Some communities in the Eastern New Mexico Rural Water Authority, most notably Tucumcar and Clovis, are gambling on growth to pay for their share of the Ute Water Pipeline, according to a study by a consultant to the project.
The consultant, Jason Bass, an economist with Dornbusch Associates of Tucson, Ariz., said last week at least two communities in the project — Clovis and Tucumcari — have reserved more water in the project than they currently use. This could mean a burden on rate payers if the reserved water is not all purchased once the project is at full capacity, he said. Clovis has reserved 10,142 acre feet of water in the project and used 7,000 acre feet in 2003. Tucumcari has reserved 6,000 acre feet, but used only 867 acre feet in 2003, Bass said. Tucumcari City Manager Richard Primrose disputed Bass’s figure last week, saying the city used about 1,600 acre feet of water last year.
An acre foot is 325,851 gallons, approximately the amount it would take to cover an acre of ground 1 foot deep in water.
Dornbusch Associates was hired in October 2003 to do a “peer review” of a May 2003 ability and willingness to pay study of the project by Bureau of Reclamation economist Steven Piper and to study ways of structuring water rates to make the project the most affordable to all its members.
Bass said when he pointed out to project officials the difference between what Tucumcari has reserved and what is its current capacity he was told to “act as if they need the water,” so he developed an equation that figures Tucumcari’s cost by multiplying the cost per acre foot of the 6,000 acre feet by number of acre feet the town now uses.
The problem is that under the bylaws of the Ute Water Project a community eventually must pay for all the water it reserves, whether its rate payers are using the full amount or not, he said. “What results is an underestimation of the burden to existing users if the reserved amount is not fully purchased,” he said. He added that Tucumcari’s demand and capacity to pay may grow over the 10 years it will take the Ute Water Project to fully come on line.
“What we’re doing is looking at a really aggressive economic development campaign, so we will increase population and use more water,” said Richard Primrose, Tucumcari’s city manager. Tucumcari’s large reservation of water was the cause of a comment by Clovis Mayor David Lansford during an April City Commission meeting, when Lansford suggested that Tucumcari transfer part of its reserved water to Portales, which has reserved project water in an amount less than three-fourths of the water it now uses. With authorization legislation being prepared to go before Congress, the project has been asked to show an “ability and willingness to pay.” Part of that requirement lies in showing each community has the capacity to pay for its reserved amount of water, Lansford said.
“Clovis reserves about 10 percent more than it now uses. That gives us a capacity for growth and Clovis is in a good position to afford its obligation to the project. Portales reserves 68 percent of what it now consumes and has the capacity to afford more,” he said. “Clovis, Portales and Tucumcari have reserved 90 percent of the water in the project. If any one of us can’t afford the water, that puts the project at risk,” he added. Portales Mayor Orlando Ortega said he, with Portales City Manager Debbi Lee, Public Works Director Tom Howell and ENMRWA board alternate Gary Watkins, asked Tucumcari’s leadership about transferring between 500 and 1,000 acre feet of water to Portales, but they said “no.”
“So, that’s that. There’s no hard feelings. Portales has always been looking at a variety of ways to supplement its water supply, besides project water,” he said.
Primrose noted that the ENMRWA’s board has hired the securities consultants RBC Dain Rauscher Inc. to study what is the bonding capacity of each community in the project and what lending alternatives are available to help each community pay the costs of the project.
He said the issue of transferring water has been brought to the ENMRWA’s bylaws committee, but any further discussion will have to wait until the completion of that study. Dornbusch Associates and Dain Rauscher are scheduled to make reports at the ENMRWA’s May 26 meeting in Clovis.