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Voter-Approved Inclusion Between Water Districts Has Failed

By Chris Michlewicz

A voter-approved plan to transfer Castle Pines North Metro District’s (CPNMD) water and wastewater facilities and operations to the Parker Water and Sanitation District (PWSD) has crumbled under the weight of unforeseen obstacles and accusations of acting in bad faith.

The inclusion of the water and wastewater assets was expected to lower costs for ratepayers within the CPNMD, but the official inclusion was delayed after several unresolved legal issues emerged for CPNMD. Despite that, PWSD’s district manager, Ron Redd, struck an optimistic tone as recently as January that the deal would eventually go through with conditions.

In the last few weeks, attorneys for each district have exchanged terse letters, culminating in the February 10 PWSD resolution to terminate the inclusion agreement.

In a letter dated February 3, CPNMD attorney Kim Seter stated the inclusion delay would result in hundreds of thousands of dollars in additional debt service costs, and criticized PWSD’s request for $11 million above the agreed-upon amount to resolve outstanding issues. Seter said he’s heard concerns that “PWSD’s positioning feels like it is being done in bad faith and may be an effort to secure more funds.”

“Although CPNMD is still eager to consummate the inclusion as soon as possible, its directors, staff and residents do not appreciate the selective use of ‘facts’ to intimidate CPNMD into providing additional funds,” his letter stated in closing.

PWSD’s attorney, Jefferson Parker, responded in a letter stating the allegations are “baseless.”

On December 23, 2021, PWSD provided detailed steps that had to be taken for the inclusion to progress to completion. “Despite repeated outreach by Parker Water staff requesting a response from CPNMD, the only formal response from CPNMD was your February 3rd letter, which instead of addressing the substantive issues, falsely accuses Parker Water of unethical behavior,” Parker said.

He pointed out that CPNMD failed to pay a $34.8-million inclusion fee to PWSD on its due date of January 3, and stated that during the mutually agreed upon post-election due diligence period, PWSD discovered numerous concerns relating to CPNMD’s system and operations.

“These concerns included, without limitation, unreported environmental violations (including raw sewage discharges into local drainage ways, some involving radioactive materials), wells that were in disrepair and incapable of delivering water necessary to meet anticipated 2022 summer demands, a nonfunctional water treatment plant that may not be ready in time for cessation of water deliveries by Centennial [Water and Sanitation], CPNMD facilities located on private property without documentation of necessary property rights, and groundwater rights being used by CPNMD without adequate evidence of ownership,” Parker stated.

He continued, “Remedies for such issues (unanticipated and unknown to Parker Water at the time of the execution of inclusion agreement) will be costly and time consuming. The additional costs have been estimated to be $26 million, if not more. At the time of entering into the inclusion agreement, Parker Water did not contemplate that on January 3, 2022, CPNMD would deliver a system in such poor condition to Parker Water.”

He concluded, “Specific issues aside, your February 3, 2022, letter makes it clear that the good working relationship between the parties no longer exists. The approach chosen by CPNMD as evidenced by your letter is not conducive to a positive outcome for either of our clients,” he continued.

According to the resolution passed by the PWSD board of directors on February 10, further efforts to pursue inclusion “would not be in the best interests of Parker Water and its customers.”

Nearly 96% of residents in the CPNMD service area voted in favor of the inclusion in May 2021.



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