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<br />Town of Paonia - Water Rights Purchase
<br />January 22-23, 2003
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<br />Agenda Item 100
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<br />unused water taps, and with subsequent steps intended to provide additional storage. The 317
<br />unused water taps were committed by the Town as part of a 1976 agreement in which the Town
<br />exchanged 400 out-of-town water taps in return for water rights on German Cre,ek. The land, and
<br />associated water taps, are now owned by the Ark Land Company, a subsidiary of :Arch Coal, Inc. For
<br />the past two years, the Town has been working with The Conservation Fund, a national non-profit land
<br />and water conservation organization, to re-acquire control of the 317 unused wa'ter taps through the
<br />purchase of the 770 acre Ark Land Property, south and east of the Town. '
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<br />At the November 2002 CWCB meeting, the Town's request for a loan of $1,710,000 for the
<br />purchase of the Ark Land Property (water taps and land), as presented in the St~ff Memorandum
<br />dated November 15, 2002, was denied. In denying the application, the Board stated that the land
<br />use planning portion of the request was not an appropriate use of CWCB loan fu:nds. The Board
<br />did leave the existing $600,000 loan authorization for new reservoir construction: in place, and
<br />expressed its strong desire to help the Town with the water supply issue. The ~oard encouraged
<br />the Town to consider reconfiguring its application and returning for possible consideration at a
<br />future meeting. The Board suggested that an opinion from the Attorney Genera)'s office on the
<br />Board's authority, under the current statutes, to make a loan for the purchase of ,water taps, would
<br />be helpful to their reconsideration of this loan. (A copy of such an opinion from ~ttorney General
<br />Ken Salazar is attached.) Further, in discussion the Board indicated that, pending legal review,
<br />any future loan consideration would be for water tap/water right purposes only, separated from the
<br />land use issue.
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<br />Staff did discuss with the Town the prospect of other raw water type storage projects, but was
<br />informed that the Town's main focus and priority at this time is the water tap purchase. The Town's
<br />intention, as expressed in its attached letter, is to pursue a $1,000,000 CWCB loan request for the
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<br />water tap retirement, and pursue alternate funding sources, such as bond or pri\i;'ate funding, for the
<br />remainder of the project.
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<br />The Town of Paonia
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<br />The Town of Paonia is located along the North Fork of the Gunnison River in D~lta County. The
<br />Town's annual budget is approximately $1.5 million, and the Town's Water Fund is an enterprise
<br />fund that has annual operating revenues of approximately $320,000, not including tap fees. The
<br />Water Fund currently has a balance of about $400,000 for system improvement~ with $229,000
<br />earmarked for water storage. There are no outstanding debts to the Town's Water Fund, as a loan
<br />for a new water treatment plant was paid off in 2001. '
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<br />The Town of Paonia obtains its raw water from a complex network of springs Iodated above the
<br />Town. The raw water supply system includes 14 spring collection units with a tbtal water right of
<br />9.9 cfs, approximately 20 miles of raw water supply pipelines, Todd Reservoir (capacity of 200
<br />ac.ft.), two small water treatment plants and three treated water storage tanks, and a metered
<br />distribution system. The peak production months of the springs are April-June ~nd the peak
<br />demand months are June-August, making the Town potentially vulnerable and in need of storage
<br />for summer month demand. As the Town is entirely reliant on a system of sprirgs, with very little
<br />storage, it is forced to spill large quantities of water from its system when the supply from springs
<br />exceeds demand. The Town's water supply planning assumes future growth, t>ased on historical
<br />and projected growth rates, in the range of 1.0 to 2.0% per year with1.5 percentias the most likely
<br />average growth rate.
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