Steamboat’s water fund dips ‘dangerously low’; rate hike likely |

Steamboat’s water fund dips ‘dangerously low’; rate hike likely

— The Steamboat Springs City Council reluctantly voted Tuesday night to raise water and sewer rates by 50 percent next year.

That probably will not be the end of the increases.

“The water fund is dangerously low,” acting City Manager Wendy DuBord told council. “This is absolutely unacceptable. The water fund is broke, basically, and that’s a pretty basic service.”

Beginning in 2009, the average Steamboat household will pay $295 more per year for water and sewer amenities, but the sting won’t immediately be felt in neighborhoods at the mountain, which are not served by city water.

“It’s a lot to ask of our residents right now on top of everything else we’re facing,” Councilman Walter Magill said.

Councilman Jon Quinn advocated splitting the 50 percent increase between two years.

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But top city administrators urged council members to approve the increase. Ultimately, Magill voted against raising water rates, and Quinn voted against raising wastewater rates.

The water fund now stands at $33,584. The wastewater fund is a little healthier, at about $500,000.

The city’s failure to increase water rates for the past 15 years, as well as the habit of subsidizing the operating budget with tap fees that should go toward capital reserves, have contributed to the crisis.

The new water rates go into effect Jan. 1, 2009, but won’t directly affect all the households in the city. That’s because the boundaries of the city water service area end where Fish Creek flows beneath U.S. 40 at Anglers Drive. South of that line, municipal water service is provided by the independent Mount Werner Water and Sanitation District.

Sometime next year, customers in the Mount Werner district will begin paying the wastewater increase because the city provides that service to the district at its treatment facility west of town.

What it would cost

The average household consumption of filtered domestic water in the city is 13,000 gallons a month, Public Works Director Philo Shelton said Wednesday. That’s higher than is typical throughout Colorado, he added.

A family using that much water currently pays a base charge of $10 per month and then $1.58 for every 1,000 gallons, up to 12,000 gallons. Higher charges kick in at consumption of 13,000 gallons a month, up to 20,000. Consequently, the final 1,000 gallons of an average consumption is billed at $2.42 for a total water bill of $31.38.

If rates including the base charge are increased by 50 percent next year – should council give final approval to the ordinance supported Tuesday – that bill would increase to $47.07 per month, representing a monthly increase of $15.69 and an annual increase of $188.28.

Residential customers are billed flat rates for wastewater treatment. That charge would increase from $17.92 monthly to $26.88, or $107.50 annually.

That’s a total of $295 more per year for the average Steamboat household.

City Finance Director Lisa Rolan told council the 50 percent increase will not be enough to rebuild the city’s reserves and that customers are likely to see a series of rate increases in the future.

“You’re going to be looking at 30, 40, 50 percent (increases) for the next few years,” Rolan said.

The city increased water rates by 5 percent in January, but that didn’t really dent the shortfall in the reserves. The new 50 percent increase should add $150,000 to a total of $178,000, Assistant City Finance Director Bob Litzau said.

And that’s still far short of the several million in reserves that should be in the fund.

“What if you have a water line break?” Rolan asked. “You no longer have the dollars to fix it. So you’re really treading on dangerous ground. Some of the water lines have been in the ground for 50 years.”

Rolan said she thinks water and wastewater, which each is assigned its own enterprise fund, should be able to stand on their own like a business. But they aren’t financially healthy enough to do that right now.

Shelton said a contributing factor to the condition of the water and sewer funds is that, prior to January, rates had not been increased since 1993. In 15 years, the city has not attempted to recover even the rate of inflation. Tap fees, collected when new buildings are permitted, have been raided to make up shortfalls.

“For years and years, you’ve been using tap fees to support operations,” Shelton told City Council. “Anything you do tonight is just stop gap.”

A somber council voted, 6-1, in favor of both rate increases.

“Ultimately, the prudent thing to do is to go ahead,” City Council President Loui Antonucci said.

Water rates ebb and flow

Mount Werner Water and Sanitation District customers reside outside the city water service area, near Steamboat Ski Area. Those customers currently pay less for water (about 35 percent less, according to General Manager Jay Gallagher), than residents in the city service district north of Fish Creek.

Mount Werner district customers saw a rate increase in 2007, and the district will study whether a further increase is needed sometime next year, Gallagher said.