VOLUME 34 | ISSUE 27 | DEC. 25, 2015 - JAN. 7, 2016 THE BUSINESS JOURNAL OF THE BOULDER VALLEY AND NORTHERN COLORADO Oil, gas & fracking Municipalities are squaring off against the state over fracking bans. How will the Supreme Court come down? Page 4 NISP Environmentalists continue to battle this massive water project in Northern Colorado. Read the pros and cons . Page 8 Interstate 25 Congestion on I-25 gets worse every day. Would widening the road just bring more growth? Page 12 Liquor sales Craft breweries oppose letting grocers sell full-strength alcohol. Would changing the law hurt local brewers? Page 16 Municipal broadband Telecoms argue that cities shouldn’t be in the Internet business, but the trend might be unstoppable. Page 20 Affordable housing Skyrocketing prices are sending many residents to rentals. What can be done to address the sticker shock? Page 24 Health insurance Businesses and consumers complain about rising premiums. Can anything be done about the cost of care? Page 28 HOT-BUTTON ISSUES OF 2016
Transcript
volume 34 | issue 27 | Dec. 25, 2015 - Jan. 7, 2016The business Journal of The boulDer Valley anD norThern coloraDo
Oil, gas & frackingMunicipalities are squaring off against the state over fracking bans. How will the Supreme Court come down? Page 4
NISPEnvironmentalists continue to battle this massive water project in Northern Colorado. Read the pros and cons. Page 8
Interstate 25Congestion on I-25 gets worse every day. Would widening the road just bring more growth? Page 12
Liquor salesCraft breweries oppose letting grocers sell full-strength alcohol. Would changing the law hurt local brewers? Page 16
Municipal broadbandTelecoms argue that cities shouldn’t be in the Internet business, but the trend might be unstoppable. Page 20
Affordable housingSkyrocketing prices are sending many residents to rentals. What can be done to address the sticker shock? Page 24
Health insuranceBusinesses and consumers complain about rising premiums. Can anything be done about the cost of care? Page 28
IN PrINtSubscribeSubscribe to BizWest, change your subscription or ask questions by calling 303-630-1965 or 970-232-3132. Get the award-winning BizWest print edition and all of our annual directories, including the Book of Lists. Visit www.bizwest.com/subscribe.Upcoming lists & directoriesn Event Planning Guide: Publishes Octobern Boulder Valley MD: Publishes OctoberCustom PublicationsBizWest Media’s Custom-Publication Division can deliver turnkey publications to celebrate your company’s anniversary, highlight new products or services, or for any other purpose. Contact Sandy Powell, [email protected] an article in BizWest that you want framed or mounted on a plaque? Want to highlight your company’s positions on one of our ranked lists? Call Missy Moss 970-232-3143 or 303-630-1953 to place your order.Tips/press releasesSubmit news tips or press releases to [email protected].
ONLINE & DIgItaLBizWest.comOur website breaking business news from the Boulder Valley and Northern Colorado, as well as content from our print edition and digital replicas of all our publications. Boulderopolis.comNews, trends and insights from the startup community in the Boulder Valley.Social mediaTwitter: Follow us at @bizwestmedia Find BizWest and Boulderopolis on Facebook, Instagram and LinkedIn.
E-newsletters
Follow breaking business news in the Boulder Valley, Northern Colorado or statewide with BizWest’s daily e-newsletters. Or get weekly or biweekly recaps in the region’s key sectors with more than a dozen industry newsletters. Sign up at www.bizwest.com.
n Morning Report: A daily email aggregation of the top business-news headlines from around Colorado.
n Business Daily – Boulder Valley: The day’s top business news from Boulder and Broomfield counties, delivered right to your inbox.
n Business Daily – Northern Colorado: The day’s top business-news headlines from Larimer and Weld counties, delivered right to your inbox.
Register for these and a dozen industry newsletters at http://bizwest.com/subscribe-to-our-newsletters
EVENtS & NEtwOrkINgBizWest produces a variety of business conferences, networking events and award programs throughout the year, both in the Boulder Valley and Northern Colorado. Visit our website at www.bizwest.com/events to submit award nominations or to register.
n Northern Colorado Economic Forecast Jan. 27 | The Ranch, Loveland
n Boulder Valley Forty Under 40 Coming in February
CONtaCt USAdvertising
Contact Sandy Powell for information on advertising, event sponsorship, custom publishing, or for a copy our editorial calendar: [email protected], 303-630-1954 or 970-232-3144.
Visit our offices in Boulder and Fort Collins
n 1790 30th St., Suite 300, Boulder, CO 80301 303-440-4950
n 1550 E. Harmony Road, Fort Collins, CO 80525 970-221-5400
Volume 34 : Issue 27 Dec. 25, 2015- Jan. 7, 2016
Copyright 2015. BizWest Media LLC.
Reproduction or use of editorial or graphic content without written permission is prohibited. BizWest (USPS 18522, ISSN 1528-6320) is published biweekly, with an extra issue in January, by BizWest Media LLC, a Colorado LLC, 1790 30th Street, Suite 300, Boulder Colorado, 80301. Periodical Postage Paid at Boulder, CO and at additional mailing offices.POSTMASTER; Send change of address notices to: BizWest Media LLC, P.O. Box 270810, Fort Collins, CO 80527Circulation: 303-630-1965 | 970-232-3132 | [email protected]
M ajor issues confront business, government and civic leaders throughout the Boulder Val-
ley and Northern Colorado, and it is only through civil debate that the public can understand diverging viewpoints, develop their own opinions and — ultimately — make progress.
It is with that spirit that BizWest intro-duces a new version of its end-of-year Newsmakers publication, providing a forum for experts to present their views on a variety of topics. With this edition, BizWest conducted email interviews with leaders on seven major issues, including:
• Fracking bans and moratoria.• The Northern Integrated Supply Proj-
ect.• Interstate 25 expansion.
• Expanded liquor sales.• Municipal broadband.• Affordable housing.• Health-insurance costs.While we could have selected any
number of additional hot-button issues, our editorial team felt that these topics represented the most-pressing issues facing communities from Boulder to Greeley, Broomfield to Fort Collins, Longmont to Love-land.
We thank the individuals who agreed to participate in our Newsmakers ques-tionnaires, and we look forward to seeing how these issues — and many others — are resolved in 2016 and beyond.
State, local control at odds over frackingV oters in Longmont
voted to ban hydraulic fracturing, or fracking.
Voters in Fort Collins approved a five-year moratorium on the practice, which involves pump-ing water mixed with sand and chemicals into a drilled hole to retrieve oil and natural gas from shale deep under-ground. District courts over-turned those bans, and both cities appealed, with much of the state watching earlier this month as the cities sparred with oil and gas industry officials in front of the Colo-rado Supreme Court. A ruling from the state’s high court is expected sometime in 2016. We checked in with Colorado Oil and Gas Association chief executive Dan Haley, Thomson visiting professor at the Uni-versity of Colorado Law School Bruce Kramer, and Kaye Fiss-inger, president of Our Health, Our Future, Our Longmont, to get their insights on the debate.
What are the pros and cons of allowing cities to ban fracking?
n Dan Haley: Colo-rado’s constitution is very clear that oil and gas is of statewide concern and therefore must be regulated by the state, not local municipalities. If we allowed the hundreds of municipalities and 64 counties to create their own rules concern-ing oil and gas, then it would be impossible for companies to do business here and the industry would cease to exist in our state. Plus, in Colorado, no oil and gas well can
produce any resource without hydraulic fracturing, so this is truly a ban on the oil and gas industry. That means the loss of the more than 110,000 industry jobs and the $30 billion in annual economic output. And that’s something Colorado families cannot afford to lose.
n Kaye Fissinger: Fracking, coupled with directional or horizontal drilling, is not over 60 years old, as claimed by the oil and gas indus-try. In fact, it is barely 10 years old — even less along the Front Range. The enormous volume of fresh water, pres-surization orders of magnitude greater than earlier fracking, and a highly toxic and dan-gerous chemical cocktail with known car-
cinogens and endocrine disruptors make it virtually impossible to protect human health and safety. Local governments have the most immediate and pervasive obliga-tion to protect residents. They are more likely to listen to their constituents and more likely to experience the dangerous impacts from the procedure. For those who want to preserve and protect people’s health, safety and the environment upon which natural persons depend, there are no “cons” against allowing localities to ban fracking. It’s common sense.
