At its March 13 meeting, the Pagosa Area Water and Sanitation District (PAWSD) Board of Directors discussed a request by Generation Housing Partners for an alteration in water and wastewater service fees for its Timberline affordable housing project and voted to create a subcommittee to study the issue further.
The project is located along Alpha Drive and Timberline Drive.
Generation Housing Partners representative Chris Applequist opened the discussion by thanking PAWSD for its assistance in providing fee waivers to help the project move forward.
He explained that the project currently pays for 51 equivalent units (EUs) worth of water in its water bills, including 50 EUs for its 50 residential units and one for its clubhouse, even though the project was designed to use nine EUs worth of water.
He stated that this difference in EU calculation has significantly impacted the operating costs and utilities on the project.
Applequist stated that the company is currently paying a substantial base rate despite currently consuming no water and requested that the development be considered as a single commercial account for both water and wastewater, which would reduce the development’s EUs to match the amount of water it uses.
He added that this approach aligns with the approach used by other jurisdictions.
PAWSD board member Glenn Walsh commented that, on the water rate side, he felt it would be difficult to run the entire development with only eight EUs for the residential units.
He added that having so few EUs would also increase the likelihood that the development would hit penalty rates for high water use.
Walsh stated that the reduced number of EUs on the wastewater side is problematic since the district has high capital expenses connected to wastewater treatment.
He explained that, when PAWSD approved the capital investment fee waivers for the subdivision, he argued that lowering the startup costs for affordable housing projects was critical, but that the waiver would not “pencil out” if each resident did not pay a monthly bill.
He added that the board could potentially consider different ways to calculate wastewater fees for varying types of housing at a later date, but that any changes would apply to all projects, not just workforce housing.
Walsh also noted that several PAWSD board members were only willing to support giving the development fee waivers due to the compromise that each unit would pay water and wastewater bills, which he commented is valued at $1.2 million or $1.3 million.
He concluded that he would “stick with the compromise,” even though it was not his preference.
Applequist noted that the district’s capital investment fees for the project increased from about $300,000 to about $1.2 million during the planning period for the project and that the waiver the developer received only brought the fees back down to $300,000 when it had initially been planned to reduce it below $300,000.
He also pointed out that affordable housing developments do not receive operating subsidies which might mitigate high utility or insurance costs.
The current utility rates are extremely high, Applequist stated, proposing that the company could potentially work with PAWSD staff over the upcoming month to determine a solution that would reduce costs while being fair to the district.
Generation Housing Partners representative Travis Barber commented that the company is not concerned about how it is billed for usage, but is concerned about the high monthly base rate of $4,000 a month that the Timberline project is being charged.
He noted that this is 10 or 12 times higher than what other nearby municipalities like the Town of Pagosa Springs or the city of Durango are charging.
Barber added that the usage rates are similar to nearby entities.
Walsh noted that the district would have to treat every apartment project similarly and increase the costs for other customers to make up for these costs.
Applequist noted that affordable housing faces unique issues since the low rates charged by the developer do not necessarily fully support the costs that each unit incurs.
PAWSD board member Bill Hudson highlighted the low rents that the company is required to charge to meet Colorado’s affordable housing regulations.
He added that the project is legally limited in what rents it can charge and that he would support treating the project differently than market-rate developments.
He recommended that the board create a subcommittee to consider the issue.
In response to a question from PAWSD board member Gene Tautges, Applequist explained that the developer cannot adjust rents at the project after it is completed to accommodate increased maintenance costs.
Walsh commented that the district could potentially make a distinction between an affordable housing project like Timberline using Low Income Housing Tax Credit (LIHTC) funds and other affordable housing projects that do not use them.
He added that he would be willing to look at the unique issues related to the project.
Hudson moved to create a subcommittee to investigate the issue, which Walsh seconded.
The board then discussed who would serve on the subcommittee, with PAWSD board member Alex Boehmer and Hudson agreeing to potentially serve on it.
Tautges expressed concerns about the precedent that granting such rate reductions would set.
The board then unanimously voted to create the subcommittee.
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