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Of flies, and elephants

The chatter concerning the desire in some quarters for the Pagosa Area Water and Sanitation District to temporarily suspend impact fees took a turn last week with indications that efforts are underway by private groups and individuals, and by local government entities to foment an insurrection — one that could lead to two new PAWSD board members taking seats following next May’s election or, in an extreme form, to a recall of the entire board (a board for which no new candidates came forward in either the 2006 or 2008 elections), or dissolution of the district.

Much of the talk is by individuals with a keen interest in the suspension of district water resource and capital investment fees — fees they claim are a hindrance to continued development and home construction in Pagosa Country. Whether or not that argument is correct, we believe one thing is certain: proponents of change are swatting at flies on an elephant’s back. The flies? The two fees. The elephant: long-term projects and debt.

There is background against which changes in policy and direction must be considered. PAWSD set on its current course after public meetings revealed residents of Pagosa Country wanted the district to protect raw water supplies and prepare for a future entailing continued growth. The public also made it known that new development should pay its own way. One result: impact fees. The undesirable option: that users in the district provide additional revenues via increased rates, etc.

Another result: PAWSD undertook projects to satisfy public demand — not the least of which was to plan for the Dry Gulch Reservoir.

And the district has incurred major debt.

The elephant.

If a new board chooses to adhere to what the public told PAWSD it wants in terms of water resources and growth, but shies away from impact fees, then it must come up with a new plan, or new ways to finance the existing plan.

And, the debt load?

Asking PAWSD, as the county is now doing, to disclose its budget, debt worksheet, bond analysis and debt service coverage is a good idea. Not that the county can crow about its financial and budget acumen — but the request could provide valuable information. It is the debt load that is the most important factor in the PAWSD equation.

The district’s water and wastewater revenue bond debt was last reported at $26.69 million. That amount includes a loan from the Colorado Water Conservation Board, authorized up to $12.3 million. Part of that loan was used to repay a loan from Wells Fargo; the remainder is listed as part of the overall debt, but is not actually accrued until planned land acquisition occurs. PAWSD agreed to collateralize the loan by fixing and, from time to time, increasing or decreasing fees, rates, tolls penalties and charges for service and to pledge such revenues for any indebtedness incurred by it for the Dry Gulch project. Water Resource reserve funds can handle repayment of the CWCB loan for two years, and other reserves exist that could be used for a time if the economy remains stagnant.

The district owes $11.6 million in general obligation bond debt — a cost borne by the taxpayer.

Also on the horizon for any PAWSD board is the fact the district is likely to ask for a tax increase, via a general obligation bond, to provide additional funding for the reservoir project — a project the cost, size and timing of which has not been fully determined. The probable date for such a request to the taxpayers is 2018.

Thus, the elephant lumbers along, with two flies on its back.

Anyone proposing a change, whether via dissolution, recall or at the May 2010 election, had best come to the party with a list of elephant training tips, not just a fly swatter.