Las Campanas, the luxury subdivision developed northwest of Santa Fe with its own water rights, would become a county water customer under a proposal being vetted by county and city officials.

Citing financial difficulty, the development has been looking for a way to back out of plans to build its own treatment plant for water from a Rio Grande diversion project now under construction.

The city, county and Las Campanas partnered to build the Buckman Direct Diversion project, which broke ground last year. Earlier this month, however, the Santa Fe County Commission discussed details of how it could sell nearly 650 acre-feet a year to the subdivision if the city and county allow Las Campanas to change its role in the project.

The deal would require the county to set a wholesale water rate with a single water meter for supplying the development's water cooperative. Individual household billing within the gated community would be the responsibility of the co-op, as would setting rates for what residents pay. Water rights equaling the amount to be consumed would be transferred from Las Campanas to the county.

Among issues likely to emerge in the discussion is the fact that Las Campanas irrigates two golf courses, which require about 600 acre-feet a year.

But Greg Gates, an engineer with CH2M Hill on contract for Las Campanas, said the golf course is a "separate entity" from the co-op, which is made up of "residents who are running their own water system."

The golf course is watered with a combination of effluent from the development's own wastewater-treatment plant, effluent piped in from the city's wastewater-treatment plant and about 15 percent potable water from the city water system.

By the year 2040, Gates said, developers expect residents in the still-unfinished subdivision will be using enough water that their private treatment plant will solely provide water for the golf course.

The development now gets most of its potable water as a wholesale customer of the city water system, tapping into a pipeline that carries water into town from the city's Buckman Well field near the Rio Grande. However, a legal settlement agreement calls for that practice to end in the future.

County staff and Las Campanas analysts say the latest proposal would be beneficial for the county's existing water customers.

It would offset county spending for the Rio Grande diversion project by about $14.5 million and stall or stunt future rate increases for other customers of the county water system.

"I don't see any particular downside to it," Gates told the County Commission earlier this month.

Las Campanas co-op water rates are comparable to rates charged by the city water utility and include a tiered structure that includes penalties for excessive use. Co-op general manager Mike Sanderson said the co-op's rates recently were increased and are designed to encourage conservation.

Customers pay a monthly fee of $16.25 plus $4.48 per 1,000 gallons up to 5,000 gallons, and as much as $14 per 1,000 gallons if they use over 10,000 gallons per month.

Surcharges kick in if users exceed the amount of water allowed for their lot's size, adding up to $60 per 1,000 gallons to a monthly bill.

"Ours are a lot steeper than the city," said Sanderson, who noted that most co-op members stay within their water limit. "It's trying to get the point across that you've got to stay within your allocation."

By comparison, the county charges a monthly fee of
$14.50 plus $5.32 per 1,000 gallons.

City residents pay a
$13 monthly fee plus $4.45 per 1,000 gallons. Each jurisdiction charges an increased rate per 1,000 gallons as volume increases. City rates are about to go higher, increasing by
8.2 percent for each of the next four years.

Las Campanas is facing hardships from recent housing market changes. The common areas in the subdivision — including the golf courses and country club — as well as unsold lots are under the direction of a management team appointed by its finance company, Bank of Scotland.

County Attorney Stephen Ross said the county might want to consider providing the water as a way to protect Las Campanas residents.

"There is a possibility — a probability perhaps even — that (Las Campanas Limited Partnership) will bankrupt or default ... and then the residents are left to fend for themselves. We did not see that as a desirable option, although it is certainly the least-cost scenario to the county," Ross told county commissioners earlier this month.

The next step in consideration of the plan, scheduled for July 9, is for city and county officials who sit on the board of the diversion project to talk about whether the project's design can accommodate such a change for Las Campanas. A preliminary analysis indicates the idea is possible, said Kyle Harwood, an attorney for the joint city/county diversion board.

There are, however, several unknowns, he said.

"The plumbing and the technical issues are the first thing," Harwood said. "So, once we discover that it's possible as an engineering matter, we need to figure out if it's something the officials want done."

Las Campanas' share of the $215 million diversion infrastructure is estimated at about $13 million, and it has already paid about $2 million toward its obligations. The city and county are set to split the costs not paid by Las Campanas. The project is expected to be fully functioning in 2011.

Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.