The San Juan Water Conservancy District (“District”) was formed under C.R.S. §37-45-101 et seq. on October 27, 1987 when the electors under the jurisdiction of the District passed a petition to form the District. The District Court in and for Archuleta County, Colorado approved the results of the election by order and that order was recorded at Reception #0151175 on October 26, 1987.
The District operates with a One Mill Levy property assessment. The bylaws for the organization provide for nine (9) seats on the board of directors, which are appointed by the District Court Judge for Archuleta County, CO and serve for three (3) year terms. The seats on the board are staggered to assure there is always institutional knowledge of the organization at all times.
At the time the District was formed, Southwester Water Conservation District transferred certain conditional water rights it held into the name of the District. The District has the statutory authority to appropriate water rights, to have and exercise the power of eminent domain and dominant eminent domain, to sponsor water resources projects, to construct water development projects, to develop and operate augmentation plans and to appropriate recreational in-channel diversion water rights, among other powers. The primary function is to address future water supply needs.
The Dry Gulch site was identified by Southwestern Water Conservation District previously, which filed on water rights and the location to preserve the priorities that would become so important later on. After the District was formed, all rights to the Dry Gulch site, including the water rights, were transferred to the District.
The District was formed to provide for the future water needs of the residents expected to move to Archuleta County. The District joined with PAWSD in evaluating various projects. A 1989 report evaluated several potential reservoir sites, and it appeared the Hidden Valley Reservoir was best to store Fourmile Creek diversions, and Dry Gulch Reservoir was the best site for storage of San Juan River diversions. Said report contemplated the Dry Gulch site for a 4,000 acre-foot reservoir.
The Hidden Valley Reservoir site was purchased and developed by a private entity, which took it out of contention as a water storage facility for public purposes. Until 2002, the water source for two-thirds of the water utilized by PAWSD was from diversions on Fourmile Creek through the Dutton Ditch into Stollsteimer Creek drainage. These diversions were used to fill several reservoirs in the Pagosa Lakes area; primarily Hatcher and Stevens. However, the water rights were junior to irrigation rights in the Dutton Ditch. The result was and remains that PAWSD water rights are regularly out of priority by late May of each year. In 2002, there was no water in the Dutton Ditch.
In the first years of this millennium, Archuleta County suffered a significant drought. As a result, a new study was commissioned (2003), which re-evaluated the reservoir options, and again concluded the Dry Gulch site was the best. This report evaluated both a 4,000 acre-foot (“AF”) water facility and a 12,500 AF facility. The conclusion was that both would cost approximately $4,100 @ AF of water. It was also observed that the maximum capacity of the site was 35,000 AF for the same cost per acre-foot of water. Plans proceeded on the assumption that eventually the largest reservoir would be built. The proposal submitted by PAWSD previously anticipated the maximum capacity would be required to assure future water needs through 2100.
Things changed when Trout Unlimited (“TU”) disputed the population projections that allowed planning for a 35,000 AF reservoir. After lengthy litigation and subsequent appeals, it was determined by the Colorado Supreme Court that the population projections were extended out too far to provide a valid basis for a 35,000 AF reservoir. A settlement of the litigation resulted in a determination the District could proceed forward with plans for an 11,000 AF water storage facility.
Notice was received from Pagosa Water & Sanitation District (“PASWSD”) to terminate the Memorandum of Understanding that had guided development of the Dry Gulch Project, which gave the Parties six (6) months to either resolve their differences or wind up the affairs of the partnership. Many meetings were held during that time, and the seeds of a way forward were established through a letter of intent. With the cooperation of PAWSD and the Colorado Water Conservation Board (“CWCB”), an agreement was worked out. The basic components of this agreement are as follows:
- The PAWSD debt was restructured to extend the payment period and reduce the interest rate to give PAWSD debt relief by reducing its payments by almost half. Savings have to be used to fix water leakage in the PAWSD water delivery system.
- The District’s debt of $1 Million was restructured to allow payment, if at all, from the sale of the Dry Gulch project property.
- The District was given authority to move the Dry Gulch project forward, take ownership of any and all water rights associated with the Dry Gulch Project, and authority to defend and perfect those water rights. CWCB and PAWSD agreed to support the District in pending water rights cases.
- Ownership of the Running Iron Ranch (Dry Gulch Project Property) would remain with PAWSD and the District and standards and conditions under which PAWSD might divest itself of its ownership were outlined that would also give CWCB an option to purchase the Ranch.
- CWCB re-committed itself to the Dry Gulch Project and PAWSD agreed to forego development of new water storage facilities in favor of looking to Dry Gulch for its future water needs.