CSU mounts pre-election media blitz to promote SDS

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Joe Saurino of Springs Fabrication grinds down a seam on the SDS pipeline to clean it for the next pass by the arc-welding machine. It takes four or five passes before it’s finished.

Joe Saurino of Springs Fabrication grinds down a seam on the SDS pipeline to clean it for the next pass by the arc-welding machine. It takes four or five passes before it’s finished.

The $880 million, 62-mile Southern Delivery System pipeline that will move water from the Pueblo Reservoir to Colorado Springs has survived the past eight City Councils and carries the support of virtually every political heavyweight in the region.

But there’s a nightmare possibility for Colorado Springs Utilities: What if voters elect a Council next week that kills it?

To make sure that doesn’t happen, CSU has launched a public relations blitz aimed at keeping the issue before voters and persuading supportive Council members to stick behind SDS.

This week, CSU held a media day to show how SDS will benefit local companies (it was rewarded with a front-page photo in the Gazette). Its public profile was also bolstered by the release a $15,000 study reporting that SDS would have a positive economic impact on the region.

CSU’s CEO Jerry Forte, has also been courting candidates in the City Council races.

“I’m on my way to have lunch with (Forte) right now,” at-large candidate Val Snider said when contacted to ask where he stood on SDS. “I don’t know what we’ll be talking about, but I imagine SDS will come up.”

Strong Council

The threat to SDS comes primarily from the Reform Team, a group of five conservative candidates led by Douglas Bruce who have made stopping SDS their top priority. The other members are Richard Bruce (no relation), Helen Collins, Gretchen Kasameyer and Ed Bircham. The group contends the project is unnecessary.

CSU spokeswoman Janet Rummel pointed out that construction has already started (a section of pipeline has already been installed along Marksheffel Road in El Paso County) and said $115 million had already been spent through the end of 2010. But Bruce argued that money already spent is no reason to “chase good money after bad.”

The reason the elections are important is that despite the move to a strong mayor, the new City Council will have complete authority over CSU, and a vote by five members could kill SDS on sight.

“There are specific provisions surrounding what the new strong mayor can and cannot veto,” said Colorado Springs City Attorney Patricia Kelly. “As it pertains to the City Council’s actions on the Southern Delivery System, the mayor will not be able to veto anything they approve.”

While few take the prospects of a Council full of SDS-slayers seriously, as of Wednesday fewer than 30,000 of more than 150,000 ballots sent to voters had been returned to the city clerk, and there are no polling results to indicate who the likely Council members will be.

“People should hold on to their ballots to see how this race unfolds,” said Bircham, a member of the Reform Team. “In an election like this you never know what kind of news might hit in the next few days. Anything can happen.”

Years of work

The way CSU sees it, any delay could be fatal to the project. Rummel, the utility’s spokeswoman, said it has taken two decades to gather dozens of permits, approvals, land purchases and intergovernmental agreements for SDS (box, page 10).

“Our permits have a shelf life, and delays could put these valuable permits at risk,” Rummel said.

“We are currently benefitting from lower costs for materials and services, as well as historically low interest rates. Delays could lead to cost increases as market conditions change. Water projects in the Western U.S. are becoming increasingly difficult to construct given the lengthy and challenging approval processes required.”

CSU’ Chief Financial Officer, Bill Cherrier, made the same point. “This isn’t something you can just build when you need it,” he said. “As far as planning and lead time goes, water projects take longer than nuclear projects.”

To find out where the 22 Council candidates stand on SDS, the Colorado Springs Business Journal polled all of them over the last week (Kasameyer, a member of the Reform Team, could not be reached, but opposition to SDS is a Reform Team position). Six said they were strongly against SDS and would move to end the project if elected. Five of these are at-large candidates running as the reform team, and they’re joined by another at-large candidate, Dawn Lloyd.

“It’s unconscionable that that CSU would burden ratepayers to fund the project by significantly raising rates during recessionary times,” Lloyd said.

