Board struggles with treatment plant funding options

Unable to commit to any option that would provide the town with a new wastewater treatment plant, the board of the Pagosa Springs Sanitation General Improvement District (PSSGID) spent the vast majority of its meeting Tuesday night discussing what would be the lesser of several necessary evils.

Simply stated, the board has been charged with solving the town’s wastewater problem. In 2003, the district was ordered by the Colorado Department of Public Health and Environment (CDPHE) to mitigate noncompliance with clean wastewater standards. Although PSSGID responded with the design of a new wastewater treatment plant that would satisfy state environmental standards and meet growth projections (6-percent based on a 2005 study), funding for the construction of the new facility fell short when contractor bids exceeded the budgeted amount by $1.25 million.

Unfortunately, for the board, solutions for the state’s order have become increasingly convoluted and painful. Currently, the project has a combination of funding that is, by all estimates, insufficient to fund construction. Along with a $1.25 million grant and a $1.5 million loan (at 5-percent interest) from the Colorado Department of Local Affairs (DOLA) and a $2 million loan (at 1.875-percent interest) from the Colorado Water Resources and Power Development Authority (CWRPDA), the district has $4.75 million for the plant designed late last year — a plant that, by lowest bids submitted, has a current price tag of $5.9 million.

PSSGID supervisor Phil Starks, presenting funding updates to the board, stated that both DOLA and CWRPDA agreed to allow the town to retain the current funding scheme should the board elect to supplement funding through a combination of USDA grants and loans. Furthermore, Starks said, “DOLA has agreed to let us keep the $1.25 million grant if we accept a larger Water and Power Authority (CWRPDA) loan at lower terms (either 2 or 2.5-percent) for another $3 million loan.”

Starks then apprised the board of where the district stood regarding the pursuit of USDA funds. Flood plain mapping (to meet the federal standard of designating a 500-year flood plain) for placement of the plant does not exist and that mapping would need to be initiated. If initiated, the mapping process would not be complete in time to meet the USDA’s Sept. 30 deadline for this year’s funding appropriation cycle. Finally, regarding USDA money, Starks said, “There’s no guarantee of funds for this project.”

Starks also reported that the CDPHE had extended its deadline — also set for Sept. 30 — but only if the town agreed to pursue an application for USDA funds. Although the town can submit applications to the USDA after the Sept. 30 deadline to meet next year’s appropriations cycle, the CDPHE has made it clear that the town would return to noncompliance with the CDPHE should the town reject the USDA offer for money and made no move to build a plant to CDPHE standards.

Duane Dale, area specialist for the USDA, addressed the board regarding what the town faced if it chose to pursue federal money for the construction of the plant. “There’s a significant funding shortfall,” he said, “and we can help with that. I believe we’ll be able to help you with a plant that will be the most affordable for you and meet your present and future needs, if you’re willing to meet the requirements set out by the USDA.”

Those requirements, however, were where much of the board balked. Cost estimates for a preliminary engineering report (PER), required for the USDA application, are between $50,000 and $100,000. When asked by board member Don Volger if the USDA would waive the requirement of 500-year flood plain mapping, Dale was steadfast, saying, “No, we can’t waive the 500-year flood plain mapping requirement but in order to satisfy all requirements for a 500-year flood plain, we need preliminary flood plain mapping to evaluate. I can’t move forward until I have a PER to justify funding this project. Unfortunately, we just don’t have the means to grant 100-percent of the PER.”

Nonetheless, Dale stated he was confident that the town, if it fulfilled application requirements, would be eligible for, and most likely secure, USDA funding. Asked by Volger what the town should have done differently, Dale replied, “I would have brought Rural Development (USDA) in a lot sooner in the process. For whatever reason, there are not enough projects for the allocated funds. Those funds are available and plentiful.”

“Do you think we’ll succeed in getting Rural Development funds?,” asked board member Shari Pierce.

“Absolutely,” answered Dale. “That’s the goal of this program.”

Should the town reject the USDA offer, the remaining options for construction of a wastewater treatment plant seem untenable. The first option, a “band-aid” solution, would retrofit the existing plant to, at least, eliminate current ammonia level violations. For all intents and purposes, a “band-aid” would be a temporary solution as the current system is obsolete, by state standards.

With a “band-aid” solution the town would have to return DOLA and CWRPDA loans and grants, necessitating a new search for available money. Furthermore, since the current system fails to meet CDPHE standards, the town would eventually have to construct a plant acceptable to the CDPHE — and return to the drawing board for engineering, site permitting, and fund-raising.

The second option would take the existing DOLA and CWRPDA funds and build the plant engineered as planned. However, the debt service incurred by the scheme would put the district in serious financial straits, restricting its budget to about $20,000 a year (by Starks’ estimate) and cutting services to a bare minimum. Under that scenario, not only would PSSGID lack sufficient reserves to address unplanned repairs and maintenance but would also curtail even basic maintenance — potentially putting the district in violation of insurance requirements (which mandate a minimum amount of scheduled maintenance on the system) and in danger of liability from private property owners who would experience property damage due to insufficiently maintained sewage lines or equipment.

Asking for a straw poll regarding what individual board members would like to do, Volger found no commitment and only hesitance in the pursuit of USDA funds. However, board members Jerry Jackson, Cotton, Pierce and Volger stated reluctantly that, given limited options and facing further expense, they felt the USDA was probably the only viable option. Only board members Stan Holt and Mark Weiler spoke in opposition of pursuing USDA funds.

“I’m not prepared to make a decision based on what might have been, could have been,” said Weiler. “I don’t think the path we’re on is the right fiscal path. I don’t support spending $100,000.”

Although the board agreed to reconsider its path at the June 18 mid-month meeting (noon in council chambers at Town Hall), it is unclear how facts of the matter will substantially change. Although the town could possibly find a grant to fund a PER for the USDA grant through DOLA (or some other funding source), little else could change the situation facing the board. Other sources of funding have been exhausted. Options outside of USDA funding appear to put the town at a severe disadvantage, both in the near and distant future.

jim@pagosasun.com