Fort Collins delays 1041 regulations, may extend moratorium on water projects

FORT COLLINS — After spending months developing city rules to implement its authority under 1041 regulations, the Fort Collins City Council has delayed approval of an ordinance, sent staff back to work, and will likely extend a moratorium on water and highway development projects that would be affected by the rules.

The 1041 regulations refer to authority given to local governments under House Bill 74-1041. As can often happen, governmental units can be in conflict over developments, with one asserting authority over another. The rulemaking authority is particularly directed at environmental concerns that a local government might have with a project of statewide concern being built within a local community.

One such project is the Northern Integrated Supply Project, or NISP, which is a major water-storage project that has been in the works for years. NISP, which has received all state and federal regulatory approvals, will build two reservoirs in Northern Colorado and supply the water to multiple cities and water districts.

Glade Reservoir is one of those reservoirs, and it would be built north of Fort Collins. A pipeline to carry water south and east is proposed in a way that it traverses some land within the city of Fort Collins.

The Fort Collins City Council enacted a moratorium on all water-supply and arterial highway development projects in 2021 until it could sort out rules for its 1041 regulations. That moratorium expires March 31. 

On Feb. 7, the council heard about provisions of those rules as written in a third iteration of the ordinance. 

While numerous pages long, the rules would first require a finding of negligible adverse impact, or FONAI, before a project could proceed without implementing the full force of the 1041 regulations. If it failed to achieve FONAI, then it would be subject to public hearings, to potential mitigation of impacts, and to review by staff, a third-party evaluator, planning commission and potentially the City Council.

A full review would take months to prepare and potentially $30,000 to $50,000 in cost, city documents said.

The complicated rules and process to enforce them left multiple speakers and members of the council dissatisfied with the draft ordinance.

Representatives from nearby cities that will benefit from NISP spoke at the council hearing. Paul Rennemeyer, mayor of Windsor, was one of three from Windsor to speak. He called NISP “vital” to Windsor and the health of the Poudre River. For 20 years, he said, regulatory agencies have reviewed the project and determined that “NISP was the best alternative. … This is nothing but a last-ditch effort to derail a project.”

Kevin Jones, representing the Fort Collins Area Chamber of Commerce, said after a review “We still find ourselves asking ‘why’ there’s a need for this sweeping regulation.”

“Until the council can clearly articulate a problem that cannot be otherwise remediated, the Fort Collins Area Chamber of Commerce asks the council to formally reject this adoption of 1041 powers and, at minimum, extend the comment period.”

Gary Wochner, who spoke on behalf of the Save the Poudre organization, said in his comments that 1041 rules were long overdue and asked that the council go further. He asked that the rules regulate activity outside the city that has the potential to impact people and properties within the city.

“The city has the right to consider adverse impacts inside the city caused by projects outside the city,” he said.

The Northern Colorado Water Conservancy District, or Northern Water, which is developing NISP, asked the council to “preserve some spirit of collaborative process within your ultimate policy adoption.”

As noted in an interview with BizWest prior to the release of version 3 of the ordinance, Jeff Stahla, public information officer with Northern Water, said the water district has attempted to mitigate every concern that’s been raised and plans call for sending as much as a third of the yield of the project water down the Poudre before it is delivered to member cities and districts. Fort Collins has long been concerned about diminishing flows in the river through the community. 

Willingness to collaborate could be affected by the regulations that result from the process, he said.

The council itself was conflicted, with Kelly Ohlson among those who wanted the ordinance to take into account increased environmental protections.

“It’s time to end using natural areas as paths of least resistance” on development projects, he said. “I’d like to see memos [from four environmental groups] included equal to considerations given to the utility groups,” he said. “We should come back better, better, better, not weaker, weaker, weaker.”

He said development costs are just one consideration. “Look at the cost of environmental destruction,” he said.

Councilwoman Susan Gutowsky concurred and said, “I’d be looking for using their advice [environmental groups] in the next version to integrate with our environmental goals.”

Shirley Peel said she’s “all for local control and protecting natural areas,” but said she was concerned about development costs related to going through the 1041 process. The costs incurred “just to see if they need a permit — this is why people hate government.” She wanted to see more information about impacts on utilities and districts that might do projects that would be affected by the rules.

“This is causing more headaches than it’s worth,” she said.

Mayor Jeni Arndt asked questions about regulating outside of city limits, to which City Attorney Brad Yatabe said, “we do not have authority to regulate projects outside the city. … It can be argued that an outside project could affect the city, but the law isn’t clear.”

Arndt warned of the “domino effect” if other communities use their 1041 powers to affect “things we do within our city.”

Emily Francis hoped the council could find a middle ground that “protects habitats and not cause undue burden and costs” on developers of public projects. 

Ohlson said “middle ground isn’t necessarily correct or the right solution. … Maybe ‘tolerable ground’ instead of ‘middle ground;’ cutting the baby in half isn’t the best policy.”

City staff said it would be unable to complete work by March 31 given the additional work that the council requested. Council members appeared open to extending the moratorium.

It voted 7-0 to delay consideration of the 1041 ordinance until May 2.

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