Geothermal water lease could require election

Once again, the imbroglio that has characterized a proposed geothermal water lease continued to simmer at the mid-month meeting of the Pagosa Springs Town Council last Thursday.

Representing The Springs Resort, attorney Jim Anesi began his lengthy presentation to the board by explaining his client’s rationale for filing on rights for the geothermal water that is the subject of the proposed lease.

“I know there are questions regarding wastewater rights the resort owns,” Anesi said, “and those rights expire 2012. Our concern is with the pipeline for that water. It’s the only way to protect the pipeline and prevent someone from coming in and taking it.

“This right does not impinge on your right,” Anesi continued, “Our primary purpose was not to get ahead of you or take something away from you but to protect the pipeline.”

Having explained the justification for filing on the town’s wastewater rights, Anesi continued with the reason for his presention: not just securing a lease on geothermal wastewater for The Springs Resort, but having that lease for a 50-year period.

Unfortunately, for Anesi and The Springs Resort, the Pagosa Springs town charter provides no latitude for allowing a chance at the lease. As reported in the Oct. 2 edition of The SUN, The Springs Resort’s filing for geothermal wastewater rights possibly violates Section 10.4.C of the town charter. Furthermore, that section of the charter is explicit in limiting leases to a 10-year period.

“The problem is,” Anesi stated, “from a practical standpoint, The Springs resort can’t make an investment on a 10-year lease and I don’t know if anyone can. Why would you invest millions of dollars on a 10-year lease?”

Acknowledging the limits of the charter, Anesi asked council, “Can you amend the charter?”

In fact, Section 12.2 of the town charter provides recourse for amending the charter by placing a matter “to a vote of the registered electors of the town.” The matter would go to a vote through either a petition process that meets requirements set forth in Title 31, Article 2 of Colorado Revised Statutes or by an ordinance submitted by the town council.

When asked if the town would be financially responsible for funding a special election to amend the charter, town attorney Bob Cole replied that the town would indeed be required to pay for the election. SUN staff then asked Cole if the expense of the election could be offset by the petitioning party. Cole’s response was that, although the town could not demand payment for the election, any largesse offered by the petitioner to assist with the expense of an election, “Would most likely not be refused by the town.”

According to town clerk April Hessman, the 2008 election for three council members cost the town $1,232.

Council member Shari Pierce asked why the town charter contained a 10-year limit placed on geothermal lease agreements.

Council member Darrel Cotton responded that the charter was drafted by using other charters as examples and templates, but also surmised, “The ten-year limit may have been a compromise to keep resources with the town.”

The final issue of the proposed lease agreement had to do with the amount of water asked for in the lease. As reported previously in The SUN, the Springs Resort is asking for 400 gallons per minute, 200 gpm more than is currently being leased to them. Previously, council had questions regarding the amount and whether preformance requirements should be added to the lease in order to ensure that the Springs Resort was using the full complement of its waste water request.

Matt Mees, representing The Springs Resort, assured council that the entire amount would be required by the time the new hotel is opened in April 2009.

“Our main water is from the Great Hot Spring, about 725 gpm,” said Mees. “Existing pools use 521 gpm. In April, when we open the new hotel addition, we’ll require an additional 250 gpm. To heat the sidewalks and with everything else, it will require 300 gpm.”

If Mees’ estimates are correct, the 400 gpm lease would leave approximately 54 gpm unused.

Mees and Anesi expressed misgivings if the town refuses the proposed lease. “We would have to scale back and become more efficient,” Mees said.

Anesi added, “Eventually, The Springs Resort will expand. How will we do it? We’ll need to become more efficient.”

Rather than decide how to proceed, council tabled the matter, ostensibly to weigh the implications of holding a special election for amending the town charter to allow a 50-year lease.

Council meets again Tuesday, Dec. 2, at 5 p.m. in chambers at Town Hall. As of press time, it was unknown if council would draft an ordinance for a special election.