Organizational Structure/Contracting

Organizational challenges may exist for some utilities or water companies due to various factors, including:

  • Limitations in options to fund capital improvements;
  • Limitations in retaining qualified system operators and related staff;
  • Lack of resources to maintain reliable supply system and/or comply with relevant and applicable regulations; or
  • Lack of control over the implementation of strategic initiatives. 

Therefore, for some organizations, a change in the organizational structure or means by which services are provided/contracted may be viable option worth assessment such that long-term sustainability of service to a utility’s customers is not compromised.

Change of Organizational Structure – Although many water organizations have no control over their organizational structure, or may be unable to change their structure, some water providers may have options.  Options may include:

Since 1990, water privatization, which relates to turning over some or all of the assets of a public system to a private company, has been growing rapidly throughout the world and some in North America. Although privatization can be beneficial in some circumstances, it is important that, at the very least, government oversight is maintained to protect the public interest.  There is a growing body of resources to leverage to understand the pros and cons of privatization (called a public-private partnership (PPP)).

The three most common forms of PPPs, in the order of increasing responsibilities for the private partner, are:

  • A management contract, under which the private operator is only responsible for running the system, in exchange for a fee that is to some extent performance-related. Investment is financed and carried out by the public sector. The duration is typically 4–7 years.
  • A lease contract, under which assets are leased to the private operator who receives a share of revenues. He thus typically bears a higher commercial risk than under a management contract. Investment is fully or mostly financed and carried out by the public sector. The duration is typically 10–15 years.
  • A mixed-ownership company in which a private investor takes a minority share in a water company with full management responsibility vested in the private partner.

A concession, under which the private operator is responsible for running the entire system. Investment is mostly or fully financed and carried out by the private operator. The duration is typically 20–30 years.

Regionalization may involve two common configurations including:

  • Creating a new organization that inherits the assets of two previously independent organizations
  • Merging an existing organization into another organization such that only one organization survives (e.g., City of La Junta and Homestead)
  • Creating a new organization that facilitates and coordinates the sharing of resources between ongoing water organizations providing funding for assets that create redundancies, interconnects and bring new supplies.  Ownership of new assets may be locally held and/or held by the regional organization, who may charge a use fee. (e.g., South Metro Water Supply Authority, Douglas County)


A water company or special district could become an incorporated municipality (e.g., Castle Pines North, Douglas County).  This action requires legal assistance and an act of voters in the area that would be affected.

Special Districts in Colorado are local governments, i.e., political subdivisions of the state, which make up a third level of government in the United States. (The federal and state governments are the other two levels.) Local governments include counties, municipalities (cities and towns), school districts, and other types of government entities such as "authorities" and "special districts.”  Colorado law limits the types of services that county governments can provide to residents. Districts are created to fill the gaps that may exist in the services counties provide and the services the residents may desire. The majority of districts draw their boundaries in unincorporated county land, but residents of a municipality may be included in one or more districts.  As political subdivisions of the State of Colorado, special districts are required to submit a number of required filings to various state agencies throughout the year. These filings are primarily financial, but also include election results, lists of boards of directors, and others.


Changing an organization’s structure requires legal advice and counsel, as well as deliberate interactions with local, state and federal regulatory agencies.

Contact the District for guidance if you and your organization wish to evaluate potential options.


Colorado Energy Office Energy Performance Contracting

Pacific Institute Study on Privatizaation

Department of Local Affairs Information on Special Districts

Information on the Super Ditch Organization

Information on History of Incorporation of the City of Castle Pines