CWCB approves $90 million loan for Windy Gap project

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Source: Northern Water

A graphic from Northern Water showing the lay out of Windy Gap Firming Project.

Looking east toward the Chimney Hollow Reservoir site, which is just this side of the red ridge. On the other side is Carter Lake Reservoir and beyond that, the Loveland area.

Brent Gardner-Smith/Aspen Journalism

Looking east toward the Chimney Hollow Reservoir site, which is just this side of the red ridge. On the other side is Carter Lake Reservoir and beyond that, the Loveland area.

DENVER – The board of directors of the Colorado Water Conservation Board gave conceptual approval Wednesday to a $90 million loan to help finance the $400 million Windy Gap Firming Project, which will divert more water from the Colorado River.

The CWCB, charged with facilitating water supply projects in Colorado, has both a loan program and a grant program. And while its grant program is being challenged by a sharp drop in severance tax revenue from the oil and gas sector, the agency’s loan program remains robust, especially as Aurora just repaid a $70 million loan ahead of schedule.

The $90 million loan to Northern Water, which is developing Windy Gap, is the largest in the agency’s history. It will help facilitate a project that is more popular on the Eastern Slope than the Western Slope, given it will increase the level of water sent under the Continental Divide.

The loan, which still needs final approval from the CWCB board, will be part of a financing package for a new reservoir near Loveland called Chimney Hollow Reservoir, which will cost $400 million to construct.

Eric Wilkinson, the general manager of Northern Water, said he expects the project to be approved in 2017, that test drilling has begun at the dam site — next to Carter Lake Reservoir in Larimer County — and design work is well underway. Gov. Hickenlooper has also endorsed the Windy Gap project, even though final federal approval is still outstanding.

Wilkinson also said that the prospect of a CWCB loan has galvanized financing discussions among the 12 different entities – including 10 cities from Broomfield north to Greeley — who are involved in the project as members of the Northern Water Municipal Subdistrict.

The entities involved in the project are Broomfield, Central Weld County Water District, Erie, Evans, Fort Lupton, Greeley, Lafayette, Little Thompson Water District, Longmont, Louisville, Loveland, Platte River Power Authority, and Superior.

“The difference that this has made cannot be overstated,” Wilkinson told the CWCB board about the loan.

Savings needed to backfill drop in severance tax funding

The $90 million loan makes up a big chunk of this year’s “projects bill,” which is submitted annually by the CWCB to the state Legislature for approval. This year’s projects bill is $165 million in all, which makes it the largest annual spending request in the history of the CWCB, which dates back to 1937.

Another big part of the projects bill is $55 million for an array of grants and loans spurred by the Colorado Water Plan, which was approved a year ago by the CWCB board and presented to the governor.

Of the $55 million, $10 million is for projects to be funded at the discretion of the CWCB directors, and $5 million is specifically for watershed restoration efforts and stream management plans, which is a nod to environmental interests in the state.

Another $10 million is used to fund the agency’s Water Supply Reserve Fund, which helps fund local water supply projects identified and approved by the nine basin roundtables around the state, including the Colorado River Basin Roundtable, which meets in Glenwood Springs.

Funding for roundtable projects is supposed to come from severance taxes paid by oil and gas producers in the state to the tune of $10 million a year. But the combination of the slowdown in the gas patch and property tax rebates given to the industry means that the CWCB is only going to see about a quarter of the severance tax revenue this year that it normally receives.

As such, the CWCB is asking the Legislature to let it spend severance tax revenue it has tucked away from the good years. That approach, however, is fraught with danger, as the Legislature is busy trying to figure out how to fill a $500 million to $800 million hole in the state’s budget, which must be balanced each year by law.

James Eklund, director of the CWCB, said the Legislature will be looking in all nooks and crannies for funds, but he’s hopeful that the approval of the state water plan last year will help convince lawmakers that the CWCB has a legitimate need for the money it has set aside for future projects.

Also in the $55 million bucket in the projects bill is a $30 million “loan guarantee fund” to help water suppliers with varying credit ratings to gain better interest rates when funding new projects together.

Eklund is sensitive to criticism that not enough has been achieved after the publication of the Colorado Water Plan a year ago, which itself was the product of an intense two-year collaborative effort among water interests in the state.

On Wednesday, he told the CWCB directors that while the Water Plan was now a year old, it was “only five days old in water years.”

“We are moving forward aggressively,” Eklund said. “And I don’t think slowly at all, especially if you look at it in water time.”

The crest of the dam across the Fryingpan River that forms Ruedi Reservoir, which can hold 102,373 acre-feet of water.

Photo: Courtesy of Bureau of Reclamation

The crest of the dam across the Fryingpan River that forms Ruedi Reservoir, which can hold 102,373 acre-feet of water.

Board renews Ruedi fish-water lease

Also at last week’s CWCB meeting, Eklund said that the Ute Water Conservancy District in Grand Junction has offered to once again lease 12,000 acre-feet of water it owns in Ruedi Reservoir to the CWCB, so the agency can help maintain flows in the Colorado River, as it has done the last two years.

While the water from Ruedi benefits endangered fish in a critical 15-mile reach of the Colorado, it has also kicked up river levels in the lower Fryingpan River below Ruedi Reservoir in the late summer and fall to the consternation of some anglers.

The CWCB board also approved a $1.7 million loan for improvements to the Grand Valley Power Plant, which controls one of the senior water rights that make up the “Cameo Call” on the Colorado River above Grand Junction.

The loan to the Grand Valley Water Users Association and the Orchard Mesa Irrigation District will help cover the costs of a $5.2 million project to modernize the hydropower plant, which was built in the 1930s.

Contracts were also finalized this week with a bevy of water consultants to prepare the next edition of the Statewide Water Supply Initiative, or SWSI, which is a more technical version of the state water plan.

The SWSI plan is slated to be finished by December 2017 and is designed to inform regional water plans created by the basin roundtables, known as “basin implementation plans,” as well as provide a base of data for the next version of the more policy-driven Colorado Water Plan.

Also, State Engineer Dick Wolfe informed the CWCB board he’ll be retiring in June 2017 at age 55, after nine years in his role as the state’s top water cop.

Editor’s note: Aspen Journalism and the Aspen Daily News are collaborating on coverage of rivers and water in Colorado. The Daily News published this story on Monday, Nov. 21, 2016.

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