparison is hardly apples to apples, the fully-developed cost through the life of the project now appears to be $356.5 million, or more than double the previous estimate.
However, the cost of the raw water component and related infrastructure alone — as was estimated before — would now run $216.5 million, or $66.5 million more than originally thought. The difference is largely attributable to a vastly more detailed analysis and calculations in 2008 dollars.
Of course, the price of the treatment plant and transmission pipelines must also be included in plan projections, and is now estimated at $140 million.
A few years ago, the districts and community taxpayers decided new growth should pay for additional raw water storage and all related infrastructure. Therefore, PAWSD created a Water Resource Fee (WRF) component as part of its Capital Investment Fee (CIF), to help offset the cost of Dry Gulch. The CIF, meanwhile, generates revenue to pay for added treatment and delivery of water to new users throughout the PAWSD district. Both fees are assessed against new development.
The amount of money each fee will generate through the life of the Dry Gulch project depends on the actual rate of growth the community sees. But at Monday’s presentation, PAWSD staff and consultants predicted the increase in Equivalent Units (EUs) — a widely accepted measure of water demand — would average 3.9 percent through the year 2055.
If so, a WRF of $5,617 per EU, at 36,413 new EUs, would bring in nearly $205 million, while a CIF of $3,579 for the same number of EUs would draw more than $130 million. The total, then, would cover all but approximately $21 million of the entire project.
Of course, all of this depends on several assumptions, therefore, PAWSD and the SJWCD will continually update growth and cost estimates on an annual basis. For now, the SJWCD has temporarily suspended collection of any growth-related fees, while the PAWSD board of directors will likely adopt a WRF and CIF consistent with those analyzed above.
For now, PAWSD charges a $7,210 WRF and a $2,575 CIF for development of new water-related EUs, for a total of $9,785 per EU. Should the PAWSD board adopt the new fees, as recommended, the total would be $9,195, or $590 less than the current amount.
Regardless, both districts say they will only build what they can afford, when they can afford to, as demand requires it. The alternative, they say, is to eventually face mandatory water restrictions, while becoming increasingly susceptible to prolonged drought.
According to recent studies in places like Las Vegas and Phoenix, the old adage, “Don’t build it, and they won’t come,” is an apparent fallacy. Build it or not, growth will come.