The city’s current capacity can accommodate more than 1,100 new units, but Steamboat will need another treatment plant on the Elk River before the full build-out of Brown Ranch can happen.
This story is part a reporting series called "Brown Ranch: Explained." New stories in this series will be published on Fridays. To get the latest, subscribe to The Morning Bugle Newsletter.
The Gist: Steamboat has enough water for Brown Ranch
While water has been a major “tripping point” in previous annexation attempts, efforts the City of Steamboat Springs took in 2020 to lease water out of Steamboat Lake means the Elk River is a viable third water source for the city.
Because of the Elk River source, Steamboat Springs has access to enough raw water for the full build-out of the Brown Ranch and the city’s current water capacity can accommodate roughly half the project’s units without significant upgrades.
Full build-out will require more water infrastructure, with the most significant piece being a new water treatment plant on the Elk River, a project that has been estimated to cost somewhere between $40 million and $58 million. The annexation agreement estimates this plant will be needed by 2030.
The cost of this new plant is assigned in the annexation agreement using a distribution modeling approach that seeks to divide costs based on the usage of the system. This modeling allocated 66% of the cost of the plant to the Yampa Valley Housing Authority and 34% of the cost to the city.
The new plant will be funded by tap fees paid on new development in Steamboat, including development at Brown Ranch. These tap fees, sometimes called plant investment fees, are determined through a rate study that the city updates every three years. Because Brown Ranch is allocated a larger share of the cost of the water treatment plant, tap fees for development at the Brown Ranch will be higher than for development in other parts of the city.
The cost of other onsite infrastructure like water and sewer lines is 100% the responsibility of YVHA, according to the annexation agreement. YVHA has also agreed to meet or exceed all of the city’s water conservation requirements.
The Brown Ranch does not have any water rights and the city waived its water rights dedication policy as a term of the annexation agreement, which would have required YVHA to pay a fee in lieu for water rights. Before waiving the fee, the city said it would have been roughly $10.5 million.
Wastewater is even more straightforward. Units at Brown Ranch will pay the same wastewater tap fees as other developments in the city, which will be used to eventually upgrade the city’s existing wastewater treatment plant. That plant is currently at 73% capacity. YVHA is also required to pay to connect the Brown Ranch to the existing city trunk line connecting the city to the wastewater treatment plant.
How much water capacity does Steamboat Springs have right now?
Currently, the city of Steamboat Springs has roughly 800 equivalent residential units of water capacity in its system, but this does not directly equate to 800 new units of housing. One EQR is equal to a 2,500-square-foot single-family home, which uses more water than many of the units planned for at Brown Ranch.
The Housing Authority estimates that phase one of the Brown Ranch could be built before hitting that 800 EQR trigger point. Phase one includes the first half of the project or the first 1,124 units.
By the time enough units are built to equal 800 EQR, the new Elk River water treatment plant needs to be completed. This is estimated to happen by the end of 2030, but will depend on how quickly the Brown Ranch develops.
Where does Steamboat Springs get its water?
The current water capacity of the city of Steamboat Springs comes from two sources, the Fish Creek Filtration Plant and the Yampa River Wellfield plant. The Elk River has been long thought of as a potential third source.
The city has a junior water right on the Elk River it obtained in 1999, but it is often subject to administration, which means it may not be available if there is a call on the river. The Elk River goes under a call at some point nearly every year.
To shore up that water right, the city entered into a water storage contract out of Steamboat Lake in 2020. When flows are strong the city can use water from its junior rights and when there is a call on the river they can use water released from Steamboat Lake.
What four infrastructure projects are needed to provide water at Brown Ranch?
Caption: These are the four water infrastructure projects needed to bring water to Brown Ranch. (City of Steamboat Springs/Courtesy)
Including the new treatment plan, City Public Works Director Jon Snyder has identified four infrastructure projects required for the Brown Ranch. Two of these projects are already funded by the city.
The first is a booster station for the West Area Water Tank. This will cost about $1.2 million and the city hopes to complete construction on the station by the end of 2026. City council has allocated funding to build this station through its capital improvements plan.
The second project is a water delivery pipeline along U.S. Highway 40 which will cost about $1 million. The city has obtained grant funding for this project and it will be built as part of an extension of the Yampa River Core Trail to the west toward Sleepy Bear Mobile Home Park.