n Bruce Kramer: The principal argu-ment in favor of allowing local governments to ban hydraulic fracturing is the notion of local control and the historical devolution of land-use powers, including zoning to local governments. The lowest-level gov-ernment is the one that is most responsive
and educated on the issues that impact them. That notion, however, leads to NIMBYism as it applies to uses which are needed but which involve negative exter-nalities. Group homes for the mentally disabled or halfway houses for prisoners about to be released are examples
Oil and gas conservation matters have, on the other hand, been historically regu-lated at the state, not the local, level. There may be important statewide interests, including employment, revenue and the protection of private property rights that might be frustrated should local govern-ments have the power to prohibit hydraulic fracturing or any other kind of lawful activ-ity.
should mineral owners’ rights trump cit-ies’ ability to ban fracking?
n Dan Haley: The question is whether or not local governments (or the state or federal government) should be able to undermine and take an individual private property right. One of the foundations of our democracy is property rights, and we will continue to stand up for the individuals and families who own mineral rights in our state. Fracking bans are illegal, which is why courts in both Boulder and Larimer counties have overturned bans and moratoriums in the past year. In commu-nities where there are specific local needs. we have seen city and county governments suc-cessfully negotiate memorandums of under-standing with operators that ensure local citizens, infrastructure and environment are protected.
n Kaye Fissinger: No. Financial invest-ment inherently involves financial risk. It should never be axiomatic that invest-ments are guaranteed a return, much less an investor-determined return. The Colorado Constitution expressly assigns inalienable rights to the people. In fact, even the Oil and Gas Act, as amended in 2007, requires protec-tion of the people’s health, safety, welfare and the environment that sustains life. These are preeminent rights. In practice, neither con-stitutional nor statutory declarations have made any meaningful difference. Our case law values the state above the people — and they are not one and the same. Case law also favors industry, specifically the oil and gas industry. The oil and gas industry has been granted dispensation after dispensa-tion (and not by the Pope) to frack, with all of the consequences that evolve from fracking. They are essentially guaranteed the ability to frack wherever, whenever and however they choose.
n Bruce Kramer: There is a difference between a ban on fracking and a ban on oil and gas production activities. With shale formations, a ban on hydraulic fracturing essentially is a ban on producing the oil and gas trapped in such formations because of the technological and economic realities relating to the production from shale forma-tions. Both the United States and Colorado constitutions contain provisions that prevent any governmental entity from taking private property for a public use without the pay-ment of just compensation. A ban on hydrau-lic fracturing operations may have the effect of destroying most of the value of the mineral estate where the minerals are located in shale formations. A surface estate owner will often have multiple uses of the surface estate even where certain uses are prohibited. That is not the case for a mineral estate owner whose property interest is made up of the ability to explore for and produce the subsurface min-erals where they are located.
a recent colorado state university study stated that water-based contaminants due to oil and gas production in the Denver-Julesburg Basin were minimal. How should research like that and other environmental effects factor into the debate?
n Dan Haley: We welcome all scientifi-cally sound research into the debate. Hydrau-lic fracturing is a safe process, and even
President Obama’s Environmental Protection Agency admits that it has not had widespread impacts on our water supply.
n Kaye Fissinger: The Public Account-ability Initiative’s “Frackademia in Depth” assesses the relative independence and quality of the studies listed on industry sites by identifying and classifying each study’s industry ties. The thorough investi-gative report of industry control of studies produced by the University of Colorado-Boulder’s Leeds School of Business should be an eye-opener for the public. Physicians, Scientists & Engineers for Healthy Energy conducted an analysis of peer-reviewed studies on the impacts of fracking and shale gas development and found that 21 of 25 papers published on the health impacts show potential risks or actual adverse out-comes, that 33 of 48 focused on water qual-ity find either the potential for, a positive association with, or direct evidence of water contamination, that 30 of 34 focused on air quality found elevated levels of air pollution, and that children are especially vulnerable to exposure to such pollution.
n Bruce Kramer: Understanding the nature of the negative externalities from the use of a particular technology is a critical component of an effective regula-tory system. Certainly since the 1970s, the federal government has developed regula-tory programs designed to minimize envi-ronmental injury through various types of human-generated activities. The same kind of research and knowledge should be used when it comes to hydraulic fracturing or other oil and gas-related operations that might cause environmental damage, such as high-volume, high-pressure waste disposal wells. Hydraulic fracturing techniques have been used for 75 years. When done appro-priately such techniques present minimal threats to the environment. Research and studies should be continued to determine what further technological steps should be taken to minimize such threats.
Why (or why not) are town-by-town agreements — such as that inked between erie and encana — a better way to go for cit-ies seeking fracking limitations, rather than bans?
n Dan Haley: MOUs are a great way for local communities to make sure that oil and gas companies are being sensitive to local needs while still allowing them to operate there. We have seen more than 30 of these around the state in the past few years, from one in Arapahoe County that addresses local concerns about road impacts to one in Adams County that addresses their specific needs concerning local water sources. All of these are done in a way that finds reasonable
solutions while respecting state regulations.
n Kaye Fissinger: Some local govern-ments have elected to enter into what are known as Memorandums of Understand-ing because it is the only option available to them. Statutory municipalities are governed by state laws and do not have the right to create laws different from those of the state. Counties are a statutory arm of the state gov-ernment and are similarly constrained. Not only are their hands tied by law, but they are especially vulnerable to being sued by either the state or industry, or both. Even home-rule communities, with relatively small bud-gets, may elect to go this route because of potential lawsuits. In my estimation, these statutory restrictions have translated into intimidation and an abuse of power, if not worse. All towns, cities and counties must be free to protect their residents in the best ways that they see fit. State regulations must be “the floor” and not “the ceiling.”
n Bruce Kramer: The enforceability of private, contractual agreements, between governmental entities and private entities is not clear. Furthermore, there may be a prob-lem in that there may be multiple oil and gas operators who want to engage in hydrau-lic fracturing operations within a single local governmental unit. Should different provisions be allowed with the multiple agreements or should there be a legislative pronouncement that is generally applicable to all? Having said that, a zoning ordinance may through a discretionary permit system still allow for individual negotiation of per-mits or other agreements that may be indi-vidually tailored to a specific, proposed oil and gas operation.
What concessions and compromises still need to be made by each side for the state to establish oil and gas rules with which all sides can get onboard?
n Dan Haley: We believed the Gov-ernor’s Task Force had done just that. The governor did a great job of bringing all stake-holders to the table, and his task force on oil and gas included 21 members from such diverse backgrounds that the expectations they could achieve a consensus were low. Yet, of the nine recommendations that came out of the task force, seven of them were approved unanimously. So we know com-promise and consensus are possible. If the state would focus on implementing the rec-ommendations as written, we would be able to find common ground just like the diverse group of task-force members were able to do.
We remain committed to engaging in a dialogue with anyone who is impacted by oil and gas operations and has legitimate concerns. For some interest groups and their followers, however, they will never be satisfied with anything less than an outright
ban on all oil and gas activity, the industry, and therefore its workers and families. For that reason, it is very important to separate legitimate voices and concerns from those special-interest groups who just want to malign our industry.
n Kaye Fissinger: If the Colorado Oil and Gas Conservation Commission were to demonstrate integrity and adhere to the sec-ond and equal part of their mandate — “in a manner consistent with the protection of public health, safety and welfare, including the environment and wildlife resources” — it would come close to eliminating the perceived need for “concessions.” Instead, the COGCC treats that part of its mandate as if it were an ugly stepsister, holding their collective noses when giving so much as one-eighth of an inch. If our Legislature and governor took their oaths of office seriously, they would rein in the oil and gas industry. All other commercial and industrial inter-ests are required to submit to local control. The argument the industry puts forth — a patchwork of regulations — is ludicrous on its face. Real estate developers, as an exam-ple, consistently deal with differing regula-tions in each community where they wish to build.
n Bruce Kramer: The state, in theory, holds all of the cards in the deck should it choose to exercise its police power authority to regulate oil and gas operations. Whether the Colorado Legislature will enact legisla-tion as did the Oklahoma and Texas legisla-tures that prohibit local governments from “prohibiting” oil and gas operations while allowing local governments to regulate oil and gas operations is somewhat doubtful. More so than most states, Colorado already gives local governmental entities input into the permit issuing and regulatory authority of the Colorado Oil and Gas Conservation Commission. Allowing local governments to prohibit activities that state statutes spe-cifically authorize would defeat the objec-tives set forth in the Colorado Oil and Gas Act. Local governments should understand that a total prohibition ordinance runs con-trary to very important statewide public policy objectives in addition to raising some significant constitutional issues. Maintain-ing the authority to regulate oil and gas operations in general and hydraulic frac-turing operations specifically, when not in conflict with state regulation, should be the objective. Just as with other NIMBYs, where the state has determined that it is in the interest of the state to allow, if not encour-age, certain activities, be they group homes, halfway houses, oil and gas operations, mining operations etc., it is unlikely that the state will stand by and allow local govern-ments to thwart such objectives.
