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OCN > 2411 > Donala Water and Sanitation District, Oct. 10 – Board receives preliminary 2025 budget, considers rate increase

Donala Water and Sanitation District, Oct. 10 – Board receives preliminary 2025 budget, considers rate increase

By James Howald and Jackie Burhans

At its October meeting, Donala Water and Sanitation District (DWSD) General Manager Jeff Hodge presented a preliminary budget for 2025, prompting discussions of capital projects and a rate increase. The board voted to put the question of eliminating term limits to the voters. The board heard financial and operational reports.

Board President Wayne Vanderschuere attended remotely and Board Vice President Bill George facilitated the meeting.

Preliminary budget assumes rate increase

Hodge presented a preliminary budget that anticipates total revenue of $11.010 million and total expenditures of $10.250 million for the 2025 fiscal year and includes a proposed 9.25% increase in rates. The budget includes $3.15 million for eight capital projects:

  • $500,000 to continue the rehabilitation of water tanks.
  • $395,144 for video inspection of the sewer system.
  • $500,000 for the Loop water reuse project.
  • $500,000 for rehabilitation of two wells.
  • $75,000 for fire mitigation at Willow Creek Ranch.
  • $245,000 for water supply/reuse water.
  • $650,000 for water treatment facilities.
  • $290,000 for the aquifer storage and retrieval (ASR) project.

Hodge told the board the district had retained Raftelis, a company that does financial modeling and rate studies for local governments and utilities, to review DWSD’s capital projects, financial policies, rates, and reserves in preparation for the 2025 budget process.

Director Ed Miller asked Hodge what could be removed from the list of capital projects if only $2.5 million were available. Hodge answered that some projects could be put off, but that would lead to more expensive projects later. If ASR were removed from the list, that would change water supplies for the next 20 years. Hodge noted that long-term capital projects totaled $23 million. Miller said the proposed increase would not fund any of the long-term capital projects. Hodge said the rate increase would allow the district to build reserves that could be used for those projects.

Miller asked Hodge to provide a water balance report to help inform decisions about capital projects. Miller pointed out that the district’s wells had not been properly maintained 10 years ago. “They were left to corrode,” he said. He added he did not feel good about forecasting expenses for projects that might not be needed. Miller proposed waiting until money had been spent before raising rates. Hodge said the district had $3 million in the bank and could not issue bonds based on revenue. Any bond would need voter approval.

Director Scott McCollough said he considered water tank rehabilitation the first priority, fire mitigation at the Willow Creek Ranch to be the second priority, and the Loop water reuse project to be the third priority. George said he thought all the capital projects were necessary and kicking the can down the road would increase costs.

McCollough said he had a visceral reaction to a rate increase of 9.25%, and he suggested extending the timeline for addressing capital projects. Superintendent of Water Operation Ronny Wright said prices were rising quickly and the district needed to address issues not handled by previous boards.

Hodge argued that the board could wait until emergency expenditures were needed or it could budget for problems before they occur. He gave the recent sudden failure of Well 1A as an example of an unexpected cost and said DWSD could lose two more wells in 2025. He pointed out that the district had a policy requiring 180 days of operating funds, about $1.2 million, in reserve. He said reserves could be reduced for 90 days.

Miller suggested a rate increase of 4% and suggested waiting on some of the capital projects.

Hodge emphasized that the capital projects were “what you need to keep the water flowing.”

Miller suggested delaying the ASR project by a year or two to save $4.7 million.

Vanderschuere said he wanted to find savings on capital projects that would reduce the rate increase to a more palatable 4 to 6%.

Helen Malenda-Lawrence of LRE Water, a company that advises DWSD on its wells and well field, said two wells needed to be rehabilitated in 2025 “because they haven’t been run properly and haven’t been maintained.” Video inspection of the wells showed they are “really bad,” she said.

Miller suggested, later in the meeting, that DWSD might want to sell Willow Creek Ranch and use the money for other purposes.

Hodge said he would make changes to the budget and try to reduce the proposed rate increase to 4%. McCollough said he would like to meet with Hodge to discuss the dependencies between the capital projects. Hodge added that five years ago, the district was delivering about 1,200 acre-feet of water to customers but that has dropped in recent years to 850 acre-feet. He said rates need to be set at a level where consumption stays consistent.

Voters will decide on term limits

At previous meetings, the board discussed the difficulty of finding candidates to serve on the board and the problems arising from the turnover of board members. The board asked its lawyer if the board’s four-year terms could be extended, but was told its only option was to put a measure on the ballot removing term limits altogether.

At the October meeting, the board voted on whether it would ask voters to remove term limits. Directors Kevin Deardorff, George, and Vanderschuere voted to put removal of term limits on the ballot; Miller and McCollough voted against doing so.

Financial report

In his summary of district finances, Hodge reported $200,000 in water sales revenue in September, and noted 2024 was a much better year than 2023 for revenue from water sales because 2023 had been exceptionally rainy. Other revenues were on track, he said, and expenses were below budget.

Operational reports

In his manager’s report, Hodge said Colorado Springs Utilities (CSU) had asked him to reconsider participating in the North Monument Creek Interceptor (NMCI) project, which would eliminate DWSD’s need to treat its own wastewater. Hodge explained NMCI, unlike the Loop, does not offer the district a way to reuse 400 acre-feet of treated effluent. He said he would continue the discussion with CSU.

Malenda-Lawrence reported on the failure of Wells 11D and 1A. Both pumps were at the end of their expected life. 11D is an important well because it can feed the Holbein treatment plant directly, without the need to use the pipeline adjacent to Baptist Creek Road that is subject to ruptures because it rests on rock. Well 11D failed due to corrosion. The district’s groundwater is corrosive, Malenda-Lawrence said. Work on the well to date had cost $25,000, she said; she recommended cleaning the well and replacing the drop pipe. She estimated the cost to rehabilitate Well 11D would exceed $200,000.

The well can produce more than 350 gallons per minute after rehabilitation, she said. Well 1A was plugged at a point where two dissimilar metals met, which caused corrosion. In addition, the well has two small holes. The cost to repair 1A would be similar to the cost for 11D. The well is permitted to produce up to 400 gallons per minute, she said.

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The next board meeting is scheduled for Thursday, Nov. 21 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.

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