Print
E-mail
Comment
District delays water hikes
By Chris Michlewicz
In a surprise decision, the Parker Water and Sanitation District voted to postpone indefinitely an increase in water rates that was approved just weeks earlier.
The district board of directors unanimously passed a resolution Jan. 8 to rescind the implementation of a 20 percent increase in water rates and flat service fees. The five board members approved the hike Dec. 22 in the face of heavy public opposition, but now want to wait until the conclusion of a water rate study later this year before making any further decisions. A work group comprising district staff, town government officials, homeowner's association leaders, developers and Parker water customers will help guide the study by researching all possible options to help defray the rising costs of day-to-day operations.
Jason Mumm, Parker water district board treasurer, has several years of experience as a water rate consultant for other metro area water and wastewater districts. He was surprised that a formal rate study had never been conducted, and said flat monthly fees for water and sewer service will be examined to determine whether they should be lowered.
Mumm said the reversal of the previous decision shows the board has listened to the public and their opinions about the controversial increase, which would have raised the average monthly cost of water rates, sewer service fees and water service fees by roughly $11. Tap fees charged to developers who connect to the water and sewer system also were increased. The changes took effect Jan. 1, but the board now says the 2008 rates will remain in effect until the study results are released sometime in the fall.
Establishing a working group of community leaders and Parker water customers is the first step toward healing a community that has been “fractured” by disagreements over the increases.
“What we can’t have going forward is a house divided,” he said.
The postponement of the rate increases means the Parker Water and Sanitation District will lose money for several months, and could possibly lead to a decision to take out a line of credit to maintain steady operations.
“I do believe it will be incredibly difficult year for this district,” Mumm said. “There will be a lot of pain and suffering, yet the board is determined to work through this process and make it very open and accessible to everyone in this community.”
Opponents to the water rate and fee increases said they felt they did not have a voice in the decision and requested a deduction in the proposed hikes. Dozens of angry customers packed meeting rooms and faulted the district for what some deemed “fat” within the proposed 2009 budget. Mumm believes the overwhelmingly negative response was due in part to people being caught off guard by such a large and sudden increase.
“We had a responsibility to prepare them for that, and frankly, we didn’t do that,” he said during an interview last week.
Mumm hopes the comprehensive study will help residents gain an understanding of the costs associated with running a public utility.
Bruce Norton, who has lived in Parker for 19 years, said customers have no control over rate increases.
“We’re dealing with a monopoly,” he said. “It’s not like we can shop around.”
Additionally, there is no incentive through the existing rate structure to conserve water, and therefore, reduce monthly water payments, Norton said. The Hidden River resident is also concerned that customers will be hit several times by the increase through spikes in HOA dues, green fees for golf courses and other costs.
District manager Frank Jaeger cut an original proposed budget that would have increased costs by 28 percent before presenting the final 20 percent increase.
District board vice president Mary Spencer said the hikes were in the best interest of the district, but the board reversed the decision because several customers disagreed with the nature and timing of the action.
All board members acknowledged that the timing for an increase could not be worse, but asserted that the move was necessary.
Some customers have started efforts to oust the board members through a recall election. Mumm encouraged the public to work together in the rate study before taking action.
District officials have cited increases in the cost of electricity and wastewater treatment chemicals as reasons to implement the rate adjustment. Water rates have not been raised in four years, which is why the board was forced to approve such a high increase Dec. 22.
The Parker Water and Sanitation District is encumbered with debt payments to cover the costs of the expansive Rueter-Hess Reservoir project, which has been touted as critical to Douglas County’s future water supply. Several surrounding cities and districts have paid a combined $60 million to reserve water storage space in the 72,000-acre-foot reservoir, which is now under construction just south of Parker.
The monthly debt payments will not go away, and despite a promise to pay for the reservoir construction with tap fees generated by new development, officials might be forced to use all income sources, including rate money, to pay the $100 million commitment. Temporarily delaying payments is likely not an option, Mumm said, adding any line of credit the district takes out would go toward covering operational costs.
Income from tap fees has dropped off by 73 percent since 2005, and the district has been forced to dip into reserve funds to keep up with the debt payments. If that money dries up, the district would become insolvent, leading to catastrophic problems such as a potential drop in local home prices. Mumm underscored the importance of maintaining a steady flow of funding and said failure is not an option.
“People in this district own this utility,” he said. “That’s their water service, and to keep it solvent is part of an owner’s responsibility. There’s no two ways about it.”