NISP controversy: a river runs through itP erhaps no issue
brings the chal-lenges of booming
growth in a semi-arid region into sharper focus than the proposed Northern Integrated Supply Project, a plan to cap-ture water before it flows out of state by building a pair of reservoirs along the Cache la Poudre River. Stakehold-ers of the Northern Colorado Water Conservancy District as well as numerous economic-development and agriculture-backed groups see the proj-ect as critical to keeping up with the growing demands of development, industry and agribusiness along the north-ern Front Range. However, officials in Fort Collins and Greeley are skeptical about the impacts on the river and their own water-treatment facilities, and environmentalists have declared all-out war on the project, contending it would drain water from the Poudre as it flows through Fort Col-lins, limiting opportunities for fishing and other recreation. We spoke with Eric Wilkinson, general manager of Northern Water; Gary Wockner, direc-tor of Save the Poudre; and Reagan Waskom, director of the Colorado Water Institute at Colorado State University.
The final environmental impact state-ment for the nisP project, which must pre-cede the u.s. army corps of engineers’ rul-ing on whether northern Water can build the nisP reservoirs, has been delayed for a year. What do you think it means and what effect will it have on the project?
n eric WilKinson: Participants in NISP began work on studies required by the National Environmental Policy Act (NEPA)
in 2004. These studies are required to look at all facets of the project to clearly define the proj-ect’s impact on the envi-ronment as well as ways to avoid, minimize, or mitigate those impacts. These studies are com-plex, requiring significant resources and specialized expertise. That is evidenced by
the nearly 12 years and approximately $15 million that the participants have invested to date.
Most studies have been completed but some require additional time, thus the reason for the extension. The project par-ticipants have supported, and continue to support, a thorough NEPA process to assure the Final Environmental Impact Statement is comprehensive, complete, and defend-able. Participants are working diligently
to assure this extension has minimal effect on the beginning of project con-struction.
n gary WocKner: We are winning the fight to save the Poudre! This project has been delayed forever, is nearly $200 million over budget and would drain and destroy the Cache
la Poudre River. If NISP towns want more water, they had better look elsewhere because we will fight to stop this project for as long as it takes. NISP would be so envi-ronmentally damaging that it has caused the Army Corps of Engineers to do study after study as the proposed damage esca-lates.
The Cache la Poudre is a wonderful ame-nity which the people of Fort Collins value immensely. Every threat against this river has been met by an even greater response. The longer the project drags out, the stron-ger the will to stop it. NISP would severely damage the ecology of the Poudre River, the economy of Fort Collins and the cultural heritage of the community.
n reagan WasKom: It simply means the proj-ect gets further scrutiny and the science behind quantifying potential impacts may get stron-ger. It delays the project again, but as someone outside the process look-ing on, the hoped-for result is a more definitive understanding of both the potential impacts and the mea-sures needed to mitigate those impacts.
given northern colorado’s projected rate of population growth, how long do you think it will be before even more storage is needed, and what might that look like?
n eric WilKinson: The Colorado Water Plan, delivered to Gov. John Hicken-
Please see NISP, page 10
NortherN colorado Water coNservaNcy dIstrIct
WOCKNER
WASKOM
“The Cache la Poudre is a wonderful amenity which the people of Fort Collins value immensely. Every threat against this river has been met by an even greater response. NISP would severely damage the ecology of the Poudre River, the economy of Fort Collins and the cultural heritage of the community.”Gary Wockner, Save the Poudre
looper in November, has a goal of develop-ing 400,000 acre-feet of additional storage within Colorado. The need for storage to better manage Colorado’s limited water resources was recognized in the South Platte Basin more than 130 years ago. Storage is needed in this semi-arid area, whether it is to store: conserved water; water available during wetter periods to make existing water supplies more reliable during drier periods, water needed to meet growing demands or provide environmen-tal enhancements; or reusable water.
Storage is also recognized as a way to address climate change that many assert will cause wet periods to be wetter and dry periods to be drier. Additional supplies are needed to meet the growing water supply gap. Storage is essential in developing those supplies. Future storage must include both
reservoir and groundwater storage, done in a manner that is environmentally sound while meeting water management needs.
n gary WocKner: Save The Poudre is fighting NISP because it would drain and destroy the river. “Storage” can happen several ways — by buying farm water or by storing water that is already diverted from the river. Save The Poudre is not against storage; we are against new diversions of water out of the river and against new dams on the river.
Further, extraordinary amounts of water are already wasted in Northern Colorado by spraying water on lawns to keep them green for three months in the summer. In fact, nearly half of all the water used in towns is used to keep the grass green. The most important solution for cities that want more water is conservation, conservation,
conservation, which is cheaper, easier, and faster. If anyone tries to further divert or dam the Poudre, we will fight them. If they want a fast, cheap, easy path forward, they should invest in conservation.
n reagan WasKom: Not long. We know that Fort Collins is currently work-ing on Halligan Reservoir enlargement and Greeley is pursing enlargement of Seaman Reservoir, so there is more storage already in the permitting process. Northern Water’s Chimney Hollow Reservoir, planned for west of Carter Lake, is moving forward, and the NISP Supplemental Draft EIS held up the possibility of a reservoir at Cactus Hill. Undoubtedly, there are other potential reservoir enlargements under consider-ation. In addition, engineers and geologists at Colorado State University are investigat-ing potential for underground storage in Northern Colorado.
Given our drought-prone systems, above- or below-ground storage is the only way we know to ensure that water supplies will not limit the aspirations of Northern Colorado. That said, we also must look at technologies, innovations and poli-cies that will help us live within our water means. Lots of opportunity for innovation and entrepreneurs in this space.
With that rate of growth and demand for water by industrial and residential devel-opment, what do you see as the future of agriculture in northeastern colorado?
n eric WilKinson: The future of agriculture in northeastern Colorado will depend largely, if not solely, on the choices society makes as to how it will control and meet its future water-supply needs. Water demands are driven by a number of fac-tors including population, society’s water conservation ethic, land-use patterns and the economy, to name a few. Those water demands can be met by conservation prac-tices, water sharing with the agricultural community, use of available reusable sup-plies, and development of available unused water supplies by well-planned projects.
To the extent the demands are not met by these means, water will be reallocated from agriculture to municipal and industrial use by free-market transactions referred to as “buy and dry.” As an example, 60,000 acres of irrigated farmland would have to be dried up to provide a water supply equiva-lent to that provided by NISP. Irrigated agri-culture is a critical part of our economy and our culture and we must work to preserve it.
n gary WocKner: Cities are growing all over the top of farms in Northern Colo-rado. Growth is destroying the agricultural heritage of Northern Colorado. As one solution to the water problem, cities can simply buy the water from the farms they
are growing on top of; that would serve a significant portion of new water demand.
Farmers own their water rights. If farm-ers want to sell their water, that’s their business. NISP would subsidize growth in Northern Colorado, would use farm water to fill the reservoirs and operate the project, and would actually cause more and more farms to be paved over and sold off. More than 100,000 acres of farms will be partly destroyed by NISP if NISP gets built.
n reagan WasKom: This is a terrific agricultural production region — if you have water. We have plenty of sunshine, productive soils and excellent farmers. Weld County has long been the number one agricultural county in Colorado and will continue to be so for some time.
In the short term, I think we need to have serious community conversations
about the trajectory we are on for agricul-ture in this area. Do we want to implement programs or mechanisms to keep local irrigated agriculture viable as the demand for water continues to create market condi-tions that make it difficult to continue irri-gating crops?
In the long term, I am certain agri-culture will look very different in North-ern Colorado, but the demand for locally grown food will remain strong. Colorado State University has a number of faculty working on aspects of this future, and this region could be a global leader on how agri-culture and cities coexist symbiotically.
Agriculture has capacity to utilize the effluents and nutrients in wastes and run-off produced by cities, as well as to utilize marginal or impaired water supplies. We can retain a viable agricultural industry in Northern Colorado, but it is going to take some planned interventions. If we don’t, the market will move water out of ag over time.
Dallas Heltzell compiled this report.
