Sun Communities wants to take over water operations in Granby’s West Service Area.

Tuesday was just the beginning of discussions between Sun and the Granby Board of Trustees on a privatization proposal that would have lasting effects for the town. The board made no decisions, but further discussions lie ahead.

The West Service Area currently serves River Run RV Resort and Smith Creek Crossing, which are both owned by Sun. This service area could one day expand above the upper Colorado River if it were to be developed.

Senior vice president of development for Sun, Bill Raffoul, presented the company’s proposal to the town board.

Sun purchased the Shorefox parcels from the town in 2017. During development agreements, the company considered whether it wanted a privately owned water treatment facility or a municipal facility, Raffoul said.

It was ultimately decided that Sun would construct and convey the facility to Granby, which Sun has not yet done.

According to the presentation, Sun has invested more than $16 million into the West Service Area facility.

In 2019, the water service agreement was amended to provide an interconnect that Granby could use to supply backup water for the North Service Area, which serves the town north of the Fraser River and Granby Bridge.

The issue, according to Raffoul, comes from the rate study recently conducted on the West Service Area, which trustees also discussed Tuesday night. While Sun had budgeted for costs similar to what other areas in town pay, the actual rates look to be much higher.

Determined through a calculation on associated costs, number of users and expected usage, the study found the 2021 rate would be $31.80 per 1,000 gallons. For comparison, Sun calculated the implied rate, including the facility charge, for the North Service Area to be $9.38 per 1,000 gallons.

While the study projects growth in water usage that would bring the rates down to comparable levels over the next few years, Sun believes the demand will be much lower and the rate will remain high.

Raffoul pitched privatization of the water service as a win-win for the developer and the town, saying the move would give Sun the most cost effective solution for operating the facility while also eliminating the financial and operational risk for Granby.

Sun promised the company would continue to provide backup water service to the North Service Area per the agreement, as well as offer service to new users in the west if future development occurred.

The company has experience with operations of private water treatment facilities at 49 locations in the US, including one in Larkspur, according to Raffoul. Sun said it uses a licensed third party operator and plans to have an engineer on site in case of emergencies.

However, the board was hesitant about what this privatization would mean for citizens in Smith Creek Crossing, the mobile home park owned by Sun. While Raffoul insisted that Sun has no intention of making money from the water service, Town Manager Ted Cherry proposed a yearly audit to ensure fair rates.

Cherry also explained a question related to the town’s ability to enforce agreements. In Sun’s proposal, the company would own the service area, so if Sun were to stop paying its bills or provide subpar service, the town couldn’t shut off the water to ensure compliance. Some sort of accountability measure for Sun would likely need to be a part of any agreement.

Trustee Natascha O’Flaherty emphasized her hesitancy to accept developers’ promises at face value after lofty ideas were left unfinished or poorly done in Granby, including by Sun’s predecessor, Shorefox, which abandoned the property after the 2008 recession.

Raffoul explained that Sun is a publicly traded real estate investment trust with an enhanced ability to raise capital compared to many other developers and a financial interest in seeing its new investment succeed.

Another concern was water rights, which the town still owns a number of in the area. Sun’s counsel said the company was willing to approach water rights however the town preferred, but those details would need to be hashed out as well.

Following extensive discussions, trustees agreed there was a lot to contemplate. Cherry said he would come back to the board with an outline of the various ways this system could work to further discussions.

In other business:

• Also related to the West Service Area, trustees decided to continue charging Sun a daily $500 fee that began Feb. 28 when the developer failed to file for initial acceptance of the water treatment facility. While Sun previously agreed to those terms, the developer asked if the town might reconsider with the turnover proposal on the table.

Most trustees felt it necessary to enforce the current agreement, though waiving the fees could be revisited if the privatization effort moves forward.

• The board briefly discussed the police chief vacancy. Jonathan Stark has been serving as interim chief since January. While trustees felt that Stark has done a good job in the role, they agreed that opening the position to other applicants would be best for the town. More information on that process will be forthcoming.

• The board heard an update about the Granby Station development, which hit a hiccup with the land it had hoped to lease from the railroad station for parking. The Granby Station plat might change to a reduced density to account for fewer parking spots. Such a change would come back to trustees for approval.

• Trustees reappointed Mayor Josh Hardy, Thomas Marquardt, Geoff Jurgensen, Casey Farrell and John Young to the planning commission and added Trustee Kristie DeLay and Carin Aichele as well.

• The board approved an agreement with GP Granby Holdings that releases $190,000 in bonds for repairs on certain roads in Granby Ranch.