Colorado Springs Utilities is in talks with Anschutz interests regarding the potential sale of the Penrose-Rosemont water system assets to The Broadmoor hotel, according to Dan Higgins, CSU’s water services officer.
Higgins acknowledged the talks, but he refused to elaborate further.
“I don’t think that this is the appropriate time to discuss any details,” he said.
If a preliminary agreement is reached, Higgins said there would be “full and complete public discussion,” and any final agreement would hinge upon approval by the Utilities Board of Directors — Colorado Springs City Council acting in a separate role.
CSU Board Chairman Andy Pico refused to comment when asked about the negotiations. Another board member confirmed the matter had been under discussion for some time in executive sessions, but refused any further comment.
No one at Colorado Springs Utilities could give a timeline for when a deal could be reached. No one at The Broadmoor could be reached to comment.
It marks the second time in recent months that the city has negotiated with The Broadmoor over publicly owned assets it wants to acquire. Earlier this year, City Council approved a controversial land swap that gives the hotel 183 acres of parkland known as Strawberry Fields to build a stable and wedding pavilion. But the water negotiations — and a potential sale of water rights — are a first for CSU.
HISTORY OF WATER
If there’s one constant and unvarying policy in the 145-year history of Colorado Springs, it’s that the city has always sought new sources of water.
As then-Mayor John Robinson wrote in 1902: “Of all problems that have occupied the time and best efforts of city councilmen … that of securing a sufficient supply of water has been the greatest,” he said. “It has almost been impossible to keep up with the growth of the city in the last five or six years, but the city council has wisely [approved funds] to carry on their work, and at the present time we are supplying the city with all the water that is needed.”
Those sentences, as a Colorado Springs Utilities document from 1990 noted, could have been written in 1873, 1933, 1973 or 1983.
They certainly would have been appropriate when the Southern Delivery System was authorized in the 1990s, and at any time during the two decades during which the nearly $1 billion project was planned, permitted and built.
Not only has Colorado Springs sought water aggressively, it has tenaciously held on to water rights, distribution systems and reservoirs. The city’s water holdings date from the 1870s — and none have ever been sold.
UP FOR SALE?
Which assets are under negotiation?
The Penrose-Rosemont Reservoir system is supplied by Rosemont Reservoir, located southwest of Colorado Springs.
Built in 1932 by The Broadmoor hotel, the reservoir currently has a capacity of 826.8 million gallons, or 2,537.3 acre-feet. An acre-foot is the amount of water it takes to fill 1 acre of land 1 foot deep.
Rosemont Reservoir and the entire South Suburban Water System were acquired by the city in 1979, when Mayor Robert Isaac spearheaded annexation of The Broadmoor and surrounding neighborhoods.
At The Broadmoor’s insistence, the city acquired the system from the hotel and integrated it into CSU’s portfolio.
Water from Rosemont and other sources on the Pikes Peak watershed are often called CSU’s crown jewels; “first-take” water — renewable, sustainable and free of contaminants.
And the rights exist as long as snow falls on the mountain — making the Rosemont water a guaranteed source for centuries.
The East Beaver and Gould creeks feed the reservoir. Water from Rosemont flows through a 10-inch pipeline to Fisher Canyon Reservoir and then to water treatment facilities.
Rosemont is partially bordered by the Rosemont State Wildlife Area. Fishing (flies and lures only) is allowed with a valid license, but camping and swimming are prohibited.
To get there, according to CSU’s website, “… begin at the intersection of Penrose Boulevard and Cheyenne Mountain Boulevard. Take Old Stage Road (FDR 368) six-and-a-half miles from there to Gold Camp Road (FDR 370). Travel five miles on Gold Camp Road to the trailhead.” It’s about a half-mile walk to the shoreline.
Why is CSU interested in selling these assets — and breaking so dramatically with its past practices?
According to one source, the aging pipeline that transports water from Rosemont Reservoir needs to be extensively repaired and replaced.
There may be both legal and political impediments to any potential deal. Pueblo elected officials might be stunned by any sale of water rights, after being strenuously lobbied by Colorado Springs officials to issue a 1041 construction permit for the Southern Delivery System. The premise: The city would run out of water without SDS.
There may be legal obstacles as well, some sources speculate. CSU’s long-term debt instruments are secured by all of the municipal utility’s assets, so bondholders may be able to block any substitution of collateral.
But for the city, there would be financial incentives. CSU currently has $2.5 billion in system-wide, long-term debt. It doesn’t make sense to add to it.
For Anschutz, it’s an obviously attractive prospect.
By owning his own water company, he’d be protected from the periodic droughts that might compel CSU to ration irrigation water, with potentially disastrous effects upon The Broadmoor’s iconic golf courses.
Properly structured, it could be a win/win deal, but, as one former Utilities employee warned: “It won’t be an easy sell.”
It’s not as if Anschutz is a newcomer to the tangled world of Western water rights.
When he acquired The Broadmoor in 2011, the transaction included rights to groundwater underlying 7,640 acres of the Greenland Ranch, a contiguous 19,000-acre property located between Castle Rock and Colorado Springs. Protected by conservation easements, the property will never be developed. Anschutz’s groundwater resources can be extracted, however — and they’re substantial.
Here’s a confidential memo describing the resource: “As part of the sale of the Greenland Ranch in 2000, Sun Resources Inc., a subsidiary of The Oklahoma Publishing Company, reserved the right to all non-tributary groundwater beneath 7,640 acres of the ranch. The water right entitles the owner to withdraw 1 percent of the total amount per year (14,562 acre-feet) for 100 years. … The right has accompanying surface land easements for well field, treatment facilities, and pipeline infrastructure development that will also be conveyed in the sale. As a result, no further legal proceedings are necessary to develop and sell the water.”
How much is it worth? That’s not yet known.
As northern El Paso and southern Douglas counties continue to grow, they’ll need water. That 1.45 million acre-foot resource will only become more valuable.
As one observer said at the time, “You wait — The Broadmoor was a throw-in in that deal.”