There is no question that due to numerous factors, Telluride’s wastewater treatment plant is due for an upgrade. Town Council on Tuesday discussed in a work session a possible bond question that could be placed on the ballot this November.
Karen Guglielmone and Paul Ruud of the town’s public works department explained that the aging plant is facing challenges not just from its age — over 30 years old — but from new, more stringent state regulations and the area’s growth. The plant serves customers not only in Telluride proper, but Mountain Village, Hillside/Eider Creek and Lawson Hill.
The work session’s examination of the plant’s near-term future of the Telluride Wastewater Treatment Plant Capital Improvement Plan (CIP) — 2019-23 — is based in part on the ever-shifting technological advances in wastewater treatment science.
“Every year there’s new technology,” Guglielmone explained. That, she said, could change expenses.
The ideal funding source for improvements made in the near-term would be a revenue bond, staff said, which must be voter approved.
In the financial analysis, three different funding approaches were offered. The cash-only scenario envisioned funding the CIP exclusively with cash from rates, tap fees and grants. According to the staff memo to council, “It resulted in the highest rate increases from 2019-23 … but the lowest long-term rates beyond 2023 … ” based on projections.
The maximum debt scenario required $9.2 million in debt issuance and carried the most fiscal risk.
The hybrid approach, which council favors, was a “middle of the road scenario that attempted to balance the pros and cons of the other scenarios” with a combination of “issuing debt at strategic times and supporting that with more modest rate increases,” the memo reads, in part. The hybrid scenario calls for $7.4 million in debt issuance in 2020, which would provide the capital improvement fund with $6.8 million in net proceeds. Moderate and consistent rate increases each year from 2019-23 are also part of this scenario.
This year, rates were increased by 70 percent. The rate increase summary under the hybrid plan scenario reflected annual bumps of 8 percent in each of the years up to and including 2023.
Council member DeLanie Young wondered how carrying a bond debt would affect the possibility of creating a sanitation district to create a dedicated revenue stream. Consideration of a special district has been floated by Ruud and other public works officials to area governments for nearly a year. It is one of a number of possible funding sources town officials are mulling, as well as additional rate increases and additional debt issuances in the years beyond 2023.
Ruud told Young and council that it would not prove an obstacle, though only ratepayers in the Town of Telluride would be responsible for it.
Should voters approve the bond, Guglielmone told council the net amount of $6.8 million would adequately fund near-term projects.
“That would be enough for the next few years to embark on the projects we need,” she said.
Among those projects listed under the CIP are replacements for items such as primary lift station pump, a displacement grit pump, a raw lift station level sensor, a tractor and manure spreaders and other needs. Most of those hardware needs are scheduled for 2020. Total projected expenditures for the years 2019 through 2047 are projected to be $63,184,722.
Guglielmone addressed the possibility of the bond failing at the ballot box in her memo to council.
“If the revenue bond does not pass in the fall of 2019, alternative funding sources will have to be considered. Regardless, staff will be looking for grant opportunities to fund specific capital projects each year into the future. Any grant funding will help the utility to continue to build its reserves,” she wrote.
Town Attorney Kevin Geiger said he had written a “preliminary draft of language that could go to the voters,” and reminded council of the deadlines they faced to get the question on November’s ballot. Council will consider a draft during the Aug. 13 meeting.