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Funny Smelling Water Facts, Part One |
Bill Hudson | 12/1/08
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When the Pagosa Springs Town Council met last month to discuss — once again — a proposed 50-year lease to the Springs Resort of 400 gallons per minute (GPM) of geothermal water from the Town’s main mineral water well, PS-5, I expected to see Springs Resort representative Bill Whittington in attendance. I also expected the six Town Councilors present to ask a lot of questions, considering that they had paid their attorney, Bob Cole, to come all the way from Denver to give them legal advice about the proposed lease. Continued...
This photo shows the expanse of vacant land owned by the Springs Resort partners just south of San Juan Street (also known as Highway 160) in the foreground. The Springs Resort is just completing a 29-room hotel, shown at the upper left. The Resort has proposed building a $250 million expansion covering most of the vacant land — but seems to first want assurances that they can lease 400 GPM of the Town's geothermal water, for a term of at least 50 years.
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The Councilors did ask a couple of questions, but they were not the ones I had hoped they might ask. So it was left up to a few members of the public to ask the hard questions about the funny smelling water facts.
Going into Thursday’s meeting, attorney Cole — who has been helping negotiate the proposed lease on behalf of the Town — had supposedly been given direction by the Council to address two legal issues. First, he was supposedly going to ensure that the Springs Resort dropped their legal water right filing, which has made a claim on the waste water coming from the Town’s geothermal heating system. Both interim Town Manager Tamra Allen and Councilor Shari Pierce have been requesting for many months that the Resort drop its “waste water” filing — since it appeared to violate the Town’s Home Rule Charter.
We would hear a curious discussion of just what “waste water” really means, a little later on.
Secondly, Cole was to include language that would gradually increase the amount of water granted to the Springs Resort as the Resort met certain benchmarks in the process of building out its proposed $250 million expansion project — and when it could show the need for the additional water.
Apparently, neither of those issues had been included in the latest version of the lease. We would find out why as we listened to a lengthy presentation by the Springs Resort’s representative, attorney Jim Anesi, who has been arguing the Resort’s side of the case in the private negotiating sessions with Cole and the Town.
 I had never seen Anesi at a Town Council meeting before Thursday, and I was frankly confused about why the Resort had chosen him to make the Thursday presentation, since the attorney showed himself — during the question and answer section —to be unfamiliar of some important facts of the case. Anesi had, however, thoughtfully brought along the former owner of the Springs Resort, the very knowledgeable Matt Mees.
It was during Anesi’s presentation that we got our first taste of the funny smelling water facts.
Anesi started out explaining that former Springs Resort owners Matt Mees and Bill Dawson had, in the mid-1990s, obtained a lease of the Town’s “waste water” from its geothermal well. That “waste water” was supposedly water that had already been run through the Town’s municipal geothermal heating system — entering the system at about 145 degrees and coming out as “waste water” at about 120 degrees. The Springs Resort then built a pipeline attached to the bottom of the Town’s new pedestrian bridge to transport the “waste water” over the san Juan River to the Resort, where the 120 degree water was still perfectly usable — either in the Resorts therapeutic mineral pools, or dumped into the Great Pagosa Hot Spring.
“There was a concern about how Mr. Mees and Mr. Dawson were going to protect the pipeline they’d had the Town put in. They came to the conclusion that the only way to protect the pipeline was to file what they call ‘waste water rights.’ The water courts say that once a water user gives up control of the water it has used — you don’t want it any more — then another party can file on it. So Mr. Mees and Mr. Dawson filed on the Town’s waste water, primarily to protect their pipeline.”
As I found out later when researching the Division of Water Resources records, Pagosa Springs Resorts — the company that previously owned the Springs Resort before its purchase by the Whittington family — had indeed filed such a claim on the Town’s geothermal waste water many years ago, and had obtained a right to use up to 450 gallons per minute of that “waste water” — partly as an “absolute right” and partly as a “conditional right.”
So the waste water filing that Allen and Pierce had been protesting for months was apparently already a fait accompli dating back several years.
Anesi continued, “I’ve discussed this filing with your [Town water attorney] Janice Sheftel, whom you all know, and we agreed that this filing does not in any way impinge upon the right of the Town to do anything you want with your geothermal water. It’s your water until you don’t care about it any more.”
