SDS: Pipe dream, coming true 

Some people would call Dan Higgins crazy. His idea of a thing of beauty is a half-mile stretch of pipe lying on the ground behind a subdivision of homes.

"Absolutely beautiful. Pipe all laid out ready to be installed," Higgins says as we drive along Marksheffel Road on the city's east edge. We're passing a string of 42- and 54-inch tubes that someday, hopefully by 2016, will deliver 50 million gallons of water a day to Colorado Springs from Lake Pueblo, increasing the city's supply by 25 percent.

Higgins is excited because the agency he works for, city-owned Colorado Springs Utilities, has finally started building the Southern Delivery System, one of the most expensive and controversial projects in the region's history.

The enterprise has battled through lawsuits, federal regulations and criticism from neighbors. The project has been so contentious that Utilities has paid a communications consultant $833,000 in the past three years for SDS alone.

But even now, as workers dig trenches and study blueprints, questions persist. About a reservoir site. About storage capacity of Pueblo Dam. About the wisdom of building a project designed to answer the call of frenetic growth — even as the project itself now stands as one of the few engines for jobs in a down economy. Development has petered out, and the 23,000-acre Banning Lewis Ranch, a chief reason for the pipeline, is in bankruptcy.

And what about cost? Water rates are forecast to increase by 140 percent in the next decade, soaking up $2.3 billion from customers — $880 million in construction costs and the balance in finance costs. That's more than $50 million a year, on average, over a 40-year payback that otherwise could be spent on clothes, food, movies, travel, furniture and other goods that feed not only local businesses but also city and county tax coffers.

That's for Phase 1 alone. There's no firm estimate for Phase 2, which would expand a new water treatment plant built in Phase 1 and also construct two reservoirs. Utilities sets that cost range from $387 million to $744 million.

But on this day, as we hop into Utilities' 2001 Dodge Durango for a day-long tour of the project, Higgins' spirits are high.

"It's actually happening," he says.

Jimmy Camp's flaws

The pipe along Marksheffel, which extends 4,000 feet and burrows under Sand Creek, is the first segment under construction; it's being buried in tandem with El Paso County's widening of the road. Next month, Utilities will open bids from seven pre-qualified pipeline contractors for a four-mile segment southeast of Colorado Springs, several miles east of Interstate 25, where pipe at least 66 inches in diameter will be buried.

SDS — which includes 62 miles of pipe, three pump stations and the treatment plant — represents a dozen construction contracts that will require 700 workers at the peak of construction. And contractors are hungry. Higgins says the Marksheffel stretch drew bids 15 percent below the engineer's estimate.

Heading south, we pull off Marksheffel along vacant rolling hills where Utilities has acquired 120 acres for a treatment plant, slated for construction in mid-2012.

Northeast of here lies Jimmy Camp Creek, where the city sunk more than $6 million into 14 tracts targeted for a treatment plant and reservoir. The deals, which paid some landowners up to four times their property's assessed value, triggered an overhaul of city land acquisition rules in 2006.

The federal environmental study later identified archaeological and paleontological artifacts at Jimmy Camp. Also, developers alleged putting a reservoir there would violate the 1988 Banning Lewis annexation agreement, which calls for a passive park — one without the distractions of a reservoir and other activities on the site. Moreover, downstream residents feared loss of life and property if the dam failed.

Now, Jimmy Camp is held as an option to a new site. That site, Upper Williams Creek, is farther south, along Bradley Road, on hundreds of acres that an 1893 map in Penrose Library's archives shows is near "Burial Rocks" amid former Arapahoe Indian territory. The site, which Utilities has not yet acquired, also might sit atop a network of abandoned mines. A 1967 city Planning Department geology report shows mines in that general area from which more than 445,000 tons of coal were removed from 1883 to 1964.

"We're aware of the presence of old coal mines," Higgins says, adding that test bores have shown Upper Williams Creek isn't a flawed site. He also says engineers will "address any presence of coal" in the pipeline's path. As for cultural artifacts that may be unearthed, Higgins says Utilities already has a plan to deal with them, though he doesn't elaborate.

Besides, those are tomorrow's headaches, because the reservoir won't be needed until 2025 under the latest forecasts.

Whenever it's built, there's one problem nobody can fix.

"I cannot imagine what sort of wisdom led people to think that an open air reservoir out here was a good idea," El Paso County resident Jan Malvern wrote to the Bureau of Reclamation during the permitting process. She predicted a "huge moisture drain" due to the plains' low humidity and constant winds. Higgins says evaporation will claim up to 4,000 acre feet (1.3 billion gallons) of water per year, or about 10 percent, which he says can't be avoided.

