Columns » Between The Lines

Water revelation stuns Council


Usually, the nine elected members of the Colorado Springs City Council handle surprises with patience and understanding.

They talk, they ponder, they listen, they respond. Diplomatically, most of the time.

There are exceptions, such as last week when the group was serving in its other function as the board for Colorado Springs Utilities.

The news at the board's May 21 meeting was bad for two reasons. One, it was clearly negative. Two, the magnitude came as a surprise.

You might have heard about Utilities revealing a $33 million shortfall in revenues for 2008. One reason given was conservation by families like yours and mine, leading to $9.5 million less than expected from water bills. But the much bigger chunk, more than $23 million, was described as the result of growth slowing in Colorado Springs, meaning fewer new-housing starts than expected.

That news, coupled with a recommendation that a rate increase would be needed to balance Utilities' budget, bothered the Council/board. Two members, Scott Hente and Jerry Heimlicher, said it sent a bad message to the public: Conserve water, and you might have to pay more. Council/board member Margaret Radford and others take it further, saying if the $9.5 million shortfall had been the only problem, this never would've been a news story.

The "real problem" is the $23 million mistake by Utilities in gauging how severe the new-housing coma would be here. Never mind that serious troubles in the local market were evident by the second quarter of 2007. That wasn't soon enough for Utilities to adjust budget projections and make sure the Council/board was informed.

But the math still doesn't make sense. If housing starts in 2008 are only expected to drop from 2,100 to 1,750, how does that add up to a $23 million shortage related to growth? That would come to $65,714 per unit, far more than connection fees for 350 homes, and more than if all those homes were built and using water.

It's confusing. It suggests we aren't seeing the full picture. So the Council/board, led by Mayor Lionel Rivera, has ordered Utilities to reassess and make changes. They start with ensuring budgets aren't outdated again; Utilities staff must check and revise projections every month in the planning process for the year ahead.

That obviously doesn't overcome the $33 million shortage. Rivera, with support from others, told Utilities not to push for a rate increase until first making cutbacks in budgets and spending. Rivera suggested those cuts could include staffing, pay raises, donations to charities, corporate memberships, travel anything.

"We're not going to give the green light (to a water rate increase) until they cut everything possible," Heimlicher says.

Perhaps, but Radford says many Council/board members realize higher water rates are likely, regardless. Through years of steady growth, water rates have stayed low because Utilities could make up the difference in other areas, especially connection fees paid by developers of new homes and subdivisions.

"The rates were jerry-rigged by our predecessors," Radford says, not mentioning individuals or time frames. "Growth has been subsidizing the rest of us for water rates, and it always has. But now that we can't count on growth anymore, we have to do something about it."

Failing to recognize the problem soon enough obviously wasn't an intentional error by Utilities staff, because now there's a serious price to pay.

"Our people thought the Springs was more immune to market forces than it turned out," Radford says, "It just caught up with us. But the bottom line is that we have a fundamentally flawed rate structure, making growth pay such a high percentage and depending on it."

If the answer has to be residents paying more for water, it can't be out of line with other cities our size. It also must mean more pain for Utilities first.

Another after-shock from these revelations might be changing timelines for the Southern Delivery System, the $1 billion project to bring water here from the Arkansas River. All along, SDS has been based on, and pushed by, the same kinds of growth assumptions. Now, some Council/board members say SDS might require another look. As Jan Martin said, "Between growth slowing down and conservation, that 2012 (completion) date could be pushed back."

And on that point, everyone might have to agree.

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