When the San Juan Water Conservancy District (SJWCD or District) was formed in 1987 the District acquired rights to several reservoir sites that were reserved by the Southwestern Water Conservation District (SWCD). The SWCD serves nine counties in the Dolores/San Juan River Basin of Southwest Colorado. Among those sites was a particular one suitable for future development called Dry Gulch. The Dry Gulch site was initially examined in 1968 by local agriculture interests, the SWCD, and the U.S. Bureau of Reclamation.
In 1988 the District joined with the local water provider, Pagosa Area Water and Sanitation District (PAWSD) to evaluate various storage project sites. 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. The report examined the Dry Gulch site for a 4,000 acre-foot (AF) reservoir. The Hidden Valley Reservoir site was purchased and developed by a private entity in ___, which took it out of contention as a water storage site for public purposes.
It was not until the severe drought of 2001-02 that serious efforts were made to move the Dry Gulch Project forward. Today, the District takes the lead in developing this project for the community. Until 2002, the water source for two-thirds of the water utilized by the PAWSD was from diversions on Fourmile Creek through the Dutton Ditch into the Stollsteimer Creek drainage. These diversions were used to fill several reservoirs in the Pagosa Lakes area; primarily Hatcher and Stevens reservoirs. 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 due to extreme drought.
One result of the 2002 drought was that a new study was commissioned in 2003, which re-evaluated the reservoir options, and again concluded the Dry Gulch site was the best. This report evaluated both a 4,000 AF water facility and a 12,500 AF facility. The conclusion was that both would cost approximately $4,100 per AF of water. It was also determined 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.
Over the years, the Dry Gulch Project has been planned at levels of 4,000??, 6,300, 12,000, 18,000, and 35,000 acre feet (AF). In ___ (year) 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 with plans for an 11,000 AF water storage facility. Reasons for down-sizing the project include:
- The Colorado Supreme Court determined Dry Gulch could not be justified at the 35,000 AF size since the “need” was based on population estimates too speculative to rely on in making that determination; and
- The majority of local voters opposed the costs of financing a water storage project at 35,000 AF; and
- The water provider essential to move a project of that size forward determined it no longer wanted to participate in developing a 35,000 AF reservoir.
Justification for an 11,000 AF Dry Gulch Reservoir water storage facility include:
- Archuleta County population is expected to reach ___ by the year 2050; and
- The latest State estimates for water needs in Archuleta County are for an additional 12,000 AF in twenty (20) years; and
- An investment for 660 acres of land has already been made and acquisition of remaining land for the pool basin was secured in 2008; and
- The District had a grant for $1 Million, which would become a loan repayable with back interest if the Dry Gulch Project was not built; and
- In an effort to meet an impending gap between water demand and supply, the State of Colorado is anxious to develop additional water storage facilities and has identified Dry Gulch as a viable project through the Southwest Basin Implementation Plan and the State Water Plan; and
- The San Juan–Chama Trans-Mountain Diversion Project takes approximately 89,000 AF of water a year out of the Upper San Juan Basin, but no compensatory storage was given at the time of that taking.
Notice was received from 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. The 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.
Colorado River Basin Study & Colorado Water Plan Findings
All of the states to the Colorado River Compact participated in the Colorado River Basin Study which was finished in 2012. The study provides much information on water supplies, as well as water demands based on population projections. The study, and the Colorado Water Plan findings, indicated that the gap between water supply and demand in Colorado will be more than 400,000 AF. This shortfall does not consider effects of climate change, which are predicted to make the water supply shortfall more severe. A reliable water supply is crucial to building a viable economy; this is especially so in a tourist-oriented economy such as Archuleta County that relies on outdoor recreational amenities.
The SJWCD used the population estimates from the Colorado River Basin Study in its application to the San Juan National Forest for either a special use permit or land exchange for the Dry Gulch Project. On July 20, 2016, the SJWCD filed an updated and amended application to the U.S. Forest Service regarding Dry Gulch. This application elects to move forward with a land exchange, which would result in the acquisition of an additional 400 acres of land for the Dry Gulch pool basin. The District has contracted with a specialist in public land exchanges to expedite the process, and the District has requested an additional $1 million from the Colorado Water Conservation Board to pay for this land exchange.
The SJWCD believes an opportunity for water banking may also exist within the jurisdiction. Water banking is a voluntary, market-based tool that could facilitate water transactions between willing sellers and buyers. The SJWCD has substantial conditional water rights it is holding for good uses within the District’s jurisdiction. Expanding availability of water to local water providers would be in furtherance of that mission.