A leading national consultant will be retained to lead the water rate study and explore options for a future increase in water costs. There is a chance, especially because of the postponement of the recent water hike, that the increase could be higher than the previously approved 20 percent increase, Mumm said.
The district receives a small portion of its funding through a mill levy on property taxes, and one option could be putting a possible mill levy increase to a vote. Property taxes are tax deductible on federal returns.
The water rate structure could also be overhauled, leading to additional conservation from those who want to move to a lower priced water usage tier. The district should consider giving a credit to customers who actively try to reduce water usage through Xeriscaping or other yard improvements, Norton said.
For more information on getting involved in the public working group or view the recently approved resolution, visit www.pwsd.org or call the Parker Water and Sanitation District at 303-841-4627.
The district board of directors unanimously passed a resolution Jan. 8 to rescind the implementation of a 20 percent increase in water rates and flat service fees. The five board members approved the hike Dec. 22 in the face of heavy public opposition, but now want to wait until the conclusion of a water rate study later this year before making any further decisions. A work group comprising district staff, town government officials, homeowner's association leaders, developers and Parker water customers will help guide the study by researching all possible options to help defray the rising costs of day-to-day operations.
Jason Mumm, Parker water district board treasurer, has several years of experience as a water rate consultant for other metro area water and wastewater districts. He was surprised that a formal rate study had never been conducted, and said flat monthly fees for water and sewer service will be examined to determine whether they should be lowered.
Mumm said the reversal of the previous decision shows the board has listened to the public and their opinions about the controversial increase, which would have raised the average monthly cost of water rates, sewer service fees and water service fees by roughly $11. Tap fees charged to developers who connect to the water and sewer system also were increased. The changes took effect Jan. 1, but the board now says the 2008 rates will remain in effect until the study results are released sometime in the fall.
Establishing a working group of community leaders and Parker water customers is the first step toward healing a community that has been “fractured” by disagreements over the increases.
“What we can’t have going forward is a house divided,” he said.
The postponement of the rate increases means the Parker Water and Sanitation District will lose money for several months, and could possibly lead to a decision to take out a line of credit to maintain steady operations.
“I do believe it will be incredibly difficult year for this district,” Mumm said. “There will be a lot of pain and suffering, yet the board is determined to work through this process and make it very open and accessible to everyone in this community.”
Opponents to the water rate and fee increases said they felt they did not have a voice in the decision and requested a deduction in the proposed hikes. Dozens of angry customers packed meeting rooms and faulted the district for what some deemed “fat” within the proposed 2009 budget. Mumm believes the overwhelmingly negative response was due in part to people being caught off guard by such a large and sudden increase.
“We had a responsibility to prepare them for that, and frankly, we didn’t do that,” he said during an interview last week.
Mumm hopes the comprehensive study will help residents gain an understanding of the costs associated with running a public utility.
Bruce Norton, who has lived in Parker for 19 years, said customers have no control over rate increases.
“We’re dealing with a monopoly,” he said. “It’s not like we can shop around.”
Additionally, there is no incentive through the existing rate structure to conserve water, and therefore, reduce monthly water payments, Norton said. The Hidden River resident is also concerned that customers will be hit several times by the increase through spikes in HOA dues, green fees for golf courses and other costs.
District manager Frank Jaeger cut an original proposed budget that would have increased costs by 28 percent before presenting the final 20 percent increase.
District board vice president Mary Spencer said the hikes were in the best interest of the district, but the board reversed the decision because several customers disagreed with the nature and timing of the action.
All board members acknowledged that the timing for an increase could not be worse, but asserted that the move was necessary.
Some customers have started efforts to oust the board members through a recall election. Mumm encouraged the public to work together in the rate study before taking action.
District officials have cited increases in the cost of electricity and wastewater treatment chemicals as reasons to implement the rate adjustment. Water rates have not been raised in four years, which is why the board was forced to approve such a high increase Dec. 22.
The Parker Water and Sanitation District is encumbered with debt payments to cover the costs of the expansive Rueter-Hess Reservoir project, which has been touted as critical to Douglas County’s future water supply. Several surrounding cities and districts have paid a combined $60 million to reserve water storage space in the 72,000-acre-foot reservoir, which is now under construction just south of Parker.
The monthly debt payments will not go away, and despite a promise to pay for the reservoir construction with tap fees generated by new development, officials might be forced to use all income sources, including rate money, to pay the $100 million commitment. Temporarily delaying payments is likely not an option, Mumm said, adding any line of credit the district takes out would go toward covering operational costs.
