Palmer Lake’s Major Financial Troubles Will Likely Lead to Higher Water Rates | New

Palmer Lake water customers will likely see their bills rise in the near future as the city seeks to increase revenue from its stand-alone water company, which is expected to be underfunded in 2023.

The “inadvertent” incorrect billing of 15 water accounts and the city’s failure to increase water rates by 3% per year starting in January 2020, as stipulated by a 2019 city resolution, caused the budget shortfall, according to administrative and financial documents.

Staff are “working through the issues now” and “will bring options to the (board of directors) for consideration,” Deputy City Clerk Julia Stambaugh said via email this week.

Stambaugh reported in a Sept. 29 city memo that the water billing issues had been resolved. It was unclear how long the city had incorrectly billed the water accounts in question.

But now bloated loan repayments coming in 2024 and a ‘significant rise’ in the cost of infrastructure materials means the city’s water fund won’t have enough money in its planned 2023 budget. , according to the financial documents.

And the locals are worried.

“(The water company) is not being run in a way to sustain itself,” said Marty Brodzik, resident and planning commissioner. “…It’s a snowball rolling down the hill.”

Part of the problem, Brodzik said, is that the city is still repaying loans it received from itself and the Colorado Water Resources and Power Development Authority. The entity provides state and federal loans to Colorado governments to pay for water, wastewater and other types of infrastructure projects.

In 2009, the city received a loan from Colorado Water Resources of approximately $1.86 million, to be paid in full by December 2031, to construct a water storage reservoir. In 2018, it received another loan of around $1.1 million, repayable in full by 2048, to build a second water storage reservoir. In 2019, Palmer Lake loaned its water fund an additional $500,000 from its general fund, which must be repaid by 2039, to cover cost overruns, according to the city’s Sept. 29 memo.

The remaining balance on the 2009 loan is approximately $772,000 and the remaining balance on the 2018 loan is approximately $954,000. The city plans to pay $104,970.98 in 2023 on the 2009 loan and an additional $68,168.30 in 2023 on the 2018 loan, Stambaugh said.

Palmer Lake water customers only paid interest on the 2019 loan – $10,000 per year. But in 2024, repayments will increase to $19,374, then to $38,748.12 per year from 2025 as residents begin to repay principal.

Why the city lent money to its water company from its general fund and did not transfer the money to the water fund was unclear. Stambaugh said there was no record to explain the previous administration’s actions and former Palmer Lake Mayor John Cressman, reached by phone Friday, said he was unaware of the reasoning.

A 2023 budget proposal for the Palmer Lake water utility shows the city also expects a cost overrun of $327,127 in 2022.

“Think of all this debt they have. Now they’ve gone over budget in just one year of operation. It’s not sustainable,” Brodzik said.

It is also unclear what might happen if the water bottom cannot sustain itself, as required by law. Stambaugh said the city is “looking at (its) options.”


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The city could consider financing options for its water company through the Colorado Department of Local Affairs and the Colorado Department of Public Health and Environment through revolving fund grants and loans from the City. state, said Colorado Municipal League executive director Kevin Bommer. That could include money from the $1.2 trillion Infrastructure Investment and Jobs Act the federal government passed last November, he said.

Palmer Lake can also use American Rescue Plan Act funds to address its water and wastewater issues, Bommer said — an option the city has taken.

Palmer Lake received a total of $752,290 over two years: $376,145 in 2021 and the remaining half of $376,145 in 2022, Stambaugh said. The city transferred that money to its water company to pay for water infrastructure improvements, including an emergency tie line to a water main that the nearby town of Monument is building. to build, for technology upgrades at the Palmer Lake processing plant and for distribution line upgrades, she said.

Those federal dollars could not be used to pay off loans, Stambaugh said.

Brodzik questioned that decision, saying those ARPA funds could have stayed in Palmer Lake’s general fund to help pay for road, police and fire improvements — especially since voters in Palmer Lake are submitting their ballots for the upcoming Nov. 8 election. City asks residents to decide next month whether to raise property taxes to about $1.3 million in 2023 and whether to allow recreational marijuana sales in town to help pay fire, police, roads and parks services.


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The tax increase will not help the water fund’s problems and means “the general fund will get more money whether it needs it or not,” Brodzik said. “But water tariffs will continue to rise too.”

Brodzik said she wanted a solid solution that included a loan repayment plan with the least amount of interest charged to residents, to build up the water company’s capital improvement fund “so that in the event rain, they don’t have to worry about getting a loan,” and determining how much water tariff and water usage needs to be collected annually to “operate within the budget “.

Stambaugh said the city is considering its next steps, including raising water rates, user fees and faucet fees, as well as analyzing the company fund’s rates of business. water “to improve funding for infrastructure improvements”.

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