I want to thank everyone who attended the 2009 MMWC Annual Meeting, and for their questions, contributions, and input. For those who didn't make it, I hope to see you at next year's annual meeting.
We had two very good candidates running for the Board -- Donna Brazill and Joe Weiner. Donna, who made tremendous contributions to MMWC over the past 3 years, was re-elected. I think that Joe, whom I met for the first time today, would have made a great director too. He has volunteered to help in a number of ways, and I look forward to working with him.
I presented a two-hour PowerPoint presentation setting forth a long historical overview of MMWC's infrastructure and budget challenges. Don enhanced the presentation with his input and several demonstratives (pipes, valves, etc.). For those of you who missed the presentation, an abbreviated version of the presentation is here. Most of the rest of the information I presented is discussed on Mountain Mutual Water Company's website, on the "Budget" and "Infrastructure" pages.
After the presentation, we presented two resolutions to the membership. First, MMWC will be assessing $80 per MMWC member or customer, to raise funds needed this year for operational and capital expenditures. Second, MMWC will raise user fees to $50/month in 2010, except that those who are metered by that time will pay the lesser of $50/month or $25/month + $0.005/gallon. Also, availability fees will be $150/year starting 2010. Both of these rather monumental resolutions passed without any opposition, which indicates that we successfully made the case that these measures were needed.
MMWC is implementing a lot of changes. For those on tight budgets, the changes may be difficult. We are sensitive to that. However, the grim infrastructure reality -- driven home by the challenges MMWC suffered during the harsh winter of 2008 -- is that MMWC cannot responsibly put off investing in much-needed infrastructure improvements. And the grim budget reality -- revealed in convincing detail on MMWC's "Budget" page -- is that MMWC has no good alternative to raising rates, and in percentage terms, rather significantly. However, even after these changes, MMWC's rates will still be below rates most other rural Teller County providers charge.
Saturday, March 21, 2009
Friday, March 13, 2009
Ponder the Unthinkable: What if MMWC Went Bankrupt?
Let's do a little thought experiment. What if MMWC went bankrupt?
Now don't misinterpret this question -- MMWC's Board of Directors has no intention of letting that happen.
But imagine what would happen if singleminded opposition to rate increases led to MMWC's insolvency. After all, it wouldn't be the first time a ditch company failed. See Farmers Water Development Co. v. Barrett, 376 P.2d 693 (Colo. 1962); Doland v. Grand Valley Irrigation Co., 63 P. 300 (Colo. 1900).
The first thing to realize is that upon dissolution of MMWC, each member would still own their share of the 1.04 cfs water rights. But these water rights would no longer be owned collectively.
CCME's residents would then face several options.
(1) One option would be for residents to hire a water-hauling company to periodically fill their cisterns. That could easily cost $85/load. The average full-time water user would need between 2 and 4 loads per month. The resulting water bill would amount to between $170/month and $340/month.
(2) Another option (which is what occurred in the Barrett and Doland cases cited above) would be for a group of CCME residents to band their resources and water rights together and make a bid on MMWC's wells, transmission, and distribution system. The group would probably have to go into debt to finance the acquisition and attorneys' fees. Moreover, the group would probably have a hard time getting owners of vacant lots to join -- so CCME residents would probably end up footing the full bill for their water service -- instead of about 50-60% as they do currently.
Moreover, the new company would probably end up with only a small fraction of MMWC's 1.04 cfs water rights -- potentially preventing the group from accommodating new members. Meanwhile, MMWC residents or lot owners who declined to join the new company might end up abandoning their water rights. Or savvy water districts and utilities would offer to buy those water rights from the members on the cheap.
Assuming enough people joined to make a new company viable, members of the new company would still probably end up paying over $100/month for their water, perhaps as much as $150/month if attorneys' fees are factored in. This is considerably higher than the $50/month rates MMWC is proposing starting in the year 2010.
