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Dry Gulch: PAWSD Back In Business |
Glenn Walsh | 7/3/08
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“Okay, so we realized that there were severe unintended consequences, and we have made changes and taken care of commercial,” Pagosa Area Water and Sanitation District Board Member Bob Huff stated after last month’s announcement of a new commercial pricing structure.
At that time, to this reporter, the assessment seemed presumptuous.
Huff, and the entire PAWSD board, were responding to widespread complaints about commercial water impact fees, particularly recent fees assessed against two local restaurants proposed for downtown Pagosa Springs. These fees, intended to fund a new reservoir at Dry Gulch, neared $40,000 for a 2200 square foot building on Main Street and $80,000 for a large restaurant intended for Lewis Street, Pagosa’s now-sleepy “Festival Street” soon to receive a $1.1 million makeover (all dressed up but nowhere to go?).
Three weeks later, Huff appears to be on solid ground about commercial water (and much closer to the mark than this reporter’s snapshot assessment).
Shadow recedes from a now-brighter investment opportunity on "Festival Street", with water impact fees on proposed restaurant reduced from almost $80,000 to less than $5000 |
Michelle Tressler, the financial analyst for the water district, presented three changes at last month’s meeting. First, PAWSD would no longer use the decades-old American Water Works Association worksheet to calculate commercial water fees. That sheet, which relies on square footage for many calculations, has led to overestimates of usage — and overcharging — of restaurants and hotels, two critical components of the local economy.
Examples: A restaurant with 100 seats crowded into 1500 square feet using 20-year-old kitchen equipment is charged half the impact fees of a 3000 square-foot eatery with fewer seats, a dance floor and the latest kitchen technology. And a 1200 square foot hotel room with only a shower, sink and toilet is assessed 300% more impact that a 400 square foot room with a private jacuzzi.
Tressler and the Board decided to switch to a precise count of water appliances within a building, whatever its square footage.
Secondly, Tressler announced a series of prices for water pipe sizes which can provide substantial savings if businesses choose water appliances which allow them to use smaller water pipes (and corresponding meters).
Will the convenient parking lot fill with cars and Town coffers fill with sales taxes now that PAWSD has almost eliminated fees for changeovers to medium-sized restaurants?
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The third change which was presented was given little emphasis, but may have emphatic impact on both PAWSD and Town sewer district charges for commercial users. PAWSD has decided to carry over the reassessment of commercial water users into its wastewater impact fee charges. Here, PAWSD is providing immediate, substantial savings which the Town (which still relies on the AWWA worksheet to calculate sewer impact fees) has yet to publicly consider. Indeed, at this Tuesday’s Town Board meeting, substantial wastewater fee increases were discussed, and no fee deferral or low-interest loan program has yet to be announced by the Town for sewer charges.
The cumulative effects of these three changes appear to make a sea change in commercial water charges.
 Consider the two poster children for PAWSD water impact fees noted above. The 2200-square-foot restaurant on Main Street which was assessed a bill nearing $40,000 will likely pay nothing now — zero. And the old Log Park building on Lewis Street which was assessed water impact fees of nearly $80,000 has been given a firm price of $4437.50, almost 95% lower than the fees assessed under the old methodology. (Readers still laboring under the misimpression that realtors don’t work for their money should note that the representative for this property, Robbie Pepper, spent scores of hours to press the case for impact fee reassessment for his clients).
Examples of potential savings for new commercial projects in both the PAWSD water and wastewater districts are impressive:
A 30-room hotel outfitted with standard number of high efficiency water appliances, which might have been assessed total impact fees of $400,000 under the old water/wastewater worksheet, could pay as little as $64,900 for water and wastewater impact fees, little more than $2000 per unit for both water and sewer impacts.
And a large restaurant/nightclub similarly outfitted with high efficiency appliances could see its water impact fees drop from almost $90,000 to $14,678 and its total water and sewer impact fees drop from almost $130,000 to less than $20,000.
PAWSD, which appeared to this reporter to be dragging its heels on commercial reassessment, has apparently been running as fast as it can for the past six weeks.
Tressler adds that she is recommending that fireflow water requirements (water required for potential use by the fire district and/or sprinkler systems) be subtracted from commercial assessments, which will add more subtractions for commercial users.
Taken together, these three changes appear to have accomplished a comprehensive, and remarkably quick (given the extent of the change), overhaul of PAWSD’s entire commercial price structure for both water and wastewater treatment which can:
- Return Pagosa Springs to a competitive commercial impact fee position relative to comparable Western Slope towns
- Provide real incentives for adopting the latest water savings technologies and practices
- More accurately count commercial water demand growth (total demand forecasts could be affected by 10% by this change alone)
- Extend the commercial reductions to wastewater fees, which no PAWSD critic at recent meetings had publicly proposed
A big step, perhaps more fairly characterized as a leap. Perhaps a leap into the dark, of course. Because the financial outlook for large-scale public projects seems to darken each day. The Town’s new wastewater treatment facility, estimated to cost $2.2 million in 2006, may cost over $7 million next year.
Another grim example: Some large steel pipe and bar prices have increased over 600% since Harris Water Engineering’s 2002 cost estimates for a 12,500 acre-foot reservoir were made, and just this week Chinese steel producers accused of dumping have been excluded from the American market, which may save some jobs in Ohio, but won’t help water districts in Colorado.
A few questions come to mind. Could the more modest 10,000 to 12,500 acre-foot reservoir model preferred by some (including this reporter) come with a nearly 35,000 acre-foot price tag?
And, if so, will the positive outcome for commercial customers (and Town and County finances) achieved by the sometimes heated and contentious debate about commercial impact fees provide a new level trust between PAWSD and its critics?
The costs of Dry Gulch Reservoir will not go down because impact fees for commercial users have been decreased. Indeed, the cost for residential users will now become a more challenging and critical question.
Will this new level of trust in the intelligence of everyone involved in the reservoir debate (and trust in the good intentions of almost everyone) allow the formation of a cooperative task force needed to discover whether utility revenue bonds, real estate transfer assessments or some other very-long-term financial tools can spread the costs of whatever reservoir is built at Dry Gulch over the very long life of the project?
And if the staggering costs of a new reservoir cannot be spread over the entire life of the project, can the project have any life in it? |
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