Wednesday, October 16, 2019

CB council open to idea of supplying town water to Cypress development

Deal could “drought-proof” the town water supply forever

By Mark Reaman

In a deal never before done by the town of Crested Butte, the Town Council is agreeable to extending municipal water service to a development beyond the town boundary without an annexation.

The council on Monday agreed to move ahead with a plan to trade water service to the Cypress Foothills Slate River subdivision just north of town. In exchange, Crested Butte will get a number of concessions, the most important being very senior water rights in the McCormick Ditch that will make the town the most senior water holder in Coal Creek.

The move is expected to essentially “drought-proof” the town’s water supply in perpetuity.

A public hearing on the overall water service proposal that will be an amendment to the pre-annexation agreement between the town and Cypress Foothills will be held in early November. A public hearing on an ordinance to change the town code to allow such service without annexation is also expected to be held at the November 7 council meeting.

In a September 29 letter from Cypress, attorney Marcus Lock asked that the east parcel of the proposed development be hooked up to the Crested Butte municipal water supply. The two entities had already formally agreed to have the town provide sewer service to the development. That 30 acres is currently going through a Gunnison County Planning Commission review process, and that board had suggested the developers investigate the potential of supplying water through the town as well instead of using wells and augmentation ponds.

The council gave a thumbs-up to the concept of the deal, which includes provisions for Cypress to purchase and deliver senior water rights in the McCormick Ditch to the town.

According to the Cypress proposal: The first six HCUs [Historic Consumptive Use] will go to the town if approved through water court.

That essentially gives the town top priority for that water right; Cypress would be responsible for all water infrastructure extensions to service their development; Cypress would adhere to the town’s water regulations; Cypress will pipe raw irrigation water down Eighth Street to irrigate town-owned parcels that will be annexed (on the Cypress development’s west side); Cypress will place a voluntary 3 percent RETT [Real Estate Transfer Tax] on the property sales in the development including the property not inside town. But the RETT would not be applicable to the initial sales made by the developer; Cypress would pay out-of-town tap and user fees; Cypress will agree to adhere to the town’s wood-burning stove regulations.

The water rights are currently owned by Billy Joe Lacy and Daniel Dow’s Verzuh Ranch Inc. Lacy and Dow developed the Verzuh Ranch annexation in Crested Butte. Out-of-town tap fees are one-and-a-half times the in-town rate, while out-of-town user fees are twice the amount. That could amount to well over $1 million for the town at build-out of the development.

“Historically the town has not provided water to non-annexed land so that is the big question,” mayor Glenn Michel said to the council.

“We think this is a good proposal for both sides,” explained Cypress vice president Cameron Aderhold, saying that the uniqueness of the deal would keep it from setting any sort of precedent for the town.

“While looking out for the town residents into the future, there aren’t many more important ways than to protect the water,” added Lock. “The 3 percent real estate transfer fee will add money to the town coffers and we will abide by watering regs and town wood burning regulations. This proposal also minimizes some of the concerns brought up with digging wells out there close to the wetlands.”

When asked by Michel why the developers didn’t just annex to town, Lock said, “We’ve been there before and it didn’t work. The east parcel is not a great fit for the town. That’s the basic reason we ended up with the hybrid development. We tried and it wasn’t a good fit.”

“Are we getting enough in the deal to extend our water service?” Michel asked the council. “It is a matter of principle and a pretty big decision.”

Michel, a former chair of the BOZAR (Board of Zoning and Architectural Review), had hoped for some Crested Butte architectural controls on buildings in the development as part of the deal. “But the idea of drought-proofing the town water supply is big. It is like a first aid kit in a future of global climate changes. This could be invaluable to the town in 50 years. It’s something you don’t want to need but when you need it, it would really, really be needed.”

“I see it more like an EMT ambulance sitting there more than a first aid kit,” said councilman Jim Schmidt. “Water is really important and this is good.”

Councilwoman Erika Vohman said she thought the end result of the negotiations was “close to ideal.”

“It is definitely a unique arrangement and the town gets a lot of benefits,” added councilman Chris Ladoulis.

How the cost of water court proceedings would be split has yet to be determined.

“There is still the need for a public hearing and we will listen to our constituents before making any formal decision,” said Michel. “But right now you are looking pretty good.”

The developers understood the situation and told the council they would update the county planners on the direction when they began the preliminary plan review process.

The council will set the ordinance to amend the town code for public hearing at the October 17 meeting. That hearing, along with the proposed amendment to the current pre-annexation agreement between Cypress and the town will likely be held at the November 7 Town Council meeting.

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