One Colorado Town's Water Supply Strategy

Guest Blog By Joel Benson

 

Joel Benson

Introduction

Two significant issues face nearly every community in rural Colorado: limited water supply, and a housing shortage. The Town of Buena Vista has been working to deal with these issues that could easily overwhelm the small community. The approach adopted brings important discussions and seemingly sound policy that would generate social and economic capital while positively impacting ecological functionality. This article is a quick discussion about the efforts that the Town has taken to address water and housing. While the specifics are for a small local government, the policy approach can be applied to any organization.

Over the past decade and a half, staff and policymakers in this small community have had intentional conversations about the collective vision of the community with varying degrees of consistency. Significant attention has been given to framing issues that crop up as they relate to this community vision so that staff implement the right policy at the right time, and for the right reasons. The sticky wicket is how a government can effectively work to accomplish this lofty goal.

The Town has adopted policies that appear to be sound, but potential success will not be known for some time; policy implementation must be monitored carefully and future political strength will be necessary to make adjustments over time. For the past decade, the Town has generally used a holistic approach to policy design, yet staff and trustee changeover made the process go in fits and starts.

In this article, I introduce specific steps that facilitated conversations and provided the basis for a water supply strategy coordinated with housing needs. Two examples illustrate some of the detailed thinking that contributed to the strategy. Much of the article comes from my experience serving 12 years as Trustee and Mayor and being directly involved in visioning, problem-solving, and both policy design and implementation. All records on water, water court cases, and water planning documents since 1984 were reviewed along with all official planning documents and economic reports since 1996.

A full econometric analysis of strategies the Town has already employed would be interesting, however, at this point claims in the article can only be supported through anecdotal evidence provided by Town staff, elected officials, and residents who have lived in the community for 15 or more years. Hopefully, this will provide insight to the application of ‘holistic policy’ and give others ideas on the importance of giving context to problem-solving and forming policy that matches its intention.

Steps for Developing the Strategy

Step 1: Provide a context for any policy

Step 1a: Who are affected by various decisions, what are the dynamics of power and equity, what resources are available, what are the potential necessary conditions of those resources well into the future in order to maintain a desired community?

Researchers have analyzed democratic theory and how people interact to accomplish what they intend. There are individuals and groups with various agendas, having to do with ego, power, altruism, and other motivations. People flow in and out of policy processes as interest representatives or entrepreneurs for economic, social and environmental reasons. It is important for policymakers to seek to recognize who is involved and when and how “stakeholder engagement” may provide unintended bias in a process if not equitable. Buena Vista took care to analyze its community through planning documents and related public engagement, but avoided intentionally engaging specific people because of their economic status or political influence.

It is also critical to understand what raw resources are available and under what conditions. Among the inventory of resources, the Town calculated how much water could be converted to municipal use in a dry-year as opposed to an average year, which had been the modus operandi until the Town’s most recent water resources master plan.

Knowing who should be involved in what types of conversations and what resources are available now and into the future, is the first part of setting a stage for policy discussions.

Step 1b: Through public processes, establish an overarching community vision that incorporates how the residents want their lives to be. Some components of this vision are outside the sphere of control of the governing body but are within a sphere of influence. Identify key strategic objectives as guardrails and guideposts that represent this vision and lie within the sphere of control.

Over the course of multiple public input meetings for comprehensive planning processes, statements from community members about how they wanted their lives to be were woven together into a description of their desired community. The in-depth statement is used as a magnetic north to bring policy decisions in line with the community perspective and reduces a lot of emotion and reactionary impulses that can dictate policy deliberations. This collective vision serves to contextualize various portions of a comprehensive plan that can be used to support or oppose virtually any policy proposal when viewed in isolation. This statement has framed the discussions about how remaining water can be used as a tool to encourage the overall desired community as a whole.

Step 2: Understand that—with rare exception—a policy is intended to solve an existing problem or prevent a potential problem. Acknowledge the complexity of all situations and that we cannot account for all variables and, therefore, must be aware that we can diagnose incorrectly.

