Serving members of Cripple Creek Mountain Estates
The short answer: All members share in the water rights of the company. This is the fee that preserves your rights to water.
The long answer (and more complete explanation):
The construction, maintenance, and operation of a central water system for a remote, sparsely-populated mountain subdivision such as CCME would have been impossible without some charge to owners of CCME's vacant lots. In 1983, for example, MMWC reportedly provided water to only about 60 different customers. Yet MMWC incurred over $150,000 in inflation-adjusted operating expenses that year. If those users were expected to bear the full cost of MMWC's operating expenses, MMWC would have had to bill them $2600/year (inflation-adjusted). It might have been cheaper for those customers to truck water to their cisterns than to pay $2600/year. Obviously, to make a central water system available to the subdivision, availability customers had to bear some of the costs. Today, MMWC provides water to over 340 taps. And today, these user customers now bear over 50% of MMWC's operating expenses. Availability customers are still subsidizing user customers, but to a smaller extent than in the past. MMWC has the potential of providing water to as many as 1300 customers. As CCME's user population grows, users will bear an ever-increasing portion of MMWC's operating expenses.
Availability customers benefit in three ways. First, it gives them a right to tap into MMWC's water distribution system and thereby obtain water and water service. Second, availability customers are currently charged only $1,500 to connect to MMWC's distribution lines. This is considerably less than the tap fees that most water companies and districts in Teller County charge (tap fees typically range from $10,000-$16,000 in Teller County). Third, the availability of a central water system increases the market value of most members' lots. The cost of drilling a well in our subdivision is not small, so not having to install a well and maintain it is a significant benefit.
No. Among other legal impediments, Article 2.1(f) of the Amended and Consolidated Declaration of Protective Covenants and Building Restrictions, Cripple Creek Mountain Estates, dated April 26, 2005, provide that "[n]o individual water supply system shall be constructed or allowed in the Subdivision. Water will be provided and distributed in accordance with the Articles of Incorporation and By-laws of the authorized mutual water company (the 'Water Company'). Each lot owner shall connect to this service and pay monthly water bills, assessments, or dues, if any, necessary for the continuing operation, repair and maintenance of said system."
There are several very practical reasons for MMWC and Cripple Creek Mountain Estates Property Owners Association (CCMEPOA) not to merge into a common entity. These reasons involve a rather lengthy discussion as follows:
For example, it would be unfortunate, in the aftermath of a lawsuit involving the POA, for the community that the POA serves to have their water distribution system seized to satisfy a judgment debt. There are also some special circumstances, peculiar to Colorado statutory law, for keeping the entities separate.
Mountain Mutual Water Company is a “special purpose corporation” under Colorado law. The Colorado Revised Statutes have specific provisions for different classes of “special purpose” corporations, including, for example, “telegraph companies” (Title 7, Art. 41), “ditch and reservoir companies (Title 7, Art. 42), and “toll road companies,” (Title 7, Art. 45). As a mutual ditch company, MMWC is not organized under the general Colorado corporation statutes, but under special legislation for ditch and reservoir companies.
MMWC’s status as a mutual “ditch and reservoir” company confers a number of quasi-governmental advantages. First, the status confers certain water rights and rights-of-way to MMWC. See C.R.S. § 7-142-103. Second, the status gives its members an equitable right to a pro rata share of the water rights for which MMWC holds legal title. See Jacobucci v. District Court, 541 P.2d 667 (Colo. 1975). Moreover, those water rights are effectively “judgment proof” in any action against MMWC. See Millers Mutual Insurance Assoc. v. Grace, Civil Action No. 82-JM-1517 (D.Colo.), Memorandum and Order dated June 20, 1983. Third, the status gives MMWC considerable power with respect to assessments. The status empowers MMWC to levy assessments on its members to keep its system in good repair; gives MMWC a perpetual lien on memberships for all unpaid assessments; and authorizes MMWC to sue, deny service to, and/or cause a sale or forfeiture of the membership rights of a delinquent member. See C.R.S. § 7-142-104. Fourth, it allows MMWC to specify the manner in which memberships may be transferred. See C.R.S. § 7-142-104(4).
Assuming that it is even possible to merge MMWC and CCMEPOA, the merged ntity would not constitute a mutual “ditch and reservoir” company. Under C.R.S. § 7-42-101, a “ditch and reservoir” company must be formed “for the purpose of constructing a ditch, reservoir, pipeline, or any part thereof to convey water from any natural or artificial stream, channel, or source whatever to any mines, mills, or lands or for storing the same….”. The Colorado Supreme Court has observed that mutual ditch companies are “organized solely for the convenience of its members in the management of the irrigation and reservoir systems.” See Jacobucci v. District Court, 189 Colo. 380, 541 P.2d 667, 672 (1975). Furthermore, they are “formed expressly for the purpose of furnishing water to shareholders, not for profit or hire.” Id. at 671.