NISP, from 9
“ The need for storage to better manage Colorado’s limited water resources was recognized in the South Platte Basin more than 130 years ago. Storage is needed in this semi-arid area, whether it is to store: conserved water; water available during wetter periods to make existing water supplies more reliable during drier periods, water needed to meet growing demands or provide environmental enhancements; or reusable water.”Eric Wilkinson, Northern Water
“ Given our drought-prone systems, above- or below-ground storage is the only way we know to ensure that water supplies will not limit the aspirations of Northern Colorado. That said, we also must look at technologies, innovations and policies that will help us live within our water means.”Reagan Waskom, Colorado Water Institute, Colorado State University
widened I-25 portends life in the fast laneA s population, busi-
ness, health-care and entertainment venues
expand exponentially along the Interstate 25 corridor, the stretch between Longmont and Fort Collins becomes ever more crowded — and it becomes ever more obvious that two lanes in each direction just aren’t enough. But debate still rages about whether widening the highway might simply spur even more growth, making a newly widened roadway obso-lete in a short time. And even more pressing is the question of how to pay for the work — a project that most see as vital to Northern Colorado’s economic development future. We spoke with Weld County Commis-sioner Sean Conway, who has ben outspoken in his efforts to expedite the widening work, and Jared Fiel, Region 4 com-munications manager for the Colorado Department of Trans-portation.
at this point, what funding source — or combination of them — seems most prac-tical to you to achieve widening of i-25 between colorado Highways 66 and 14 within the shortest possible time?
n sean conWay: The most realistic funding source to achieve the widening of I-25 from Highway 66 to Highway 14 in the near future is the passage of a TRANS Bond II ballot initiative in 2016, which would allow $3.8 billion in new bonding for highway capacity statewide without raising taxes. Passage of such a ballot issue, which is being led by the Northern Colorado Leg-islative Alliance, would allow approximate-ly up to $700 million for construction of a
third lane on north I-25 from Highway 66 to 14.
In addition, the new FAST Act just approved by Congress specifi-cally singled out North I-25 to be eligible for a federal Transportation Infrastructure Finance and Innovation Act loan that could provide funding for new capacity between High-
ways 7 and 14. The loan would be repaid by tolls on the new lanes constructed, not cur-rent lanes.
In 2016, due to $13 million in funding approved by the North Front Range Met-ropolitan Planning Organization earlier this year, I-25 will see a new climbing lane in 2016 on the Berthoud Hill for trucks and the construction of a new overpass at Crossroads Boulevard in 2017. Also, if CDOT is successful in the Presidential Challenge
in 2016 for $100 million in federal funding, replacement of bridges on I-25 across the Poudre, Big Thompson and Little Thomp-son rivers could happen.
n JareD Fiel: Sadly, there is no single source for this money. While the gas tax is our single largest form of funding, most of that money is obligated with maintaining the roads we already have. So, we are con-stantly looking for new sources, including
federal grants. Some have suggested increasing the gas tax or the sales tax to provide funding to support bonding. There is also the possibility of having a private company invest private money to build an additional tolled lane. Any (or all) of these sources and others will be needed to get us to the point
we all know we need to be.
given northern colorado’s projected rate of growth, how long do you think it will be before even three lanes in each direction aren’t enough to handle the traf-fic? at that point, what would be the next step?
n sean conWay: Based on current traf-fic studies by CDOT and the NFRMPO, the new third lane would address future traffic demands and growth along the north I-25 corridor from Highway 66 to Highway 14 through 2040. The third lane from High-way 66 to Highway 7 constructed almost 10 years ago currently has more traffic on it than what is projected in the future from Highways 66 to 14 and will remain a free-flowing corridor for decades to come, according to CDOT traffic studies.
n JareD Fiel: Rate of growth is only one small part of the massive puzzle that goes into transportation planning. Yes, our goal is to have two general-purpose lanes and one Express Lane in each direction from Highway 66 to Highway 14 by 2035. But, by the time that happens, we might already be in need for a fourth lane.
One method of extending the opera-Please see I-25, page 14
steve MIller/BIzWest
FIEL
“Due to $13 million in funding approved by the North Front Range Metropolitan Planning Organization earlier this year, I-25 will see a new climbing lane in 2016 on the Berthoud Hill for trucks and the construction of a new overpass at Crossroads Boulevard in 2017. Also, if CDOT is successful in the Presidential Challenge in 2016 for $100 million in federal funding, replacement of bridges on I-25 across the Poudre, Big Thompson and Little Thompson rivers could happen.”Sean Conway, Weld County Commissioner
tional life is incorporating technology to improve capacity and accommodate our existing and future growth. CDOT is cur-rently piloting a pilot project called RoadX (https://www.codot.gov/programs/roadx) to look into technology improvements like car-to-car and car-to-infrastructure com-munication that can hugely increase capac-ity and do it safely.
After exhausting the technology option, additional capacity would be the next logi-cal step. All that being said, when we did the original I-25 planning, based on existing technology and design, three lanes would handle traffic on I-25 until 2030 when some stretches begin to get overwhelmed.
is tolling a viable option to ease i-25
traffic? Why or why not?
n sean conWay: Tolling remains a viable option only for new lanes to ease congestion for north I-25 traffic. In 2013, a bipartisan group of elected officials from Northern Colorado made it clear to CDOT that any tolling on I-25 from 120th Street to Colorado Highway 14 must be tied to new lanes and capacity. That group now makes up the North I-25 Coalition. The Coalition is represented by every county (Adams, Broomfield, Larimer and Weld) along with every municipality along the I-25 corridor
from Thornton to Fort Collins.In a meeting with the NFRMPO Council
in 2014, then CDOT Director Don Hunt said CDOT agreed any new tolling should be for new capacity only and current general-pur-pose lanes should not be subject to tolling.
n JareD Fiel: Yes. People have the wrong idea about tolling. Tolling is not about raising money (although the money brought in will assist in maintaining the new road). Tolling is more about what we call “trip reliability.” What that means is that with a tolled Express Lane, drivers will always have an option to be able to get where they are going without major concern for delays. So, if you are going to Denver to see a Rockies game and you don’t mind missing the first couple innings, you can take the always free general-purpose lanes. But if you are going to Denver Inter-national Airport and are worried about missing your flight, you can pay the toll in the Express Lanes.
The addition of a toll lane also improves traffic flow on the free, general purpose lanes, easing traffic for all users.
Another misconception is that tolling is a new concept. Having a tolled lane on I-25 has been planned since serious discussions began about expansion of I-25.
Dallas Heltzell compiled this report.
I-25, from 13
Startups make their
own luck.
“While the gas tax is our single largest form of funding, most of that money is obligated with maintaining the roads we already have. So, we are constantly looking for new sources, including federal grants. Some have suggested increasing the gas tax or the sales tax to provide funding to support bonding. There is also the possibility of having a private company invest private money to build an additional tolled lane.”Jared Fiel, Colorado Department of Transportation
who will toast victory after liquor-sales vote?t he push to allow
grocery and conve-nience stores to sell
full-strength beer and wine is a battle that’s been fought before Colorado’s state Leg-islature six times in the past 25 years and failed each time: But now a group called Your Choice Colorado aims to put the question before the state’s voters on the 2016 ballot. As of now, stores wishing to sell full-strength beer, wine and liquor are allowed only one license, meaning each grocery store chain may sell full-strength alcohol at only one store no matter how many it has in the state. Liquor store owners and the craft beer industry largely oppose the measure. We spoke with Your Choice Colorado campaign manager Georgie Aguirre-Sacasa, Colorado Brewers Guild executive direc-tor John Carlson, and Dennis Dinsmore, owner of newly opened Wyatt’s Wet Goods liquor store in Longmont, to get their takes.
What are the pros and cons of such a measure, and how will consumers be affected?
n georgie aguirre-sacasa: Con-
sumers in 42 other states can buy Colorado craft beer or wine in grocery stores, but right here, where it’s brewed, Coloradans cannot. An antiquated state law forbids it. But it doesn’t have to be this way. Expand-ing the sale of beer and wine to grocery stores will provide small-business owners an opportunity to grow by giving consum-ers better access to the products they’re
eager to buy. Here’s how our ballot
initiative will benefit all Coloradans:
Shoppers: Two-stop shopping doesn’t always work for Coloradans’ active lifestyles. Expand-ed sales will give con-sumers more choices over where and how they shop. It will also lower the cost of beer
and wine prices by 18 percent.Brewers: Expanded sales will provide
craft brewers better access to shelf space, increasing their sales by over an estimated $125 million.
Economic growth: More choices equal more sales, spurring $2.2 billion in eco-nomic activity and 20,000 new local jobs over two years.
Many small businesses have found their first customers on grocery stores’ shelves.
By making a common-sense change to the law, we can give that same choice to our state’s wine-makers and more than 300 brewers, allowing us to buy our favorite Colo-rado produce, craft beer or wine in one stop.
n JoHn carlson: Colorado Brew-
ers Guild has teamed up with other local businesses throughout Colorado, includ-ing local liquor stores, craft brewers, local winemakers and craft distillers, to pro-tect our small-business climate and local economy. We’re a part of the effort to Keep Colorado Local because we want to protect Colorado’s economy and small businesses, and promote our thriving craft culture.
n Dennis Dinsmore: The chain stores
say it’s about convenience, but it’s really about boosting their profits at the expense of local businesses, Colorado’s craft culture and public safety. Gro-cery and convenience stores are proposing rules in which only they could have multiple liquor licenses and the ability to sell alcohol alongside food and gas. Not only would that give them an unfair advantage that would hurt local stores, it would eliminate local businesses that serve as key distribu-tion points for craft brewers.