So often in a governmental setting there is a declaration of a problem followed by an effort to design policy to address that problem. Sometimes staff or elected officials will develop policy directly. Other times a facilitator will engage stakeholders to find commonalities and then recommend policy to accommodate interest groups and personalities. There is a spectrum of democratic involvement, following top-down approaches, deliberative processes, adaptive governance, policy governance, collaborative governance, and so forth. No matter the approach to governance, a common starting point is the identification and contextualization of the problem itself. Often, the actual problem is assumed; it has been my experience that people tend to either jump ahead to policy design or give a cursory look at a problem definition that inevitably mismatches the true need.

It is easy to state “this is a problem” and accept it as so, or for individuals on a governing body to assume that they all know what the problem is. Discovering the intent of a policy to match a specific problem gives credence to the discussion. Issues inherent in simply stating a problem and diving into a presumed policy design can be mollified simply by asking, “what does the problem prevent the people in the community from achieving?” This turns the question away from a problem definition to connecting an issue to the desired community. Doing so leverages decision-making to create solutions to achieve that vision rather than seeking to stop a problem without also filling the niche in which the problem had arisen.

Numerous economic and workforce analyses aimed at helping Buena Vista recover from the Great Recession identified a lack of workforce housing as the primary issue affecting the region. Mostly relying on data from qualitative surveys, elected officials embarked on an effort to diversify housing stock. Simultaneously, an increasing awareness of Town’s water supply highlighted that a large increase in development through robust incentives would inevitably intersect with a firm limit of water supply. An increasing housing supply cannot outpace demand and bring down prices due to this limit. The twin problem of a water shortage and housing shortage creates a dilemma: How can Town shape policy to encourage needed housing that contributes to the collective vision, including economic vitality, a small-town feel, clean air and water, and so forth, while also limited by raw resources? Policy must be created to address this complex situation, partly addressing the existing problem of housing shortage and proactively building in safeguards for a future problem related to water supply.

Step 3: Seek the root cause of any problem so that policy addresses the root as close as possible.

Can the Town truly understand the “problem” of water and housing? All economic and demographic trends point to a macro issue of housing shortages throughout the West. This may be out of our control or influence. Water is also difficult to address and requires collaboration on how water is allocated and used, and/or an acquisition of vast new supplies. With new water, the Town may build itself out of the housing issue, yet probably steer away from the small-town character and quality of life that the community wants. In any case, understanding as much about the situation can inform policies that mitigate the problem.

Concern about water supply has existed for decades but only recently have resources been seriously devoted to addressing a long-term strategy. From 1984 through 2006, water planning documents recommended a blanket pursuit of additional water rights and water storage opportunities without any accompanying strategy. Only in the 2006 Water Master Plan was a connection made to population growth. Yet, this plan incorrectly assumed the amount of available rights and established false security about long-term availability.

The Board of Trustees commissioned the 2008 Comprehensive Plan shortly after this water plan largely due to statutory requirements. The adopted plan contained 64 pages of policies and goals, with recommendations about how to successfully implement the plan. However, the plan was entirely silent about water. When asked about the rationale for omitting such an important topic, then Town Administrator stated that water was naturally included in the section on “infrastructure” where it referenced replacing waterlines.

The combination of poorly developed planning documents and their apparent disconnect to water acted as catalyst for incoming Board members that forced water into the rhetoric. Specific attention was given to challenging assumptions feeding both the 2015 Water Resources Master Plan and the 2015 Comprehensive Plan.

A concerted effort was launched to understand the nexus of water and housing, specifically drilling down on how various types of development used water. Trustees began to demand sound practices that linked water to growth and sought to create policies regarding water supply. The competing issues of a housing shortage and limited water supply have been discussed for the past few years, as an integrated conversation. 

Step 4: Identify the economic weak link that slows progress so that resources can be dedicated to strengthen this link. Be cognizant if an issue may halt progress and divert resources to adjust circumstances as soon as practicable.

