Every flush, every clean glass of water, every linear foot of pipeline costs money. A lot of money. As of Jan. 1, everyone who uses water or sewer services through the Town of Telluride will see that utility bill increase by 30 percent for water and 70 percent for wastewater (sewer).
“We need to increase revenues so we can make improvements,” Public Works Director Paul Ruud told Telluride Town Council at its Dec. 4 meeting, when the new rates were unanimously approved on second reading.
Ruud also reported to council that additional revenues, such as a bond question this year, will likely be on the table to fund the improvements needed at the wastewater treatment plant.
Town officials took into consideration a pair of rate studies conducted in 2018 by financial consultants with experience in the industry that made financial projections based on current rates and future funding needs. For both water and wastewater, it was determined that at the current rate schedule there would not be enough money to operate, maintain the infrastructure required to meet the area’s water demands or to expand the wastewater treatment plant. Without the funding tool that a special district would provide by means of mill levies (property taxes), user rates were the town’s only recourse.
Until the Pandora Water Treatment plant project went on line — which draws water from Blue Lake, Bridal Veil Creek and the Bridal Veil Basin —town water came from Mill Creek and Cornet Creek, two surface water sources with aging infrastructure. Voters approved a bond for the new Pandora project, which went on line five years ago.
The water fund — in the town’s portion of the budget under enterprise funds — covers operational expenses, debt from the Pandora project and costs of long-term capital improvements. The cost of doing business includes installing and maintaining over 20 miles of pipeline for both water and sewer throughout the service area.
The town provides water to not only the Town of Telluride proper, but to the Royer Creek area to the east of town, and to Brown Homestead, Hillside, Eider Creek and Lawson Hill to the west, as well as wastewater services (not water) to Aldasoro.
The scope of the Pandora project, Ruud said, was massive. “We knew it would be a phenomenal undertaking,” he said. And, he added, debt still exists on this project. The bond was for $10 million. The overall cost of the project was $16-17 million.
The budget approved by council for the 2019 water fund shows $3,443,581 in revenues and $3,467,776 in expenditures. Expenses include line items for labor costs, materials and equipment, capital outlay and debt service.
The water fund’s five-year capital plan includes improvements largely focused on Bridal Veil Basin for 2019.
The average water bill that service users will pay in 2019 (based on 4,000 gallons per month) is high compared to similar mountain towns and nearby communities, falling behind only Ouray and Mountain Village.
The wastewater rate study recommended a 70 percent increase — which was approved by council — and also a ballot question this fall for debt issuance. Ruud said town officials will likely follow that recommendation, as well.
In his memo to council Ruud explained that FCS Group, which conducted the financial analysis, advised using “a hybrid approach to pursue recovery of anticipated wastewater utility costs from 2019 through 2023.” A combination of rate increases, the pursuance of a revenue bond of $6.8 million, and if voters approve the bond, adopting rate increases of 8 percent each year from 2020 through 2023.
The memo continued that, if the bond measure fails, alternative funding sources would have to be considered and that the ongoing search for grant opportunities would continue to fund specific capital projects going into the future.
Seventy percent is a substantial increase, Ruud concurs. But three things are driving the increase. The plant is aging, at peak times it operates at full capacity (like this holiday season, Ruud said), and new, regulatory challenges create burdens on smaller, unique locales like Telluride’s.
The new regulations that govern testing for materials like nutrients and pharmaceuticals in the water are state-mandated and can be onerous.
“They are stringent to the point where they’re difficult to meet,” Ruud said. Requirements such as testing for contaminants in terms of parts per billion and can quickly leave plant operators out of compliance. “It takes very little material,” Ruud explained, “to detect bad things” in the effluent which is released into the San Miguel River.
On the horizon are demands like temperature regulation, which would require wastewater treatment plants to release effluent at a temperature similar to that of the river, which Ruud said would be astronomically expensive. With no room at the plant site at Society Turn for cooling ponds, refrigeration costs would be prohibitive. As far as testing for pharmaceuticals, since the human body flushes the majority of a daily multivitamin into the waste stream, Ruud only half-joking, said that there might be “don’t take your vitamins” alerts.
Additionally, state regulations are based on water consumption. Telluride’s growth and visitor impacts place it among larger municipalities.
The wastewater treatment plant is slated to be massively upgraded in the near future, an anticipated capital outlay of a projected $18 million that is driving the 70 percent increase.
“I know what these increases will do to people,” he said. “But these two utilities need to be funded. (These systems) are difficult and expensive to run. It’s just not easy.”
When Town Council meets on Jan. 15, the board will be considering an analysis from the finance department on hardship exemptions for fixed-income and low-income households. Exemptions, Ruud said, will hopefully be approved before the March bills are prepared, sometime in early- to mid-February.
Ruud has floated the idea of a special district for the wastewater facility that would greatly aid in funding ongoing operations that serve the disparate user groups. At an intergovernmental meeting late last year, he said that that kind of special district need not be contiguous so that only the service areas would be included. Special districts can go to the voter for mill levies to fund specific projects or for operational support.