Doubling the number of outlets that sell alcohol also poses a risk to public safety in that beer and wine could be sold in grocery and convenience stores that don’t have the same age limitations on customers and cashiers that liquor stores do (ours must be over 21). A recent University of Arizona study found kids preferred targeting gro-cery and convenience stores to illegally obtain alcohol because of easy access and poor supervision. And Washington state is dealing with brazen shoplifting since changing their laws (Google: “Stores seeing huge spike in liquor thefts”).
How have colorado’s current laws helped shape the state’s craft beer climate, and why is change necessary?
n georgie aguirre-sacasa: Colo-
rado’s unique craft brewing and winemak-ing culture has won awards and customers across the state and across the nation. We rank third in the number of craft brew-eries per capita, but among the top five craft brewery states, only Colorado does
Please see Liquor, page 18
steve MIller/BIzWest
CARLSON
DINSMORE
“A recent University of Arizona study found kids preferred targeting grocery and convenience stores to illegally obtain alcohol because of easy access and poor supervision. And Washington state is dealing with brazen shoplifting since changing their laws.”Dennis Dinsmore, Wyatt’s Wet Goods
not allow craft beer to be sold in grocery stores. Our brewers and winemakers are being limited by a Prohibition-era law that only allows for the sale of 3.2 percent “near beer,” closing off additional shelf space for breweries to grow and reach new customers. Coloradans want to proudly support their local products, Therefore, we need this common-sense reform that will help brewers and winemakers, Colorado customers, and our economy.
n JoHn carlson: Our brewery mem-bers have been in Colorado for 36 years, and we employ about 6,000 people in the aggregate. We want to promote Colorado’s independent, small-business climate that allows businesses like ours to create jobs, give back to the local community and pro-vide our customers with a great craft beer selection at an attractive price. Allowing out -of- state corporations to sell alcohol in chain stores would do just the opposite. It would hurt small business and force hun-dreds of those businesses to close. An eco-nomic study predicts that as many as 700 independent liquor stores would be forced to close in just the first five years, and Colo-rado would lose 10,000 jobs.
n Dennis Dinsmore: Change isn’t necessary. Colorado’s craft brewers and their trade organization, the Colorado Brewers Guild, understand that our current laws have created the incredible market we have in the state. That’s why they, along with the Colorado Association for Viticul-ture and Enology and the Colorado Distill-ers Guild — the trade groups for the state’s vintners and distillers — oppose the idea of big-box alcohol sales. Colorado’s craft industries thrive in their infancy because of their close relationships with independent liquor stores. Local liquor stores, which make the decision on what to stock quickly and locally, are happy to give shelf space to the smaller guys who may be selling a few cases at a time. The out-of-state chain stores aren’t geared toward helping the lit-tle guy, as they buy in bulk, make the deci-sion on what to stock at the corporate level, and have limited space.
The craft beer boom and grocery-store beer sales seem to coexist in other states such as california. Why is colorado’s situa-tion similar or different?
n georgie aguirre-sacasa: Like California, we too have our own “micro-climate” example in Glendale, Colo., where two local grocery stores are currently able to safely stock and sell full-strength Colo-rado beer and wine under the single license they are currently allowed. They coexist with more than 70 nearby liquor stores and breweries, who flourish. This convenience
and choice shouldn’t be limited to those who reside in the Denver metro area. Two-stop shopping does not work for everyone, and all Coloradans deserve the choice.
n JoHn carlson: Colorado is home to nearly 500 craft breweries, wineries and distilleries. Of that, 320 are breweries. Colo-rado’s craft culture exists because of the close relationships between liquor stores and craft producers. Local liquor stores can give shelf space to the smaller guys, but the big chain stores won’t be able to do that. It’s not in their business model. It’s a pretty spectacular situation for a state with 5.3 million people. If California, a state with 37 million people, had a similar system, it might enjoy 2,400 craft breweries instead of 600.
n Dennis Dinsmore: I won’t argue that other states have good craft-brewing environments. I will argue that Colorado’s is better because of our laws. With more than 70 distilleries, we now lead the nation in growth in that sector. We have more than 170 local wineries. The number of craft breweries in Colorado has grown from 181 in 2012 to more than 300 today as the indus-try’s economic impact has eclipsed $1 bil-lion. And Colorado, home to about 5 million people, now produces the third-most craft beer in the country, behind only Pennsyl-vania (12 million people, and also doesn’t allow grocery store sales) and California (38 million). Laws in those states — just like Colorado — have been in place long enough to provide the certainty businesses need to thrive. The success of Colorado craft pro-ducers is owed to the 1,600 locally owned stores that help them easily and quickly get
their products to consumers.“If it ain’t broke, don’t break it.” is it fair to allow grocery stores multiple
liquor licenses while still excluding liquor-store owners from such a right, and what are the impacts of that?
n georgie aguirre-sacasa: Right now, we are listening to Coloradans on what may work best for them. We have heard from people across the state who have responded with resounding support to reform Colorado’s Prohibition-era laws to make it more convenient for consumers to buy real beer and wine at their neighbor-hood stores while promoting the growth of Colorado’s vibrant brewing and winemak-ing industry by opening new shelf space. As we bring this to the ballot in 2016, we look forward to sharing more information with folks across the state.
n JoHn carlson: Colorado craft cul-ture and beer diversity. Colorado liquor laws don’t just encourage small businesses to open and grow here; they actually pro-vide the beer lovers with better selection.
n Dennis Dinsmore: No, it’s not. Why should Kroger, Safeway, Walmart and the out-of-state convenience stores be able to continue selling their existing products and be the only ones who can have multiple liquor licenses? Why should they be able to buy in bulk, when the little guys can’t? If fairness is what you’re after, that’s exactly what we have in Colorado right now: one license per owner. There’s also an impor-tant economic argument to make here, which is that local businesses return more money to our communities compared to chain stores. Multiple studies have shown that more than 50 cents of every dollar spent in a locally owned business stays in the community, compared to less than 15 cents of every dollar for chain stores.
What will happen to the selection of local beers on shelves at grocery stores and liquor stores alike?
n georgie aguirre-sacasa: Accord-ing to a study by University of Denver econ-omist Jack Strauss, changing Colorado’s antiquated laws would result in a boost in craft beer sales as more shelf space opens to local craft beer and wine. For instance, two grocery store chains’ sales of local craft beer in Oregon and Washington state are well over $100 million. In Oregon, 65 per-cent of one chain’s sales of craft beer are from Oregon. The current system substan-tially hurts craft beer sales and profits. We estimate improved access of Colorado craft beer by allowing it to be sold in Colorado grocery stores will generate an additional $125 million in sales of Colorado craft beer,
Liquor, from 17 “Two grocery store chains’ sales of local craft beer in Oregon and Washington state are well over $100 million. In Oregon, 65 percent of one chain’s sales of craft beer are from Oregon. The current system substantially hurts craft beer sales and profits. We estimate improved access of Colorado craft beer by allowing it to be sold in Colorado grocery stores will generate an additional $125 million in sales of Colorado craft beer.”Georgie Aguirre-Sacasa, Your Choice Colorado campaign manager
and significantly boost pro-duction of Colorado beer. This makes sense, and now’s the right time to make this impor-tant change.
n JoHn carlson: Out-of state corporations see an opportunity to boost their profits through alcohol sales, and their efforts to change our laws show that they don’t care how many small businesses would be forced to close, how many jobs would be lost, or how it would hurt Colorado’s economy. This is just another example of David vs. Goliath. We’re local, independent busi-nesses, and we’re fighting off big out of state corporations. For a craft brewer, access to market is paramount. Success is not guaranteed, but the cur-rent system allows an opportu-nity for small brewers to grow into larger brewers. It’s the sys-tem that helped create Colo-rado, the state of craft beer.
n Dennis Dinsmore: There will be no selection at a local liquor store if it’s out of business. According to a recent study by Summit Econom-ics, allowing the sale of full-strength beer and wine in gro-cery and convenience stores would force more than 700 local liquor stores to close and result in the loss of 10,000 jobs in the first five years. Losing any portion of beer and wine sales, which can make two-thirds or more of a store’s sales, poses a significant risk to these local businesses. The selection, knowledge, training, and local connections that independent-
ly owned liquor stores have with their communities can’t be replicated by Walmart, et al., and once they’re crowded out by big-box retailers, they’re gone and we can’t get them back. Grocery stores will stock only the most popular items, as their business model requires them to move product rapidly.
Joshua Lindenstein compiled this report.
