Durango water users could see an annual rate increase of at least 2% if the city decides to start building a new water treatment plant in 2022.
City councilors Tuesday heard recommendations from staff, consultants and the Utilities Commission about options for building a treatment plant at Ridges Basin.
The City Council did not make a decision this week about increasing water rates – Tuesday’s session was intended to update the council about the progress of a draft water rate study started about six months ago. The city’s Utilities Commission has had at least three meetings to discuss the consultant’s findings and debate what option it thinks is best to ensure there’s enough water to meet projected demands.
North Carolina-based consulting group Raftelis conducted a water rate study, analyzing how the city can best adjust rates to meet the demands of a growing population, aging infrastructure and a changing climate, city documents show.
Raftelis Senior Manager Todd Cristiano gave the City Council two options for building a water treatment plant at Ridges Basin to pull water from Lake Nighthorse. Each option requires at least a 2% increase in water rates and the use of at least $9 million of reserve funds from 2020 to 2025. The water reserve fund in 2019 has about $6.24 million, budget documents show.
The first option, expected to cost $56 million, suggests starting construction on a complete plant designed to treat 14 million gallons of water each day. Plans to start construction on the plant in 2022 would require the city to incur more than $30 million in debt – Colorado law requires incursion of debt by a municipality to go to a public vote.
The second option, expected to cost $21.9 million, proposes building a partial plant to treat 4 million gallons of water a day. The city could start building the partial plant in 2022 without incurring debt. The city proposes breaking the project into different parts over time to reduce the immediate construction costs.
Utilities Commissioner Brian Devine told city councilors Tuesday that the commission had not yet seen the most up-to-date numbers presented to policy makers, but he said the recommendations from Raftelis are in line with what he and colleagues on the commission suggested.
“We proposed going forward with a 2% annual increase in water revenue target,” Devine told councilors. “Our official recommendation doesn’t commit to any particular plant.”
City Councilor and Utilities Commission liaison Kim Baxter, who appeared Tuesday by telephone, suggested an alternative to increasing water rates.
She proposed a fee separate from water rates for city users. Separating the fee for a treatment plant from rates would ensure transparency, she said.
“That seems logical, so rates are not constantly adjusted,” Baxter said through a teleconference speaker. “It’s the fee changing rather than the rate.”
City Councilor Barbara Noseworthy suggested city leaders need to be diligent to show that all options were vetted before bringing a proposal to the public. If residents can see that city staff, elected officials and the Utilities Commission looked at all options, including adding capacity to the existing plant at College Mesa, then ratepayers may be more amenable to cost increases.
“Taking a big-ticket item to the public requires that we show that we looked at all options,” Noseworthy said.