Each of these two water infrastructure projects needs to be completed before any units at the Brown Ranch are occupied.
The third infrastructure component is the water delivery lines and sewer collection lines within the Brown Ranch. The annexation agreement assigns 100% of the cost of these lines to YVHA, which is how this is handled with other developments in the city already. These lines will be constructed over time as individual developments are built.
The fourth infrastructure component is the water treatment plant on the Elk River.
What is the benefit to the current city of adding a third water treatment plant?
While Steamboat has enough water to serve more growth without adding a third treatment plant and current treatment capacity could be increased without building another facility, city officials have long been worried about the potential for a wildfire near Fish Creek.
A fire in the canyon could compromise that water supply for an extended period of time and leave the city to rely solely on the smaller Yampa Wellfield plant.
“Anybody that believes we will not have a wildfire in the Fish Creek drainage basin is probably fooling themselves,” Snyder told the annexation committee a year ago. “When it happens, the Yampa Wellfield supply becomes the primary supply, but it can only support indoor and limited outdoor water, which makes the Elk River supply particularly important from a resiliency standpoint.”
What is the biggest hurdle to build a new Elk River treatment plant?
The wide variance in the estimated cost for the new Elk River treatment plant has a lot to do with the property acquisition needed to build a new plant, Snyder said.
“Property acquisition is largely outside of our control and that’s going to be the biggest obstacle,” Snyder said.
The annexation agreement calls for the city to start acquiring property for the plant before units at Brown Ranch exceed 300 EQR in water usage. The city is then supposed to start building the plant as water use at Brown Ranch approaches 600 EQR.
If annexation is approved by voters in March, Snyder said work to start designing the new plant would start soon after. Until then, the city is hesitant to spend money on design without knowing the outcome of annexation.
Who pays tap fees and how will they be different at the Brown Ranch?
Tap fees are collected at the time of development and are typically only paid once. The purpose of tap fees is to plan for the growth of the water system and are paid for by developers.
These fees are determined through a rate study, which the city of Steamboat Springs updates every three years. The city intends to do a rate study in 2024, which will likely result in an increase in tap fees, according to Snyder.
Per the annexation agreement, money to build the Elk River plant will be collected through tap fees. Because YVHA has been allocated a higher share of the cost of the plant than the city, development at the Brown Ranch will pay the city’s standard tap fee and an additional surcharge.
This means that development at the Brown Ranch will pay higher tap fees than projects anywhere else in the city. The exact size of the additional surcharge for Brown Ranch is not identified in the annexation agreement but will be determined through the rate study.
The annexation agreement allows for YVHA to prepay tap fees, which are typically paid at the time of building permit application. This would allow YVHA to source grant funding to pay for tap fees before they are ready to pull building permits.
This won’t end up saving YVHA money though. The annexation agreement requires YVHA to pay more if tap fees are increased over time. That means while YVHA may pay tap fees in advance, they will need to pay more if the fees for that particular development are higher at the time of building permit application.
What about wastewater tap fees?
The annexation agreement takes a different approach to tap fees paid for wastewater, with development at the Brown Ranch paying the same fee as development elsewhere in the city. These fees will fund the expansion of the city’s existing wastewater treatment plant, though it currently has additional capacity.
Upgrades to the wastewater plant are determined by various trigger points in state law. When the plant reaches 80% capacity, the city needs to start design work on expansion. When the plant reaches 95% capacity, construction on expansion needs to start. The plant is currently at 73% its treatment capacity.
Does Brown Ranch have water rights?
The Brown Ranch does not have water rights associated with it and annexation will not bring new water rights to the city. The city has also agreed to waive its water rights dedication policy, which would have required YVHA to pay a fee in lieu of water rights.
While the city identified $10.5 million to be an appropriate figure for this fee, YVHA argued in the annexation negotiation process that it was a cost the development could not afford.
Ultimately, City Council did waive the requirement for a fee in lieu in the annexation agreement, saying that Brown Ranch’s development will help the city accomplish its own goals to develop its Elk River water supply. The agreement also points specifically to the additional tap fee surcharge Brown Ranch development will pay as part of the rationale to waive the fee in lieu of water rights.