Committee backs additional funding for Leavitt Reservoir project

The State of Wyoming’s Select Water Committee is recommending an additional $32 million in state funding for the Leavitt Reservoir Expansion Project (LREP), which has been on hold since the only bid to complete the work came in well over budget earlier this year.

Thursday’s committee vote was a victory for the Shell Valley Watershed Improvement District (SVWID), which has been working on the project for the past 15 years.

“It was a relief, just crossing that hurdle,” said Kent Johnson, vice president of the SVWID.

The larger battle looms, however, as state lawmakers will have the final say at their next session whether the $32 million earmark remains in the omnibus construction bill. 

It’s by far the largest single appropriation in the dams and reservoirs program, and while they ultimately voted in support, several committee members expressed concern about the escalating cost of the project.

Background

On recommendations and support from RJH Engineering and the Wyoming Water Development Office (WWDO), the Leavitt Reservoir Expansion Project (LREP) was bid as a single contract on Jan. 11, 2022.  

Initial cost estimates provided to the SVWID and WWDO by RJH Engineering originally anticipated the project would cost  approximately $46 million, which is the amount of funds WWDO originally set aside for this project.  It was set up as a grant/loan, with $44.3 million in grant.

Only one bid was received on Jan. 11, 2022, and it came in 58% higher than anticipated.  It was submitted by Ames Construction, a general contractor headquartered in Burnsville, Minn. 

The total bid price was $70.3 million.

In a statement written on behalf of the board, Johnson said the increase was due to the current inflationary environment, including, increased cost for fuel, pipelines, cement, equipment and labor and the fact that many potential contractors were wary of the continuing uncertainty in the current economic environment.

In April, state lawmakers denied the request for additional funding for the LREP, citing insufficient funds.

Since then, the SVWID, WWDO and RJH Engineering have been working closely to identify cost cutting measures and project modifications to reduce costs while maintaining the functional design of the project. 

Several potential cost saving options  were identified. 

In addition, SVWID requested that the project be divided into four contracts with the intent of potentially reducing the overall construction cost and to make the project more appealing to local or smaller contractors. 

The four separate contracts:  1) dam, outlet works, wetlands and recreation facilities; 2) supply pipeline and structures; 3) transfer pipeline and structures; and 4) terrace borrowing processing. These potentially could be bid by one contractor or a combination of contractors and subcontractors. 

The district has employed a local consultant to explore additional grant funding opportunities for additional funds to supplement the overall costs, these include various state and federal agencies.

The district continues to compensate the affected local landowners affected by these delays through funding by the WWDO.  Some landowners affected by pipeline easements may opt out of the more expensive turnouts to save costs associated with the overall project.

Committee meeting

Jason Mead, interim director of the WWDO, spoke on behalf of the project at last week’s meeting of the Select Water Committee, detailing how the expansion would increase the size of the reservoir from 643 acre feet to 6,600 acre feet.

His request of the committee was to allocate the $32 million from the Sponsors Contingency Fund. 

On top of what was already approved, that would increase the budget of the LREP to $78 million.

“Everyone realizes costs are going up and dams aren’t simple projects as we know,” said Mead. “But the economic benefit, over the 50-year life expectancy — and it’ll last longer than 50 years — is $141.5 million.”

Mead called it “a potential game changer” not only for the irrigators who rely on the water, but also the public, citing recreational opportunities.  He estimated the “public benefit” at $96 million, which would far exceed what the state invests in the project.

Johnson was in attendance as well, part of an SVWID delegation that also included Greg Flitner, Karl Bertagnole and Ev Dunklee.

He, too, made a strong pitch for the funding.

“If you haven’t been up there, it’s a beautiful spot,” he told committee members. “We see that snow pile up on the mountain … then watch as it melts and goes down into Beaver Creek, into Shell Creek, into the Big Horn River and straight into Montana with no benefit to the state of Wyoming whatsoever.”

Larry Hicks, a Republican and vice chair of the Select Water Committee, ultimately voted in favor of funding the LREP, but not before questioning the high cost of the project on a per acre foot gained basis. He used 4,461 acre feet, which doesn’t include the 643 existing acre feet or the 1,500 acre-foot “conservation” to come up with a figure of approximately $17,000 per acre foot.  Mead countered that they should be — and when they are factored in, the per acre-foot cost falls closer to $13,000 per acre foot. 

