* UPDATE *  Look below for additional responses from Janet Rummel and Douglas Bruce

The Southern Delivery System is one of the biggest infrastructure projects that Colorado Springs has seen in recent years, so it’s no wonder the water pipeline projected headed up by Colorado Springs Utilities has been so contested this election season. For the fourth part in our election fact-check series, we evaluate claims made about how much more customers will have to pay for water for SDS and how much the total price tag is for SDS.

The Southern Delivery System price tag claims:

David M. Jensen, a candidate for Council District 2, said his water bill will double because of SDS.

“My water bill for 2010 was $683 and in 2016 will be $1,366,” he wrote in his submittal for the Gazette’s Voter Guide.

Douglas Bruce and his Reform Team (Ed Bircham, Richard Bruce, Helen Collins and Gretchen Kasameyer) all wrote the same answer on their submission to the Gazette’s Voter Guide. They said the project will cost $3.3 billion, which amounts to $10,000 per foot.

The facts:

Janet Rummel, a utilities spokeswoman, said that the expected rate increases would mean a doubling of water bills from 2010 through 2016. She calculated the increase at $5 per month extra for the average residential customer on water bills. She noted that the increase isn’tentirely to pay for SDS – one third of that increase will help cover normal operations for Utilities.  (Look below to see a graph, provided by utilities, which shows the predicted rise in rates for the average customer) 

As for the $10,000-per-foot price tag, here’s how Bruce said he made the calculation: He first used the $2.3 billion for Phase 1 of the project — which includes the estimated $838 million construction costs plus financing the costs over 40 years. Then added it to the $744 million high-end construction costs that Utilities estimated for Phase II of the project. (On the low end, Utilities estimates $387 million in construction). He then added an extra third of that high-end cost to account for inflation and a rise in construction costs by 2020 when the phase is expected to begin. (That extra third tacked on is debatable, but in his calculations he did not include costs for financing which, for the first phase of the project, will end up being more than double the construction costs).  According to Bruce’s math, that brings the SDS project to a total price tag of $3.3 billion. Divide that number by the 327,360 feet over 62 miles of pipeline and you get $10,080 per foot of pipeline for the project.

 Rummel said it is misleading to boil down the whole project  — which also includes the cost for permits, “three pump stations, a connection to Pueblo Dam, a new water treatment plant capable of treating 50 million gallons per day, and two new reservoirs that store 30,000 acre-feet each,” she wrote in an e-mail to The Gazette. “His calculation would be similar to taking the cost of a car plus the financing over the term of the loan and then figuring a ‘per-foot’ cost of the car. In this example, the per foot cost doesn’t have any relationship to the monthly car payment.”

Bruce contends that when all is said and done, the project ultimately is about piping water 62 miles to the city.

Conclusion:

Jensen is mostly right – water bills will are predicted to double through 2016, though not all of that cost is because of SDS. Also, it is misleading to boil down the whole project into a single foot of pipe. However, the math put out by Bruce and the Reform Team is solid. 

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Here’s a graph provided by Colorado Springs Utilities which shows how water rates are predicted to increase through 2016.

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Here’s an e-mail from Rummel with the point of view on the project from Utilities:

Maria,

Thanks for sharing how Mr. Bruce calculated his “per foot” cost of the SDS project.

Mr. Bruce’s calculation is misleading because it over-simplifies the project.

First, it leads the reader to believe that SDS is only a 62-mile pipeline. By dividing the capital cost and repayment cost by the length of pipe, it doesn’t account for the other significant components that make up the project which include: three pump stations, a connection to Pueblo Dam, a new water treatment plant capable of treating 50 million gallons per day, and two new reservoirs that store 30,000 acre-feet each. It also doesn’t take into account the value the project provides in backing up our existing system.

A recent study commissioned by the Chamber’s Center for Regional Advancement determined that SDS will cost less than half as much as the Homestake system – built in the 1960s – when compared on a per person basis and adjusted for inflation.

His calculation would be similar to taking the cost of a car plus the financing over the term of the loan and then figuring a “per-foot” cost of the car. In this example, the per foot cost doesn’t have any relationship to the monthly car payment.

If we were looking at strictly the pipeline construction cost, the first two segments we have contracted for 66-inch diameter pipe will cost between $500 and $650 per foot to construct.

We believe our customers are more interested in understanding how the project will impact them directly. The typical monthly residential bill is estimated to increase incrementally by an additional $5 per month on average each year through 2016. It’s important to note that this monthly cost is not exclusively for SDS – about one-third is for operating and maintaining the extensive transmountain water system that we have in place today. In 2016, the SDS portion of a residential customers monthly water bill will be about $25.

At today’s water rates, one gallon on water costs about a half a cent.  In 2016, that same gallon will cost about one cent.  That includes transporting it from the other side of the Continental Divide, purifying it and delivering it to customers’ homes.  When you compare this to the cost of one bottle of store bought water at about $2, that’s a good value.

In addition, funding for Phase I of the project has been approved by City Council, however the funding for Phase II of the project – or those individual components which may be built at different times in the long-term – would be approved by a future City Council when it becomes necessary for the community to expand the core project we are building today. The timing of Phase II of SDS – estimated to be built as early as 2020-2025 – will ultimately be determined based on customer water demand and system capacity needs, which will depend on factors such as population growth, weather, and water use. The cost of Phase II will depend on that timing – and whether the components are built at the same time or separately over a longer period of time.