Annually, the Board discusses how the Town can be supported most effectively, viewing governmental activity as beginning with raw resources and iteratively moving through a chain of production toward the fulfillment of the collective vision and the accruement of additional resources with which to carry out business. Between 2010 and 2017, the Town focused on smoothing development processes, strengthening relationships, and encouraging more efficient land-use. More recently, the Town recognizes that primarily focusing on this “product conversion” link that benefits the housing shortage cannot be effective if attention does not shift to interface with water. The Town presently puts additional funds and time to strengthening its resource base to more efficiently use its water resources and earnestly seeks additional water security.

Step 5: Develop policy that solves/prevents a problem while leading toward the Collective Vision.

Researchers who study patterns and trends in policy processes recognize that elected officials will often make small, incremental shifts rather than implementing sweeping and dramatic policy changes. This avoids shock to a system and allows for self-correction as needed. Without careful monitoring, if one policy has some negative unanticipated consequences, subsequent incremental policy can build upon the first and continue to unwittingly promote undesired effects. It is important to contextualize problems and the intent of a specific policy as it relates to a community as a whole. Even if incremental changes are proposed, adopted, and implemented, contextualizing the problem they seek to address can highlight potential external effects on social, economic, and environmental factors so that a future policy iteration can relieve negative consequences.

It is also important to remember the tendency of a government to endorse these incremental changes, keeping in mind that major change may be needed at times in order to effectively deal with a problem. With this frame of mind, strategy can be developed that incorporates small steps of transition. A small change is easier for the public, business entities, interest groups and others to accept. In this case, the Town has sought a balance of incremental change and a shift in paradigm that directly links water to housing in municipal planning and knows it cannot build its way out of a supply-demand conflict.

Ideally, proposed policies match the problem at hand and the problem is sufficiently understood in order to appropriately devote a community’s resources to implementation. Within the assessment process, the Town uses a set of filtering questions to double check policy direction toward the collective vision. These are found on the Town’s website along with the vision. With these questions, the Trustees can prioritize for wealth generation, and have public discourse about marginal reaction and marginal effect, tie to the weak link, social logjams, long term resiliency, and potential sources or uses of money and energy.  

Strategy

Two renowned political scientists, Weimer and Vining, note that “the public-sector goal of social cost minimization can conflict with private-sector goal of profit maximization” (2017, 230). There is a natural trade-off in how the Town can continue to promote development while securing long-term viability of a community that requires a safe and reliable water supply. Data show that there is plenty of water for existing uses and enough water rights to support new development for 7-9 more years. If the Town is not able to diversify its water portfolio, it needs a strategy that has democratic support for collaboratively aligning housing in the Town’s interest alongside prudently using its available water resources.

A water strategy and policies work session was recently held. This facilitated meeting served as a culminating event that provided direction for developing water policy aimed at addressing the pending water supply issues and trying to balance repeated demands from the public for more governmental intervention in the housing situation. Reducing transaction costs incentivizes development and eases red tape but jeopardizes current allocation of water rights. There must be a mechanism to accommodate future generations since the finite resource cannot be borrowed from future reserves nor is it susceptible to changed interest rates or other means to manipulate the market. Water is a finite, common good subject to enormous unpredictability with a changing climate and its shifting associated weather patterns.

Two Policy Examples

Two specific policy changes are explored in greater depth to highlight the Town’s approach. It is important to devise unique policy and not to mimic anything specific since each policy is so situational. These policies detailed include: 1) how development could pay its own way and 2) how known water supply can promote desired types or locations of development.

1. Development Paying its Own Way

As part of a solution, the Town has created a Water Dedication Fee that prices water as a public good assuming that it will cover foreseeable costs of additional water rights, storage, and general augmentation. This forcing contract is assessed on any new development. A charge for water now is a necessary trade-off designed to do two things. First, it continues targeted policy incentives that encourage a diverse housing stock. Second, it adds a demand-incentive to gain the benefit of a secure, dedicated water supply. This slight increase in transaction costs and short-term reduction in profit margins produces community-wide savings and fiscal equity through a revenue stream now instead of deferring the cost to a later date. Furthermore, the financial burden of new water is placed on new residents rather than existing residents.

