- Rate study recommends 5% rate increase
- Groundwater supply study
- 2025 budget
- Term limit waiver to go before voters
- Executive session
By James Howald and Jackie Burhans
At Donala Water and Sanitation District’s (DWSD) November meeting, consultants presented the results of two studies: the first addressing proposed rate increases and the second analyzing groundwater supply issues such as the status of existing wells, plans for well maintenance, how best to manage the district’s two well fields, and next steps.
The presentations were intended to address questions arising from a discussion of the district’s 2025 budget at the previous board meeting, in which a 9.25% increase in rates had been proposed by General Manager Jeff Hodge. Hodge presented a revised 2025 budget that compared 4.5% and a 5% rate increases. The board voted on a resolution calling for a special election to ask voters to waive term limits for DWSD board members. The meeting ended with an executive session.
Rate study recommends 5% rate increase
Todd Cristiano, a consultant with Raftelis, a company that does financial modeling and rate studies for local governments and utilities, presented the results of his study of water and wastewater rates to the board. His goal was to create a financial roadmap that aligns rate revenues with annual expenditures, debt coverage and required reserves; that funds capital projects using debt, rates, and reserves; that structures rates to recover the costs of water and wastewater service; and that minimizes the financial impacts on customers.
Cristiano pointed out that DWSD was restricted in its ability to issue debt, has to rely on cash, and has to save money in advance to fund large capital projects.
Cristiano recommended a 5% rate increase, which he said would result in a $5.38 increase for DWSD’s typical customer. He pointed out that water and sewer costs were increasing much faster than general inflation as measured by the Consumer Price Index. One reason for this was that water and sewer infrastructure that was built in the 1970s with funding from the Environmental Protection Agency was coming to the end of its useful life and needing to be replaced.
Cristiano said DWSD currently comingles water and wastewater funds. He argued those funds should be handled separately to ensure that the rates for those services are adequate to recover their costs.
Cristiano told the board his financial plan assumed the district required an operating reserve adequate to cover 180 days of operation and a capital reserve to cover one year of depreciation expense. He assumed inflation of between 3% and 6.5% for salaries, utility costs, convey and treat charges from Colorado Springs Utilities, chemicals, and miscellaneous supplies. He said water and wastewater services should be self-sufficient by 2029.
Cristiano presented two scenarios. In the first, DWSD would rehabilitate the R. Hull Treatment Plant, fund DWSD’s Aquifer Storage and Recovery (ASR) project pilot, upgrade the chlorine system, drill needed wells, and fund capital replacement projects. The proposed 5% annual increase, between 2025 and 2033, would generate the $18 million needed for those purposes, Cristiano said.
In the second scenario, DWSD would participate in the Loop water re-use project, fund the ASR pilot and some future well projects for a total cost of $24 million. In this scenario, in addition to an annual 5% rate increase, DWSD would have to spend reserve funds in 2026 and between 2029 and 2033. Reserves would remain above target in this scenario, Cristiano said.
On the wastewater side, Cristiano said the proposed 5% annual increase would generate enough revenue to cover the cost of wastewater service.
Following Cristiano’s presentation, board President Wayne Vanderschuere asked Nate Eckloff, a bond expert at Piper Sandler, an investment bank that advises DWSD on how to manage debt, if anything in Cristiano’s study gave Eckloff pause. Eckloff said the study “looked solid,” and the district would have time and flexibility to adjust rates if needed. Vanderschuere said the board’s direction had been to increase fixed fees rather than rates. Hodge agreed, saying that increasing the district’s tiered water usage rates risked stifling demand.
Director Ed Miller said before he would agree to the proposed rate increases, he wanted to see a justification for the proposed spending.
Groundwater supply study
Helen Malenda-Lawrence, of LRE Water, presented to the board a detailed analysis of the district’s groundwater resources that included an assessment of each well, well maintenance, projected supply scenarios, and suggestions for long-term maintenance.
She said Hodge had inherited well fields that had not been well maintained and problems cropped up that needed immediate fixes. She said that DWSD had made significant investments in understanding the current conditions of its two well fields, its wells and its infrastructure. Her supply study had a lot of in-depth studies behind it, she said.
Malenda-Lawrence showed the board a map of the district’s two well fields and explained that wells in the northeast field fed the Holbein Water Treatment Plant (HWTP) and wells in the southwest field fed the R. Hull Water Treatment Plant (RHWTP). The district has a total of 14 wells, the oldest drilled in 1985 and the newest in 2022. Five of the wells are currently out of service, some temporarily and some permanently. She said Wells 1A and 11D both failed in September. Well 11D is an important source of water for the HWTP, Malenda-Lawrence said.
Malenda-Lawrence said Wells 11D, 9A and 4A were the most important to repair. She estimated the cost to diagnose and rehabilitate them at $580,000. She said Wells 1A-R and 14A were optional to repair if additional water supply is needed or redundancy is desired. She estimated the cost to repair those wells would be about $700,000. She related the well maintenance schedule to the district’s ability to meet demand by pointing out if Wells 1A and 11D had failed before Well 16A, the district’s newest well had come into production, it would have been difficult for the district to meet its peak demand in the summer months.
