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Funny Smelling Water Facts, Part Two |
Bill Hudson | 12/2/08
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As we discovered in Part One, the Town Council at its last regular meeting came to a verbal agreement with the Springs Resort’s attorney, Jim Anesi, that the proposed geothermal water lease between the Town of Pagosa Springs and the Springs Resort has little to do with “waste water,” in either the legal sense or the functional sense. It has mainly to do with the Town agreeing to deliver fresh, unused geothermal water on a regular basis from its municipal well to the town’s most prominent recreational bathing facility.
We’ll look a bit later at whether such an arrangement is legal. We’ll also look at whether it would have a likely impact on the geothermal resource itself.
 But first, Durango attorney Anesi has more important concerns to address with the Council. A previous version of the proposed 400 GPM water lease had included language stating that the Town and the Resort agreed in principle that the lease would be renewed, at regular intervals, over a 50 year period.
Because the Town Home Rule Charter legally limits the duration of geothermal leases to 10 years, the previous versions of the lease contract included some non-binding language intended to indicate a general intention on the part of the 2008 Town Council to have future Councils continue to renew the lease.
Unfortunately, neither Town Councils nor recreational bathing resorts typically maintain the same leadership over a 50 year period — so it’s extremely likely that any tentative 50 year agreement made between the 2008 Town Council and these particular Springs Resort owners would be re-negotiated within that 50 year time period.
“This language doesn’t mean a lot,” Anesi pointed out, referring to the non-binding references to a 50-year duration.
The Springs Resort would, however, would be reluctant to spend $250 million in resort expansion, without some kind of guarantee that they had enough geothermal water to supply such a huge resort —as Anesi reminded the Council. The sketch plans approved by the Council earlier this year show dozens of additional, new hot springs pools scattered through the expanded resort. Where will the water come from to fill all those recreational pools?
“The problem is,” Anesi continued, “for example, if I came to your town and I wanted to buy a water tap to build a new home, and you told me, ‘Fine, but I’ll only give it to you for ten years.’ I don’t know if any of you, or I, would build a house under those conditions. You can’t build a house on a ten year commitment.
“The [current 200 GPM] lease was a fifteen year lease, but since then you have adopted a new Home Rule Charter, and that Charter says ten years. So you can only do ten.
“The Resort is prepared to make a nice, new addition to the city, but they can’t make an investment based on a ten year lease.”
Anesi came back to his “who would build a house with a ten year water tap” analogy several times during his presentation, without ever noting an important distinction between a residential water tap and the proposed geothermal lease — namely, that a residential water tap shares an enormous water storage system with thousands of other residential tap owners, whereas the proposed Resort lease would claim essentially all of the Town’s water rights and deliver them to one single profit-making business, for the very reasonable fee of about $1,000 a year.
Nevertheless, anyone can see why the Springs Resort might feel more comfortable investing $250 million into an expansion project if a proposed lease term could be 50 years rather than the legally allowed 10-year term.
“So the practical problem for the Resort — and for anyone who would want to lease this water — is, we’ve got to find a way where we can have a longer term commitment. So I have to ask Bob, here, but I don’t know if there is a way you can amend your Charter, or if you want to amend your Charter or not. But it seems to me, if we’re going to have serious negotiations — I don’t think the amounts of money and some of the other things listed in this lease are going to be deal-breakers., I think they can be overcome — but what can’t be overcome is this 10-year limitation. Because it doesn’t make business sense. I’m not going to build a home in Pagosa with a ten-year tap. Nobody is.
“So we need to have Bob tell us how that is.”
“Bob” was of course Bob Cole, the Town’s Denver-based attorney who had come down to Pagosa especially for this meeting, as requested by Councilor Jerry Jackson at an earlier Council meeting.
“Mr. Cole, what is the mechanism for amending our Charter?” asked Councilor Mark Weiler.
“It would require a petition and a town-wide vote,” Cole answered simply.
Councilor Shari Pierce asked Councilor Darrel Cotton — who, as she recalled, had served on the Home Rule Charter committee — if he could explain the original decision to include the 10-year lease limitation.
“My guess, Shari, is that our Charter is plagiarized off of a hundred other Charters,” Cotton replied with a chuckle. “We picked the parts we like the best, and that was part of it. I remember we had some conversations with Bob and decided we wanted the resources — all of the Town’s resources — to remain the Town’s forever. Maybe the 10-year limit was a compromise, so there would be the ability to do what we’re talking about — leasing the water.”
Pagosa Springs SUN Reporter Jim McQuiggen asked attorney Cole whether the Springs Resort would be the party to initiate a petition, asking for a change to the Town Charter — or if the Town Council could, on its own, initiate a community-wide vote.
“I’d have to review the Charter before I could answer that question,” Cole replied. “It’s possible that the Town Council could initiate the process. But clearly the Charter would have to be amended to allow more than a 10-year term.”
“Would the Town be scheduling a special election? And who would be funding the election?” McQuiggen wondered if the Springs Resort might want to provide the funding for a special election, rather than putting that burden on the Town.
“The citizens have the right to initiate these changes. Typically an election does not have to be paid for by those who have access to the process,” Cole explained — hinting, perhaps, that the Springs Resort owners are not residents of the Town and therefore unable to initiate a petition process.
The actual wording in the Town Home Rule Charter dealing with amendments to the Charter reads, in part:
This Charter may be amended at any time in the manner provided in the Colorado Constitution and in Title 31, Article 2 of the Colorado Revised Statutes, as said provisions may be amended from time to time. Proceedings to amend the Charter may be initiated by the filing of a petition meeting the requirements of the Colorado Revised Statutes, or by the adoption of an ordinance by the Council submitting the proposed amendment to a vote of the registered electors of the Town.
According to the Colorado Revised Statutes, only registered electors of the Town may petition to amend the Town Charter. A Town Council may also initiate an amendment vote.
In his summary for the Council, attorney Anesi proposed that further discussions about the geothermal lease would be meaningless — without an amendment to the Town Charter allowing a 50-year lease term.
“We could spend a lot time trying to finalize the terms of this lease, but without coming up with a different thought about the restriction in your Charter, or a Charter amendment, that effort could be unnecessary.”
Perhaps it would have been useful for the Town Council to have known this in advance, before the Town spent nearly $4,000 on attorneys fees over the past year, in connection with the geothermal lease negotiations.
But we have still more funny smelling water facts to consider before we leave this lease discussion — facts relating to what other water rights the Springs Resort already possesses, how much water the Resort uses currently, and some funny little questions dealing with the Town’s original agreements when it drilled the PS-5 well in 1980 for its municipal heating system.
Read Part Three...
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