Our next stop comes off I-25's Exit 123, just north of Pikes Peak International Raceway. We walk toward Fountain Creek, where erosion has carved a shelf under the bank. Utilities has agreed to realign four miles of the straight channel to make it meander and to slow floodwaters. It's one of three projects Utilities will fund to improve the creek, in addition to handing over $50 million to the Fountain Creek Watershed Greenway and Flood Control District, an agency created in 2009 to oversee creek improvements. Utilities also has paid Pueblo County $2 million for a levee project.

Pueblo County inherits whatever Colorado Springs puts in the creek, including sewage that sets off health warnings. Anger and opposition in Pueblo spawned two 2005 lawsuits since resolved — one alleging Safe Drinking Water Act violations and another concerning jurisdiction for the project's permitting.

East of the raceway, crews will likely bore 30 feet under I-25 and 20 feet beneath Fountain Creek as the pipeline angles to the east and then north.

The dam

Our next stop is Pueblo West, a project partner that will be bisected by the pipeline. Utilities is making headway on land acquisition here, having bought several easements and six homes at prices that nearly match assessed values. Higgins notes the homes are being stripped of reusables, such as appliances, windows and doors, to be used by Habitat for Humanity.

At Pueblo Dam, Higgins points out a gushing stream from the dam's north side. A new outlet from the dam will be built there so that some water can still empty into the Arkansas River to nurture habitat, while another stream goes into Utilities' new pipeline. This is the site of SDS' first construction contract, awarded to Pueblo West-based ASI Constructors.

Although Utilities originally envisioned drawing water from the south outlet, which provides water to other users, Higgins says hydraulic capacity is lacking for the city to take 96 million gallons a day — 18 million for Pueblo West and 78 million for Colorado Springs. (The project's first phase will deliver only 50 million; to reach capacity will require treatment plant expansion and the reservoirs.)

Some wonder if the dam's structurally capable of holding as much water as will be expected. Springs Councilman Tom Gallagher notes that water for the Arkansas Valley Conduit, which will supply downstream towns, was dismissed as "speculative" in its 2008 Environmental Impact Statement approving the Springs pipeline. It's now in the permitting stage.

"I'm not saying Pueblo Dam is not safe today," Gallagher says. "But we're not talking about operations under historical conditions. We're talking about all new stress loads that were never factored in, in the original drawings."

Utilities spokeswoman Janet Rummel, who's with us on the tour, acknowledges the conduit's water storage rights in the dam are superior to those of Colorado Springs; the conduit, after all, was part of the 1960s Fryingpan-Arkansas project that built Pueblo Dam. SDS technically relies on "excess" storage in the lake. But Higgins says the dam's operator, the Bureau of Reclamation, knows what it's doing, and the dam is perfectly capable of holding water for the conduit and SDS.

Lots of horsepower

Pushing all that water 1,100 feet uphill will require three 21,000-horsepower pump stations. Power will come from Black Hills Electric and Mountain View Electric, Higgins says. Power for Phase 1 is estimated to cost $1.5 million annually; after both phases are implemented, the bill will be $7.4 million a year.

The project's multiple price tags, taken together, remain an albatross.

"We need to consider what's seen, which is the pipeline, as well as what is not seen, which is the transfer of $50 million a year of wealth out of the community," says T.A. Arnold, a former Utilities Policy Advisory Committee member and former director of the state of Idaho's Department of Commerce. "The politicians tend to focus on that which is seen, which is the pipeline itself."

Arnold disputes that the pipeline's stated purpose is to provide redundancy and serve new growth. He says the project clearly is aimed at supplying the bankrupt Banning Lewis Ranch, where only a few hundred homes have popped up so far. "This city wants to disguise it to say it's everybody's project," he says. "That's baloney, and everybody knows that."

Pueblo officials, some of whom still oppose the pipeline, wonder if a change in seven of nine Springs City Council seats after next spring's city election will affect SDS. With development stalled and customers facing annual 12 percent water rate increases through 2017, will it become a campaign issue? Would the city postpone the project, risking the loss of its federal and Pueblo County permits? Would Council even pull the plug?

Or has the city reached the point of no return, having spent $105 million so far and borrowed another $180 million?

Pueblo County Commissioner Jeff Chostner has his doubts, telling the Pueblo Chieftain two weeks ago, "They don't have the financial wherewithal to build it.''

But as we pull into Colorado Springs, concluding the tour, Rummel notes the city's transmountain Homestake water line, built in the 1960s, also caused water rates to more than double. She says SDS, like Homestake, will provide long-term economic benefit by assuring a reliable water supply into the 2040s.

"Maybe some believe you can start and stop a project like this on a dime," she says. "They forget how far we've come to get to this point. That we're here with construction underway is a big success."


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