Article by Bob Engel
Water – October 2003 – Colorado Central Magazine
FOR EVERY ACTION there is a reaction. The Chaffee County Commissioners have reacted to drought and the City of Aurora by proposing a local referendum to keep water in the Upper Arkansas Valley.
The commissioners’ proposal would establish a 2% use tax on motor vehicles purchased outside of Chaffee County. The revenues, close to $500,000 a year, would be divided between the municipalities and the county. The county would get about half, and the municipalities would divide the other half in proportion to overall vehicle registrations.
The ballot proposal states that the funds be used “for the preservation, protection, acquisition and enhancement of Chaffee County’s water resources for the beneficial use of the citizens of Chaffee County.”
The resolution behind the ballot proposal states that the county will form a “Water Resources Fund Board to act in an advisory capacity and make recommendations” to the commissioners on disbursement of funds consistent with the purposes and limitations of the ballot measure.
The measure would expire after 10 years. Commissioner Tim Glenn said that the sunset provision would ensure that the measure “will die if it’s abused”. If it’s successful, residents can vote to continue it.
The broader goals of this ballot measure include keeping the valley green, protecting agriculture, protecting vested water rights, providing water storage and helping the towns obtain water.
Including New Tools
The first two goals — keeping the valley green and protecting agriculture — are important objectives. The mountains, combined with the agricultural open spaces, combine to give Chaffee County a rural character with majestic beauty — important reasons why many people live here and others move here. That character and appearance are also important economic assets; in combination with the mountains and streams, they support tourism, the county’s main industry.
In early discussions about the measure, the commissioners focused on the purchase of water and construction of storage. They talked about leasing the county’s share of water to ranchers or storing it in a multitude of ponds that would recharge the valley aquifer.
But the temporary nature of this approach soon became apparent. At the commissioners’ presentation to the Upper Arkansas Water Conservancy District Board meeting in August, Glenn Everett challenged the assumption that buying water would protect ranching.
Everett, a rancher, conservancy board member, and former county commissioner, said that having the county buy water wasn’t going to make ranching any more profitable. Thus as ranchers went out of business, the county eventually would run out of ranches to lease water to. Commissioner Joe DeLuca admitted they “couldn’t guarantee there will be ranching here in 100 years,” to which a rancher responded, “you mean in 10 years.”
By the time the commissioners’ made their presentation to the water conservancy district board, they were already considering a broader approach. They were looking into a successful program approved in 1997 in a Park County referendum.
Back then, the Park County Commissioners were concerned about Aurora pumping water from the South Park aquifer. So they asked voters to approve a 1% sales tax “for the preservation, protection, acquisition, improvement, and maintenance of Park County’s remaining water resources and lands in Park County containing associated water rights and water resources.”
The Park County tax proceeds went into a trust fund administered by a board appointed by the commissioners. One of the first projects funded by the trust fund was a court challenge to Aurora’s proposal to take more water from the South Fork aquifer in a “conjunctive use” project.
After Park County beat Aurora in court, the trust fund awarded grants to the Park County Heritage Program, a rancher-initiated conservation-easement program started in 1994. The Heritage Program has subsequently gained support from the real estate, environmental, recreation, tourism, and historic-preservation communities.
The Park County Heritage Program expects to have acquired conservation easements on 25 ranches by 2005. So far the program has leveraged $1.4 million in grants from the trust fund into matching funds from outside the county of about $6.6 million,
It’s unlikely that a county could get that kind of leveraging affect from buying water outright, and an outright water purchase would not keep the fields irrigated.
A conservation easement is essentially a deed restriction on the property — both the land and water rights. Easement specifics are up to the property owner and easement buyer, but generally they seek to keep the property as a functioning ranch with the irrigation performed as before.
These easements to keep land in agricultural production have become popular with Colorado ranchers, who can receive compensation while continuing to ranch. At some point, they can even sell the deed-restricted property on an active market for such properties. Or they can pass it to their heirs with reduced estate taxes.
Either way, they’ve preserved an operating homestead that has been in the family for generations. And they’ve potentially avoided turning over much of the ranch’s value to the government in taxes, or to a realty agent in commissions.
People in the Lower Arkansas Valley are also concerned with losing water and farms to Aurora. Both the Otero County Commissioners and the five-county Lower Arkansas Valley Water Conservancy District recently set up their own land trusts to accept conservation easements. Otero County won a large GOCO grant, but the primary funding source in the lower valley is the sale of the state tax credits through brokers.
A Chaffee County Water Portfolio?
Three municipalities in Chaffee County have water utilities and well-defined customer bases: Salida, Buena Vista and Poncha Springs. They would use their share of the tax proceeds to purchase and store water — not for conservation easements.
The municipalities will have approximately half the tax revenues available for the purchase of water rights and the construction of storage.