The groundwater supply study considered sustainable pumping rates, water quality, permit levels at all wells, and which wells might go out of production to identify scenarios in which the district might struggle to meet demand. All the scenarios in the study trigger flags about water quality in some circumstances. If both Wells 11D and 4A are down simultaneously, the district can’t meet demand, Malenda-Lawrence said. Her conclusions were that DWSD has been able to meet demands up to this point but it does not have a lot of flexibility, which means the operations team has to juggle things and could run into “volumetric limits.”
She recommended DWSD consider drilling two new wells into the Denver aquifer in 2026 and 2027, one in each well field, at a cost of around $1 million per well. Those costs do not include transmission lines for the water and electrical power to the well sites, she said. If DWSD intends to rely on groundwater as its main source of raw water, she recommended the drilling of another five wells between 2025 and 2040 to replace wells that can be expected to fail during that timeframe.
Hodge said most of the wells in the northeast quadrant use a pipeline adjacent to Baptist Road to convey their water to the HWTP. That pipeline is subject to failure because it is installed directly on rock without the usual clearance underneath the pipeline. The pipeline failed in September. That situation makes Well 11D critical to repair, because when the pipeline fails again Well 11D will be the only well able to supply the HWTP without the pipeline, he said.
Hodge mentioned a Colorado Supreme Court decision in the case of Parker v. Rein that will affect DWSD’s planning. The ruling states that water right holders are entitled to a fixed volume of water and not a fixed rate of withdrawal. That means water districts may have to document how much water they have pumped to date and may see their water rights end sooner than expected.
Brett Gracely, also with LRE Water, discussed the next steps DWSD should consider. He said the district should compare the costs of maintaining and improving their two well fields to the costs of using its water supply from the Willow Creek Ranch conveyed by Colorado Springs Utilities, obtaining water via the Loop water re-use project, and moving to direct potable re-use of effluent from the Upper Monument Creek Wastewater Treatment Facility.
Vanderschuere said he applauded the rigor of the groundwater supply study.
2025 budget
Hodge presented an updated 2025 budget that, in response to the board’s comments on the budget he presented at the October meeting, lowers the proposed rate increase from 9.25% to 5% and delays some capital projects to reduce their total costs to $2.2 million. He said the updated budget “keeps the lights on,” is in balance, makes debt service payments, and includes financial reserves that will fund operations for 180 days.
The board will hold a final vote on the 2025 budget at its next board meeting on Dec. 12.
Term limit waiver to go before voters
The board voted in favor of Resolution 2024-7, which authorizes a special election to be held on Feb. 4, 2025 on the question of waiving term limits for members of the DWSD board.
The district headquarters at 1580 Holbein Drive will be used as a polling place, and district residents can vote in person between 7 a.m. and 7 p.m.
Executive session
The meeting ended with an executive session to determine positions relative to negotiation regarding the Intergovernmental Agreement governing the Upper Monument Creek Wastewater Treatment Facility that DWSD shares with the Triview Metropolitan District, the Forest Lakes Metropolitan District, and the Academy Water and Sanitation District. No actions were taken after the executive session.
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The next board meeting is scheduled for Thursday, Dec 12 at 1:30 p.m. Generally, board meetings are held the third Thursday of the month at 1:30 p.m. and include online access; call (719) 488-3603 or access www.donalawater.org to receive up-to-date meeting information. The district office is located at 15850 Holbein Drive, Colorado Springs.
James Howald can be reached at jameshowald@ocn.me. Jackie Burhans can be reached at jackieburhans@ocn.me
Other Donala Water and Sanitation District articles
- Donala Water and Sanitation District, Nov. 21 – Board hears rate and groundwater supply studies (12/5/2024)
- Donala Water and Sanitation District, Oct. 10 – Board receives preliminary 2025 budget, considers rate increase (11/2/2024)
- Donala Water and Sanitation District, Sept. 19- -Board continues term limit debate (10/5/2024)
- Donala Water and Sanitation District, Aug. 15 – Board debates waiving term limits (9/7/2024)
- Donala Water and Sanitation District, July 18 – Board considers request to exclude property (8/3/2024)
- Donala Water and Sanitation District, June 20 – Loop water reuse project discussed (7/6/2024)
- Donala Water and Sanitation District, May 16 – Audit report positive (6/1/2024)
- Woodmoor Water and Sanitation District, April 8 – Board discusses bills to regulate wetlands (5/4/2024)
- Donala Water and Sanitation District, April 18 – Board discusses financial policy, water demand (5/4/2024)
- Donala Water and Sanitation District, March 21 – Good news on radium, PFAS (4/6/2024)
- Donala Water and Sanitation District, Feb. 15 – Board considers request to extend service area (3/2/2024)