Water providers for farmers and ranchers could have more dollars and flexibility to upgrade their aging delivery systems if a pair of Colorado lawmakers can push through their respective bills in Washington.
Many in Colorado and Wyoming — a pair of states each lined with thousands of miles of irrigation canals, spillways, inlets and diversion structures — are eager for passage, since routine upgrades and repairs to these water-delivery systems can add up into the millions of dollars.
Current law says that mutual ditch and irrigation companies must receive 85 percent of their income from shareholder investments to maintain nonprofit designation.
In recent years, though, a number of ditch companies have seen an influx in revenue, mostly from an upswing in oil and gas activity in their regions, and that increase in dollars has put some companies past the 85 percent threshold, leaving them to be taxed on the additional revenue.
With aging water infrastructure being a concern in rural parts of the West, Sen. Michael Bennet, D-Colo., recently introduced a bill that would reform tax provisions and allow irrigation and ditch companies to receive additional sources of income and still maintain nonprofit status.
The legislation requires that the extra revenue be used exclusively for operations and maintenance of the ditch and irrigation company.
Bennet, along with Sen. Mike Crapo, R-Idaho, introduced their Water and Agriculture Tax Reform Act of 2013 this month.
Rep. Cory Gardner, R-Colo., introduced companion legislation in the House last fall.
The U.S. Joint Committee on Taxation estimated last year that Gardner’s bill would take away about $31 million in tax revenue from the federal government between 2012 and 2021 — “definitely worth it,” Gardner said, stressing how important irrigated agriculture is to the economy and to the nation’s food security.
With the efforts now receiving bipartisan support, many — like Dale Trowbridge, general manager at the New Cache La Poudre Irrigating Co. in Lucerne, Colo. — are hopeful, adding that the additional dollars and flexibility from such legislation would “certainly be welcome.”
Trowbridge and his company alone oversee about 80 miles of ditches and canals for about 350 shareholders — and the system is 134 years old.
“When you’re working with something that big and that old, there’s always upgrades or repairs needed,” he said.
But replacing any of the nearly 200 head gates along his system can cost $10,000-$15,000 each, Trowbridge noted.
Replacing or doing major work on any of its diversion structures can add up into the hundreds of thousands of dollars.
Building new facilities to store more water or repairing reservoirs can cost $10 million-plus.
Trowbridge didn’t even want to take a crack at estimating the costs of implementing further water-efficiency measures — such as lining irrigation ditches with concrete, to prevent water lost to ground seepage.
At the same, though, when ditch and irrigation companies incur a large capital expense from projects, they are severely limited in how they can collect revenue, Trowbridge and others say.
Both the Senate and House bills look to ease such restrictions.
“Across the board, we see this as a good thing ... if we want to make the most of our water,” Trowbridge said. ❖