Because a merged water & POA entity would not be organized “solely” for the management of a water delivery system, it would not qualify as a “ditch and reservoir company.” Therefore, the merged entity would forfeit the benefits that Colorado state law confers on “ditch and reservoir” companies.
MMWC could also forfeit some tax advantages. According to Art. X, Sec. 3 of the Colorado Constitution, "[d]itches, canals and flumes owned and used by individuals or corporations for irrigating land owned by such individuals or corporations, or the individual members thereof, shall not be separately taxed so long as they shall be owned and used exclusively for such purposes.". The merged entity would also be subject to a different – and potentially stricter – set of requirements in order to obtain exemption from federal income taxes. See 26 U.S.C. § 501(c)(12).
Furthermore, it may be legally and/or practically impossible for CCMEPOA to merge with MMWC. The members of MMWC – and not MMWC – own the water, along with the rights to it, that is conveyed by MMWC’s distribution facilities. MMWC could not transfer these rights to CCMEPOA.
In any event, a merger of MMWC and CCMEPOA would be inadvisable. CCMEPOA exists to maintain, preserve, and architecturally control the residence lots and common areas within CCME -- and thereby maintain and improve CCME residents' quality of life. MMWC exists to serve a more fundamental necessity – water. The loss of potable water would severely disrupt the lives of MMWC customers. To ensure a continued supply of potable water to its customers, MMWC regularly addresses complex water rights, water transmission and distribution, and water quality issues that require a considerable amount of serious attention. Securing the continued delivery of potable water to its customers merits the undivided attention of MMWC’s employees and directors.
MMWC's authority comes from multiple sources. Mountain Mutual Water Company is a mutual ditch company. C.R.S. § 7-42-104 authorizes ditch companies to make assessments on its shareholders (members) for the purpose of keeping the property of the corporation in good repair. That section also grants such corporations "a perpetual lien upon such shares of stock and the water rights represented by the same for any and all such assessments until the same are fully paid."
Moreover, the Colorado Supreme Court has held that "[b]y becoming a stockholder," a member, "by implication, enter[s] into a contract with the company to pay all assessments upon his stock, levied pursuant to the governing statute and by-laws of the company, of which by-laws appellant will be presumed to have had notice." Callahan v. Chilcott Ditch Co., 86 P. 123, 124, 37 Colo. 331, 334-335 (Colo. 1906).
Furthermore, Article 2.1(f) of the Amended and Consolidated Declaration of Protective Covenants and Building Restrictions, Cripple Creek Mountain Estates, dated April 26, 2005, provide that "[w]ater will be provided and distributed in accordance with the Articles of Incorporation and By-laws of the authorized mutual water company (the 'Water Company'). Each lot owner shall connect to this service and pay monthly water bills, assessments, or dues, if any, necessary for the continuing operation, repair and maintenance of said system."
No. Article 2.1(f) of the Amended and Consolidated Declaration of Protective Covenants and Building Restrictions, Cripple Creek Mountain Estates, dated April 26, 2005, provide that MMWC is to be the only supplier of water to homes in the subdivision. Therefore, it is a violation to have water placed into a cistern that was not provided by MMWC either by its distribution system or by its own truck delivery service.
Additionally, there is no assurance that the water from an outside source is not contaminated or meets the quality the MMWC reports to the State of Colorado. In the event the backflow preventer of the user has failed, it is possible that contaminated water could enter the MMWC water system placing other water users at risk.
MMWC's Regulations provide that "[t]he repair to any portion of the water line from the main line to the property shall be the responsibility of the property owner after connection to the water main. Repairs and replacement of the valve/meter/meter box shall be the Water Company's responsibility, except that any repairs made necessary as a result of property owner's negligence or misuse shall be chargeable to that owner." Likewise, Article 2.1(f) of the Amended and Consolidated Declaration of Protective Covenants and Building Restrictions, Cripple Creek Mountain Estates, dated April 26, 2005, provide that "[e]ach lot owner shall maintain, at the owner's expense, the water piping to the point of connection with the Water Company."
When you submit plans to the Cripple Creek Mountain Estates Property Owner's Association, it will need to show the location of the cistern. It will be reviewed by MMWC for approval of location and other requirements. The requirements for the cistern can be obtained from the MMWC office; they can be found for download from this website here. Once the cistern is installed, MMWC will inspect it for compliance, and if found to be in compliance with its standards, MMWC will make connections to the distribution system.
Colorado law allows rainwater collection on a limited basis. Single-family residences can collect it only in containers not exceeding 110 gallons in total. You can only use the water for outdoor uses (irrigation, etc.) It cannot be used for drinking or domestic uses. For a complete discussion of rainwater collection, visit the Colorado State Extension Service website. This discussion comprehensively covers the regulatory and health aspects of rainwater collection and gives good guidance on installing and using rainbarrels. Unless rainwater is diverted into a user's cistern or domestic water system, either willfully or inadvertently, MMWC has no authority to regulate rainwater collection.