Income from tap fees has dropped off by 73 percent since 2005, and the district has been forced to dip into reserve funds to keep up with the debt payments. If that money dries up, the district would become insolvent, leading to catastrophic problems such as a potential drop in local home prices. Mumm underscored the importance of maintaining a steady flow of funding and said failure is not an option.
“People in this district own this utility,” he said. “That’s their water service, and to keep it solvent is part of an owner’s responsibility. There’s no two ways about it.”
A leading national consultant will be retained to lead the water rate study and explore options for a future increase in water costs. There is a chance, especially because of the postponement of the recent water hike, that the increase could be higher than the previously approved 20 percent increase, Mumm said.
The district receives a small portion of its funding through a mill levy on property taxes, and one option could be putting a possible mill levy increase to a vote. Property taxes are tax deductible on federal returns.
The water rate structure could also be overhauled, leading to additional conservation from those who want to move to a lower priced water usage tier. The district should consider giving a credit to customers who actively try to reduce water usage through Xeriscaping or other yard improvements, Norton said.
For more information on getting involved in the public working group or view the recently approved resolution, visit www.pwsd.org or call the Parker Water and Sanitation District at 303-841-4627.
Submit a Comment
|
You must be logged in to post a comment.
|
Not yet a registered member?
Click here to become one. |
Reader Comments
mmagic wrote on Jan 23, 2009 7:56 PM:
" “District “delays” water hikes---“
The headline on this story is dead on. PW&SD is using the “Devil Made Me Do It” ploy to implement their planned rate increase. By spending money that they don’t have on an outside consulting firm and selecting a citizen group sympathetic to their plan the board places themselves one step removed from the problem and creates a justification for their rate increase that can merely be endorsed instead of their fault.
Don’t get me wrong. A restructuring of the water district’s revenue stream is needed to more closely align long term obligations with long term revenue streams and provide conservation incentives. Such a revenue stream restructuring will inevitably result in higher monthly bills for some and lower bills for others. While the board blames a drop in new construction tap fees for a need to dramatically increase rates a more accurate match of costs to revenue streams could have mitigated today’s problem.
My Parker water bill is 83% flat fee and 17% based on usage. In contrast the provider at my previous Colorado residence relied on flat fees for 32% and consumption for 68% of my bill. Obviously I was much more careful in my usage at the previous location.
The current revenue stream fails to provide the customer with the advantage of tax savings from payment of capital costs through property taxes. If I had paid $420 as property taxes to PW&SD instead of rate, I would have had a net savings of 12% on my net cash outflow and PW&SD would have realized the same revenue. Further PW&SD potentially could have a revenue stream component available to restructure debt to today’s low bond interest rates! There is opportunity to create a rate structure that is both more advantageous to the customer base as a whole and the objectives of the district.
My greater concern is with a continuing lack of judgment displayed by the board. It is their judgment that we must rely on for all the policy decisions required in running a governmental business as large and complex as PW&SD operations and the Rueter-Hess reservoir.
In the infamous December board meeting they passed a budget that relied on a 20% to 28% across the board rate increase as casually as ordering a pizza. Then in January they rescinded the increase with less discussion than sending the pizza back to be re-heated! I am more concerned with the flip-flop for political reasons than with the amount of the proposed increase as it establishes either a failure to fully vet the original budget or an effort to thwart a recall effort by making a political decision to reverse course rather than stand by a decision that was based on doing the right thing.
When I look at the Glossy special mailing I received explaining how bad they need the rate increase and hear that their austere budget reportedly includes an Escalade, I start to think that this bunch is about as bright as a group of Detroit automakers that would take separate corporate jets to Washington to beg for a handout. Then just to reinforce the point I received another special puff piece mailing at District expense telling me that they have rescinded the rate increase!
Nevertheless I attempted to remain objective and attended the 1/22 board meeting to observe the PW&SD board real time. Although there were two persons at the table whose technical knowledge impressed me, as a group they confirmed my expectations.
1) No one could explain why budgeted 2009 salaries were 20% greater than August 2008 full year projections. By August this number should have been known within a percentage point. Even though W-2’s likely have been released and unaudited financial statements should be in the board’s hands the board was unable to explain that the August projections were in error or why excessive salary growth should be budgeted in 2009.
2) While declaring that numerous expenses had been reduced from the 2009 budget, the board refused to revise the 2009 budget and only would explain that they were working on a reduced, presumably secret number.
