Pipeline Averts Financial Crunch

Payson head ranger offers creative way to avoid loss of millions in grants by getting Blue Ridge construction started

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With financial disaster looming, Payson Head Ranger Angie Elam managed to hack through the Gordian knot of Forest Service bureaucracy.

Payson feared it would lose millions of dollars worth of federal grant money when Blue Ridge pipeline project managers learned the U.S. Forest Service rules required detailed engineering plans for the entire $34 million pipeline and water treatment plant before issuing a construction permit.

That endangered the town’s ability to meet the deadlines written into a $10.5 million federal stimulus grant received three years ago and designed to produce jobs quickly at the onset of the recession.

Then Elam hit on a brilliant work around.

She could issue an interim, three-year permit so the town could start building the pipeline up at Washington Park while engineers continued to finalize plans for the $7.5 million water treatment plant adjacent to the Mesa del Caballo subdivision alongside Houston Mesa Road.

“It’s extremely helpful to have someone like Angie who can think outside the box,” said Payson Mayor Kenny Evans of the last-minute save.

Elam noted, “We are working hand in glove with them to get that permit in place. So the way it stands, it’s not looking like the engineering can be done within the time frame we would like to issue the permit. So we’ll be issuing an interim permit to allow them to give us the technical information regarding the pipeline before the full-blown, 30-year permit is issued.”

The shift to an interim permit should allow crews to start digging trenches alongside Houston Mesa Road for the buried, 18-inch pipeline within weeks, she said.

Evans said he hopes construction can begin even sooner, but predictions of quick action have been repeatedly frustrated in the past.

The pipeline and water treatment plant will deliver 3,000 acre-feet of water from the Blue Ridge Reservoir each year, more than doubling Payson’s water supply.

The town spent two decades working doggedly to win rights to the reservoir’s water, which finally resulted two years ago in an act of Congress that required the Salt River Project to hand over to Payson rights to 3,000 acre-feet, with another 500 acre-feet reserved for other, unspecified northern Gila County communities.

The town also landed a federal stimulus grant, which provided about $6 million in grants and nearly $6 million in low-cost loans, with the requirement that the town spend or obligate the money by this summer.

Initially, the town thought the deadline posed little threat as it hired an engineering firm to design the pipeline and paid for consultants to complete some $500,000 worth of environmental studies of the pipeline route and treatment plant location required by the U.S. Forest Service.

The consultants had mostly completed that environmental study in October of 2010, but tackled additional issues raised by the Forest Service that delayed the final report until February of 2011. The consultants concluded the project would have no significant impact on any endangered species or archaeological sites. The Tonto National Forest then spent nearly a year reviewing that conclusion before finally agreeing that the project would have no significant environmental effects.

Payson hoped the approval of the environmental assessment would quickly lead to the issuance of a construction permit based on the final engineering designs for the pipeline and preliminary engineering designs for the water treatment plant.

However, the discovery that Forest Service regulations required final, detailed engineering designs on every aspect of the project before permitting any work to start would have pushed the start of construction well past the deadlines in the separate federal stimulus grants on which the town relied to cover perhaps one-third of the cost of the project.

“We’re working with them,” said Elam. “We have a team put together and everyone is pretty focused.”

The town already spent a big chunk of the federal grant buying 12.5 miles of 18-inch water pipe, which it has had to pay to store in Phoenix for nearly a year. Originally, pipeline managers bought the pipe on the assumption the Forest Service would quickly approve the environmental assessment and issue a construction permit many months ago.

But Elam’s creative intervention means the town can avoid the financial disaster involved in missing the grant deadlines for spending the bulk of the money. The town had already approved a roughly 25 percent increase in water rates to make up for the lack of impact fees as a result of the housing collapse. Loss of the federal grant money could have triggered additional water rate increases.

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