Council seeks more financial alternatives
[ By Mark Reaman ]
Despite a 20% increase in Crested Butte water and sewer rates and tap fees that took effect in January of this year, the town council is reluctantly agreeing with town staff that there is a need to increase revenues 30% to the enterprise fund that pays for town water and sewer services starting in 2023. That might mean a change in the rate structure and or dipping into other town fund balances. It could mean another increase to rates.
Public Works director Shea Earley presented a grim scenario to the council at the September 19 meeting showing that cash flow issues were inevitable for the water and sewer enterprise fund even if the town basically ignored some looming issues bound to arise in the town waterworks system.
Earley said he went through the Capital Improvement Plan (CIP) with the intent to hold off on any expenditure that could immediately be delayed. He said he eliminated about half the projects in the $61 million CIP anticipated to be needed over the next 19 years. He said as an example, he cut approximately $1 million that was to be used for assessing various infrastructure. He explained that some water flow pipes installed in the 1970s were basically a mystery.
“We know they flow, and they work but we really don’t know anything more about them,” he said. “Not doing that type of assessment work can save us money now. It will probably be problematic in the future but our history of dealing with problems in this realm has been reactive.”
Mayor Ian Billick asked for information defining what the impact would be to keep assessments in the future CIP budget. “Getting that information could be better in the long-term,” he said and asked for further information on details and costs.
“We are now trying to be more proactive and less reactive. That makes better sense to be knowledgeable about what we will need in the future,” agreed Earley. “But the system is such that it will be expensive coming up.”
In a graph presented to council, Earley showed that not increasing revenues at all would likely put the enterprise in the red by 2024. A 25% increase would stay out of the red until about 2039 while a 30% increase would get the town through 2041 with a positive fund balance. That analysis is with Earley’s drastic cost saving measures included.
“It is all dynamic,” cautioned Earley. “It is too hard to say what will be needed and when.”
Councilmember Chris Haver asked if the recent 20% rate increase simply wasn’t adequate.
“That’s part of it,” said Earley. “But inflation and other factors are involved. We had originally thought the wastewater treatment plant upgrade would cost about $8 million. But we’ve had to cut that back and it is coming in at more than $17 million now. Prices are out of control and the supply chain is out of whack. This is something we’ll have to revisit regularly.”
“This isn’t going to go away,” said Billick. “For me, that’s a reason to keep the assessment projects in there.”
“There are always a lot of moving parts and unknowns with the waterworks system,” agreed town manager Dara MacDonald.
“It seems like the two options are to upset people or really upset people,” concluded Billick. “They’ll be upset with a rate increase but be really upset if the system has to be shut down because of a major break.”
“I’m struggling with the impact on the town citizens, especially its seniors and more vulnerable population,” said councilmember Mallika Magner. “This is a big blow to those people. Can we find additional money in some of our other town funds?”
Councilmember Gabi Prochaska said it could be time to charge specific water fees based on consumption given the situation and also coming climate change impacts. “We should encourage people to use less water and do that by making people pay for what they use,” she said.
Earley said the town can monitor what individual residents consume in terms of town water. Currently rates are based on block allotments. He noted that for most municipalities, capital projects are centered on increasing capacity but in Crested Butte the issue is aging and failing infrastructure.
“I agree with Mallika that affordability is an issue,” said Billick. “But one thing a town should do is provide water and wastewater services. So maybe we look at other reserves in the town to help pay for the needs.”
Earley emphasized he was not pleased to be the bearer of bad news. But he suggested the 30% increase was appropriate since they were for capital improvements and not tied to routine maintenance and operations and agreed that citizens should be incentivized to use water conservation measures. He also agreed that livability and affordability was important for vulnerable members of the community. In fact, the town has implemented a program to discount monthly rates by half for qualifying individuals. The town has qualified 62 people so far for the program and it has cost the town $36,000 in revenues from a $2.7 million budget.
Billick said it appeared the council felt the direction being pursued was unfortunately appropriate. The council asked for more details and instructed staff to look at how other town fund balance reserves might be used to help ease the financial crunch.
More information will be presented to the council this fall.