“We want to promote Colorado’s independent, small-business climate that allows businesses like ours to create jobs ... Allowing out -of- state corporations to sell alcohol in chain stores would do just the opposite. It would hurt small business and force hundreds of those businesses to close. An economic study predicts that as many as 700 independent liquor stores would be forced to close in just the first five years, and Colorado would lose 10,000 jobs.”John Carlson , Colorado Brewers Guild executive director
Municipal broadband: to speed or impede?M unicipal broad-
band, whereby cities provide
high-speed Internet access to residents and businesses, has been a controversial subject in Colorado since 2005, when the General Assembly prohibited cities from offering the service without a public vote. Recently, dozens of cities and towns along the Front Range have voted to allow the service. Biz-West spoke with Todd Barnes, communications director for the city of Thornton and presi-dent of the Colorado Commu-nications and Utility Alliance; Don Ingle, director of informa-tion technology for the city of Boulder; and Pete Kirchhof, executive vice president of the Colorado Telecommunications Association, about the pros and cons of cities offering broad-band service.
should government compete with the pri-vate sector in offering municipal broadband? Why or why not?
n ToDD Barnes: If the private sector fails to meet the needs of com-munities, governments should absolutely be able to step in and fill the need. Broadband is a necessity in today’s world and is something many consider a basic utility. Every municipality’s managers and elected officials should have the author-ity to assess their community need and take actions to meet that need.
n Don ingle: The city believes that a local community, through its elected offi-cials, should determine the government’s role
in offering broadband ser-vices. With the 2014 vote to exempt the city from state limitations, residents and businesses expressed their desire to explore a variety of options, and that is what Boulder is currently doing.
We are already learn-ing that not all broadband is created equal and it is not as simple as saying the private sector should offer these services and the public sector should not, or vice versa. There may be roles for each. For example, is the city even competing with the private sector if the private sector chooses not to invest in and offer state-of-the-art services over fiber-to-the-premises (FTTP), and the local govern-ment does? The municipal government’s
investment in offering those services does not preclude the private sector from making a similar investment.
Furthermore, in the area of high-speed broadband, most communities have a private monopoly or duopoly situation with high hur-dles to entry by new providers. This prevents the competitive forces that normally exist, as well as the subsequent choices that would otherwise ensure the highest level of ser-vices to consumers and lowest cost for those services. To address this, Boulder is likely to prioritize the exploration of partnering with a private-sector partner to provide consumers with broadband services using city-owned conduit and dark fiber. The public owns this infrastructure already, and it is under-utilized. It makes no sense to not to make it available in service of the public good.
n PeTe KircHHoF: Many government-spawned broadband efforts either fail or face significant struggles. One only has to look at Eagle-NET here in Colo-rado. There is much more to running an effective broadband system than laying a vast network of fiber. According to the National Telecommunications and Infor-mation Administration, nearly 99 percent of the U.S. population already has access to wired or wireless broadband. The gaps that remain, largely in sparsely populated, rural regions, need to be closed. In Colorado, much of that work is being done by the private-sec-tor companies that know the terrain.
What government needs to do is rec-ognize its limited — but very important — role in closing existing broadband gaps. That includes linking the most geographi-cally remote and economically challenged communities to the Internet so that all may benefit. Right now, the government looks too often to itself as a potential broadband “company”
Instead of enticing state and local gov-ernments — and ultimately taxpayers — into making extensive investments in fiscally shaky, publicly owned broadband systems that have little or no experience in the marketplace, communities should look at the extensive work already being done by private providers and use public resources to fill the gaps needed to improve broad-band access.
Please outline the underlying factors driving the push for faster internet connec-tions by businesses and consumers. Do you believe that the private sector is not respond-ing fast enough?
n ToDD Barnes: The Internet supplies a vast array of services these days. Many of those services include large volumes of data. Couple that with the fact that time is money and speed becomes essential. Bandwidth for the capability of many users using the Internet simultaneously increases the needs. The private sector has the technology to offer high-speed services, but the affordability of those services often is prohibitive.
n Don ingle: Boulder is home to a world-class business community – including many Internet-based companies – that needs ultra-reliable, high-speed Internet service. We also have a higher than average number of home-based businesses, and these also rely on fast, high-speed service. But availability, speed and cost of Internet service vary considerably throughout Boulder. Community feedback about current private-sector offerings sug-gests that needed services are not available or that they are cost prohibitive. This is a par-ticular challenge for Boulder’s business com-munity. To further understand the underly-ing factors and the community’s needs for broadband, Boulder is currently welcoming feedback from Boulder residents and busi-nesses through a brief online survey through Dec. 31 at www.connectboulder.net.
n PeTe KircHHoF: In rural communi-ties, broadband is critical for so many critical services — education, economic develop-ment and commerce, public safety and health care, just to name a few. Many CTA
Please see Broadband, page 22
Istock Photo
KIRCHHOF
“In the area of high-speed broadband, most communities have a private monopoly or duopoly situation with high hurdles to entry by new providers. This prevents the competitive forces that normally exist.”Don Ingle, director of information technology for the city of Boulder
member companies have long roots in their communities and have been the only reliable communications provider for many years, ensuring that their communities were con-nected and not isolated.
Rural access has been expanding steadily here in Colorado, and much of this is because of the innovation and proven know-how of seasoned CTA member companies. Our state’s rural broadband and telecommunica-tions members have been among the lead-ers statewide in bridging the digital divide, bringing high-speed Internet to a host of rural farm and ranch communities in the mountains and on the plains.
is there a way for government to partner with the private sector in offering these ser-vices? What would that look like, or why is it not practical?
n ToDD Barnes: Partnerships are absolutely possible and preferable for many municipalities in Colorado. The models for these partnerships are many; including con-duit sharing, leasing of municipal fiber and joint trenching operations.
n Don ingle: Examples of successful broadband public–private partnerships are emerging nationwide. The city believes that such partnerships could be practical (given the right circumstances) and worth consider-ing to meet Boulder’s broadband goals. While the existing and announced partnerships vary in terms of the financial and functional responsibilities of each party, the partner-ships share common elements: They enable the public sector and private sector to focus on their respective strengths; they generally distribute the risk and rewards among the partners; and they enable local and state gov-ernments to achieve their broadband goals, on behalf of residents and businesses, to a degree that would generally not be possible without private-sector investment. If Boulder were to partner with a private-sector partner or partners, such an agreement would be the culmination of a lengthy exploratory process
and negotiations that ensure that the inter-ests of the city and its residents and business community are protected.
To provide a more concrete perspective on potential partnership opportunities, the city will be issuing an exploratory Request for Information (RFI) early in 2016. The goal is to collect ideas and measure interest in any of a number of business models involving differ-ent level of public/private capital investment, operating relationships, and sharing of risks and rewards.
n PeTe KircHHoF: Yes, there are ways for government to partner with the private sector to provide service. However, those ways should not include government financ-ing, building, owning and operating a very capital-intensive and complex network. For example, government can install conduit in roads when they are under construction to allow companies to install fiber optic lines. One of the largest costs of deployment are trenching and burying lines. Additional sup-port can come by limiting permit fees and local taxes, streamlining permitting process-es and expediting tower siting.
many colorado communities have voted in recent years to allow municipal broad-band. should state law be changed to elimi-nate the requirement for a public vote? Why or why not?
n ToDD Barnes: Yes. Eliminate the need for the vote. People vote for people to run their local governments and make decisions for their communities — mayors and coun-cils, etc. Industry hasn’t even opposed these elections in recent years, so why does this law even exist? If communities decide to raise taxes for any broadband initiative, they will have to have a vote anyway under TABOR. The law serves no purpose other than to try and prevent competition and delay meeting the needs of many Coloradans.
n Don ingle: Senate Bill 152 was passed in 2005 in Colorado as part of a national effort by the broadband indus-try to limit competition in the sector. The city supports the repeal of SB 152, which has discouraged local governments from working to meet their community’s broad-band needs and required a small minority of local governments to spend the time and money necessary to ask their voters to approve an exemption. This should be treated as a matter of local control reserved to locally elected officials to determine, much like they determine when it is neces-sary to build roads, water lines, parks and libraries (and for which decisions those local officials may get re-elected or voted out of office).
n PeTe KircHHoF: No. The state law should not be changed. It is working exactly
as the Legislature intended. If government is going to engage is a very expensive and com-plex business venture, citizens should be well informed about the risks. Colorado’s unique system where local governments may enter the broadband market after approval from local voters represents an important check-and- balance by letting taxpayers decide if they want their local government involved in the telecommunications business. It’s a criti-cal part of local government accountability that neither broadband advocates nor voters should want removed. Many of the votes sim-ply gave the authority to the local government to explore the idea of providing services. Additional votes are still necessary to approve the public financing through bonds and debt to build these networks.
