Settlements reached in Avon water tank litigation
Tank, paid for by Traer Creek, failed just months after it went online
AVON — The Upper Eagle Regional Water Authority, the Traer Creek developer and various contractors have reached a settlement in a three-year legal fight over a failed 2 million gallon water tank that was meant to serve the development.
The Traer Creek development, known as the Village at Avon, is approved for up to 2,400 homes and 825,000 square feet of commercial space. Currently, 244 affordable homes have been built within the development and about 350,000 square feet of commercial property have been constructed.
The water authority received $5 million in the settlement.
The failed tank will now be demolished and rebuilt, with the water authority in charge of the project. The replacement tank project is anticipated to cost between $9 million and $12 million, said Jason Cowles, engineering manager for the Eagle River Water and Sanitation District, which provides operational and management services for the water authority under contract.
The authority is hoping to complete the new tank in 2021, Cowles said.
“We are pleased to have come to a settlement on the water tank, which is being finalized now, and that we can all move forward in a manner that resolves the matter permanently and puts it into use for the community,” said Marcus Lindholm, manager at Traer Creek.
The Traer Creek developer, then known as EMD LLC, was required in a 1997 agreement to build the tank to serve its property.
The authority imposed a moratorium on water taps within the development area in 2006, saying it would be lifted once the requirements for a tank had been met. The moratorium effectively precluded development in the area.
An amended water-tank agreement involving the authority was reached in 2014 as part of the settlement of litigation between the town of Avon, the Traer Creek Metropolitan District and the Traer Creek developer.
Pursuant to that agreement, the developer agreed to pay for the design and construction of the tank. The authority would then take over the ownership and operation of the tank.
The moratorium was lifted in 2014 after Traer Creek met its requirements with respect to the tank.
Construction of the tank began in 2013.
The water authority accepted the newly built tank into its system April 1, 2015, but less than two months later, a significant leak was located in the tank. Water district employees noticed via monitoring systems that the tank was leaking 425 gallons per minute.
The tank was drained and taken offline.
The leak was caused by soil settlement beneath portions of the tank. It was later determined that the tank needed to be replaced.
On May 16, 2016, the water authority filed suit against the developer, Traer Creek-RP LLC, in District Court, saying the developer was responsible for the repair or replacement of the tank.
According to the complaint, the developer told the authority it had met its obligations to the water authority with respect to the tank by assigning bonds executed by several of the contractors “as a security for the cost of any potential repairs.”
The developer later offered what the authority called a “deficient” initial repair plan. The developer also continued to dispute its warranty obligations for repair or replacement, the authority said in its complaint.
Traer Creek said in court documents that it was not responsible for the design or construction of the tank.
“We believe it’s a construction defect issue,” Michael Lindholm, of the Traer Creek Metro District, told the Vail Daily in November 2016. “It’s an issue between the water authority and the construction parties.”
In November 2016, the water authority filed an amended complaint that also named several contractors and an insurance company as defendants.
A settlement between the water authority, the developer and several contractors was announced in February of this year.
A settlement was announced between the water authority and the developer in March.
At that point, two parties remained in the dispute, the developer and Bates Engineering, which completed the structural design of the tank.
Those parties notified the court of a settlement in May.
A jury trial had been scheduled for June.
The Upper Eagle Regional Water Authority provides water to its six members: the town of Avon, the Arrowhead Metropolitan District, the Beaver Creek Metropolitan District, the Berry Creek Metropolitan District, the EagleVail Metropolitan District and the Edwards Metropolitan District. The authority also provides service to the Bachelor Gulch and Cordillera metropolitan districts.
Traer Creek-RP and its related entities have been planning the development, known as the Village at Avon, for decades.
The land, annexed into the town of Avon in 1998, stretches from the current Beaver Creek Rodeo grounds on the west to proposed home sites that are directly north of Dowd Junction.
The Walmart and Home Depot opened as part of the development in 2003, and Traer Creek Plaza, an office and commercial building, opened in 2006. An ambulance station was completed in 2008.
A 240-apartment project at the old STOLport parcel is expected to break ground this fall. Traer Creek closed Thursday on a deal to sell the land to Longmont-based Actis LLC, a company that plans to develop the apartments.