Costs Skyrocketed

Things have changed since the Utah Legislature passed the 2006 Lake Powell Pipeline Development Act. For one thing, the cost of the Lake Powell Pipeline has grown significantly, from $187 million in 1995 when it was first conceived, to $257 million in 2001, $354 million in 2006, and now, $1.8-2.0 billion in the 2020 draft EIS. Meanwhile, 2065 population projections have plummeted from 860,000 to 508,952. Even at antiquated consumption rates, demand should have dropped by 40 percent, obviating any need for risky, imported supplies.

Providing for southern Utah’s water demand while protecting the area’s affordability and unique culture is essential to southern Utah’s future. But satisfying demand with the Lake Powell Pipeline would all but destroy Washington County’s tradition of fiscal responsibility, self-reliance, and good stewardship of our land and water.

The Economic Risk

The Utah Legislature, concerned about the Utah Division of Water Resources’ (UDWRe) approach to providing water for Washington County, asked the Office of the Legislative Auditor General to assess the state’s need for water and the UDWRe’s analysis of potential solutions, including the Lake Powell Pipeline proposal. Issues related to financing of the Lake Powell Pipeline were summarized for the Governor’s Executive Water Finance Board in 2018 in the following figure:

Governor Herbert created the Executive Water Finance Board to study the cost of the LPP. They have determined the LPP is a $1 billion state subsidy with annual payments by the state of $80-120 million that will take funds away from other state needs. Click Here: 

State law requires that large water projects be repaid by those who benefit—a reasonable requirement. But they auditors noted that the Washington County Water Conservancy District’s (WCWCD) proposal attempts to circumvent that requirement:

“Although the Lake Powell Pipeline Act calls for a ‘reasonable interest rate,’ a recent financing summary submitted by the Washington County Water Conservancy District would create a large state taxpayer subsidy (range of $1 billion). The proposed taxpayer subsidy comes primarily from repaying the loan over a long time period with devalued future dollars.”

With a public project of this size, the lack of transparency is troubling. The entire repayment burden will fall on the shoulders of Washington County residents and we have a right to know how much we will pay in higher impact fees, surcharges, and property taxes before the Lake Powell Pipeline is approved. Despite spending 14 years and $36 million of taxpayer’s dollars on the analysis, these questions are still not answered.

How Might Washington County Pay?

All alternatives for repayment by Washington County hinge on population growth.

  • Impact Fees

One proposal assesses an impact fee on every family or business that buys a building permit. The  WCWCD assumes that population growth means more impact fees; however, to cover any shortfall in impact fees, the WCWCD has already imposed a Water Development Surcharge ($1.75 per month) on all residents of cities that signed the Washington County Regional Pipeline Agreement. This surcharge can be increased at any time to protect WCWCD’s bond rating.

Washington County already has the second highest water impact fee in the State. AUDIT. Planned increases will nearly double the impact fee from $9,417 in 2019 to $15,448 by 2026. The maximum impact fee has not been established, but it’s almost certain to increase once the final cost of the Lake Powell Pipeline is established.

  • Water Rates

The Washington County Water Conservancy District, (WCWCD) plans to increase water rates from $0.84 per 1,000 gallons a year to $3.84 by 2045, a 357 percent increase over 30 years.

It makes sense to charge more for more water use, however, higher fees in a recession could undermine the WCWCD’s ability to service the debt. Notably, Washington County’s water rates are 30%-85% lower than other cities in the southwest.

  • Property Taxes

The third leg of the repayment stool is property tax. In the last two years, the WCWCD has raised property taxes twice. The former WCWCD manager planned to continue raising property taxes until reaching the upper property tax levy of 0.001 by 2030. Washington County is known as an attractive retirement community and many in this population live on a fixed income. Increased property tax increases will put a growing burden on those who may be able to least afford it.

Cheaper Alternatives

Southwest Utah is fortunate to have many sources of water that can be developed incrementally as needed at a fraction of the cost of the Lake Powell Pipeline.

Washington County is not running out of water.  The Water County Water Conservancy District claims as much when they submit reports to credit agencies FITCH. Yet, perhaps in an effort to justify the building of the Lake Powell Pipeline, the WCWCD did not report all of the existing water supplies to the public and the Utah Legislature. The amount of potential water apparently depends on the situation or objective: whether protecting a credit rating or justifying building the Lake Powell Pipeline.

The Lake Powell Pipeline is not the answer and is not financially sustainable. State and county leaders should be pursuing a strategy of making our area more self-reliant by reducing water demand and developing new and unused local water resources. Vulnerability to reduced flows of the Colorado River, litigation, political conflict, controversy, uncertainty, and almost certain quagga mussel infestations should not be part of Washington County’s future.