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Of wastewater plants, user rates and loans

Although the Pagosa Springs Sanitation General Improvement District (PSSGID) has decided to not pursue the construction of a new wastewater treatment plant, customer rates raised for the construction of that plant will continue to remain high — 150-percent higher than the state average.

Sewer rates were raised nearly 67 percent in July 2008 from $22.50 to $37.50 a month. Additionally, Equivalent Residential Tap (ERT) fees rose from $3,750 to $4,400 per ERT — an increase of 17.3 percent.

The rate increase was a stipulation for securing a $1.5 million loan from the Colorado Water Resources and Power Development Authority (CWRPDA). Due to funding shortfalls plaguing the project, the CWRPDA demanded the rate increases as a condition for taking out the loan.

In 2006, the Colorado Department of Public Health and Environment (CDPHE) directed the PSSGID to look for options to improve the current lagoon system. In the process of phasing out obsolete lagoon-type wastewater treatment systems statewide in favor of more modern mechanical wastewater treatment systems, the CDPHE pressed the PSSGID to begin looking into building a new system.

The problem with the current treatment plant is twofold: the system in place occasionally exceeds ammonia levels in its discharge during the winter months, and also risks hydraulic problems and violations during the spring when snow runoff can overload the system. In fact, the PSSGID has violated CDPHE effluent standards on several occasions, adding to CDPHE pressure to build a new facility.

A funding shortfall and construction bids well above the estimated costs for the plant stymied the PSSGID’s pursuit of building a new facility. Talks with the USDA last May and June for $9 million funding combination of loans and grants fell through when the PSSGID board balked at paying $100,000 for additional engineering needed to meet requirements for the USDA funding application.

Instead, the board decided during its July 7 meeting to fund additional studies that could ostensibly lead to a revision of current guidelines for effluent discharge. Current allowable levels (averaged over several years, including the drought year of 2002) have been set, at what the board believes, are levels uncharacteristic of the San Juan river. The board hopes a revised study would allow the current plant to pump higher levels of effluent discharge into the river.

It is that study, with results pending spring 2010, that is the linchpin of PSSGID plans for wastewater treatment — and the rationale for holding onto the CWRPDA loan. According to Pagosa Springs Town Manager David Mitchem, the PSSGID will attempt to retain the CWRPDA loan in case study results will not allow the town to avoid building a new wastewater treatment plant.

When asked if the PSSGID was still looking at constructing a new wastewater facility, Mitchem replied, “We’re looking at options at this point.”

Furthermore, when asked if the PSSGID board would return the CWRPDA loan, Mitchem said, “If the Water and Power Authority (CWRPDA) permitted the town to hold onto that loan, that money is in place if we need to build a new plant.”

In fact, with the board having decided to not pursue the construction of a new plant, the CWRPDA has made it clear that it wants the loan money back, to disburse to municipalities who are looking to build their own wastewater treatment plants — a situation that Mitchem acknowledges.

For PSSGID customers, it is the board’s desire to hold onto the loan that is keeping — and will potentially continue to keep — sewer rates considerably higher than what is being paid by the average Colorado resident.

When asked if rates would be lowered to previous levels, Mitchem replied, “I suspect we would want to,” but added, “It has not been addressed at a policy level, as of yet.”

Furthermore, since the rate hike was predicated on the pending construction of a wastewater treatment plant for which the CWRPDA loan was taken out, and since PSSGID board has rejected the construction of that plant, Mitchem was asked if the balance of sewer fees, paid since the rate hike, would be refunded to PSSGID customers.

Mitchem said, “I don’t know.”

According to figures provided by the town, sewer fees billed during the first two quarters of 2008 (prior to the rate hike), amounted to $183,937.50 while fees billed during the last two quarters came to $313,762.50 — a 58.6-percent increase. There was $472,725 billed to PSSGID customers for the first three quarters of 2009.

While the board does not appear positioned to lower customer rates or refund money taken from customers based on the assumption of the construction of a new plant, it has been generous to developers, having waived Plant Investment Fees for developers (good through 2010, with a 50-percent waiver through 2011), while continuing to collect increased fees from existing customers.

That point was brought home at the Sept. 1 PSSGID board meeting when PSSGID Supervisor Phil Starks reported that the Socorro Senior Living Center had $44,000 in Plant Investment Fees waived. Furthermore, it was reported that builders for Socorro opted to use subcontractors from Bayfield and purchased materials from outside the county.

Although it was later confirmed that Socorro did not qualify for the fee waiver (permits were drawn well before the July 1 start date), it illustrated to the board that fee waivers for developers, without contingencies for local hiring and purchases, were not necessarily providing for the economic benefit of the town.

All said, the PSSGID does not appear to be in a financial situation that would suggest lowering or refunding customer fees. As reported last week in The SUN, the PSSGID owed $75,000 in interest on a Department of Local Affairs (DOLA) loan taken out to fund a wastewater treatment plant. As with the CWRPDA loan, the board did not return that loan even after it was clear in early July the board had no intention of proceeding with the construction of a plant.

Finally, if the study in spring 2010 does not yield results to satisfy CDPHE requirements, PSSGID could find itself in a deeper financial hole. Looking no farther than Bayfield, CDPHE levied $150,000 in fines for continued water quality violations. Furthermore, CDPHE imposed a building moratorium on the town of Bayfield in April 2006 for its continued water quality violations, a situation that would make fee waivers for developers a moot point.

How the PSSGID board will decide on a new plant will most likely not be known until spring 2010. However, what will be on the mind of most customers is whether or not rates will come down, or if a refund of higher rates could be forthcoming.

The PSSGID meets again Thursday, Sept. 17, at noon in Town Hall.

jim@pagosasun.com