Cost of Pandora Water System Project Continues To Mount
by Samantha Wright
Apr 25, 2013 | 1978 views | 0 0 comments | 7 7 recommendations | email to a friend | print

But Council Concurs It’s Money Well-Spent to Secure Water Supply

TELLURIDE – Here’s the good news: the Town of Telluride’s Pandora Water System Project is 36 percent done, and on schedule to be fully operational by November 2014 (except for a hydro-electric component which is slated for completion in 2017). 

Now for the bad news: after doing some high-level number crunching, Telluride Public Works Project Manager Karen Guglielmone told the Telluride Town Council during a work session on Tuesday that she projects this year’s Pandora price tag will come in $500,000 over-budget. 

Council had originally budgeted $6.5 million for the 2013 portion of the ambitious project, which aims to provide a state-of-the-art water distribution and treatment system to ensure a reliable, high-quality water supply for the Town of Telluride. 

This number, however, did not incorporate the so-called Falls Crest Diversion outlined in the Comprehensive Settlement Agreement which the town and Idarado entered into late last year. The agreement brought a 20-year legal battle over water rights between the two entities to an end.  

The elaborately engineered Falls Crest Diversion brings one source of water from Bridal Veil Basin via pipeline across the cliff face directly below Bridal Veil Power Station to tie into the tailrace (where another source of water comes out of the turbine). The water then flows into a collection system vertically down toward Black Bear Road, eventually reaching the Pandora Water Treatment Plant currently under construction. 

The CSA calls for Idarado to contribute about a quarter of the cost for the Falls Creek Diversion – roughly $125,000 – with the Town of Telluride picking up the rest of the tab. 

Also not included in original cost projections for 2013 were the “zero-discharge” processes that are an essential part of this project as it has been negotiated in the CSA. 

Initially, Telluride Public Works Director Paul Ruud explained, the design for the water treatment plant included a discharge component that would release some untreated water into Marshall Creek. The CSA’s zero-discharge requirement scuttled that plan. 

“There won’t be anything coming out of the plant except clean water,” Ruud explained. “This did add considerably to the expense of the plant.” 

Beyond the cost overruns for construction in the current year, council also discussed the fact that the overall construction cost for the project (including the small hydro component) is estimated to come in at around $15 million – significantly more than the $10 million bond approved by Telluride voters to pay for the project in 2005. 

This money, mobilized in 2010, has gone toward improvement of complicated diversion and conveyance infrastructure over the past two years that is intended to get the water from Bridal Veil Basin to the site of the new Pandora water treatment plant. Last fall, the Telluride Town Council approved an additional $2 million transfer of Real Estate Transfer Tax (RETT) funds from the Capital Improvement Fund to the Water Fund to cover additional costs for the project through 2013. 

How to pay for the rest of the project remains to be seen. 

The overall $15 million figure addresses only construction and does not take into account the estimated $3.2 million in legal fees that the town has accrued over the years in a series of legal battles over water rights in Bridal Veil Basin with both Idarado (whose parent company is the giant Newmont Mining Corporation) and Eric Jacobson, the former operator of the Bridal Veil Hydroelectric Plant. 

Guglielmone pointed out that the $15 million figure is about what was projected by a consulting engineer hired by the Town of Telluride to assess the Pandora project in 2008. “That was for construction only, and did not include hydro, zero-discharge, or Falls Crest,” she said. “So, we are there. It really looks like they were pretty accurate. What isn’t included in there is the engineering elements, permitting and legal support.”

Councilor Thom Carnevale observed that the overall cost of the project, when adding up those additional elements, will be “at least twice what taxpayers expected to pay” when they passed the 2005 bond. 

“This project has been fraught with cost overruns,” he said. “I think that is a concern; we need to be straightforward with taxpayers; when I voted in favor of the bond, I was anticipating the project would cost $10 million. It needs to be out in the open.” 

Town Manager Greg Clifton countered that he would characterize the Pandora Water System Project “more as a project that was grossly underfunded back when (the bond) was approved; I have seen nothing in my records that the project was ever anticipated to cost $10 million.” 

Mayor Stu Fraser, who was on council at the time, recalled that back in the day when the bond measure was first being discussed, the $10 million figure “was presented to council as what could probably pass,” not what the project would ultimately cost, and that there was a belief at that time that the economy would be able to support any cost overruns that came up.

“I do think it was unwise for the council who initiated this project to do something open ended without any idea of how it would be paid for,” Carnevale scolded. “It’s a bad way to approach large capital projects; I hope you learned your lesson.”

Council discussed pursuing a low interest loan through the Colorado Water Conservation Board to pay for the remainder of the project. If they decide to go this route, the matter would have to appear before the Telluride electorate for approval in November of this year.

Councilor Chris Myers felt it was something that voters would likely support. “Clean water does come at a cost,” he said. “We need to let people make that connection.” 

Despite of the Pandora Water System Project’s hefty and ever-mounting price tag, council generally agreed in the end that it was a price worth paying. 

“I am thankful that past council members made the decision to get us started,” said Councilor Ann Brady. “Imagine if we were just starting this project, with the climate change we are facing now. Thank goodness the people before us took the step (of securing the $10 million bond). Even though it was skimpy, at least it got us started.”

Clifton echoed Brady’s sentiment, adding, “This will bring the town well into the future in terms of our domestic water supply.” 

swright@watchnewspapers.com or Tweet @iamsamwright

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