(3) A third -- and certainly more practical -- option would be for residents to form a water district. The water district would be easier to capitalize than a new mutual ditch company, because it would have the right to tax property and sell bonds. But it would be expensive to form and more expensive to manage, because of the vastly larger body of regulations that apply to special districts. Also, the district would have to go into debt to buy MMWC's infrastructure. The new water district would likely lose the ability to charge availability fees. Consequently, full time residents would bear a much larger share of the fiscal burden. In the end, users would probably end up paying $80/month or more for water. Moreover, there could be significant obstacles to transferring all of MMWC's water rights to the new district.
Conclusion: Allowing MMWC to fail would be very unfortunate. It would be a lot more expensive to solve CCME's water problems if MMWC members let them grow into a full-blown crisis, than if they address them now.
Now don't misinterpret this question -- MMWC's Board of Directors has no intention of letting that happen.
But imagine what would happen if singleminded opposition to rate increases led to MMWC's insolvency. After all, it wouldn't be the first time a ditch company failed. See Farmers Water Development Co. v. Barrett, 376 P.2d 693 (Colo. 1962); Doland v. Grand Valley Irrigation Co., 63 P. 300 (Colo. 1900).
The first thing to realize is that upon dissolution of MMWC, each member would still own their share of the 1.04 cfs water rights. But these water rights would no longer be owned collectively.
CCME's residents would then face several options.
(1) One option would be for residents to hire a water-hauling company to periodically fill their cisterns. That could easily cost $85/load. The average full-time water user would need between 2 and 4 loads per month. The resulting water bill would amount to between $170/month and $340/month.
(2) Another option (which is what occurred in the Barrett and Doland cases cited above) would be for a group of CCME residents to band their resources and water rights together and make a bid on MMWC's wells, transmission, and distribution system. The group would probably have to go into debt to finance the acquisition and attorneys' fees. Moreover, the group would probably have a hard time getting owners of vacant lots to join -- so CCME residents would probably end up footing the full bill for their water service -- instead of about 50-60% as they do currently.
Moreover, the new company would probably end up with only a small fraction of MMWC's 1.04 cfs water rights -- potentially preventing the group from accommodating new members. Meanwhile, MMWC residents or lot owners who declined to join the new company might end up abandoning their water rights. Or savvy water districts and utilities would offer to buy those water rights from the members on the cheap.
Assuming enough people joined to make a new company viable, members of the new company would still probably end up paying over $100/month for their water, perhaps as much as $150/month if attorneys' fees are factored in. This is considerably higher than the $50/month rates MMWC is proposing starting in the year 2010.
(3) A third -- and certainly more practical -- option would be for residents to form a water district. The water district would be easier to capitalize than a new mutual ditch company, because it would have the right to tax property and sell bonds. But it would be expensive to form and more expensive to manage, because of the vastly larger body of regulations that apply to special districts. Also, the district would have to go into debt to buy MMWC's infrastructure. The new water district would likely lose the ability to charge availability fees. Consequently, full time residents would bear a much larger share of the fiscal burden. In the end, users would probably end up paying $80/month or more for water. Moreover, there could be significant obstacles to transferring all of MMWC's water rights to the new district.
Conclusion: Allowing MMWC to fail would be very unfortunate. It would be a lot more expensive to solve CCME's water problems if MMWC members let them grow into a full-blown crisis, than if they address them now.
Our Water Rights -- What Are They Worth?
Many residents take their water for granted. Few have any idea how much their water rights, measured collectively, are worth.
MMWC's members own 1.04 cfs of relatively senior priority Beaver Creek water rights, with an initial appropriation dating back to 1865. 1.04 cfs amounts to 753 acre-feet per year.
Recently, the Pueblo Board of Water Works made an offer for shares of the Bessemer Ditch water rights -- most of which are also relatively senior -- equal to $9,000 per acre-foot. See the Pueblo Chieftan article on the subject.
At that valuation, MMWC's members' Beaver Creek water rights would be worth $9,000 * 753 = $6.78 million. Split evenly between about 1450 members, that amounts to about $4,675 per member.