The timing of implementation is critical. A trade-off implies that, in pursuit of maximizing the total utility of a good, a person is willing to exchange a certain amount of that good for another good. Public acceptance associated with such a trade-off would change depending on the marginal rate of substitution. The curved slope in Figure 1 illustrates how the rate changes as housing gains give way to contributing smaller amounts of money to water diversification. At a certain point, requiring larger development fees may not be politically palatable. The implementation of this policy occurs at a time when the “instantaneous slope” is relatively low (Figure 2) as opposed to several years from now when the same slope is much steeper (Figure 3). Because the fee provides security for financially creative solutions to expanding the water portfolio, distributes the responsibility of new water away from existing residents, and buffers future political calamity for enacting a larger policy change, the policy was enacted. Thus far, there has been zero pushback from the development community and the financial security has allowed the Town to move forward with two efforts that would not have happened otherwise: necessary capital projects and purchasing a new senior water right.

The curved slope in Figure 1 illustrates how the rate changes as housing gains give way to contributing smaller amounts of money to water diversification. At a certain point, requiring larger development fees may not be politically palatable. The implementation of this policy occurs at a time when the “instantaneous slope” is relatively low (Figure 2) as opposed to several years from now when the same slope is much steeper (Figure 3).  

2. Targeting Water Supply to Town Desires

After thoroughly understanding how much water was left in the Town’s portfolio and the time horizon until development would exhaust that supply, the Town contextualized its housing needs. Based on the collective vision, elected officials prioritized higher density, historic town lots, and deed restricted housing for much of the remaining water supply. This allows for continued development of desirable properties and leaves the door open for developers to seek their own source of water to bring into the portfolio. The Town set aside water specifically for infill after weighing the economic benefits regarding infrastructure, traffic, maintenance, waterlines and roads, and the sense of community that comes with higher density. Water is also set aside for urban agriculture, a government sponsored housing project, and a needed child-care facility.

 

Framing

The Town took care to frame these policies for public support and to collect critical feedback on the policies themselves. The first policy was aimed at ensuring financial resources would be available if needed. The second was particularly cognizant of the community look and feel and the use of money and energy well into the future. Government officials received zero pushback despite the increased cost of development and potential limitation to individual development of property. While a direct causal relationship cannot be established, it appears that the absence of resident pushback is related to the processes outlined above. An educational component was key: media were involved; in local government, local and social media are the primary or only source of information about policy issues for citizens. Additionally, a policy entrepreneur, in this case a particular elected official, was necessary to effectively utilize the political process toward problem contextualization and to lead by example.

Lastly, I have included all recent policies related to water that have been discussed in Buena Vista. Most have been adopted and staff have received direction to bring others back for review. These may give some ideas to those readers pondering similar intertwined issues.

•        Assume conservation measures yield ‘bonus’ water and are not consistent for long term residential needs.

•        Establish accurate water accounting including useable water rights, water in use, and leftover supply. Base use on peak demand and dry-year water availability. Base availability on ‘wet water’ and historic calls on water rights.

•        Set aside water as a reserve below the dry-year water right supply.

•        Set aside water for infill that promotes density, uses existing infrastructure leading to potentially lower cost of housing, and encourages accessory dwelling units on existing lots.

•        Institute a water-dedication fee for any new development for new water rights acquisition, storage development, augmentation, and other growth-related water needs.

•        Require that any major subdivision include a percentage of housing that targets long-term needs.

•        Develop a conservation plan and related code.

•        Revisit the collective vision statement with the public to provide additional or confirmatory guidance on how the community wants to be. Even with new water rights, there may be a limit to the desired growth and development of the community.

            Joel Benson is a teacher, policy advisor, water resource specialist, and HMI Certified Educator. He lives in Colorado where he has worked to demonstrate holistic management in non-land based businesses and through work with the Town of Buena Vista as a former Mayor and Trustee. He can be reached at: joel@paratuinstitute.com. For more information about Joel's work as mayor of Buena Vista go to the Buzzsprout podcast or this Chaffee County Times article.

            To read the Town of Buena Vista’s Community Vision go to: https://buenavistaco.gov/2467/Community-Vision