Derek Franz
Eagle Valley Enterprise
Vail, CO Colorado

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August 18, 2012
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Reservoir expansion project getting pricier for Gypsum

GYPSUM - Gypsum's expansion of LEDE Reservoir is going to cost about half a million more than budgeted.

The good news is that construction work was suspended during the summer due to the drought, so there is unspent money and the town has time to budget for the extra cost next year.

The permitting process with four agencies is the biggest contributor toward the extra expense. Finding agreement with the U.S. Forest Service and the Army Corps of Engineers seems to be the crux.

"The Forest Service has been great to work with, but they're slow," said Jim Hancock, Gypsum engineer, at Tuesday's town council meeting. "It's been tough to get the Army Corps of Engineers on the same page, though."

LEDE has a current capacity of 473 acre feet of water. The latest plans are to expand it to 947 acre feet. The expansion will submerge some small wetland areas that are around the reservoir at its present size, and the town has plans to compensate for that loss by replacing the wetland areas with new ones. Those plans are mainly what need approval from the Corps of Engineers and it's unclear if that will happen.

"We might want to get some other plans in the works if it looks like they're going to fight us on these," said Ramsey Kropf, water attorney. "Then again, they might fight us on anything we propose."

Costs were also bumped up in 2010 when the latest plans for the expansion were approved by the Gypsum Town Council. Council members opted to expand the reservoir to 947 acre feet instead of 680 acre feet as originally planned. That budget presented the town with a $680,000 funding shortfall. However, the larger option was a much better value per acre foot.

At that point, the project was estimated to cost about $4.5 million. Now that number is just over $5 million, leaving a difference of $536,000 to scratch up.

There is $3.7 million left in the 2012 project budget, so that helps.

"We held off on construction this year because we would have had to drain the reservoir to work on it," Hancock said. "By holding off, we were able to save water for the drought, which was a good thing because we ended up getting calls for it from ranchers. That illustrates the need for a bigger reservoir right there."

LEDE is slated to be ready in 2013. That is also when the town will have to start payments on a $3 million, 30-year-loan from the Colorado Water Conservation Board. The loan carries an interest rate of more than 4 percent. Hancock said they'll look into renegotiating that rate.

Tom Edwards, council member, suggested using the extra sales tax revenues from Costco next year, when the town's revenue sharing agreement with Eagle expires.

"That's an extra $400,000 right there," he said.

The problem with that idea, attorneys told him, is that money goes into the general fund and would have to somehow be transferred into the town's water enterprise fund, which is dedicated for projects such as LEDE.

Another option might be to sell shares of the water rights, but council members said that was the last solution they wanted to pursue.

There have been some financial partners so far, such as Eagle County, but no water rights have been sold. Eagle County paid Gypsum for advance water tap fees.

"The town prefers to keep as much of the water right as possible," said Tim McMichael, council member. "Water is the new gold."

With that in mind, the town of Gypsum will be looking under sofa cushions to come up with the extra half million and hoping for permit approvals as 2013 approaches.


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The VailDaily Updated Aug 18, 2012 10:47PM Published Aug 18, 2012 10:45PM Copyright 2012 The VailDaily. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.