Treatment plant price tag too high for town

Faced with revenues spiraling downwards and a budget that, by most accounts, is not flush with cash, the town of Pagosa Springs is in a position to where it must move on a wastewater treatment plant — getting off the pot is not an option.

Unfortunately, for the town and sanitation district customers, bids for the construction of the wastewater treatment plant came in higher than expected. “At least a million dollars over what we’d hoped,” said Pagosa Springs Town Manager David Mitchem.

After raising customer rates almost 67 percent last year (from $22.50 to $37.50 a month) in order to fund the new plant, the town of Pagosa Springs finds itself in the unfortunate position of needing fewer effluents and more affluence. Indeed, unwilling to further boost rates — perhaps due to the prospect of a citizenry strapped for cash but loaded with tar and feathers — the town is scrambling to find outside sources to help offset the unexpected expense of the project.

“There’s some different funding options out there,” said sanitation department supervisor Phil Starks. “If we get loans, we’d have to raise our rates, again, which the mayor is dead-set against. So we’re really looking at grant options.”

In fact, the initial rate hike was a condition for accepting a $1.5 million loan from the Colorado Water Resources and Power Development Authority (CWRPDA), taken out to pay for construction of the plant. In order to secure the loan, the sanitation district agreed to substantial customer rate increases as set forth by the CWRPDA. Additionally, the CWRPDA mandated an increase in tap fees, from $3,750 per Equivalent Residential Tap (ERT) to $4,400 per ERT — an increase of 17.3 percent.

The loan was required, by and large, to mitigate a funding gap for the plant. A preliminary engineer’s estimate of $4.3 million in 2006 rose $1 million in 2007 to $5.3 million. Although the Department of Local Affairs (DOLA) promised the town $2.75 million in funding, a $1.25 million grant and a $1.5 million loan — up $1 million from the district’s initial DOLA application — total funding for the plant still fell short by about $550,000, and it was that shortfall that led to CWRPDA stipulating the rate hike.

Unfortunately, for the town and its sanitation district customers, delaying or otherwise forgoing a new wastewater treatment plant is not much of an option. With the current system occasionally exceeding ammonia levels in its discharge during the winter months, the plant also risks hydraulic problems and violations during the spring when snow runoff can overload the system. The problems with the current wastewater plant put the town at risk of not only polluting one of its most precious resources but also running afoul of state water quality statutes.

Looking no farther down the road than Bayfield, it’s clear the state can do much more than merely levy fines for continued water quality violations. Aside from fining Bayfield about $150,000 (with more fines threatened), the state also imposed a building moratorium on the town in April 2006 for its continued water quality violations. The state lifted the ban in early 2007 after Bayfield secured funding for a new treatment plant and, according to Bayfield Town Manager Justin Clifton, Bayfield settled the $150,000 fine by, “agreeing to complete a supplemental environmental project estimated at $85,000 in total cost.”

With time running out for the Pagosa project — construction had been set for early summer — the project has had a history of delays. Originally set for construction in October 2008, the project ran into funding and permitting problems during the planning stages.

Apprising the Pagosa Springs Town Council of the funding shortfall during the Pagosa Springs Sanitation General Improvement District board meeting Monday night (following the town council meeting), Starks informed the board that bids for construction ranged from $5.9 million and $8.8 million. With the apparent low bid looked at for a contract award, the project still comes in $1.15 million over budget.

Board member Mark Weiler asked, “Who says we need to build a new sewage treatment plant? My personal opinion is that, if someone makes a mandate, they need to send a check.”

“I agree with trustee Weiler,” said Mayor Ross Aragon. “The health department has been aggressive and they need to help us.”

Aragon went on to ask if the state health department couldn’t advocate for the town with the USDA. Earlier in the discussion, Mitchem informed the board that he and Starks had scheduled a conference call with the health department, the USDA, DOLA, and the Water and Power Authority to discuss options for securing grant money.

The scheduled conference call was the big “if” in council’s discussion on Monday, as the uncertain future of the wastewater treatment plant relied on the outcome of the call (results of the call were unknown as of press time). As such, the discussion between the board and Starks was confined to brainstorming rather than reaching any kind of resolution. The only decision council reached was that it would not pursue loans to fill the funding gap for the project.

With stimulus funds from the Obama administration already spoken for, an idea (floated by several council members) for returning current loans and grants in order to qualify for stimulus package money was determined to be a nonstarter.

Board member Stan Holt wondered if the project couldn’t be mortgaged, asking, “Couldn’t we get a mortgage on the plant like we did with the community center, where the bank owns part of the plant and leases it back to us? I just think we need to look at everything,” Holt added.

Board member Jerry Jackson asked Starks, “Does anyone in the private sector own and operate wastewater treatment plants?”

Starks answered that, in fact, there are companies that provide wastewater treatment services for municipalities and that the town had been approached in the past by a company that had offered to do just that for Pagosa Springs. However, Starks indicated that while the offer had not been seriously considered, the board might want to investigate that avenue.

Still, with the conference call still days away, council was left with no recourse but to await the results of that call. Whatever the results, council have more to discuss when it meets at noon Thursday, May 21.

jim@pagosasun.com