The Pagosa Area Water and Sanitation District (PAWSD) Board of Directors heard a first-quarter financial report and discussed potential budgetary issues at its May 14 meeting.
PAWSD Comptroller Jack Dossett presented the report, explaining that this was his first quarter of analyzing the budget and noting that, before he presented concerns, he wanted to note $21,000 in safety reimbursements from the district’s insurance company to help improve safety for staff.
He also noted that staff are aware that fuel and other utility costs are rising, which will be reflected across all funds.
However, Dossett noted that his “real issue” for the district’s water and wastewater funds is that capital investment fee (CIF) revenues are tracking behind last year’s incomes, which already failed to hit the revenue targets PAWSD had set.
He explained that the district’s revenues from the two funds came in at $628,000 less than the budgeted revenues in 2025, which were $1 million for water CIFs and $1.25 million for wastewater CIFs.
CIF income for the water fund was approximately $763,000 in 2025, while CIF income for the wastewater fund was approximately $859,000.
Dossett added that the district budgeted for $30,000 more CIF income on the water side, raising it to $1.03 million, and the same amount on the wastewater side, in 2026.
He stated that he is expecting another $650,000 deficit to these line items in 2026 given the current progression of CIF income.
Dossett stated that the district did not budget for the affordable housing waivers it has given, amounting to approximately $70,000.
He indicated that all these revenue shortfalls impact PAWSD’s debt service calculations for its loans. The banks granting these loans require the district to maintain certain amounts of income to ensure it can continue to pay its debts.
Dossett commented that, although there might be other concerns with increased costs, his primary concern is the impact of low income on the district’s debt service.
In response to a question from PAWSD board member Bill Hudson, Dossett explained that these debt service calculations factor in both revenues and expenses and, if the district could cut costs to match its lack of revenues, it would not have debt service issues.
PAWSD board member Glenn Walsh commented that he does not believe that affordable housing waivers for Habitat for Humanity or other organizations caused these issues or that the district would be able to solve them by eliminating these waivers.
He instead commented that the district might have to face a structural change in growth in Archuleta County, with growth potentially decelerating and no longer matching the growth assumptions that the district based the funding and associated rate structure of its most recent construction projects on.
He proposed that the board should potentially hold a special work session to discuss a new approach, although he noted he is not in favor of simply raising CIFs more among the units that are built.
Instead, Walsh proposed that the district set specific CIF revenue goals for both funds and then impose a one-year water and wastewater rate surcharge the next year to make that money up if the goal is not met.
“People need to know this is not for affordable housing,” Walsh said. “It’s to pay for your water plant and to pay for your wastewater plant, and I think folks will realize … you just have to pay the bills.”
PAWSD board member Alex Boehmer commented that the district does not have shareholders and is not trying to make a profit for them, which he commented is a misunderstanding among some in the community.
He expressed agreement with Walsh about holding a work session on the issue since there are a wide variety of approaches the district could take.
PAWSD board chairman Gene Tautges commented that the number of additions to PAWSD’s system is highly unpredictable.
He added that reducing fees is different from eliminating or forgiving them and that, while waivers for affordable housing are not currently “huge,” “they do set precedents in my opinion.”
“They do damage us in a small way … and, in my opinion, they open up the door in the future for more projects,” Tautges said.
Walsh commented that he does not believe that affordable housing is responsible for the crisis the district is currently looking at.
He added that he is not interested in doubling fee income if the district does experience greater growth and that he feels his approach to using surcharges to pay CIF shortfalls would provide the district with a degree of stability and dependability.
Tautges emphasized the importance of paying the district’s bills and his concerns about potential cuts to the district’s services if there is not enough income.
Walsh noted that CIF revenues and water sales are the most unpredictable aspects of the district’s revenues.
Hudson noted that he likes Walsh’s ideas, but did not like the idea of doubling monthly rates to cover CIFs.
He added that he would like the district to “look really hard” at what to cut and to impose any CIF shortfall costs as a temporary surcharge instead of a permanent rate increase.
Hudson added that he would support holding a work session on the issue.
He also proposed that the Pagosa Springs Sanitation General Improvement District (PSSGID) could share some of its recently approved sales tax increase with PAWSD to help cover its costs.
Dossett noted that only certain projects contribute to the debt coverage ratios, with only operational expenses counting.
Hudson commented that the area is likely to experience a period of slow growth in the near future.
PAWSD District Manager Andy Connor noted that the district is already cutting operational items like seasonal workers, but that it can only cut operations so far.
Boehmer commented that, although he wants to keep rates low, he also has concerns about not building necessary infrastructure in an effort to reduce rates.
PAWSD District Engineer Justin Ramsey commented that, if the district is able to move away from making payments on Running Iron Ranch, that would also help its debt service coverage, which Hudson agreed with.
Tautges commented that both this and payments from the PSSGID on the money it owes to PAWSD are “hoped for,” but are not “given.”
“I don’t like gambling,” Tautges said.
Dossett commented that it was probably not “smart” that PAWSD made a debt service coverage budget at the floor of what the debt service coverage needed to be.
He added that, in future, the district should aim for a higher level of debt service coverage.
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