The North Weld County Water District and the East Larimer County Water District seek to build NEWT 3, a 5.3-mile pipeline through parts of Fort Collins and Larimer County. Courtesy city of Fort Collins

North Weld water-tap moratorium halts building permits in Severance

SEVERANCE— A moratorium on new water-tap sales imposed by the North Weld County Water District has caused issuance of new building permits in the fast-growing town of Severance to grind to a halt, leaving numerous development and home-building projects in limbo.

The North Weld County Water District last fall issued a moratorium on new taps, blaming uncertainty over potential project delays for a new pipeline stretching through parts of Fort Collins and Larimer County.

The move has prompted a complete moratorium on building permits by Severance and an “effective moratorium” on building permits in Eaton. Other nearby communities also have been affected.

“We started the moratorium at the same time North Weld did, so we put it in place in late October, when they initially did theirs, and we are following them,” Severance town manager Nicholas Wharton told BizWest.

Eric Reckentine, district manager for North Weld County Water District, did not respond to calls for comment.

Hundreds of permits affected

Severance — with a population approaching 8,000 and representing the fastest-growing community in Northern Colorado — includes two water service areas, one administered by the town and the other by North Weld. Wharton said that when the town had to impose its moratorium, 37 building permits that were in process had to be halted, with another 110 permits in the town’s service area subsequently affected.

But that’s only the beginning of the impact on the town’s building activity. Wharton said that in North Weld’s service area within the town, “There are  hundreds of additional permits that need to be pulled that they’re holding up because they won’t give their water.”

The moratorium has affected both national and local home builders, Wharton said, including D.R. Horton, Richmond American Homes, Richfield Homes and Horizon View Homes.

Severance mayor Matt Fries, who took office after a special election in September, published a Notice from the Office of the Mayor, Jan. 3, regarding the moratorium.

“The Town of Severance has a very robust water portfolio and an abundance of actual water to provide to current and future residents,” Fries wrote. “However, the town only has one provider to treat our water. Until additional providers are secured, or North Weld County Water District lifts its moratorium, the Town of Severance will not issue new building permits. This means that current construction in subdivisions will come to a halt and remain unfinished. This also means there will be no new growth, which does include the possibilities of new commercial services.”

Fries declined further comment when contacted by BizWest.

Severance owns its own water, but the water is treated and delivered by North Weld.

“They are our wholesaler,” Wharton said. “We own our own water, and we have a healthy portfolio. However, they deliver the treated water to us. We purchase plant investment fees, which is the volume that is brought to us. I have been trying to purchase additional volume from them for the last year, and they have not allowed us to, and that’s when we found all this.

“Being responsible, we can’t issue more permits if we can’t get more volume for water,” he added. “Even though we have the water, they can’t deliver that water to us. That’s the situation that us and pretty much every town around us that is having these same problems are in.”

Wesley LaVanchy, interim town administrator for Eaton, said the town has not imposed an official moratorium but has “an effective moratorium” in place.

“As of yet, we haven’t had a request that we’ve had to deny just yet, but in conversations with developers and people seeking to move applications through the development process, we are alerting them that there’s this moratorium [by North Weld] and that they need to take that obviously into account when they put their proposals forward,” he said.

“We’re definitely having the conversations with the developers that there is an effective moratorium in place,” he added.

LaVanchy indicated that the capacity issues for North Weld have been disconcerting for Eaton and other communities.

“Obviously, this is of great concern for the community to find out that its partner that it has relied on for a number of years is at a constraint in its ability to serve substantially the needs of the community moving forward,” he said.

LaVanchy said he and others have encouraged North Weld to explore other ways of serving its communities.

“I don’t know as of yet that there’s much in the way of remedy put forward. These things don’t magically cure themselves overnight,” he said.

1041 regulations blamed

The North Weld County Water District serves Ault, Eaton, Galeton, Gill, Lucerne, Nunn and Pierce, along with portions of Fort Collins, Greeley, Timnath and Windsor.

At issue — at least in part — for the district are so-called 1041 regulations — named for Colorado House Bill 1041, passed in 1974 — which allow local governments to exercise greater control over certain land-use projects, such as water pipelines.

Fort Collins initiated a process to write 1041 regulations, in part to exercise greater control over Northern Water’s planned $1.1 billion Northern Integrated Supply Project, known as NISP, and the city late last fall considered a moratorium on new projects while the new 1041 regulations are written.

But city staff found that another, smaller pipeline project also would be affected, a water-transmission pipeline — known as the NEWT 3 Pipeline — being constructed by the North Weld County Water District and the East Larimer County Water District.

The pipeline would run 5.3 miles from North Timberline Road in Fort Collins east into Larimer County.

District representatives and Fries spoke at an Oct. 19, 2021, Fort Collins City Council meeting, requesting that NEWT 3 be exempted from the moratorium, and the Fort Collins council agreed.

But North Weld subsequently announced that it would extend its tap moratorium until Dec. 13, 2021, citing continued uncertainty surrounding the 1041 process in Larimer County, which imposed a nine-month moratorium on all 1041 permit applications while it worked to update those regulations.

Larimer County’s moratorium was extended until Feb. 15, and North Weld in December extended its moratorium on new taps until May 31.

“This action results from proposed new regulatory language changes being considered by Larimer County that could affect the permitting process for essential pipelines needed to meet growing demand within the NWCWD service area,” the district stated in an October post on its website that has subsequently been removed.

North Weld posted an update on its website Jan. 18.

“As you may be aware, North Weld County Water District (NWCWD) is experiencing some system capacity issues that are affecting future customers within our service area,” according to the post. “While NWCWD has had system improvement plans in place for years, the permitting and approval process for the NEWT III pipeline that will bolster capacity has delayed the project and therefore limited NWCWD’s ability to serve some proposed homes and subdivisions in our service area. We recognize that this presents a significant challenge to clients of yours looking to purchase or sell property within our service area.

“The NWCWD board of directors in December voted to extend a moratorium on new tap sales through May of this year. This is important information for you and your team to be aware of when meeting with clients interested in property within our service area. While the moratorium is in place, NWCWD will not be able to guarantee water for new development.

“We are working on solutions that will remedy the distribution and capacity issues that are affecting NWCWD’s ability to serve new customers, while also ensuring adequate supply for our existing individual and wholesale customers. We hope to have a temporary fix in place over the coming months that will allow the board of directors to lift the moratorium prior to the completion of NEWT III, which is a number of years away once permitting is approved. We hope to be able to begin issuing limited tap sales as soon as February, when the board of directors will consider procedures for easing the moratorium, though not fully lifting it.”

Wharton said he was unaware of the late-Tuesday posting to the North Weld County Water District website announcing the potential for a partial lifting of the moratorium in February.

“That’s news to me,” Wharton said. “That would be amazing for us, but he [Reckentine] has told me no such [thing]. I have been trying to reach out to him, too, and there really have been no communications.”

Wharton said officials in Severance and neighboring communities have been trying to figure out what might be happening with North Weld’s capacity constraints, beyond issues with the 1041 regulations.

“We’ve tried to help them as much as possible, and now we’re just getting more and more excuses,” Wharton said, “so we’re trying to figure out what is going on as well.

“I wish I knew,” he added. “I wish I knew. I don’t right now, unfortunately.”