Granby's town manager provides an update on the water treatment plant project and explains why a similar Kremmling project will cost less

The North service area is what many people refer to as “Old Town” Granby. It includes areas north of the Fraser River and the community of Edgewater at Granby Bridge. This region gets its water directly from the Fraser River.

The area's water treatment plant was built 40 years ago. Since then, the equipment has aged, while critical parts have become harder to find and more expensive to produce. The technology and efficiency are more outdated and government regulations are stricter.

By investing in a new water treatment plant, the city is trying to prevent the existing system from failing to meet safety standards, water needs, or both.

Previous boards faced the same dilemma of increasing water rates for the northern service area and refused to increase water rates. Granby Mayor Joshua Broady, who works full-time as a water supervisor for the city, said he should have pushed previous boards harder to pass water rate increases.

As a result, the board and staff are now faced with the reality of needing a new water treatment plant and finding a way to finance it.

Improvements needed in the northern service area include replacing the existing water treatment plant and purchasing a 500,000-gallon potable water storage tank by 2026.

Water rates for 2024 were increased and quarterly water bills increased from $195.41 to $298.66.

Residents in the area have expressed frustration with the situation at meetings and suggested various strategies to reduce water rates.

City Manager Ted Cherry listened to these suggestions and, along with representatives from other agencies, provided an update on the water treatment plant project in the northern service area.

The challenges with water rights

Many attendees at previous meetings and people outside the meetings have asked city staff why they can't simply combine the water treatment plants in the western and northern service areas.

At previous meetings, some residents pointed out that the water treatment plant in the western service area was not operating at maximum capacity and suggested using this facility for the northern service area.

The West service area includes residents of Sun Communities and Sun Outdoors. The demand of the water treatment plant is much less than the capacity of the plant because it was built with the foresight of requiring more water as the area continues to grow.

However, this combination of water is much easier said than done due to water rights.

A memo written by Douglas Clements, city water resources engineer, and Nathan Krob, city attorney, states: “In order to provide reclaimed water to the NSA (Northern Supply Area), the city must have the legal and contractual rights to do so,” as well as the necessary infrastructure.” City staff must decide whether they want to use the water rights of the West Service Area to supply the north, or whether they want to use the water rights of the North Service Area, which are to be treated at the West facility, to supply the north to provide.

Any changes to water rights must be made through the Colorado Water Courts. The memo warned that this approach could potentially strip the city of water rights and result in years of litigation.

Another problem is that the western supply area's water rights do not provide enough water to supply the northern area, so currently only an emergency exception applies. To make changes, this application would need to be heard in water court.

Such a case would face strong opposition, be expensive, time-consuming and not guaranteed to produce the desired outcome, the memo said. Even if the process were successful, it would probably still not provide enough water for the northern supply area.

In an earlier case, it was “much less complicated”: The city applied for changes in the western service area, which four parties opposed, and four years passed between the application and the final decree.

This is just the tip of the water rights iceberg. The full memo is available online and provides further information on the various challenges facing the city.

Financing the new water treatment plant

Residents have asked the city if it could provide more money for the project. The city is currently examining options on how to move forward with the project without another rate increase.

Kim Crawford is an attorney with Butler Snow and has been working with the city on this matter. One option is to provide the project with a large infusion of general or capital funds from the city.

The city has been working on a model where this infusion acts as a “down payment” for the project. If a cash transfer of $4 million to $4.5 million can be accomplished, limited to no rate hikes will be required in 2025. However, Cherry also said that this financial model includes outstanding state and federal funds that the city is not yet certain to receive.

Additional grants, low-interest loans and more are being discussed by the city to find solutions to ease the burden on area residents. Cherry warns residents that the city cannot make any final financial decisions until more information is available.

The current cost of the facility as currently planned is approximately $32 million.

A large transfer of funds to the North Utility Area could impact the “corporate” status of the project. Local government functions that are considered businesses are exempt from TABOR requirements. This places spending and revenue restrictions on local governments. The Northern Area Water System has been considered a business since 2011 and the status is reviewed annually.

TABOR defined Corporation as “a publicly owned corporation authorized to issue its own revenue bonds and to receive less than 10% of annual revenue in grants from all of Colorado's state and local governments combined.”

Crawford's memo states that this cash transfusion would exceed 10% of the Northern Area water system's annual revenue and would be considered a grant for TABOR purposes. The memo states: “Because the transfer of $4 million from the city's general fund is clearly a 'grant' for TABOR purposes and would represent more than 10% of the system's revenue, the second question is, how this affects the system’s ability to borrow funds without choice.”

Crawford further writes that the North Area water system would no longer have corporate status in 2025 if the cash transfusion occurs this year. However, there is also the possibility of regaining corporate status in the future. Without this status, the project would not incur debt without voter approval.

The nearby city faces similar problems with lower costs

Kremmling residents have not seen a significant increase in water prices in a decade. However, to address deteriorating infrastructure and continued demand for safe and reliable drinking water, tariffs will increase in 2025.

Parallel to Granby, the city of Kremmling is also working on a new water treatment plant. That leaves some wondering why the improvements to the Kremmling water treatment plant will be so much cheaper to build.

Initial estimates for the Kremmling project are around $14 million. The cost of the facility in Granby's northern service area is expected to be approximately $32 million.

SGM Engineering's Warren Swanson met with Element Engineering's Nick Marcotte to learn more about the differences between the two projects. Marcotte revealed that the Kremmling Water Treatment Plant Improvement Project is still a work in progress and that some numbers are not set in stone.

One reason for the large cost difference was that the scope of the project is significantly smaller. The Kremmling building's footprint is 5,000 square feet, while that of the Granby plant is 9,500 square feet.

Both areas have different pretreatment processes and water sources. In Kremmling, the primary raw water supply is Jones Reservoir. This reservoir water flows to the project site via a short section of Sheep Creek. This reservoir provides a high quality water supply, even during the runoff season, eliminating the need for a pre-treatment process. However, the northern service area in Granby draws its water from the Fraser River, which requires a pre-treatment process.

Water from the Kremmling Wastewater Treatment Plant flows by gravity because the plant is located approximately 200 feet above downtown. For this reason, there is no need for a water pumping system required for the Granby water treatment project.

According to Swanson, pumping finished water is by far the largest consumer of electricity at the current plant. Therefore, a power supply is required as well as associated pumping equipment, piping, valves and other instruments.

Swanson's full memo is available online and provides further details on the project differences.

What's next?

Cherry said staff will continue to evaluate grant and loan options for the project while updating the board on any developments. They are currently waiting for feedback on various applications.