Fast-growing northern Colorado won approval for two major water loans from the state this month that will help finance a new dam outside Loveland and a major regional water project northwest of Fort Collins.
Vetted by the Colorado Water Conservation Board and approved by a bipartisan group of lawmakers May 1, the $155 million for Chimney Hollow Reservoir and the $100 million for the Northern Integrated Supply Project, or NISP, are among the largest financing packages the state has approved in recent years, according to the board.
“Is it a lot, yes,” said Jeff Stahla, a spokesperson for Northern Water, the agency that is sponsoring the projects for a group of cities that includes Loveland, Broomfield, Erie, and Greeley.
“We know that these were big asks, and we are grateful for the support. We also recognize that these projects are going to benefit hundreds of thousands of people in the fastest-growing part of the state right now,” Stahla said.
The full costs of the water projects, $561 million for Chimney Hollow and roughly $2 billion for NISP, are being financed by water users, as well as the state, Stahla said.
The loans come as forecasts show the state’s streams shrinking as much as 30% due to the warming climate while the area’s population continues to grow.
Kirk Russell, the board’s finance section chief, said the two loans combined make up 20% of the agency’s $1.1 billion revolving loan fund. The program operates by providing cash to borrowers below market rates. The interest that is generated, in turn, helps finance loans for new borrowers as these are repaid.
The mega loans mean the state will have somewhat less to lend next year, Russell said, for the state’s 2025 fiscal year, which begins July 1.
“I estimate we will have about $50 million to $60 million in loan funds available next fiscal year. That’s about our average annual total [in available loan funds] for the last few years,” Russell said via email.
The loan program is funded with cash generated by interest and loan payments, as well as federal mineral lease payments and severance taxes collected from oil and gas production, Russell said.
Among its other major loans in recent years is the Arkansas Valley Conduit in southeastern Colorado, which received a $90 million loan, and Aurora’s Prairie Waters Project, which received a $60 million loan, according to Russell.
Rep. Karen McCormick, D-Longmont, said she and her fellow lawmakers are pleased the state has been able to provide the financial help. McCormick was one of the bipartisan group of lawmakers who sponsored House Bill 1435, the legislation authorizing the loans.
“These projects are super important, especially to my area of Colorado,” McCormick said. “To have these new reservoirs completed is critical. A lot of different water providers are depending on this.”
The projects are not without controversy, however. Federal permitting for both began 20 years ago, according to Stahla, and each has been delayed numerous times after environmentalists sued over concerns about the impact on the drought-strapped Colorado River, the supply that will eventually fill Chimney Hollow, and the equally stressed Cache la Poudre River, whose flows will be used by NISP.
In fact, the Chimney Hollow loan grew from its original $90 million to $155 million in part due to the cost of litigation and increases in construction costs, Stahla said.
Though Chimney Hollow is under construction, NISP continues to face delays due partially to a lawsuit by Save the Poudre against the federal agencies that approved the deal. It was filed in January.
And it will also have to eventually win an OK from the City of Fort Collins, which has historically opposed the project. Mayor Jeni Arndt declined to comment on the state funding, but said the project would still have to undergo review by the city.
How quickly that might occur isn’t clear. Gary Wockner, head of Save the Poudre, said he expected years of additional delays before NISP would have all of its government approvals in place.
“We will see how this goes. … The drama will continue for a long time,” Wockner said.
Correction: This story has been updated to correct the list of cities participating in the Chimney Hollow project.
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