Sun Communities wants to take over water supply operations in the western Granby service area.
Tuesday was just the start of discussions between Sun and Granby’s board of directors on a privatization proposal that would have lasting effects for the city. The board has made no decision, but more discussions are to come.
The western service area currently serves River Run RV Resort and Smith Creek Crossing, both of which are owned by Sun. This service area could one day extend over the headwaters of the Colorado River if it were to be developed.
Sun’s senior vice president of development, Bill Raffoul, presented the company’s proposal to city council.
Sun bought the Shorefox plots from the city in 2017. During development agreements, the company considered whether it wanted a private water treatment facility or a municipal facility, Raffoul said.
It was ultimately decided that Sun would build and ship the facility to Granby, which Sun has yet to do.
According to the presentation, Sun has invested more than $ 16 million in the installation of the western service area.
In 2019, the water service agreement was amended to provide an interconnection that Granby could use to provide back-up water for the northern service area, which serves the city north of the Fraser River and the de Granby.
The problem, according to Raffoul, stems from the recently conducted rate survey on the western service area, which administrators also discussed on Tuesday evening. While Sun had budgeted for costs similar to those paid in other areas of the city, the actual rates appear to be much higher.
Determined through a calculation of associated costs, number of users and expected usage, the study found that the rate for 2021 would be $ 31.80 per 1,000 gallons. For comparison, Sun calculated that the default rate, including installation charges, for the north service area was $ 9.38 per 1,000 gallons.
While the study predicts growth in water use that would bring rates down to comparable levels over the next several years, Sun believes demand will be much lower and the rate will remain high.
Raffoul presented the privatization of the water service as a win-win solution for the developer and the city, claiming that the move would give Sun the most cost-effective solution for operating the facility while eliminating the financial risk and operational for Granby.
Sun promised that the company will continue to provide back-up water service to the northern service area in accordance with the agreement, as well as provide service to new users in the west in the event of future development.
The company has experience operating private water treatment facilities at 49 sites in the United States, including one in Larkspur, according to Raffoul. Sun said it uses a licensed third-party operator and plans to have an engineer on-site in case of an emergency.
However, the board was hesitant about what this privatization would mean for the citizens of Smith Creek Crossing, the mobile home park owned by Sun. While Raffoul insisted that Sun had no intention of making any money from the water service, general manager Ted Cherry offered an annual audit to ensure fair rates.
Cherry also explained an issue related to the city’s ability to enforce the agreements. In Sun’s proposal, the company would own the service area, so if Sun stopped paying its bills or provided substandard service, the city would not be able to shut off the water to ensure compliance. Some sort of liability measure for Sun should probably be part of any deal.
Trustee Natascha O’Flaherty stressed her reluctance to accept promoters’ pledges at face value after lofty ideas were left unfinished or poorly realized in Granby, including by Sun’s predecessor Shorefox, who abandoned the property. after the 2008 recession.
Raffoul explained that Sun is a publicly traded real estate investment trust with an increased ability to raise capital compared to many other developers and a financial interest in seeing its new investment succeed.
Another concern was over water rights, of which the city still has a number in the region. Sun’s attorney said the company is willing to approach water rights as the city prefers, but those details should be clarified as well.
After extensive discussion, directors agreed that there was a lot to consider. Cherry said he would return to the board with an overview of the different ways this system might work to move discussions forward.
In other cases:
• Also with respect to the western service area, the administrators decided to continue charging Sun a daily fee of $ 500 which began on February 28 when the developer did not file an initial acceptance request for the l water treatment plant. While Sun had previously agreed to these terms, the developer asked if the city could reconsider the revenue proposal on the table.
Most directors felt it necessary to implement the current agreement, although the waiver of fees may be reconsidered if the privatization effort progresses.
• Council briefly discussed the vacancy of the post of Chief of Police. Jonathan Stark has been acting chef since January. While the administrators felt that Stark had done a good job in this role, they agreed that opening up the job to other candidates would be best for the city. More information on this process will be forthcoming.
• Council heard an update on the development of the Granby station, which had an issue with the land it had hoped to rent from the station for parking. The flat of the Granby station could change at a reduced density to take into account fewer parking spaces. Such a change would revert to the directors for approval.
• Trustees re-elected Mayor Josh Hardy, Thomas Marquardt, Geoff Jurgensen, Casey Farrell and John Young to the planning committee and also added Trustee Kristie DeLay and Carin Aichele.
• The council approved an agreement with GP Granby Holdings which releases $ 190,000 in security for repairs on certain roads in the Granby Ranch.