What level of investment is required for a community to offer municipal broadband?
n ToDD Barnes: Declined to respond.
n Don ingle: As with any large-scale municipal infrastructure initiative, the investment required for Boulder (or any other community) to offer municipal broadband would vary widely based on a whole host of project parameters. These naturally include both the physical scope of the project (i.e., how many homes and busi-nesses are connected, what technology is deployed) and the business model selected (e.g., municipal ownership and operation, municipal ownership with private opera-tion, public–private partnership). The costs would be determined through a transpar-ent planning and procurement process that includes consideration of public input and a focus on the public’s needs.
n PeTe KircHHoF: There is no way to quantify the level of investment as each community has different levels of existing service, ability to pay and geographical challenges.
Christopher Wood compiled this report.
Broadband, from 21
“If communities decide to raise taxes for any broadband initiative, they will have to have a vote anyway under TABOR. The law serves no purpose other than to try and prevent competition and delay meeting the needs of many Coloradans.”Todd Barnes, city of Thornton; president of the Colorado Communications and Utility Alliance
“Our state’s rural broadband and telecommunications members have been among the leaders statewide in bridging the digital divide, bringing high-speed Internet to a host of rural farm and ranch communities in the mountains and on the plains.”Pete Kirchhof, Colorado Telecommunications Association
affordable housing: still possible in area?A ffordable housing has
become a critical issue in the Boulder Valley
and Northern Colorado, with rapidly increasing housing prices forcing many residents out of some cities or into rental housing. BizWest spoke with Ken Hotard, senior vice presi-dent for public affairs with the Boulder Area Realtor Associa-tion; Greg Miedema, executive director of the Home Build-ers Association of Northern Colorado; and David Sinkey, of Louisville-based Boulder Creek Neighborhoods, about the causes and solutions to the problem.
With the rising cost of homes and apart-ment rents in the Boulder Valley and northern colorado coupled with relatively stagnant wages, is the term “affordable” that is bandied about by governments still valid?
n Ken HoTarD: Affordability is affect-ed by a number of variables including loca-tion, quality, housing type, housing supply, demand, buyer incomes and financing. A change in any of the variables for a specific buyer can affect relative affordability. The Boulder Valley is a very desirable location and, coupled with the current limited supply of housing for sale, the market can be challenging for some in availability, pricing and affordability. Northern Colorado, on the other hand, has a stronger inventory of homes for sale, a variety of locations and a good mix of hous-ing types to choose from, providing con-sumers more choice in price ranges afford-able to a broader range of incomes.
n greg mieDema: “Affordable” is an innocuous way for any city or jurisdiction
to address the question without definition. And I’m not indicting them for that; there really is no definition. “Afford-able” is a widely ban-died term that has no real baseline. There is some complicated for-mula including percent of median income, median home price or appraised value,
cost of living, etc. that makes everyone feel like they are addressing the issue, but what it really comes down to is whether your citizens can afford to live in the commu-nity they work in. And affordability should also encompass the rental market. For, if purchasing is out of reach (income, credit worthiness, housing availability) and the workforce still needs housing, we are miss-ing a big piece of the puzzle if we leave out rental property and affordability. And they
are inseparable. When housing costs rise, so do rental prices. You’ll see more in this regard in other responses.
n DaViD sinKey: The idea of affordable is always being redefined. Especially in a dynamic market like Denver. It would be helpful in the conversation about affordable to
define more clearly the distinctions between market rate and subsidized affordable.
is the current construction-defects law
affecting the supply of less expensive hous-ing options?
n Ken HoTarD: Current laws govern-ing construction litigation in Colorado are negatively impacting both the construction of new condominium projects and the abil-
ity of unit owners in some existing projects to sell or refinance their properties.
n greg mieDema: The construction-defect environment is definitely impacting affordability and entry-level housing. It is a problem that, in the absence of decisive action by the state Legislature, has proved important enough to see a growing num-ber of local jurisdictions adopt their own controls. If the towns and cities want infill, want the density needed to support mass transit (think the Max in Fort Collins) and younger residents to take up ownership, then condos provide a necessary stepping stone to the dream of SFR (Single Family Residence). However, don’t disregard the fact that a condo lifestyle and ownership is attractive to many in its own right. When litigation, or more properly the threat of liti-gation, adds tens of thousands of dollars to each unit sales price, then yes, the current laws are affecting supply and affordability of this section.
n DaViD sinKey: The current construc-tion-defects environment in Colorado is unquestionably reducing the supply of less expensive for-sale housing options.
How is the availability of water is affect-ing the price of homes?
n Ken HoTarD: We have not seen good data that provides a reliable accounting of the effects on the price of homes resulting from water availability. In those jurisdic-tions where developers are required to pro-vide water shares or pay fees in lieu needed
Please see Housing, page 26
Istock Photo
SINKEy
“There is some complicated formula including percent of median income, median home price or appraised value, cost of living, etc. that makes everyone feel like they are addressing the issue, but what it really comes down to is whether your citizens can afford to live in the community they work in.”Greg Miedema, Home Builders Association of Northern Colorado
to support their projects, it is clear that these additional costs are passed on to buy-ers of new homes. Where existing supplies support new development, new-home and resale-home buyers are paying the same rates for water as existing property owners. A number of communities also increase tap fees for new-home construction that are reflected in higher home prices. Future effects are uncertain as a number of new water-storage projects are under consider-ation statewide.
n greg mieDema: This has recently shown itself in the Fort Collins area. An area of land, within Fort Collins but out-side of the Fort Collins utilities, is prime for development. However, the cost of water from ELCO, which serves that area and does not have the luxury of low-priced and previously stocked water supplies, must charge market rate for the water and not the much more affordable (and thankfully so) cost charged by Fort Collins Utilities.
So you have houses, one street apart, that, were they to be built, would have a price tag of nearly $20,000 higher, with no vis-ible advantage. It’s time for the various districts to cooperate in areas of overlap, so that land can be developed, citizens can be brought into the jurisdiction, and revenues generated from otherwise vacant land. In the bigger picture, anything that adds to the fixed costs of a home are going to impact the final sales price. Projects such as NISP, which would allow North-ern Colorado to store water that otherwise flows downstream (water that it has pri-mary rights to), can also help to keep water affordable in Northern Colorado.
n DaViD sinKey: The price of water has increased substantially further hurting affordability.
How are city and county planning departments affect the price of homes?
n Ken HoTarD: Boulder County and its municipalities have more stringent devel-opment regulations and arduous approval processes that add to the cost of housing. Depending on the location, these costs can be as much as 20 percent to 25 percent of the total project costs. A recent action by the Boulder County Commissions now requires all housing of 5,000 square feet and larger to be constructed in a manner that the home produces 100 percent of the ener-gy the home uses. The amount of additional construction cost to meet this requirement is disputed.
n greg mieDema: One of the biggest impacts planning departments have is time – time as in getting a project from planning to production. Market conditions change, carrying costs add up.
That point goes deeper, however, when you consider the time, as in hours by build-ers and staff, to meet documentation/test-ing requirements, and compliance with layers of rules and regulations. One of the frustrating facets comes in when the com-pliance requirements become redundant, as in required by local, state, federal. Why can’t we all just get along? Even the most innocuous sounding rule or requirement adds another need for a file, but to further compound that it adds a layer of govern-mental oversight that will require some funding source to maintain.
n DaViD sinKey: Because munici-palities are so busy, it is taking two to four times longer to process all varieties of approvals from annexation and zoning to building permits and inspections. This costs huge amounts of additional dollars as a function of lost time and associated carry costs, again further hurting affordability.
What needs to happen to drive down the cost of housing?
n Ken HoTarD: Driving down the cost of (existing and new) housing is ques-tionable as a goal. Rather, we need to take actions that will diversify the housing available for rent or purchase. In the City of Boulder easing occupancy limits, allowing accessory units, splitting lots for smaller home development and appropriate loca-tion of new mixed-use development could have a positive impact on housing availabil-ity and pricing. In other locations commu-nities need to encourage diverse housing development by supporting the annexation and zoning of additional development lots.
n greg mieDema: I think we may be approaching that question from the wrong end. Housing costs locally have somewhat made up for the devaluation, but there’s no overriding consensus that sales prices are
inflated. Even regionally, while some areas (Boulder, most notably) have costs that are truly out of reach for most, the hotter spots are driven by demand, and the price increases have been absorbed with no drop in sales volume. On a national basis, there is a lot of territory yet to be made up, and as that happens, the local market can only get stronger.
