For more than 10 years, Colorado Springs Utilities officials have haggled with and acquiesced to homeowners, ranchers, developers and others as they've carved a pathway for the $898 million Southern Delivery System pipeline from Pueblo Reservoir to Colorado Springs.
But those days are winding down now for the city-owned utility. Outside of a handful of parcels tied up in eminent-domain court actions, the city has amassed the vast majority of land needed to complete the 66-inch-diameter line across Pueblo and El Paso counties. And as for those in court, Utilities has been granted possession; at issue is determination of their value.
Which leaves only one other property acquisition needed for the pipeline itself, and a couple dozen others for related projects. Overall, the land-acquisition project is on schedule, if significantly over budget.
"We are pleased to be nearly complete with acquiring the land needed for SDS," says Utilities project manager John Fredell in a statement. "We have worked hard to be fair with property owners and appreciate their cooperation to advance this critical project for our community and partners."
SDS will bring up to 78 million gallons of water per day to Colorado Springs and its local partners, Security and Fountain, and increase the city's water supply by a third. To meet its 2016 target for turning on the spigot, the city has already built more than 42 miles of the 50-mile pipeline. Construction of the water treatment plant and three pump stations is underway.
The city's initial foray into acquiring property for the project, in 2003 and 2004, caused an uproar, and a tightening of city real estate acquisition procedures. Utilities, in some cases without Utilities Board approval, had made offers for homes near Jimmy Camp Creek, northeast of the city, for up to three times the homes' assessed values, plus six-figure moving costs — in one case, $340,000. The city paid $6.1 million for 14 properties and then allowed the former owners to rent for $300 a month indefinitely.
Within a few years, the city abandoned the Jimmy Camp area as a reservoir site due to archaeological values and other factors, and instead chose Upper Williams Creek near Bradley Road.
In 2009 and 2010, Utilities tangled with Pueblo West residents and left some hard feelings in its wake. The buried pipeline, which traverses the back portions of residential lots, can't be built upon, which residents say renders their yards unusable.
Resident Dwain Maxwell, who's forced Utilities into condemnation court, says he was paid $1,850 for land his appraisal said was worth $16,500. Meanwhile, he estimates Utilities has spent four times that amount on attorneys. "I feel like they've not been honest with us," he says today.
Gary Walker of Pueblo County is also still in condemnation court with the city, and declined to be interviewed for this story. But he notes in an email that he's been recognized repeatedly for his stewardship of the land at his ranch, and was the first to sign up for the reintroduction of the black-footed ferret under federal rules. "How do you put a price on the destruction of something so important as our environment?" he asks.
In 2012, Utilities went up against the Norris ranching family for a chunk of land for Upper Williams Creek Reservoir. After the Norrises moved to create their own reservoir, a deal was reached in which the city paid the family $7.5 million for 791 acres.
But the biggest single acquisition was land next to the Norris property owned by the State Land Board. The city paid more than $11.8 million for 1,128 acres, the highest per-acre price paid for pipeline property.
The bottom lines
Back at Jimmy Camp Creek, the city has been sitting on the properties it acquired years ago. With other reservoir property in hand, SDS spokeswoman Janet Rummel says, the city will decide how to sell those unneeded tracts.
Rummel says contracts for about half the properties acquired by Utilities in Jimmy Camp contain a "first right of refusal" provision, meaning the previous homeowners have an option to buy back their homes at current market value. That probably means Utilities will take a hit.
For example, a 40-acre tract with a house for which the city paid $500,000 in March 2003, and another $340,925 in so-called moving costs, has a current market value of $190,000, according to the El Paso County Assessor's Office.
Those properties without first right of refusal will be sold, Rummel says, in accord with the City Real Estate Manual, which, she adds, "could result in the City recovering some of the original costs."
Utilities needs to acquire about 15 additional properties for the reservoir site, but the reservoir won't be built until SDS' second phase, from 2020 to 2025, as demand requires. The city also needs 11 more properties for a section of pipe for treated water, Rummel says.
So far, the city has spent $34.6 million on land for SDS. That's about 38 percent more than the $25 million estimate in 2009 for 274 parcels in Phase 1 and reservoir land. If costs for surveys, appraisals, real estate fees and closings are added, the cost is $45 million, or 22 percent more than the 2009 "all-in" estimate of $37 million.
Water rates, meantime, haven't increased as much as earlier predicted. Ratepayers saw 12 percent hikes in 2011 and 2012, and 10 percent increases in 2013 and 2014. A 5 percent hike is expected in 2015. Previously, 12 percent annual jumps were forecast from 2011 through 2017.