But in contrast to the clear needs of the municipalities, what will the county’s water portfolio look like? If the county buys water, who will its customers be? And who will benefit from county water projects? Will county water subsidize growth?
On this last point, the resolution placing the referendum on the ballot says that “No Water Resources acquired by or from the Water Resources Fund may be permanently conveyed, sold or transferred to any private or public entities or exported for use outside the boundaries of the county.” The resolution contains a long definition of Water Resources, but the term essentially means water and storage structures.
The resolution also states that the county and municipalities are “permitted to pool resources to maximize the benefits to the community and citizens.” Suppose Maysville became an incorporated town. Would it be allowed to get county resources for its water system? That’s unclear.
The county’s water resources could be leased, but a court would consider excessively long leases as a permanent conveyance. Leases could be periodically renewed, but it’s doubtful that any housing development would want to be subject to a periodically renewed water lease.
On the other hand, however, the commissioners feel that the option to purchase water rights or construct storage reservoirs is an essential tool for achieving their objectives.
It was difficult to find examples for how and when the county would use any water it purchased. But the commissioners expect situations where conservation easements will not be applicable. Perhaps a property owner will want to sell his ranch without committing to an easement or a property won’t be sufficiently desirable to warrant easements. In such cases, it’s possible that the county (or the municipalities) would want to buy the water.
The county has also discussed the possibility of augmenting water rights on the South Arkansas River. Augmentation is when water is put into the river to replace water taken out of the basin. For example, cities often have augmentation plans which obligate them to release water into the river so there will be downstream water for other users.
[And that’s one of the reasons municipalities tend to own water here, there and everywhere — because not all of the water they purchase is for their own use, some is for augmenting the river. Thus, Salida can answer a call from a senior user below Pueblo by releasing water it owns in Pueblo Reservoir rather than by dipping into its own physical water supply.]
But private wells may also require augmentation so that downstream users won’t be adversely affected when well water is removed from the system. And therein lies the possibility that county water could be used for development. By augmenting wells, the county would be making more water available for private users, and thereby may end up contributing to sprawl, ridge top development, or some of those other unpopular phenomena.
But on the other hand, irrigation and lawn watering replenish aquifers, and there’s a justifiable fear that as ranches fail, there will be less irrigation, and wells will go dry. Despite talk of conservation, there’s a good argument to be made that we need to keep water usage up in order to preserve meadows and wetlands — because the majority of the Ark Valley was no doubt a dry, sand-dune riddled landscape before settlers arrived.
But it’s definitely questionable whether county resources should go toward augmenting private — or even municipal — water use. The county’s proposal does allow for ample public input and oversight, however.
This resolution also offers the possibility that funds be used for the legal costs of defending water rights in Chaffee County. Like Park County, the City of Golden recently had considerable legal expenses defending its water rights — as have other cities.
But why involve the county, when we have two conservancy districts and several municipalities who can step into such litigation when necessary?
Perhaps county involvement is desirable because of the deep pockets of those interested in acquiring Chaffee County water. And conservation easements can also entail incidental legal costs. Thus the proposed tax could offer needed legal protection. But once again, public oversight will be necessary to make sure that this doesn’t turn into a welfare program for water lawyers.
[Otero Pump Station]
Aurora, a representative threat
With considerable justification, the City of Aurora, is frequently viewed as a threat to Chaffee County. Aurora, which sits just east of Denver, is growing and wants to acquire 10,000 acre-feet of water every decade. It’s the only Front Range City in the South Platte River drainage to get water from the Arkansas River, and its activities in Park County, Lake County and the Lower Arkansas Valley cause plenty of concern.
Aurora removes both imported water and native water from the Arkansas River basin through its Otero Pump Station just north of Buena Vista. The water flows into South Park and into Aurora’s Spinney Mountain Reservoir.
There are four related risks that Chaffee County faces from an entity like Aurora:
1) Aurora’s movement of water could damage vested water rights in Chaffee County.
2) Aurora could buy local water rights, thus reducing the physical supply for local municipalities.
3) Aurora could buy local ranch water and dry up ranches. This could affect the timing and location of return flows, and increase the depth of the water table.
4) The city’s movement of water could reduce flows in the Arkansas River through Chaffee County, and thereby damage tourism.
Protecting against the first of these risks is the responsibility of the water court — because changes in use or points of diversion are not supposed to harm existing water rights.
But water rights owners here, as elsewhere, should still monitor court cases to see that their interests are protected. The Upper Arkansas Water Conservancy District provides local oversight of court cases, but the county could reinforce that role.
The county also feels it can strengthen some local rights by buying and storing water to use as augmentation for junior rights, which are more susceptible to call regardless of who owns them. This course might aid some of the irrigators who are keeping our valley green, and also discourage water sales to Front Range cities. But once again, it’s questionable whether the county should be using its resources to insure private rights.