Anesi touched briefly on the viewpoint of attorney Sheftel — a partner in the law firm of Maynes, Bradford, Shipps & Sheftel — concerning the difference between water that can be leased, and water that is just “waste water.”
“Her point — and it’s well taken — is that, as long as the Town is leasing the water, then it’s not ‘waste water.’ And that’s a hard statement to argue with. If you’re leasing it, then you still have control over it, so it isn’t waste water.”
In fact, the Town’s so-called “waste water” which the Springs Resort has been leasing since 1997 — with a lease that expires in 2012 — fails the “waste water” test in still another way, not only in the legal sense. The Town of Pagosa Springs drilled its PS-5 and PS-3 geothermal wells with the financial and logistical support of the U.S. Department of Energy during the late 1970s — just as the country was recovering from the Arab Oil Embargo. That frightening economic event showed the U.S. how vulnerable it was to international oil markets, and sparked serious explorations into alternative energy sources in America. One source of alternative energy — a source especially applicable to municipal heating systems — was geothermally heated water, such as the 145 degree water found in the Great Pagosa Hot Springs aquifer.
Since this municipal heating system would create a extensive new demand on the aquifer — pumping up to 450 gallons per minute during the heating season — the project was initially opposed by the owners of some other geothermal wells in the downtown area. The Town was asked to make careful studies of the aquifer before proceeding with the project.
The new wells were drilled and brought online in 1980 — with explicit assurances from the Town that the wells would be used only during the winter heating months, and only for municipal heating. In fact, the Town’s water rights limit the legal use of the water to “municipal use associated with heating purposes.” The PS-3 well is currently capped and is not planned to be used unless the PS-5 water becomes unavailable.
Up until 1995, the water that ran through the Town’s heat exchanger was dumped into the San Juan River — about 20 degrees cooler than it had been before its trip through the exchanger. In other words, the Town was dumping 120 degree mineral water into the river — still containing its full range of therapeutic minerals and still too hot for therapeutic bathing without further cooling. In other words, useful water for a profit-making resort.
Bill Dawson and Matt Mees, as owners of the Spring Inn — later to become the Springs Resort — apparently decided that was simply a waste of good mineral water, and they filed for the rights to the still-perfectly-usable, discarded “waste water.” The Town and the neighboring Spa Motel defended their own water resources by opposing that filing. The three parties finally settled the suit, and the settlement agreement involved allowing the Spring Inn to lease a maximum of 200 GPM of the outflow from the Town’s heat exchanger — an outflow that was still perfectly usable for recreational bathing.
Just one small problem. The Town’s heat exchanger is not operating in the summer, which is exactly when the Spring Inn got most of its visitors. To make the plan work properly, the Town needed provide water to the Spring Inn even when it was not running its heat exchanger.
But as we see, “waste water” can be taken to mean two very different things — legal waste water, and functional waste water.
In their formally filed “waste water right” the Pagosa Springs Resort owners were given the right to use up to 450 GPM that came out of the Town’s geothermal heat exchanger during the winter months — water the Town was done using and for which the Town had no further use.
That legal definition of “waste water” means that, if the Town does not run its geothermal heat exchanger, then there is no “waste water” to be legally claimed.
But what the Springs Resort really wants, in its current lease negotiations, is 400 GPM of water from the PS-5 well — guaranteed, year round. That is not "waste water" at all, on two accounts.
Since the Town’s geothermal water, during the summer, runs through a non-functioning geothermal heat exchanger and directly into the Springs Resort’s pipeline, it is not “waste water” in the legal sense because the Town is delivering it directly to a lessee and being paid to do so — the Town has never released control of the water. And it is not “waste water” in the functional sense either, since the Town itself never used it for anything useful.
Councilor Jerry Jackson wanted to clarify attorney Anesi’s position.
“So are we hearing you say, Jim, that you agree with Janice [Sheftel] that, if we have a lease on it, it’s not waste water?”
“I think that’s hard to argue with,” Anesi replied.
“I just wanted to clarify that,” said Jackson.
“But if you look at page three of the current draft,” Anesi continued, “you see the provision that, so long as we have a lease with the Town, we will not make a claim on the waste water. I hope that will satisfy the Council — and it certainly doesn’t hurt our position.”
In other words, the Springs Resort is generously agreeing not to make a claim on the Town’s waste water as long as there is no waste water to claim.
But we were just getting started with the funny smelling water facts.
More to come tomorrow... |
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