Leaky tank prompts litigation between water authority, developer
November 29, 2016
AVON — The goal is to build hundreds of homes high above the Traer Creek area on the east side of town. But first, those homes will need water.
After financing the construction of a 2 million gallon water tank in 2015, the parties that had been involved in its construction process were disappointed to learn the tank had a significant leak and needed to be drained and taken off line.
Fast forward to today. The Upper Eagle Regional Water Authority filed an amended complaint on Nov. 22 in an effort to determine who was at fault for the leak, and, consequently, who should pay for a new tank.
"We believe it's a construction defect issue," said Michael Lindholm, of the Traer Creek Metro District. "It's an issue between the water authority and the construction parties."
“The remaining question is, is it really ultimately Traer Creek’s responsibility, or are they absolved of responsibility because they provided a warranty bond.”Linn BrooksUpper Eagle Regional Water Authority General Manager
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Lindholm said the geotechnical engineers found evidence of expanding soils underneath the tank that were sensitive to water.
"There was settlement, and that's caused the slab to separate from the wall a little bit, and that's where the leak is, according to the experts," Lindholm said.
The authority says a new tank should be constructed by Traer Creek.
"In our view, Traer Creek is ultimately responsible for delivering a tank," said Upper Eagle Regional Water Authority General Manager Linn Brooks. "They've contracted with contractors and engineers, etc., to do that work, but ultimately they're responsible."
TANK TO BE DEMOLISHED
The completion of the water tank was a stipulation of a 2011 settlement terms sheet and the resulting negotiated settlement that was finalized in 2014 between, among others, the town of Avon and the Traer Creek Metro District to end a lengthy litigation.
That agreement defined what could be built on the Traer Creek site — home now to Walmart, Home Depot and the Traer Creek Plaza commercial building. The original plan called for more commercial building and hundreds of homes, but all that development requires water service.
Delivery of the tank from the developer to the Authority was a requirement for the development to receive that additional water service.
The leak was discovered on May 25, 2015, and the new round of litigation began shortly thereafter.
In April, Traer Creek sent the authority a default notice demanding that the authority pursue claims against the construction bonds and the construction parties.
"The remaining question is, is it really ultimately Traer Creek's responsibility, or are they absolved of responsibility because they provided a warranty bond," Brooks said.
The warranty bond was provided to the authority by Traer Creek in April of 2015, along with a deed for the water tank site and an easement to access the water tank site.
"The authority had a very active role in the whole process," Lindholm said. "I was not out there with a shovel."
The current tank will need to be demolished and reconstructed before any home construction can begin in the area above the tank, Brooks said, due to the fact that the authority will not be able to get the current tank insured, even if the leak is repaired.
"A real unknown right now is how the project will be phased, since the demolition itself is probably a fairly complex, lengthy work effort," Brooks said. "Roughly speaking, we've been expecting that we would have a tank online in three years."
—This story contains material from press releases issued by Traer Creek Metro District and the Upper Eagle Regional Water Authority