3) I found it difficult to believe that with the complexity of PW&SD operations and construction in process on the only new reservoir between Canada and Mexico that only two trivial non-agenda items need the board’s approval. I could only surmise that much of the board’s work was being performed outside of board meetings via e-mail, phone calls and ad hoc meetings raising questions as to whether open meeting laws might be violated.
4) After two trivial motions, a report and a photo tour of Rueter-Hess progress, in apparent contravention to Colorado open meetings law, it was announced that they would adjourn to “executive session” to discuss “contracts”. This was done without a motion and without definition of the lawful purpose to go into executive session. Nearly everything that PW&SD does involves a contract. Except for employment matters and a limited few specific types of contracts nothing can legally be discussed in secret.
My first contact with this board left me with more questions than answers. While it was the unusually large rate increase that drew my attention, it is the sequence of poor judgment calls that concern me. If they are incapable of getting the small and procedural things right how can they be expected to make sound decisions on multimillion dollar issues.
I will continue to monitor their mode of operations. "
The headline on this story is dead on. PW&SD is using the “Devil Made Me Do It” ploy to implement their planned rate increase. By spending money that they don’t have on an outside consulting firm and selecting a citizen group sympathetic to their plan the board places themselves one step removed from the problem and creates a justification for their rate increase that can merely be endorsed instead of their fault.
Don’t get me wrong. A restructuring of the water district’s revenue stream is needed to more closely align long term obligations with long term revenue streams and provide conservation incentives. Such a revenue stream restructuring will inevitably result in higher monthly bills for some and lower bills for others. While the board blames a drop in new construction tap fees for a need to dramatically increase rates a more accurate match of costs to revenue streams could have mitigated today’s problem.
My Parker water bill is 83% flat fee and 17% based on usage. In contrast the provider at my previous Colorado residence relied on flat fees for 32% and consumption for 68% of my bill. Obviously I was much more careful in my usage at the previous location.
The current revenue stream fails to provide the customer with the advantage of tax savings from payment of capital costs through property taxes. If I had paid $420 as property taxes to PW&SD instead of rate, I would have had a net savings of 12% on my net cash outflow and PW&SD would have realized the same revenue. Further PW&SD potentially could have a revenue stream component available to restructure debt to today’s low bond interest rates! There is opportunity to create a rate structure that is both more advantageous to the customer base as a whole and the objectives of the district.
My greater concern is with a continuing lack of judgment displayed by the board. It is their judgment that we must rely on for all the policy decisions required in running a governmental business as large and complex as PW&SD operations and the Rueter-Hess reservoir.
In the infamous December board meeting they passed a budget that relied on a 20% to 28% across the board rate increase as casually as ordering a pizza. Then in January they rescinded the increase with less discussion than sending the pizza back to be re-heated! I am more concerned with the flip-flop for political reasons than with the amount of the proposed increase as it establishes either a failure to fully vet the original budget or an effort to thwart a recall effort by making a political decision to reverse course rather than stand by a decision that was based on doing the right thing.
When I look at the Glossy special mailing I received explaining how bad they need the rate increase and hear that their austere budget reportedly includes an Escalade, I start to think that this bunch is about as bright as a group of Detroit automakers that would take separate corporate jets to Washington to beg for a handout. Then just to reinforce the point I received another special puff piece mailing at District expense telling me that they have rescinded the rate increase!
Nevertheless I attempted to remain objective and attended the 1/22 board meeting to observe the PW&SD board real time. Although there were two persons at the table whose technical knowledge impressed me, as a group they confirmed my expectations.
1) No one could explain why budgeted 2009 salaries were 20% greater than August 2008 full year projections. By August this number should have been known within a percentage point. Even though W-2’s likely have been released and unaudited financial statements should be in the board’s hands the board was unable to explain that the August projections were in error or why excessive salary growth should be budgeted in 2009.
2) While declaring that numerous expenses had been reduced from the 2009 budget, the board refused to revise the 2009 budget and only would explain that they were working on a reduced, presumably secret number.
3) I found it difficult to believe that with the complexity of PW&SD operations and construction in process on the only new reservoir between Canada and Mexico that only two trivial non-agenda items need the board’s approval. I could only surmise that much of the board’s work was being performed outside of board meetings via e-mail, phone calls and ad hoc meetings raising questions as to whether open meeting laws might be violated.
4) After two trivial motions, a report and a photo tour of Rueter-Hess progress, in apparent contravention to Colorado open meetings law, it was announced that they would adjourn to “executive session” to discuss “contracts”. This was done without a motion and without definition of the lawful purpose to go into executive session. Nearly everything that PW&SD does involves a contract. Except for employment matters and a limited few specific types of contracts nothing can legally be discussed in secret.
