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.