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As Colorado towns come to grips with a coal-free future, the state looks for ways to help

Ideas range from retraining to relocation programs to funding to help towns realize tourism potential.

In 2017, when residents of the Hayden School District debated the merits of building a new pre-k through 12th grade school, little was said about the near certainty that a nearby coal-powered power plant would likely be retired long before the building’s debt was. The Hayden Generating Station pays 57% of property taxes in the district.

“Nobody wanted to talk about it. Now we’re talking about it pretty hard,” says Doug Monger, a life-long resident of Hayden and a Routt County commissioner. “When the power plant goes away, get your checkbooks out.”

Editor’s note: This is the second of two stories on Colorado’s transition from coal. The first installment was published Wednesday.

Smaller districts in and around Hayden will similarly see substantial revenue shortfalls. The West Routt Fire Protection District, for example, gets 62% of its property tax revenues from the power plant. The hospital, library and cemetery districts get 57%.

Such revenue shortfalls are among the many impacts to communities and workers addressed by a draft report issued Aug. 1 by the state’s Just Transition Advisory Committee. A final report is due state legislators on Dec. 31.

Created by a 2019 law, the committee was charged with devising strategies to assist workers and communities impacted by that transition.

The draft recommendations identify precise proposals to help the 2,000 coal miners, railroaders, and power plant workers who have or will likely lose jobs as Colorado shifts from coal-generated electricity to renewables during the next several decades. They’re spread across Colorado from Brush to Pueblo to Paonia. 

One recommendation calls for assisting workers with wage and health differential benefits for three to five years. Depending upon how long they were in the coal-dependent jobs, the workers would get part or all of the difference in reimbursement between the old jobs and new work.

Another provision calls for up to $30,000 in funding for new training or education for dislocated workers. Still another recommendation calls for assistance to workers who choose to relocate more than 50 miles for new work.

COVID-19 complicates potential aid from the revenue-strapped state government but also prospective help from foundations and other sources. As one committee memo notes, new sources of revenue must be developed. Then again, the bulk of coal plants — and all of them in the Hayden-Craig area — will not begin closing until 2025, possibly after the economy has recovered.

The law also specifies that these plans must be local in origin. The state won’t tell a coal-mining community that it must become a place that manufactures, for example, tennis balls. The draft report recommends creation of new tools that could assist new business formation. One recommendation would create a state-wide investment fund focused on investments in coal transition communities.

‘The conversation changed’

In Hayden, Xcel Energy is the operator and primary owner of the power plant. A 2016 filing with state regulators projected one unit closing in 2030 and the second unit in 2036. That was the understanding voters were operating under when they approved the $23 million bond proposal in 2017, by a whisker-thin two-vote margin. 

But that was before prices of renewable electricity had dived, causing Xcel to rethink its options. In December 2018 it announced that it intended to reduce emissions from its power generation in Colorado and other states where it operates 80% by 2030 as compared to 2005 levels.

There had been uncertainty at the time of the 2017 vote, says the town manager, Matthew Mendisco. Xcel’s decarbonization pledge was sobering. “When they made their announcement, that’s when I think the conversation changed,” he says.

State legislators in 2019 made that pledge a legal mandate. Xcel early next year is expected to outline exactly how it will meet that requirement. Closure of the plant will also hit Peabody Energy’s Twentymile Mine, whose primary market is the Hayden plant. Production was already skidding from the mine. The mine is one of the primary employers in Hayden.

school constructionA bond measure to construct new school facilities in Hayden, Colorado was approved when voters thought the area’s coal plant would stay open through 2030.

In Craig, one unit was already scheduled to close by 2025, but in January Tri-State Generation and Transmission, the operator and primary owner, announced closing of the two remaining units by 2030. Also almost certainly to close will be the two coal mines, Trappers and WyoColo, that supply them.

In early March, when the Just Transition Advisory Committee held listening sessions in Craig and Hayden, they heard anger, grief and uncertainty.

“They don’t feel heard by the state Legislature. They know they can’t replace coal jobs, and they don’t see a future for Hayden without coal,” reported Beth Melton, a Routt County commissioner, relaying the comments expressed at her table. Fears of lifestyle loss were mentioned often in a session held in the airport cafeteria near Hayden. The coal-based paychecks allow a reasonable quality of life in smallish, uncongested towns — not poor places, but not places of wealth either. Always there are the mountains and high desert, and sheer canyon walls of ochre, too, the hay meadows and  other manifestations of a pastoral landscape just three or four minutes away.

If there was always an understanding that someday the plants would close, the coal would play out, it always seemed too far into the future to seriously contemplate. Even those with their eyes wide open thought they had 10 to 15 years to figure out a future.

Dinosaurs to the rescue?

In theory, the lost tax base from the coal plant can be offset by increased growth. Hayden has excellent water rights — a valuable commodity in the arid West — capable of serving a population of 4,000 to 5,000. It has real estate costs that should make it an attractive option for those unable to afford housing in the prosperous resort community of Steamboat Springs 25 miles to the east. In reality, Hayden has changed very little in the last 40 years, despite its relative proximity to Steamboat. The population of Hayden was at 1,600 in the late 1970s, only lately growing to 2,200.

In Craig, a town of 9,000 people, some residents can remember life before coal became king. They suggest it wasn’t a bad place then, either.

But even before the announcements of plant closures, the Yampa Valley towns needed to think about diversification, says Jennifer Holloway, director of the Craig Chamber of Commerce.

“It has been our community’s mission to provide electricity, and now it has to shift,” says Holloway. “Every community needs a purpose. We need to have something we work toward.”