And though he didn’t explicitly say he would vote against it, District 3 candidate Michael Merrifield, who is locked in a tough battle with Lisa Czelatdko, wouldn’t commit to backing SDS.

“There are a lot of unresolved questions, and I would like to see an independent third-party analysis before figuring out the best way to move forward,” Merrifield said. “A lot of people remain unconvinced that this is necessary, so an objective outside party would need to determine its feasibility.”

Still, the odds are on the side of CSU — and SDS. The two incumbents who will remain on the nine-member Council, Scott Hente from District 1 and Bernie Herpin from District 4, would both defend the project if it came to a vote. That means five of the seven openings would have to be filled by candidates that are against the project in order to kill it, and they’re going up against 15 candidates that favor SDS, including current Council members Jan Martin and Sean Paige.

“Clearly the Council will be the lead body when it comes to SDS, so if you got five in there that were adamantly opposed they could (shut it down),” Paige said. “But I don’t think that’s going to happen. Even if we got some critics on the Council, it’s easy to talk when you’re on the outside looking in. It’s different when you get in there and are faced with actually making that choice.”

PR blitz

Monday’s media day, sponsored by CSU, featured a local company, Springs Fabrication, that has a contract to provide dam-connection piping for SDS. The company’s CEO, Tom Neppl, said in a letter to the Business Journal that Springs Fabrication employs more than 100 people in Colorado Springs, 25 of whom will be working on SDS at the height of the company’s involvement in the project.

“Combining our long-term needs for a secure water supply with creating local jobs is a huge win for our community,” Neppl’s letter said. Neppl wrote a similar letter in favor of SDS that was published by the Gazette.

As for the regional impact study, CSU, the Pueblo Board of Water Works and the Center for Regional Advancement, an arm of the Greater Colorado Springs Chamber of Commerce, paid $15,000 to Summit Economics for its findings.

Stephannie Finley, the Chamber of Commerce’s president for governmental affairs, defended the timing and findings of the study.

“We told CSU we would release the report no matter what the findings, and they were fine with that,” Finley said. “Once we got the study, (CRA) discussed withholding the report until after the election because we didn’t want there to be any question about the timing. We ultimately agreed that there was a lot of important information in the study, and people should have it beforehand in order to make an informed decision.”

CSU has also reached out to Council candidates, several of whom told the Business Journal they had been offered tours or had met recently, or had plans to meet, with CSU’s Forte.

Several attempts to speak to Forte directly were declined. CSU said it didn’t want to speculate about future Council positions.

None of the Reform Team members reported more than an invitation to tour the project.

“One of the project managers contacted me about taking a tour,” Douglas Bruce said. “I told them there was no reason to take a tour because I wasn’t going to be persuaded by their song and dance to support a $3.3 billion project to be paid with other people’s money. It costs $10,000 per square-foot and it exists solely to bail out a bankrupt California developer. The pipe ends up at Banning Lewis Ranch; you can’t have a smokier gun than that.”

A tale of two stories

Bruce’s comment highlights two aspects of the disagreement over SDS.

First, each side is attempting to gain control of the narrative. CSU estimates the project will cost $880 million, which is the total of the direct capital investment and the present value of debt obligations CSU will take on. The $3.3 billion price tag referenced by Bruce includes interest payments incurred on that debt over the 40-year life of the bonds.

And Banning Lewis Ranch has been another hot issue. The development was supposed to provide an outlet of growth for the city and seemed to validate the need for an additional water supply. Instead, bankruptcy has stopped development completely.

CSU said the project is necessary despite the Banning Lewis bankruptcy, on the grounds the region will need the water anyway. Anyway, the project may be hard to stop: Last November, CSU issued $180 million in municipal bonds to pay for the initial phases of construction, and another bond issue is planned for 2012.

Even Reform Team member Richard Bruce wondered aloud about how easy it would be to kill the project.