Protecting against the second and third risks — Front Range purchases of local water and the resultant diminishment of irrigation — are the main benefits of the county’s ballot measure. The municipalities will have more incentives and resources to purchase local water. And the county can use conservation easements to help retain ranches and thereby maintain the return flows supplied by irrigation.
According to one hydrologist, the aquifer in Chaffee County is highly variable — that is, it’s a mistake to say “the aquifer” because there may be dozens. But keeping the water on historically irrigated land would, in general, help maintain the water table.
The fourth risk, Aurora’s potential negative impact on Arkansas River flows, is a very real threat. But the ballot measure’s response to this danger is necessarily limited.
Aurora’s removal of its upstream imported water does not impact the natural river flows in Chaffee County. Nor does removing Lake County ranch water (since Aurora only holds rights on the consumptive use value, or in other words, the amount of water which ranching would have consumed once upon a time, anyway). And none of that water was in the Arkansas River before Aurora acquired the rights.
The real threat to Arkansas River flows comes from Aurora’s downstream water rights. As Aurora changes the points of diversion from south of Pueblo upstream to the Otero Pump station, it reduces flows in the Arkansas River through Chaffee County. Rafting, boating, fishing and the aesthetic value of the river are the important economic interests that are at risk from Aurora — and perhaps other Front Range cities.
So far, the flows have been maintained at a level to support river recreation. But the risk will worsen as Aurora and others acquire more water in the Lower Arkansas Valley, or attempt to change the point of diversion to the upper valley.
There are opposing opinions on the best way to protect flows. Chaffee County might use its position to help resolve the disagreements and support a unified strategy for the future.
[Anti Elephant Rock Sign]
Legal Considerations
The commissioners say their attorneys have told them the ballot objectives are legally sound. The similarity of the measure to Park County’s efforts gives some assurance of this.
Certainly, supporting conservation easements and the augmentation of agricultural rights are common government activities (although augmentation by county governments is probably not so common). Nor is there a legal problem with municipalities buying water or building storage.
Where the ballot’s approach might face some risk is when the county offers temporary use of water — since county governments are not normally in the business of supplying water to users.
In Colorado, it’s illegal to hold water for “speculation” because water is considered too vital to be tied up that way. Although the courts have recognized that government entities need to acquire reasonable supplies for future use, those entities have to be careful.
In a 1996 case, City of Thorton v. Bijou Irrigation Co., the court said that the Colorado General Assembly “recognized the need for governmental agencies, which include municipalities and other agencies responsible for supplying water to individual users, to exercise some planning flexibility with respect to future water needs. The exception [for these entities], however, does not completely immunize municipal applicants from speculation challenges.”
The court continued: “a municipality may be decreed conditional water rights based solely on its future needs, and without firm contractual commitments or agency relationships, but a municipality’s entitlement to such a conditional decree is subject to the water court’s determination that the amount conditionally appropriated is consistent with the municipality’s reasonably anticipated requirements based on substantiated projections of future growth.”
So our county and municipalities are not allowed to buy more water than they can prove they will need in the future. And regardless of what the county’s attorneys say, you can bet that if Aurora sees what looks like too much buying of water by a non-municipality (like the county) with conditional decrees (or temporary uses), Aurora will attempt, either in court or through the legislature, to put a stop to it.
But it’s not the loss of Chaffee County water that Aurora would lament, as much as the fear that the practice might spread.
The Municipalities
Municipal officials will probably prefer letting the commissioners take the heat for raising taxes. To them the tax revenue will look like found money.
Buena Vista has ample water rights and requires voter approval for annexations, but it could use more money for storage.
Salida would be the most receptive to the tax revenue. It’s currently considering a water rights purchase for which the money would come in handy.
In Poncha Springs, those wanting annexation have to bring their own water to the table (or cash in lieu of water), and the town owns sufficient augmentation water for development within existing town limits. But Poncha needs wells for its physical supply, and the proposed tax revenues should cover that.
Salida would probably prefer that the ballot proposal had a later sunset date; twenty years would better match its expected bond obligations. But Buena Vista and Poncha Springs should be satisfied with ten years. Poncha’s costs are less, and Buena Vista can wait until sufficient funds accumulate to expand storage.
Conclusion
I would have preferred another way to fund water protection. This sales tax will only be imposed on locals and not tourists, and it may have been possible to obtain funds without taxing locals further.
But all in all, the commissioners should be commended for giving voters a chance to address, with a reasonable proposal, a threat that can only get worse. Aurora isn’t the only city that might try to tap into our water in order to continue growing — and this measure gives us some control over our destiny.
Bob Engel is a former actuary who once served on the Salida city council, and as chairman of the city planning and zoning commission.