Colorado Springs Utilities is financing $838 million of the capital cost for Phase I of  SDS over the next 40 years. So in the year 2051, it will have cost a total of $2.3 billion for Phase I when adding the estimated interest payments and inflation. Since the $2.3 billion is paid over the 40 years, future water users will also share in these costs.

We appreciate you putting the costs in context for your readers, and I hope you will update what you have online to include this important information.

Thanks,
Janet

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From Douglas Bruce:  

Don’t forget in your story to mention the $800+ million Gazette estimate.

(Editor’s note — this estimate is the construction cost of Phase 1 of the project and does not include the cost to finance the project)
The Gazette editorial said the Reform Team objection to SDS was “insane,”  based on the Gazette’s false estimate of cost. The real cost is four times greater than the Gazette claimed, and may end up even higher.

Mention that $3.3 billion does not include the SDS operating cost, but only construction.

Mention that the pipeline ends up at Banning-Lewis, which has only about 200 homes.

The 1988 annexation estimate for houses in 2010 was 20,000. Mention that B-L is owned  by a bankrupt California developer and is up for sale. 410,000 citizens would have their  water bills double and redouble to provide water to phantom occupants of non-existent
houses on land that will be resold in bankruptcy court by the end of May.

Mention that water rights to Pueblo Dam water can be sold and the money used to purchase mountain water rights using our existing easements.

Operating costs would not then include pumping water 62 miles uphill 24/7/365

CSU says the purpose of SDS is to have a “redundant” system in case a pipe breaks in our existing system. Does your house have two complete plumbing systems? Is that a good investment?

For the third part of this series looking at candidate claims, we look at the price tag of FrontRange Express– a bus service that transports commuters to and from Colorado Springs, Monument and Denver. FREX started in 2004 to help with air pollution and originally also included Fountain and Castle Rock along its route, but pulled out of those cities as funding for the project was cut. That funding, now coming almost entirely from the city of Colorado Springs, has been a political platform for some candidates this election.

The FREX price tag claims:

In a questionnaire BY Focus on the Family, mayoral candidate Brian Bahr outlines the FREX budget like this: “Specifically I support reducing FREX service, which costs taxpayers over $1 million per year while serving only 350 rides (about 175 riders going round trip) per day. This cost amounts to approximately $6,000 per rider per year.”
In that same survey, Douglas Bruce, running for an at-large council seat, wrote this: “FREX costs taxpayers over $1 million yearly (and adds to the federal deficit) to bus 175 people to DENVER jobs, not local ones. “
Are they right?

The facts:
In general, those estimates are not far off, according to Andy Garton, the transit business administrator for Mountain Metropolitan Transit, which runs FREX. The total cost of FREX each year is about $1.5 million. Of that, riders pay about half a million in fare and the system is slatedto receive vehicle maintenance grants from the Colorado Department of Transportation for $133,500 in 2011 and about $146,500 in 2012. That puts the remainder of the FREX budget at just less than $1 million, which is all paid for by the City of Colorado Springs. (The majority of riders on FREX are Springs residents who work in Denver, Garton said).
In 2010, that price tag was covered by selling extra FREX buses, but Garton called that an unusual circumstance.
As for the number of riders, Garton said that FREX doesn’t count unique passengers, but instead counts the number of rides it gives. In 2010, FREX gave just about 79,500 rides. Since Garton said the bus system runs about 250 days a year, that would be approximately 318 rides a day – which could be translated to 159 round-trip riders. (If, theoretically, every rider rode round-trip).
Garton said the candidates’ estimate of about 175 riders round-trip  isn’t exact, but isn’t too far off either.
“It’s a good generalization, but it is a generalization,” he said.
Since it is a generalization, it’s a stretch for Bahr to then divide the number of round-trip riders by the FREX $1 million price tag to estimate $6,000 per rider. (Using his logic it would be $5,714 per rider). But at least you can follow the math and see that his claim is based on reason.

Summary:
It’s impossible to determine the exact cost that Colorado Springs will pay per rider on FREX, but the numbers that Bahr and Bruce put out are pretty much on target.

The series
Candidate fact check examines claims made by candidates in the 2011 Municipal Election.

Fact Check No. 2

If you don’t duck this election cycle, you’re likely to be hit by a figure about Memorial Health System. In the second part of our series of campaign fact-checks, we look at figures that have been thrown out about the money Memorial has paid to study whether to become a nonprofit. Included in this cost are the  consultants who have helped Memorial Commission through the process.

The Memorial study price tag claim:
Douglas Bruce  and his Reform Team (Ed Bircham, Richard Bruce, Helen Collins and Gretchen Kasameyer) claim that the hospital spent $350,000 “of public funds to steer council into backing that $500 MILLION giveaway” according to Bruce’s submission to the Gazette’s Voter Guide which was filled out in February.

However, in November, Memorial Hospital ran a city council request which put the figure at $331,479.73.

Also, in January, the Gazette published an article putting the cost at about $400,000.

So what’s right?

The facts:

All of these numbers are wrong, but it’s not the fault of those who have been reporting them. The numbers are wrong because the price tag keeps going up.

Memorial Spokesman Brian Newsome told Gazette Reporter Daniel Chacon on Thursday that the $331,000 number released in November was outdated. Since then, the hospital has received more invoices from the consultants it has paid to help with the process.

As of Thursday, Memorial estimates it has paid $458,042.40. However, even that number will go up. Consultant Larry Singer’s contract goes through April and when all is said and done, Memorial estimates the total cost to be at $505,542.40.

Summary:
Looks like everyone underestimated how much the process would cost.