But Pueblo's offer was for dirty ditch water. Pueblo is offering to sell its pristine Columbine ditch water rights for $22,800 per acre-foot. At that valuation, MMWC's members' Beaver Creek water rights would be worth $22,800 * 753 = $17.17 million. Split evenly between about 1450 members, that amounts to about $11,840 per member.
Also last year, the City of Broomfield paid $7.65M to acquire 525 acre-feet of Big Thompson water rights. This amounts to about $14,600 per acre-foot. At that valuation, MMWC's Beaver Creek water rights would be worth about $11 million -- or about $7,600 per member.
Our water is indeed a precious resource.
See also:
Colorado Big Thompson Water Right Price Trends, 1990-2003
Broomfield laps up some Greeley water
MMWC's members own 1.04 cfs of relatively senior priority Beaver Creek water rights, with an initial appropriation dating back to 1865. 1.04 cfs amounts to 753 acre-feet per year.
Recently, the Pueblo Board of Water Works made an offer for shares of the Bessemer Ditch water rights -- most of which are also relatively senior -- equal to $9,000 per acre-foot. See the Pueblo Chieftan article on the subject.
At that valuation, MMWC's members' Beaver Creek water rights would be worth $9,000 * 753 = $6.78 million. Split evenly between about 1450 members, that amounts to about $4,675 per member.
But Pueblo's offer was for dirty ditch water. Pueblo is offering to sell its pristine Columbine ditch water rights for $22,800 per acre-foot. At that valuation, MMWC's members' Beaver Creek water rights would be worth $22,800 * 753 = $17.17 million. Split evenly between about 1450 members, that amounts to about $11,840 per member.
Also last year, the City of Broomfield paid $7.65M to acquire 525 acre-feet of Big Thompson water rights. This amounts to about $14,600 per acre-foot. At that valuation, MMWC's Beaver Creek water rights would be worth about $11 million -- or about $7,600 per member.
Our water is indeed a precious resource.
See also:
Colorado Big Thompson Water Right Price Trends, 1990-2003
Broomfield laps up some Greeley water
Thursday, March 12, 2009
MMWC's Budget and Infrastructure Problems and Solutions
In the Slide Presentation below, learn about the longstanding infrastructure and budget problems that MMWC faces:
Uploaded on authorSTREAM by ecernyar
If you would like a copy of the complete, 2007 PPT version of the presentation, please contact me.
MMWC members are welcome to attend Mountain Mutual Water Company's Annual Meeting on Saturday, March 21, 2009, at 10:00 a.m., at Rocky Mountain Chapel next to MMWC's office building.
But also learn what MMWC intends to do to solve those problems:1) A 3", Sch. 40 PVC transmission line that is less than adequate to meet the needs of CCME's existing residents, much less future growth.
2) Pressure problems, freezing lines, and other issues that interrupt and threaten water delivery for CCME's residents.
3) Rates and revenues that haven't kept pace with inflation or MMWC's growing user population.
4) Dwindling reserves and the threat -- if nothing is done -- of insolvency.
The following is an abbreviated, internet-based version of the slideshow presentation:1) Immediately increase investment in needed infrastructure improvements, especially a new 6" transmission line from the Gillette Flats well field to our main water tank, and -- within the next 5 years -- to CCME.
2) Require all users be metered by 2011.
3) Levy a special assessment of $80 on all MMWC members and customers in 2009.
4) Raise availability fees to $150/year in 2010.
5) Raise user fees to $25/month + $0.005/gallon (if metered, with monthly amount temporarily capped at $50 to encourage early metering) or $50 (if not metered) beginning Jan. 2010, to encourage metering and conservation and
to transition toward a more equitable distribution of MMWC's costs.
6) Investigate and pursue grant opportunities.
Uploaded on authorSTREAM by ecernyar
If you would like a copy of the complete, 2007 PPT version of the presentation, please contact me.
MMWC members are welcome to attend Mountain Mutual Water Company's Annual Meeting on Saturday, March 21, 2009, at 10:00 a.m., at Rocky Mountain Chapel next to MMWC's office building.