The Crested Butte News Serving the Gunnison Valley since 1999
Staff analysis shows benefits to existing rate payers
By Mark Reaman
The Crested Butte town council gave the thumbs up Monday to proceed with embracing Gunnison County’s proposal to defer the payment of $7.5 million in tap fees for the Whetstone affordable housing project until 2030 after which the town will collect ten annual payments of $751,000. Crested Butte will be extending water and sewer utilities to the planned 252-unit project located about two miles south of town near Brush Creek Road.
A lengthy staff analysis admits that “from a sheerly financial perspective” the best case scenario would be to receive all the tap fees up front. But the staff report concludes that “under all reasonable scenarios Whetstone does not trigger the need for more capital improvements, all the tap fee revenue would be going to offset the costs of capital improvements already planned. By spreading those costs among more users, existing users will benefit from the project even with delays in when the tap fees are received.”
While monthly service fees will go to pay for ongoing operations and debt service expenses, tap fees are assessed to new developments to provide a source of funds that allow utilities to finance future projects to serve growth and/or needed capital replacements. Whetstone is being developed by Gunnison County and the county will be responsible in perpetuity for maintenance of the new distribution and collection infrastructure. During the August 19 council meeting, town manager Dara MacDonald reiterated that the Whetstone development would be responsible for any utility capital costs needed as a result of the development.
“Knowing what we know now, we can maintain an annual service fee increase for water and sewer rates of 3% beginning in 2025,” she said. “That’s not to say something unexpected won’t come up because something probably will.”
In her staff report she indicated that “without the Whetstone development, to maintain a positive fund balance in all years with a deficit only occurring in the year 2042, existing customers would have an annual rate increase of 5% beginning in 2025.”
She said town had never considered charging the standard out-of-town rates for the Whetstone workforce housing project, and admitted that without the up front payment, the town would lose interest income. “But financing the tap fees as proposed by the county does not have a direct detrimental impact on existing users.”
County commissioner Laura Puckett Daniels said the county was doing whatever it could to keep expenses down so Whetstone rents could be kept as low as possible. “The extended payment timing helps with that goal,” she said. “Otherwise, we would have to get a loan for the tap fee that includes interest.”
Citizen David Leinsdorf said the council should not make a decision on the tap fee payment plan that night until more firm costs for the project were provided in detail. He indicated the county had been lax with detailing the $132 million estimate that didn’t include the tap fees or a town-required roundabout and pedestrian underpass at the entrance to the development. He presented council with a public records request asking for the specifics that came back with no detailed numbers or information. “There is no way you know what kind of project you as the town are getting involved with at this point,” he said. “You are fiduciaries for the town and shouldn’t act until you understand the costs.”
Gunnison County attorney Matthew Hoyt said the county responded to the information request filed by local attorney Marcus Lock that asked for the county’s total incurred costs, of which there were not yet many. “We emailed Marcus to see if his client wanted to get together and go over the cost estimates we could publicly share or see if we could help craft a public information request that better suited their desire. That invitation was not accepted.”
County Manager Matthew Birnie added that hard costs were not yet set in stone since a guaranteed maximum price contract had not been signed. He said he was working with Servitas, the county’s development partner, and Moss Construction, the contractor selected to develop the project, to home in on construction costs and that the estimated price was holding firm. “We will have a solid budget this fall with the guaranteed contract,” he said. “If we can’t reach the estimated costs we are working with at this point, there won’t be a project.”
Skyland resident George Gibson was not a fan of the staff analysis. “The staff report is misleading and a sales piece,” he said. “You can’t assume there will be no need for upgrades. There are significant discrepancies between tonight’s staff report and what has been presented before. This just isn’t credible. The interest rate losses are significant when compounded. When you add up the actual giveaways being proposed, the total is staggering.”
In a letter to the council, citizen Marcus Martin stated the County’s counteroffer for the tap fee payment “represents a significant reduction to the $7.5 million figure…. this multimillion-dollar reduced amount represents a significant financial detriment to the utility system and ratepayers of Crested Butte. It also reflects the Whetstone Project’s overall lack of financial soundness, which should concern council.”
Councilmember Mallika Magner said having additional users paying into the system helps current users. Councilmember Kent Cowherd said he was comfortable that the development itself would be responsible if unexpected capital needs arose as a result of the project. Councilmember Jason MacMillan said he agreed that no analytical model was perfect but that “shared responsibility would help with future costs like adding a new water source in the Slate River drainage to the town’s water system.”
Councilmember Gabi Prochaska asked for a clearer picture of what not having the money in the bank collecting interest meant for the town. That information will come back to the council when final wording is presented in October.
MacDonald said a council discussion over the roundabout and pedestrian underpass on Highway 135 at the development’s entrance would be on the September 16 town council meeting agenda. From there, staff will prepare an amendment to the Utility Extension Agreement for the council to consider in October.
Magner made a motion to have staff prepare language reflecting the county’s proposal to defer tap fees and pay them over time.
“It’s complicated and a little scary but we are faced with the cold, hard reality that we need affordable housing,” said Magner. “Hopefully this provides some relief and addresses the issues.”
“Some people see this as a giveaway,” said MacMillan. “I see it as an investment.”
“The town has put in a lot of work into this to understand a lot of complex issues,” said mayor Ian Billick. “I appreciate the county taking on a lot of the cost risk. It is valuable to see the town and county collaborating. It has been a rollercoaster of an issue and I also appreciate members of the public pushing us to look closely at details and do better.”
The council voted 6-0 to approve the motion with councilmember Anna Fenerty not at the meeting.
