Power lines for the Western Area Power Administration run through a valley at Chimney Hollow west of Loveland on Sept. 16, 2020. Plans call for installing a reservoir at the valley as part of the Windy Gap Firming Project.   (Jenny Sparks / Loveland Reporter-Herald)
Power lines for the Western Area Power Administration run through a valley at Chimney Hollow west of Loveland on Sept. 16, 2020. Plans call for installing a reservoir at the valley as part of the Windy Gap Firming Project. (Jenny Sparks / Loveland Reporter-Herald)
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Broomfield City Council voted unanimously Tuesday evening to approve an allotment contract for the Windy Gap Firming Project, taking on 29.4% of the project’s costs.

The percentage of cost is proportionate to the city and county’s planned ownership of 29.4% of storage in the Chimney Hollow Reservoir. The project’s estimated total cost is $600 million, meaning Broomfield will owe an estimated $176.4 million.

Since 2000, Broomfield and 11 other entities have been working with the Municipal Subdistrict of the Northern Colorado Water Conservancy District to build a water reservoir that would provide multiyear storage. A 90,000 acre-foot reservoir, known as Chimney Hollow, would be constructed through the Windy Gap Firming Project. The reservoir will be located west of Carter Lake in Larimer County.

“The (Windy Gap Firming Project) is a critical element in Broomfield’s long-range plan to meet the projected water demands at ultimate build-out,” the Broomfield City Council memo reads. “Once completed, it will support the addition of 11,600 water licenses and supply 5,600 acre-feet per year. The project supports Broomfield’s 2016 Comprehensive Plan and is an ongoing City Council priority.”

City Council on May 11 approved a $2.06 million payment for initial expenses related to the project, and on June 8 the Council approved the method of payment and authorized staff to proceed with debt financing.

The council approved the project allotment contract on Oct. 13 last year for 26,464 acre-feet of storage in the reservoir. The city and county intends to fund its share of the project through a combination of a $22 million cash payment from the Water Fund and $154.4 million in long-term independent financing.

City and county staff have been working with a financial advisor, bond counsel and underwriters to “structure the most advantageous bond issuance.”

“The pricing anticipates selling bonds in the par amount of $132.6 million with premiums of $32 million to cover project funds of $165 million plus a debt service reserve of $9 million and bond issuance costs of approximately $0.6 million,” the memo reads. “The ‘All-In True Interest Costs’ (TIC) are projected at 2.58% annually with an annual debt service of $8.96 million.”

The proposed bond would pay out in 25 years, and the total cost of repayment is estimated at $225.3 million, including principal and interest.

The annual debt service payments will be paid from the water enterprise fund, which will be programmed through the Capital Improvement Program that can only be used to support water-related activities, the memo states. The final bond closing is tentatively scheduled for Sept. 17.

During public comment Tuesday evening for the ordinance’s second and final reading, one Broomfield resident said she was worried the project would inevitably raise taxes.

Chief Financial Officer Brenda Richey addressed the concern, stating, “The reason why there will be no taxes, property sales tax or any other tax associated with this is because the water enterprise fund is strictly self-supported and it is funded through license fees, user charges and those fees associated with that. Very similar to our sewer, all the enterprise funds are self sustained business units. … They need to bring in the revenue to support them.”

The city and county issued a request for proposal for an independent utility rate study to be conducted this year. The study will provide “an in-depth analysis of the current charges and ability to support ongoing systems,” the memo reads.

“The rate study is independent of the (Windy Gap Firming Project) and its financing as the (Windy Gap Firming Project) is supporting by new licenses fees, which support new growth systems,” the memo states. “Whereas charges for the system directly impact the ongoing operations and maintenance for the enterprise systems. The cost associated with the (Windy Gap Firming Project) debt issuance include anticipated future refreshes, as well as it operating and maintenance costs.”

The 11 other Windy Gap Firming Project participants include Platte River Power Authority, Loveland, Greeley, Longmont, Erie, Little Thompson Water District, Superior, Louisville, Fort Lupton, Lafayette and Central Weld County Water District. Each participant that provides residential water services has committed to reduce per capita water supply through water conservation, according to the Chimney Hollow Reservoir Project’s webpage.

“This new storage allows us to supply clean water reliably, even in times of drought, to the people of northeastern Colorado from the existing Windy Gap Diversion,” the webpage reads. “Starting construction on Chimney Hollow Reservoir is a major step to address water supply shortages for our growing population, much like our visionary predecessors did for us, while demonstrating that modern storage projects can also improve the environment.”

Northern Water’s Municipal Subdistrict held a groundbreaking for the reservoir Friday. For more information on the project, visit northernwater.org/CHRP.