Mead continued to emphasize the big picture, calling it “a good investment for Wyoming” and adding that will keep agriculture viable in the state. “A lot of these communities wouldn’t exist without the ag community — and we know that in order to keep the folks in the next generation in business, they need to be able to survive.

“The only way to get a handle on that … is to store water we can’t hold up when it’s running down the creek or with our current conservation measures.  So unless we want out-of-state folks coming in and buying our ranches, we have to figure out how to make this work.”

Hicks said he agreed, “But that’s not the discussion that typically occurs on the floor.  There, it’s how is it relative with the balance and other project.” From past experience, he said lawmakers tend to support the ones that are most cost efficient, rather than the ones that are most costly.

“I’m just telling you, when you get into the $17,000 to $18,000 per acre foot, relative to some of the others, it’ll be an ongoing discussion. I support the project, but if we’re going to build dams and reservoirs, you all need to go back into your communities and tell every representative and every senator that they need to support this program. We do not have broad legislative support for constructing dams and reservoirs in this state. That’s what it’s going to come down to.”

Other committee members, including Rep. Dan Laursen, R-Powell, said they agreed with Hicks.

Sen Tim French asked how many acres of land and landowners would benefit from the expansion.  Mead told him “roughly 15,200 acres” and “several hundred.” French later called it “an awful lot of money” and said it “could be spread out to pay for a lot of other things.”  He did, however, vote in favor of the funding recommendation.

Perhaps the strongest support came from Ogden Driskill, a Republican who said, “irrigation projects have never paid for themselves in the history of Wyoming — and we’re faced with a similar thing here.  But irrigation is a small part of these projects … these (reservoirs) are treasures to the state down the road. We’ve got to educate not just legislators but people that recreation isn’t free, that it comes at a cost. This is one the state can help on.”

He added, “I’m willing to invest state money back to making this a better place to live.”

And later on, “A lot of the conversation around this is negative, but I believe it should be positive.  If you’re looking at our grandkids and great-grandkids, and why they are going to want to live in Wyoming, it’s not going to be because of buildings or highways. It’s going to be because of recreational opportunities like fishing and other things Wyoming is known for.”

When asked about the funding recommendation’s prospects in the legislature, Sen. R.J. Kost, R-Powell, said, “This year there are more funds than anticipated and such projects could be funded. I feel we have to push forward with good data and reasoning if we want this to move forward. We need to talk about the fact that water projects are vital to the financial support of the economy and to the area. 

“It would be my opinion that we push forward and if they vote it down then we have lost nothing but if we don’t move it forward we have lost any chance of using the extra funds available this year for such projects.”

The future

Buoyed by the committee vote, Johnson is as optimistic as he’s been in quite some time about the project reaching the finish line.  While there were “six or seven” contractors who expressed interest in bidding last time, only one followed through. 

“I’m confident we’ll get more this time,” he said. “Last time it was during the holidays and I don’t think a lot of them had time to crunch the numbers. That’s just my opinion.  But from our side, we saw the inflation on the horizon and tried to hurry things along. It didn’t work out.”

If state lawmakers approve the $32 million and Gov. Mark Gordon follows through with his signature on the bill, the SVWID is hopeful of being able to call for bids soon after, possibly clearing the way for construction to begin in September 2023.

The SVWID anticipates that the project will take all of two years to complete.

Johnson credited the other members of the SVID — John Ed Anderson, Greg Flitner, Fred Barnett, Lawrence Griffin — as well as Sarah Good and Ev Dunklee for their dedication to moving the project forward. At the committee meeting, he offered kudos to WWDO staff for their efforts as well.

“Community support has been fantastic,” he added. “Water is the most precious resource there is in the Big Horn Basin and in the West and I credit the people who had the foresight to build Shell Reservoir, Adelaide, Upper and Lower Sunshine.

“I know money will be tight with the legislature, but when you consider the overall economic benefit of close to $150 million … it’s not just going to benefit the 48 shareholders. There will be wetlands, fishing opportunities, people can get on their paddleboards.  

“I don’t think you can put a number on how much it’ll mean for this area.”