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Cost To Flush Going Through the Roof? |
Glenn Walsh | 8/4/08
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The Town Council will consider approval of a proposed 67percent increase in monthly wastewater bills at this Tuesday’s monthly meeting, which convenes at 5pm at Town Hall.
More accurately, the Council will ratify the increase, which is required by the Colorado Water Resources and Power Development Authority (CWRPDA). The CWRPDA has made the increase a requirement for the $2 million loan it has offered the Town for the construction of a new wastewater facility on the site of the Town’s aging treatment lagoons.
The terms offered are attractive: 20 years at a rate of 1.857 percent.
 The price tag for the new waste treatment facility became less attractive this month. In June, Sanitation Department head Phil Starks warned the Council “If the wastewater treatment plant does come in much higher, then the debt service will be much higher — then the rates will be much higher.”
The treatment plant came in $1 million higher two weeks ago.
Preliminary estimates from project engineers were hiked from $4.3 million to $5.3 million two weeks ago. And this $5.3 million estimate is very tentative. The new wastewater plant in Bayfield, similar in design to the Pagosa plant but only two-thirds the size, began construction last week and is now expected to cost $7.1 million.
So, that debt service will rise at least $500,000 if the Town receives an additional $500,000 loan from the Department of Local Affairs.
Interim Town Manager Tamra Allen characterized the 33 percent increase recommended last month by the Town’s consultant, Red Oak Consultants, as “fairly dramatic” at the July meeting of the Sanitation District.
That 33 percent increase was based on assumptions from a Red Oak rate survey for 2008-2012 which relies on growth assumptions which no longer are valid:
That rate and fee survey:
- Assumed growth of 6 percent in 2008 and 3 percent annually through 2012. ( Last year's growth rate was 6 taps total, or 0.4 percent)
- Assumed a plant cost of $4.3 million, with construction beginning in 2008
- Assumed no property tax increase (either receipts or rates) until 2012
- Assumed tap fee collections of $1.26 million from 2008-2012 (Town received $25,000 in tap fees last year)
Reactions to these doubled hikes required by CWRPDA may be more dramatic, if not fairly operatic.
Councilor Darrel Cotton did not find the numbers palatable last month. “These numbers are kind of ugly. We accelerate for the next two years and we are up 30 percent in two years. ... People can’t afford this.”
There are added costs to digest, as well. The Town is required to pay off $162,000 outstanding on a loan it received from the CWRPDA in 2002, and to budget $200,000 to decommission the aging lagoons, adding nearly $400,000 to cost of financing the new mechanical facility. (Note: A local financial professional with far more acumen that I advises that, strictly speaking, paying off an existing loan will not contribute any additional cost — but it does add to the difficulty of arranging financing without completely exhausting the Sanitation District's $148,000 reserve. )
While “67 percent” makes an eye-catching headline, for residential customers, the price increase amounts to 50 cents per day. For this reporter, the ability of the Town Sanitation District or PAWSD to collect all of my family’s kitchen and bathroom waste, treat it and return it to the San Juan River basin ready to be further treated into drinking water for downstream users for one dollar per day is an impressive engineering and governmental accomplishment.
For Town commercial health, there is clear uncertainty. Given the dramatic reduction the Pagosa Area Water and Sanitation District has recently introduced for both commercial water and commercial wastewater impact fees and rates, the Town Sanitation District may find itself unable to compete with PAWSD for commercial projects. Commercial projects comprise less than one-fifth of PAWSD wastewater operations, but almost one-half of Town Sanitation District customers.
Compare the wastewater impact fees for a new 4000 square foot restaurant in the PAWSD wastewater district and the Town Sanitation district. PAWSD under its new methodology might charge the restaurant, if it adopts conservation technologies, less than $5,000 in impact fees, and almost certainly less than $8,000.
The Town's sewer tap fee rates suggest the same project, inside the Town limits, would be charged $44,000.
Monthly wastewater rates for that restaurant in the PAWSD district would be less than $60, while the new monthly rate for this restaurant in the Town Sanitation District would be $375 per month.
Does this make it very appetizing for an investor to open a new restaurant downtown on Lewis Street — the new million-dollar “Festival Street” — if he or she must pay impact fees and monthly rates almost 1000% higher than those charged in the PAWSD district where your restaurant might be closer to 75 percent of the County’s population?
And what if the Town's new waster treatment facility should, in fact, cost $7 million or more? Would monthly fees near $50 per tap, and plant investment fees top $6,000?
If the Town does not adopt the PAWSD commercial schedule, wastewater impact fees for this large restaurant could approach $60,000, and monthly rates could top $500. Note that the Town’s emergency response to the local recession — mitigating impact fees by offering a 10-year 3.5 percent payment plan — has not yet been extended for sewer impact fees.
There will be very closely related agenda items considered at Tuesday’s Town Council meeting as well:
- The Town Council will consider approval annexations of 63 new properties into the Sanitation District. The Town charges no inclusion fee at present. The inclusion of 63 new properties into the PAWSD district would generate $177,000 in fees.
- The Council is considering approval of a pre-annexation agreement with the developers of Blue Sky Ranch which will allow the development to form its own water district but disallow it from creating a wastewater district, sending 2000 taps worth of fees (and feces) into the Town’s new facility over the next thirty years.
- The Council will consider a sewer line extension agreement to provide sewer services to the 41-unit Hickory Ridge affordable housing complex. At the July meeting, the Council agreed to charge the low-income facility only $50,000 in sewer impact fees. A same-sized for-profit project would be charged $180,000 in sewer impact fees this month.
There are no similarly-sized commercial projects on the Council agenda this month. |
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