What we should be asking is what can we do to drive up wages and income? That question is, again, not local or regional in nature. One thing missing from this (admittedly soft, drawn out and somewhat tenacious) recovery is wage growth. We’re fooled, often, by a low infla-tion rate (unheard of, less than 2 percent for years running now), that we don’t need to increase wages. There’s more to the cost of living than the base inflation rate, though. With housing costs —rental or ownership — being such a big part of bud-gets, wage growth must at least keep pace with that marker, lest we see deterioration
in other parts of the economy. If wages don’t grow, and housing continues to take the lion’s share of income, compromises will be necessary in other areas, such as food, durable goods and the amenities that we enjoy in Northern Colorado will become a luxury for our own residents.
n DaViD sinKey: It is my feeling that housing costs will continue to rise. Denver is a place people want to be (increasing demand) and the supply side of the equa-tion is constrained in many significant ways. I believe we are in a transition to smaller housing and that builders will need to constantly refine operations. I don’t see a reduction in housing cost prior to the next downward cycle in the market. In some ways, with rates as low as they are, now may be the lowest cost of housing for some time to come.
Doug Storum compiled this report.
Housing, from 25
“ In the City of Boulder easing occupancy limits, allowing accessory units, splitting lots for smaller home development and appropriate location of new mixed-use development could have a positive impact on housing availability and pricing.”Ken Hotard, Boulder Area Realtor Association
“I believe we are in a transition to smaller housing and that builders will need to constantly refine operations. I don’t see a reduction in housing cost prior to the next downward cycle in the market. In some ways, with rates as low as they are, now may be the lowest cost of housing for some time to come.”David Sinkey, Boulder Creek Neighborhoods
Experts mull how to slow spiraling health-care costst he Affordable Care
Act was intended to stem the tide of rising
health-insurance costs, but premiums have continued to increase at alarming rates, posing challenges for busi-nesses and consumers. Biz-West spoke with Adela Flores-Brennan, executive director of the Colorado Consumer Health Initiative, and Clair Volk, owner of Longmont-based VolkBell, about what’s causing the spikes.
Why do health-insurance premiums con-tinue to rise?
n aDela Flores-Brennan: While we have made significant progress in get-ting people in Colorado covered through either Medicaid or private health insurance, health insurance premiums do, in fact, continue to increase. After Year One of health reform, the increase was very small, on average. This past year, depending on the health-insurance company and the area of the state, some increases were sizable. This past year was the first year post health reform that the insurance companies had the benefit of data based on their cus-tomers’ insurance claims. For some carriers, those claims were very significant because they had a lot of sick customers or because their customer base represented a lot of pent-up demand (people who had previously been uninsured and putting off care). These factors explain insurance increases in the very recent past, and while we can expect those factors to moderate in the coming years, they will not necessarily completely prevent insurance rate increases. There are still many things about the health-care system that we need to address that ulti-mately impact consumer pocketbooks. For example, the way we pay for health care is on a fee-for-service basis that incentivizes the delivery of more care or services. There is a
great deal of consolidation happening in the delivery system that increases negotiating power and can keep rates higher. The costs of prescription drugs are increasing.
At the end of the day, there are still pro-tections in place to help mitigate the impact of rate increases for customers:
The Division of Insurance scrutinizes all proposed rate increases before they are able to go into effect. The division can and does reduce proposed insurance rate increases. This process has saved Colorado consum-ers tens of millions of dollars.
The so-called 80/20 rules requires 80
cents of every health-care dollar to be spent on health care, thus reducing the amount of money that can be spent on administra-tion. This rule has resulted in rebates to Coloradans.
n clair VolK: Health insurance premiums continue to rise because the Affordable Care Act has not addressed the biggest problem in the health-care industry: the cost of care. The Affordable Care Act addressed the accessibility gap in the health-insurance industry, but until employers start focusing on the cost of the
Experts mull how to slow spiraling health-care costs
care its employees are receiving, premiums (and claims) will con-tinue to rise.
is the single-payer health-insurance system that coloradans will vote on in 2016 fair to individu-als when everyone will be taxed 10 percent of their wages to pay for it?
n aDela Flores-Brennan: Our under-standing is that the single-payer health insur-
ance proposal will be available to just about everyone in Colorado, and that is the reason for the tax. Some individuals will pay less than 10 percent because it will be adminis-tered as a payroll tax and the burden will be divided between the employer and employee.
n clair VolK: First of all, this tax increase will be enormous, initially estimated at $25 billion. As we have learned from other government programs this tax increase very likely will not be sufficient and will go up significantly to support the program. The big-gest concern with the tax increase will be the
impact to the employer community, which is the engine to the Colorado economy. How many will go out of business, reduce their number of employees or leave the state for a more friendly tax environment?
The state of Vermont proposed a single-payer model back in 2010. In addition to an 11.5 percent payroll tax, they also needed to increase income taxes. Even with all that, they could not project operating out of the red; thus, they scrapped the idea. As Gov. Peter Shumlin, who promised to implement this model if elected, noted from Vermont, “The potential economic disruption and risk would be too great for small business, work-ing families and the state’s economy.”
Currently we have a choice of carriers (although not many, but better than just one) and we can choose a plan design that meets our individual needs. Neither of these are available with a single-payer model. We only have to go to Canada or the United Kingdom to get a glimpse of a single-payer model. They are great if you are healthy, but not so good if you actually need care.
What are the two first steps that need to be taken to lower health-insurance premiums?
n aDela Flores-Brennan: There is no silver bullet on lowering health-insurance premiums. One first step is increasing price transparency across the system so that we know what we are dealing with. The other is finding a way to pay for value (rather than fee
Please see Insurance, page 30
Istock Photo
VOLK
“There are still many things about the health-care system that we need to address that ultimately impact consumer pocketbooks. For example, the way we pay for health care is on a fee-for-service basis that incentivizes the delivery of more care or services. There is a great deal of consolidation happening in the delivery system that increases negotiating power and can keep rates higher. .”Adela Flores-Brennan, Colorado Consumer Health Initiative
n clair VolK: I will give you three steps. Employers can curb, and even lower, the cost of health insurance premiums by implement-ing programs to keep the healthy population well, ensuring those that do need care are receiving the appropriate treatments and proper diagnosis, and giving plan members access to the highest quality care at the best possible price.
Will building new hospitals in areas where existing hospitals don’t run at full capacity increase or decrease cost of services for patients?
n aDela Flores-Brennan: Creating more supply without a demand seems coun-terintuitive and expensive and might incen-tivize higher charges to pay for the construc-tion or unoccupied beds.
n clair VolK: I see no scenario where another hospital in Boulder County will do anything but increase the cost. The cost to build a new facility will have to be paid by someone, those of us that pay insurance pre-miums and/or those of us that pay taxes to fund Medicare and Medicaid. Our problem with health care today is we use more than we need, and when you get to the hospital the
costs are hard to control. Most hospital sys-tems are trying to figure out ways to engage with their community to improve the health of the population with the goal of reducing unnecessary hospitalizations. I’m not sure how adding new beds in a community helps achieve that goal.
Do you agree or disagree that there is unnecessary care being forced on unwitting patients, and tell us why?
n aDela Flores-Brennan: I think there is an imbalance in information and knowledge between patients and provid-ers, and the current system does not support full engagement of patients in a way that helps them understand all of their options or risks and which treatments have the highest degree of success or are the most cost effective.
n clair VolK: In many cases, there is too much unnecessary care being delivered. One reason is the way doctors and hospitals are paid. Currently most are paid a fee for service, which means the more procedures you do, or the more days in the hospital, the more they get paid. The United States provides more CT Scans, MRIs, bypass surgeries, etc., than any other country, yet we find ourselves in the middle of the pack when it comes to life expectancy. Some of the new payment models from the government and insurance
carriers are changing this to incentivize the providers to reduce this unnecessary care.
Another reason for this is that for too long. those of us with regular insurance had little if any incentive to question the cost or need for the procedure being recommended. As long as someone else is paying the bill, why would I care what the total cost was?
This is changing, however, with the advent of higher-deductible plans, which has given the consumer the incentive to now shop for best price and outcomes. It has also forced providers to now be more transparent with their costs and quality.
Doug Storum compiled this report.
Insurance, from 29
Just 16 cents a day. That’s all it takes to get more business-news content than all of the daily newspapers in our region combined.
The BizWest PrintPlus subscription delivers the print newspaper right to your mailbox, access to our latest online content, a replica “Flyp” edition of BizWest, access to our robust online offerings and every one of our annual industry directories, including the Book of Lists — all for just $59.99.
THE BUSINESS JOURNAL OF THE BOULDER VALLEY AND NORTHERN COLORADO
Cents (and sensibility).
Introducing
BizWest
PrintPlus!
“Most hospital systems are trying to figure out ways to engage with their community to improve the health of the population with the goal of reducing unnecessary hospitalizations. I’m not sure how adding new beds in a community helps achieve that goal.”Clair Volk, VolkBell