Some hope for new manufacturing to replace the manufacture of electrons. But with the closest interstate highway 90 miles away by twisting roads, that appears unlikely.

Tourism offers more hope. Moffat County is only slightly smaller than Connecticut and with a population of 13,000. It’s uncluttered but relatively rich with high-desert attractions. For decades there has been talk about pushing for national park designation for Dinosaur, the national monument about 90 miles west of Craig. Local elected officials refused to endorse the idea for fear that it might adversely impact oil and gas extraction along its perimeter. Now, a coalition of regional governments and river groups is being stitched together for a September summit to address the idea as well as the idea of a field museum in Craig.

The Yampa River, one of the last undammed rivers of the West, flows past Craig and through Dinosaur. Already, it adds a bit of business to Craig, if mostly boaters stop to gas up and grab groceries at the City Market. Perhaps to highlight potential opportunities, Gov. Jared Polis, when traveling through Craig in March to a listening session, stopped by a small manufacturer of rafting gear called Good Vibes. Other ideas involve what has worked for other tourism-based communities; a water park in the Yampa River between the town and the power plant, to challenge the skills of kayakers? And, in time, mountain bike trails on the slopes now being created by draglines at the Trapper Mine?

Improved mass transit, possibly including trains, could better link Craig with the wealth of Steamboat, 42 miles away, and its visitors. Colorado has three other tourist-driven trains. There’s little interest, however, in becoming a bedroom community for Steamboat’s poorly paid service workers. Craig will have enough of its own once the $100,000-a-year-plus-benefits coal jobs are gone.

Others wonder if curriculum at the local Colorado Northwestern Community College can be developed to take advantage of the assets of the region, such as programs in wildlife management or archaeology.  

Then there’s hope for an art gallery on Craig’s main street. Like many small-town downtowns, it lost vibrancy when Walmart arrived at the edge of Craig along with fast-food franchises.

How can the state help?

Altogether, the efforts suggest strategies of creating more attractive communities, creating the sort of place that will draw location-neutral people. 

But to achieve this will require infrastructure — just at a time when budgets are being strangled by the pandemic. The Just Transition committee’s draft report emphasizes this challenge unforeseen by legislative authors of the law. 

“A significant amount of work remains to reach a final Just Transition Plan for Colorado,” says the report. “Most notably, we need to better develop funding options that will be viable given Colorado’s constitutional fiscal limits as well as new budget constraints in the wake of the covid-19 pandemic.”

Since March, when the committee was in Craig to take testimony, for-sale signs have popped up in front of houses. Craig has been drawing people interested in fleeing the Denver metropolitan area. Unlike Colorado’s mountain towns, you can buy a house in the Yampa Valley for $200,000 to $300,000. 

Taxing districts face huge gaps as the coal properties recede. In Routt County, the Twentymile Mine and the Hayden plant together deliver 2.3% of the county budget at the courthouse in Steamboat Springs. Farther west in Craig, taxes on the two coal mines and the power plant deliver 11.3% of revenues for Moffat County’s budget.

Beth Melton, a Routt County commissioner, speaks in March as Just Transmission Advisory Committee vice chair Ray Beck, left, and Dennis Dougherty, chair, look on. Beck is a Moffat County commissioner and Dougherty is executive director of the Colorado AFL-CIIO.

School districts will have layered effects. Colorado seeks to equalize funding for students across the state, so that in theory a student in the poorest school districts gets an equal opportunity with that in the richest. Coal assets today deliver 46% of the budget for the Hayden School District and 20.5% of the budget to Moffat County schools.

But there are other impacts, explains John Wall, the finance director for Moffat County schools. A diminished tax base reduces the district’s ability to borrow money to repair the aging schools, the newest of which is 40 years old, about the same age as the coal plants.

Colorado communities must look at their assets when seeking economic development, says Paul Majors, chief executive of the Telluride Foundation, and a member of the Just Transition committee. Northwestern Colorado’s rugged beauty, he suggests, lies at the top of the list.

The Just Transition committee proposes aid to the coal-impacted communities for co-work spaces, business accelerators and other initiatives. The lengthy draft report also identifies the need for new state-sanctioned tools that provide a funnel for capital investments. Legislation will help, says Majors. It will signal to investors that the state is all in, they want this to happen, they’re supportive.”

‘More work to be done’

The intent of the Just Transition effort is not to replace lost revenue, although that could be part of the assistance. Rather, it is to help communities craft new ways to generate revenue. But the committee also recommends study of how to overhaul Colorado’s tax structure, to see if constitutional requirements actually impair the ability of local jurisdictions to plan for ways to strengthen and diversify their economies.

Colorado is not known as a coal state in the same way as Wyoming or West Virginia are. But coal had been central to the economy of the Yampa Valley for the last 50 years. Because of that dependence and its relative isolation, it stands out as among the nation’s most interesting places to see how it transitions to life beyond carbon.

Kelli Roemer, a human geographer working on a dissertation at Montana State University, focusing on Colorado, Montana and Washington state, observes that Colorado stands out because of its attempt to provide planning tools. Montana and Wyoming, two states even more dependent on coal, have made no similar effort at planning.

Colorado has potential to become a model for other coal-dependent states, says Mark Haggerty, an economic geographer associated with the Headwaters Economics, a Montana-based think tank and an advisor on Colorado’s effort. “Discussions and draft recommendations are headed in the right direction, but there is more work to be done, and ultimately the model taking shape will need support from the Legislature and the governor.”

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