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Paonia considers water rate hike

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Paonia water users could see an increase in their water bill as early as Jan. 1.

At the Oct. 25 board meeting, the town board voted to direct town attorney David Marek to draft a resolution for a 2-percent across the board increase in water rates. The proposed increase is in response to recommendations included in a water rate study the town contracted last February with the Fort Collins consulting firm Cruz & Associates, Inc. The study was completed Sept. 28.

Public works committee members reviewed the long-awaited water rate study before suggesting the increase. Included in the study is a recommendation for a three-percent "escalation factor" beginning in 2017. The motion passed on a 4-2 vote, with Bill Brunner and Suzanne Watson voting "Nay."

If approved, the increase will generate just under $16,000 annually for the town. "The only thing we've done here tonight is to put it on the plate," said Mayor Charles Stewart. "Those voting in favor of are not voting for an increase."

Watson, said she would "just as soon not waste the money (on attorney fees) because the town doesn't need to increase rates." With a sewer rate study by Cruz also pending, Watson said she'd like to look at the "bigger picture" and wait and see what kind of increases are projected for sewer and trash services.

The last rate hike -- an across-the-board 27 percent increase -- went into effect Dec. 1, 2015. The increase was passed by an emergency ordinance in order for the town to meet its debt obligations for state-mandated upgrades to the water filtration and delivery systems. Those projects were largely completed in 2015.

The increases were "rough" on water users, said Brunner. He noted that the study indicates that there is no need to increase rates for the town to meet financial obligations for 2016 "and for subsequent years in this five-year financial plan."

Mayor pro tem David Bradford serves on the town public works committee and said committee members considered the study's recommendation for a rate increase and the fact that the town's reserves are below recommended levels. Rather than the full 3.5-percent increase, they suggested the two-percent increase. "That is in keeping with inflation recommendations," said Bradford.

The study states that the town doesn't include depreciation expenses in its annual budget, which Cruz said was almost $178,000 in 2015. "I strongly recommend that the depreciation expense be considered in the budgeting process going forward," wrote Cruz president Leroy Cruz in his recommendations.

Town auditors and accountant have recommended the town start paying for depreciation, said trustee Bill Bear, who also serves on the public works committee. Under the current rates the town can meet day to day expenses, but without an increase there won't be money when a major project comes along. "This is one way to do it and still keep up with inflation."

The report also addresses the town's current rate structure, and the fact that out of town users pay higher rates than in-town users. The study suggests all customers should be treated equally, regardless of where they live. It also suggests converting commercial accounts to "equivalent residential units"(ERQ), based on usage of water as compared to residential usage. The system would create a tiered rate system that charges higher rates for higher volume users based on the demand they place on the water treatment plant.

The study also recommends that the town write into the water ordinance that rates be reviewed every year or every other year to ensure the rates are current. A copy of the rate study is available at townofpaonia.com.

The ordinances are being drafted and will be on the agenda a early as Nov. 8, and citizens are urged to check the agenda before the meeting.

In a related matter, trustees also approved by a vote of 5-1 a motion to direct the town attorney to draft an ordinance changing the way the town adopts rate changes. The town has historically adopted rate changes in the water ordinance, said Dean. In considering whether to adopt them by ordinance or resolution, "If it's more of a permanent nature, it's more suited for an ordinance," said Dean. "If it's subject to change on occasion it could be better suited for a resolution."

If the ordinance passes, then monthly tap fees will also be passed by resolution, while water and sewer tap fees rarely change and should remain in the ordinance. The town doesn't anticipate any increases in water and sewer tap fees for the foreseeable future, said Dean.

The debate over resolution versus ordinance came about while looking at the Cruz water rate study as it relates to codification, said Dean. In reviewing town code, he found ordinances which were passed that weren't codified (published in town code). That opens the possibility of approving rate changes, but not getting them published in the code. Adding ordinances to the town code also uses staff time and costs money, he said. If they are adopted by resolution, then anyone wanting to look up the current rates will know where to look.

Brunner cast the dissenting vote due to transparency concerns. Trustees are voting on possible water rate increase water rates and change the way rate changes are passed, and neither was on the agenda, said Brunner.

Watson said she disliked that the vote to spend money to have attorney David Marek draft the documents wasn't on the agenda and leaves the public out of the process.

Suggestions made by town clerk Corinne Ferguson to consider fees related to water use were added to the motion prior to the vote. Ferguson requested that the board take a look at current fees for setting up new accounts, which have been $35 for several years. That doesn't cover the costs of administration and the public works department, said Ferguson.

She also asked the board to consider increases in disconnect services for non-payment, and for temporary disconnect and reconnect services typically done for inspection of vacant properties, also currently at $35.

Bradford said the town also is lacking a set policy for billing adjustments when water leaks and other issues occur. That's the kind of detail that may be appropriate to include it in the water ordinance, too, said Dean.

In other business, trustees voted to enter into a three-year contract with Elevate Fiber for broadband internet service. The motion included approval of payment of a one-time $100 installation fee and a monthly service fee of $79.95.

Trustees also discussed and changes to the final draft of the town's comment letter to the Bureau of Land Management regarding the draft Resource Management Plan. The public comment period ended Tuesday.

The town is also advertising for a new town administrator. Closing date for applications is Nov. 15. Interested parties can submit a letter of interest and resume to the town clerk; for a job description and other information, visit townofpaonia.com.

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