GO TIME For Colorado’s Water Plan: Meeting the plan’s storage and funding goals

Coloradans put far too much work into Colorado’s Water Plan for it to simply gather dust on the shelf of some government office. Yet the plan, whose first draft was released in late 2015, remains a non-binding advisory document. That means those who helped shape it must take responsibility for acting on it as well. In part two of an ongoing series on the water plan’s implementation, Headwaters examines what we as a state must do to achieve the goals for two of the plan’s nine defined measureable outcomes: storage and funding.

Adding capacity, flexibility and resiliency to water systems

Whether the water to fill Colorado’s projected mid-century gap of more than 500,000 acre-feet comes from new projects, conservation, or better sharing between farms and cities, we’ll need a place to store it. Aside from giving water providers flexibility in how and when to use their water supplies, adequate storage provides a hedge against droughts, floods and a changing climate. The water plan sets a goal of attaining 400,000 acre-feet of new storage by 2050 by completing at least 80 percent of the projects identified in the 2010 Statewide Water Supply Initiative.

Those projects involve everything from the expansion of existing reservoirs to construction of new ones and increased use of aquifer storage and recovery (ASR), which is the storage of surface water underground. Ensuring adequate storage will also require reforming the arduous water project permitting process. The process includes important environmental protections in compliance with federal laws like the Clean Water Act and National Environmental Policy Act, but can take more than a decade and cost millions of dollars to complete.

According to Becky Mitchell, chief of the CWCB water supply planning section, excessive fear of the permitting process could already be discouraging the pursuit of major projects: “There is some post-traumatic stress from past experiences and people are looking to avoid the permitting process, so we are hoping that if we start by reforming permitting, folks won’t be so afraid to get into it.”

A major improvement would be to “front-load” the process through better coordination between government agencies early in a project’s lifespan. “It has been pretty haphazard in the past as far as when different agencies from different levels of government weigh in,” says Lane Wyatt, co-director of the Water Quality and Quantity Committee for the Northwest Colorado Council of Governments.

To minimize costly last-minute delays, the water plan recommends that each state agency involved in reviewing a water project signs a Memorandum of Understanding early in the permitting process, dictating who will lead the review and how the agencies will work together to gather the data they need.

The water plan also acknowledges the growing importance of multi-purpose, multi-partner water storage projects. Getting a broad range of stakeholders involved in building new storage can help defray the massive expense, complexity and controversy inherent in the enterprise, according to Joe Frank, general manager of the Lower South Platte Water Conservancy District and chair of the South Platte Basin Roundtable.

“You need lots of money, so you need lots of partners,” says Frank. “Also, the more people you bring on board from the agricultural, environmental and municipal communities, the less opposition you’ll run into down the line.”

Paying the way to a sustainable water future

Colorado’s economy may depend on water, but water management also relies on an essential ingredient: money. With that in mind, Colorado’s Water Plan sets the straightforward goal of funding itself. This means finding ways to pay for the vast array of priorities that the plan identifies, from new reservoir storage, conveyance, and treatment facilities to recreational projects, watershed plans, and river improvements.

Colorado officials estimate it will cost state and local entities about $20 billion by 2050 to maintain and improve Colorado’s existing water infrastructure while constructing new projects currently on the drawing board. And that’s just to get the projects in place—it doesn’t include the ongoing costs of treatment and distribution.

Generating that money may require a new public funding source dedicated exclusively to water. Existing water-related loans and grants from the Colorado state government are largely funded through revenue from severance taxes on oil and gas, which oscillate wildly with the price of oil and can be siphoned away to pay for other budget priorities. Because of that, state funding for water projects has varied widely in recent years: In 2009 it was $319 million, but it plummeted to just $36 million in 2010.

A new “water-only” funding source would likely require voter approval and could take many forms: One idea that nearly made the state ballot in 2010 was a volume-based fee on bottled beverages. Legislative economists estimated that charging a penny for every six ounces of liquid and capping the charge at 50 cents per container could raise about $110 million a year. That cash could be divided between priorities like additional investment through Colorado Water Conservation Board (CWCB) loans and grants, more money in the state Water Supply Reserve Account for Colorado’s nine basin roundtables to invest regionally, and a legal fund to protect Colorado’s water rights under interstate compacts.

“We knew that there had to be a new dedicated, independent revenue source that would not be competing with K-12 education, transportation, Medicaid and things like that,” says Dick Brown, a lobbyist for the Pike’s Peak Regional Water Authority who led the container fee campaign in 2010 along with former Arkansas Basin Roundtable chair Gary Barber.

The container fee didn’t make the ballot in 2010 due to opposition from the bottled beverage industry, which convinced the Colorado Supreme Court that it violated the “single-subject test” for ballot initiatives by altering more than one area of state law. Brown says backers need time to educate voters, but a similar measure could reappear in 2017.

Even if voters aren’t willing to raise taxes for water, the water plan proposes a suite of new ways to use existing state revenues. One is a repayment guarantee fund, where the state would put up money to back the repayment of bonds issued to finance multi-partner water supply projects. Currently, participants in projects like the Windy Gap Firming Project, which involves 13 northern Colorado water providers, can’t issue bonds collectively (they still can individually) because the lower credit rating of smaller water providers makes it tough to obtain a favorable interest rate, making borrowing more expensive.

The water plan also suggests a green bond fund to help pay for environmental and recreational projects: The state or an affiliated entity would issue bonds offering slightly below market-rate returns in the hopes of attracting socially minded investors.

Finally, the water plan notes that the state should use incentives like low-interest loans and extended repayment periods to encourage multi-purpose, multi-partner projects that accomplish more with each scarce dollar—and each drop of water.

A recent collaboration in the Rio Grande Basin illustrates the potential of multi-partner projects. To combat heavy metal contamination from the Summitville Mine and rehabilitate the local fishery, the watershed group Alamosa Riverkeeper acquired water rights to boost streamflows. But the group lacked a place to store the water in order to time its most effective release. In 2013, they partnered with the irrigation company that operates Terrace Reservoir southwest of Alamosa and secured state and federal money to improve the reservoir’s spillway. That permitted the irrigation company to store more water, and in exchange the company granted Alamosa Riverkeeper 2,000 acre-feet of free storage.

Cindy Medina, Alamosa Riverkeeper co-founder, says the project was successful in attracting state funding because it served both environmental and agricultural uses. “I think the state wants to get the biggest bang for their buck these days,” she says, “and projects like this are the ones that will succeed from here on out.”

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