The Crested Butte News Serving the Gunnison Valley since 1999
Headed to mediation?
By Mark Reaman
The town of Crested Butte and the Mt. Crested Butte Water and Sanitation District are in the midst of a financial conflict, and the town council is expected to determine a course of action at the first meeting in November. That appears likely to be a call for mediation to try and solve the problem.
The issue began in 2021 when the town started the process of upgrading its wastewater treatment plant, including the Solids Processing Facility used by the Mt. CB district which is part of the larger plant. The district and town have an Intergovernmental Agreement (IGA) signed in 1996 that divvies up costs of operations and replacement. Original cost estimates put the bill to the Water and San District at approximately $1.5 million. But in 2022 cost increases raised that amount to $3.3 million. Given the rising costs, the town “value engineered” the project to lower costs and upgrade only essential improvements. The larger project was cut from about $24 million to approximately $19 million.
According to a memo from Crested Butte town attorney Karl Hanlon, the Water and San District has made three payments, including one for $1.5 million, but the town determined it still is owed $1.9 million. The district however has told the town its staff and experts estimate it owes the town $1.78 million and they have proposed the district pay that amount to town over five years at a low interest rate.
“This is something the council has talked about a lot in executive session,” explained mayor Ian Billick at the October 20 council meeting. “Given where we are, it is time to discuss it in public. Given there is a chance of litigation, the council should be cautious in its discussion.”
Hanlon said ongoing conversations between the town and the district have been taking place since 2022. He said if the council doesn’t accept the district’s payback offer, the district suggested the parties engage in a one-day nonbinding mediation to see if the situation could be resolved.
“This could lead to litigation, but we aren’t there yet,” said Hanlon. “That would be a last resort. They, along with us, also want to update the IGA to avoid these conflicts in the future.”
Hanlon said town staff was willing to accept the district’s $1.78 million figure given the complexity of the project and the fact it would take a lot of time and money to go over all the receipts associated with the larger project. “The issue is more about the financing,” said Hanlon.
Interim Crested Butte finance director Rob Sweeney said taking in all the factors, the town would be losing about $400,000 total under that proposed five-year payment plan since the money would otherwise be in town hands and used for other purposes or collecting interest.
Hanlon said the process used to keep the district informed of the project costs was the same as used in previous projects. “The record reflects a lot of communication between the parties,” he said. “It is complicated because it was an integrated project with both the solids processing division and the overall wastewater treatment facility upgrade.”
When asked, Hanlon estimated litigation could cost the town hundreds of thousands of dollars in attorney and expert witness fees. Mediation would likely run between $7,500 and $10,000.
“If we sponsor them by financing the payback we’re acting like their bank,” said councilmember Kent Cowherd. “The citizens of Crested Butte would be subsidizing their users. That doesn’t seem fair. Plus, their inaction and pushback has added unnecessary cost. I’m disappointed. I am not comfortable financing this over five years. Let them borrow the money and take on the debt.”
“They of course would take a different position and characterize it differently,” said Hanlon. “Understand too that you will be living together for quite a long time.”
Billick said he would like a mediation process with a third-party decision at the end of it.
Hanlon said if the final number was agreed upon, the financing element was essentially a business decision for the town. “Mediation would be meant to agree to terms of payment,” he said. “It would be an attempt to get the parties to a place they can agree, but it would be up to the parties to come to an agreement they could both sign. While nonbinding, there can be a lot of value in such mediation.”
“I’ve been trying to understand the financing request,” said Billick. “It is hard to sit here and ask our taxpayers to finance the Mt. CB Water and San District’s portion of the project. It’s an example of growth paying its own way, so I struggle with it.”
“It’s an unfortunate situation with a partner we’ll be involved with for many years,” noted councilmember John O’Neal. “I’d just like to move forward and finish it or move to mediation.”
Crested Butte public works director Shea Earley informed the council there are plans to the facility in 2026 that would involve the district’s financial participation.
“I agree with Kent that $400,000 is a lot for our citizens to shoulder,” said councilmember Anna Fenerty. “Mediation is the best option.”
“There is a lot to absorb so we won’t make a decision tonight,” said Billick. “Let’s all think about it and put it on the November agenda.”
“Let’s hope a resolution can come with this before mediation is scheduled. That’s my hope,” concluded Cowherd.
The Crested Butte News reached out to Mt. Crested Butte Water and Sanitation administration for a comment and district board chair Nancy Woolf said, “We look forward to continuing to work with the Town to find a mutually acceptable resolution to the current disagreement.”
The issue will be included on the November 3 council meeting agenda.
