Water-project loan wins state approval

Water-project loan wins state approval

Dec. 2, 2000

By Jim Mimiaga
Journal Staff Writer

The Dolores Water Conservancy District has won approval from the state water board for a $7.2 million loan for a project to expand the amount of irrigated farmland served by McPhee Reservoir and the Dolores Project.

At its Nov. 20 meeting the Colorado Water Conservation Board, which provides low-interest loans for state ag and water projects, unanimously gave the DWCD’s financing and loan request the green light.

"We think the project is really great," said Dan McAuliffe, acting director for the CWCB. "We were excited to authorize the loan for a project that actually brings more land into agricultural production.

"We haven’t had the opportunity to do that for quite some time."

The 30-year loan, secured at a 3.5 percent interest rate, will be included in the CWCB’s project bill submitted for approval to the state legislature next session. McAuliffe said that the loan’s chances for legislative approval were "very good" now that it has the CWCB’s blessing.

The price tag is just over $8 million; the DWCD would put up $800,000 in cash.

The project involves the DWCD purchasing 6,000 acre-feet of unused irrigation water for $2.25 million from the Montezuma Valley Irrigation Company for delivery via the Dolores Project system. A series of additional canals and laterals would then be connected to the Dolores Project’s Dove Creek canal to reach 4,000 acres of dryland farms there whose owners want access to sprinkler irrigation.

Construction costs, engineering and contingencies are listed at $5.2 million, with the main feature being the installation of a pump station at Totten Lake that will deliver water across a short distance into the nearby Towaoc Canal. The newly purchased water would run to the Ute Mountain Farms to satisfy claims, thereby allowing water stored in McPhee Reservoir and historically used for the Ute allocation to flow down the Dove Creek Canal and irrigate new lands.

The rest of the MVIC shares being purchased are already stored in McPhee Reservoir.

Completion is tentatively scheduled for 2005, with construction possibly beginning as early as July 2001.

"We’ve crossed one more bridge," said Don Schwindt, DWCD president, referring to the much-anticipated loan authorization. Schwindt is also a CWCB board member. "We’ve put a lot of effort into this, and there is still more to be done."

For instance, more paperwork and environmental scrutiny are needed before construction can start, and the plan is facing some opposition from two large environmental groups. (See related story.)

The CWCB recommended the loan conditionally. A carriage contract between the Bureau of Reclamation and the district must be completed.

The agreement is needed any time non-project water owned by a private company (MVIC) is purchased by the government and then delivered through a federally-owned and financed system, in this case the Dolores Project.

An environmental assessment was also completed by the Bureau of Reclamation as part of that carriage agreement.

But the EA is awaiting a biological opinion from the U.S. Fish and Wildlife Service on its effects on fish habitat within the Colorado River system.

In addition, all necessary permits must be obtained and the repayment plan for the loan must be finalized by the district board.

One financing plan heavily discussed by the board has the district investing $4.2 million of its reserves at an estimated 6 percent return over 30 years. In that amount of time, according to DWCD analyses, the investment revenues, along with $1 million gained from selling the new water, would be used to pay off the $7.2 million loan and all the interest.

Earnings would also be enough to recoup the initial investment. In the meantime the project would be completed and on line by 2005.

Who gets the new water will be hashed out at a series of public meetings that could begin as soon as spring of 2001, officials say. Fifty landowners representing 15,000 acres have expressed interest in buying the water at $250 per acre.

But there is only enough water to irrigate 4,000 acres, so "some tough decisions will have to be made by this board," Schwindt said, adding that lands chosen for allocation will depend heavily on how economically feasible they are to access with laterals and canals off the Dove Creek Canal.

Regardless, the project will expand agriculture, help protect open space from the sprawling "ranchette" phenomenon, and preserve a traditional way of life, supporters say.

"Too often we hear of ag lands being converted into development, so I think that the board really liked the fact that this will help counter that trend," McAliffe said.