My first contact with this board left me with more questions than answers. While it was the unusually large rate increase that drew my attention, it is the sequence of poor judgment calls that concern me. If they are incapable of getting the small and procedural things right how can they be expected to make sound decisions on multimillion dollar issues.
I will continue to monitor their mode of operations. "
mmagic wrote on Jan 23, 2009 7:48 PM:
The headline on this story is dead on. PW&SD is using the “Devil Made Me Do It” ploy to implement their planned rate increase. By spending money that they don’t have on an outside consulting firm and selecting a citizen group sympathetic to their plan the board places themselves one step removed from the problem and creates a justification for their rate increase that can merely be endorsed instead of their fault.
Don’t get me wrong. A restructuring of the water district’s revenue stream is needed to more closely align long term obligations with long term revenue streams and provide conservation incentives. Such a revenue stream restructuring will inevitably result in higher monthly bills for some and lower bills for others. While the board blames a drop in new construction tap fees for a need to dramatically increase rates a more accurate match of costs to revenue streams could have mitigated today’s problem.
My Parker water bill is 83% flat fee and 17% based on usage. In contrast the provider at my previous Colorado residence relied on flat fees for 32% and consumption for 68% of my bill. Obviously I was much more careful in my usage at the previous location.
The current revenue stream fails to provide the customer with the advantage of tax savings from payment of capital costs through property taxes. If I had paid $420 as property taxes to PW&SD instead of rate, I would have had a net savings of 12% on my net cash outflow and PW&SD would have realized the same revenue. Further PW&SD potentially could have a predictable revenue stream component available to restructure debt to today’s low bond interest rates! There is opportunity to create a rate structure that is both more advantageous to the customer base as a whole and the objectives of the district.
My greater concern is with a continuing lack of judgment displayed by the board. It is their judgment that we must rely on for all the policy decisions required in running a governmental business as large and complex as PW&SD operations and the Rueter-Hess reservoir.
In the infamous December board meeting they passed a budget that relied on a 20% to 28% across the board rate increase as casually as ordering a pizza. Then in January they rescinded the increase with less discussion than sending the pizza back to be re-heated! I am more concerned with the flip-flop for political reasons than with the amount of the attempted increase as it establishes either a failure to fully vet the original budget or an effort to thwart a recall effort by making a political decision to reverse course rather than standing by a decision based on doing the right thing.
When I look at the glossy special mailing I received explaining how bad PW&SD needs the rate increase and hear that their austere budget reportedly includes an Escalade, I start to think that this bunch is about as bright as a group of Detroit automakers that would take separate corporate jets to Washington to beg for a handout. Then just to reinforce the point I receive another special mailing puff piece at district expense telling me that they have rescinded the rate increase!
Nevertheless I attempted to remain objective and attended the 1/22 board meeting to observe the PW&SD board real time. Although there were two persons at the table whose technical knowledge impressed me, as a group they confirmed my expectations.
1) No one could explain why budgeted 2009 salaries were 20% greater than August 2008 full year projections. By August this number should have been known within a percentage point. Even though W-2’s likely have been released and unaudited financial statements should be in the board’s hands the board was unable to explain that the August projections were in error or why excessive salary growth should be budgeted in 2009.
2) While declaring that numerous expenses had been reduced from the 2009 budget, the board refused to revise the 2009 budget and only would explain that they were working on a reduced, presumably secret number.
3) I found it difficult to believe that with the complexity of PW&SD operations and construction in process on the only new reservoir between Canada Mexico that only two trivial non-agenda items need the board’s approval. I could only surmise that much of the board’s work was being performed outside of board meetings via e-mail, phone calls and ad hoc meetings raising questions as to whether open meeting laws might be violated.
4) After two trivial motions, a report and a photo tour of Rueter-Hess progress, in apparent contravention to Colorado open meetings law, it was announced that the board would adjourn to “executive session” to discuss “contracts”. This was done without a motion including specification of the lawful purpose to go into executive session. Nearly everything that PW&SD does involves a contract. However, only employment and a limited few specific other types of contracts can be discussed in secret.
My first contact with this board left me with more questions than answers. While it was the unusually large rate increase that drew my attention, it is the sequence of poor judgment calls and lack of transparency that concern me. If they are incapable of getting the small and procedural things right how can this board be expected to make sound decisions on multimillion dollar issues.
I will continue to monitor their mode of operations. "