“I would vote (against it),” he said. “But the fact is, I don’t know if it can be stopped. A lot of contracts have been signed, bonds have been issued and over $100 million has already been spent. I’d like to stop it — it’s a terrible idea, but we’re not at the beginning.”

But Douglas Bruce, the Reform team’s leader, said he believes the city can get out of existing agreements.

“We got approval from Pueblo, but that’s not a commitment,” he said. “Pueblo would be delighted if we didn’t go through with this. And not just the citizens (of Pueblo), but the government too. (intergovernmental agreements) are not enforceable, ironclad agreements saying that we’ll definitely build this. They just say that we can build this (if we want to).”

Where the candidates for City Council stand

AGAINST THE PROJECT

At Large Candidate: Dawn Lloyd

At Large Candidate: Douglas Bruce (Reform Team)

At Large Candidate: Richard Bruce (Reform Team)

At Large Candidate: Ed Bircham (Reform Team)

At Large Candidate: Helen Collins (Reform Team)

At Large Candidate: Gretchen Kasameyer (Reform Team)*

ON THE FENCE

District 3 Candidate: Michael Merrifeld

FOR THE PROJECT

District 1 Incumbent: Scott Hente

District 2 Candidate: Mike Terry

District 2 Candidate: Larry Bagley

District 2 Candidate: Angela Dougan

District 2 Candidate: David Jensen

District 3 Candidate: Lisa Czelatdko

District 4 Incumbent: Bernie Herpin

At Large Candidate: Dan Reifschneider

At Large Candidate: Tony Carpenter

At Large Candidate: Brandy Williams

At Large Candidate: Bill Murray

At Large Candidate: Thomas Exum

At Large Candidate: Tim Leigh

At Large Candidate: Sean Paige

At Large Candidate: Jan Martin

At Large Candidate: Merv Bennett

At Large Candidate: Val Snider

*No response, but Reform Team is anti-SDS.

How SDS got its permits

National Environmental Policy Act Review (2003-2009)

The U.S. Bureau of Reclamation’s 5½-year review under the National Environmental

Policy Act included these steps:

  • Draft Environmental Impact Statement (Feb. 2008); public comment period starts
  • Public comment period ends (June 2008)
  • Supplemental Information Report (Oct. 2008); public comment period starts
  • SIR public comment period ends (Nov. 2008)
  • Final Environmental Impact Statement (Dec. 2008)
  • Record of Decision (March 2009); includes steps to mitigate environmental impact

Pueblo County 1041 Permit (March 2009)

Board of County Commissioners approves land-use permit to mitigate impacts of SDS construction and operation and protect Fountain Creek, Pueblo Reservoir, landowners and county residents.

CSU Board approval of preferred alternative (July 2009)

Board approves moving forward on a 2016 project delivery schedule.

Fountain Creek Watershed, Flood Control and Greenway District Approval (Jan. 2010)

District votes unanimously to support components that fall within Fountain Creek Corridor and recommends approval to El Paso County Planning Commission for SDS facilities outside corridor but within Fountain Creek watershed.

El Paso County Location Permits (March 2010)

Planning Commission approves location permits for various components of SDS within county.

State Water-Quality 401 Certification (April 2010)

Colorado Dept. of Public Health and Environment approval.

404 Permit/U.S. Clean Water Act (May 2010)

Corps of Engineers and EPA approved permit required by U.S. Clean Water Act.

Fish and Wildlife Mitigation Plan (May 2010)

Colo. Water Conservation Board and Colo. Wildlife Commission approve plan developed in partnership with Colo. Division of Wildlife. Includes possibility of angling/recreation opportunities at future reservoir sites to be built during Phase II of SDS.

City Council approves water rate adjustments for 2011 and 2012 to fund SDS (May 2010)

Phased-in water rate increase will fund initial SDS construction and costs of operating and maintaining existing water system.