OCN

Volunteers reporting on community issues in Monument, Palmer Lake, and the surrounding Tri-Lakes area

OCN > 2411 > Woodmoor Water and Sanitation District, Oct. 14 – Board considers ways to fund Loop

Woodmoor Water and Sanitation District, Oct. 14 – Board considers ways to fund Loop

By James Howald

At its October meeting, the Woodmoor Water and Sanitation District (WWSD) board discussed options for funding the district’s portion of the Loop water reuse project. WWSD is one of four water districts participating in the project to divert water from Fountain Creek and return it to customers in El Paso County. Cherokee Metropolitan District and Donala Water and Sanitation District are committed to the project; the Town of Monument is considering participation.

District Manager Jessie Shaffer delivered a draft budget for 2025 to the board, and a budget workshop and public hearing were scheduled. The board heard financial and operational reports. The meeting ended with an executive session, after which no actions were taken.

Financing options for the Loop prove complex

Andrew Rheem of Raftelis, the company that advises WWSD on rates and financial modeling, attended the meeting to help the board sort through the options for financing its portion of the Loop. Shaffer said he had asked Rheem to consider whether WWSD should seek its own financing or have the Loop issue revenue bonds on WWSD’s behalf, and to analyze sensitivities around using general obligation bonds, raising the district’s volumetric rates for water use and raising tap fees.

Rheem said funding for the Loop is a medium to long-term decision and not about rates in 2025. WWSD can use group financing, which is based on the credit worthiness of the weakest participating district, or can “go it alone.” He explained there are several potential funding sources: cash funding from reserves and tap fees and rates; grant funding; general obligation bonds, which require voter approval; and revenue-backed bonds that do not require voter approval but that raise rates. General obligation bonds tend to get lower interest rates than revenue-backed bonds. The district could decide to use a combination of these sources, Rheem said.

Shaffer suggested the board might use a sinking fund, essentially a savings account that would allow the outstanding debt on the Woodmoor Ranch to be paid off early, saving interest costs. Those savings could be used to finance the Loop. He said there are other options that might be worth considering.

Board President Brian Bush said the Loop could not be financed with rate increases alone; higher rates would motivate customers to conserve water. Weather conditions could affect funding from water rates, he said. Financial reserves should be used carefully, he argued, because the district has ageing infrastructure that is subject to catastrophic failure.

“General obligation bonds are on the table,” he said, but the district’s Renewable Water Infrastructure Fee (RWIF) made it less likely voters would approve any general obligation bonds. He recommended a two-year marketing campaign to educate voters. “We need a composite,” he said, which would include rate increases, tap fees, use of financial reserves and perhaps general obligation bonds.

Shaffer said the board had time to consider its options and volumetric rates could be kept low if the board decides to do so.

Rheem said repayment in 20 years is common for infrastructure debt but the board could consider a 30-year repayment schedule, which would result in lower payments over a longer time.

Director Dan Beley argued for raising tap fees to make new development fund the Loop as much as possible. Beley has made the same argument at previous meetings. Director Tom Roddham agreed with Beley’s position on tap fees. Shaffer pointed out that tap fee revenue can be high one year and low the next due to economic forces that affect new construction.

Bush raised the issue of savings that would result from the need for fewer capital projects when the Loop is completed. Board Treasurer Roy Martinez said the district’s funding for renewal and replacement would likely increase in the short term due to the age of the district’s infrastructure. Shaffer said once water was available through the Loop, spending on new wells would drop, perhaps to zero. Operations Supervisor Dan LaFontaine said WWSD was currently spending about $1 million per year on renewal and replacement, and he was working on a long-term renewal and replacement plan. LaFontaine said the corrosive soils in the district caused the saddles that connect pipelines to fail, leading to increased renewal and replacement costs.

Summarizing the discussion, Shaffer said he would continue to work with Rheem to develop funding options for the board to consider, general obligation bonds seemed less likely to be useful, static fees might be part of the solution, and volumetric rates should remain unchanged or perhaps be increased by 1% above the cost of living. Bush said he believed the RWIF would remain in place beyond its current expiration date of 2031, and it was likely WWSD would have to use some of its reserves to finance the Loop. General obligation bonds at some point in the future were on the table, he said.

Draft budget for 2025 delivered

Shaffer gave the board copies of the proposed budget for 2025. The board scheduled a workshop for Oct. 23 to discuss it and a public hearing to be opened at the board’s next meeting on Nov. 11. The public hearing will remain open until the board’s meeting in December.

Financial and operational reports

In his financial report, Martinez noted higher water service revenue due to a dry September. He said the meter replacement program was spending about $100,000 per month. The board voted unanimously to accept the financial report.

LaFontaine, in his operational report, said that he had purchased a clamp-on electromagnetic flow meter that he was using to test the district’s other meters to identify discrepancies in water measurements. He said he had confirmed that the meter at the Southern Water Treatment Plant was adding about 3.8% to the true amount it was processing. He also noted two line breaks, neither resulting in large water losses. All the district’s lift stations had been cleaned, he said, and he was seeing good results from the use of enzymes to prevent the accumulation of grease in lift stations.

In her engineering report, District Engineer Cydney Saelens said the transmission line for Well 22 had passed its first pressure test. Shaffer added that the pipeline was nearly half completed.

Shaffer said bids had been requested for the construction of a 650,000-gallon concrete water storage tank and he anticipated construction would begin in late spring or early summer of 2025.

Executive session

The meeting ended with an executive session to discuss negotiating positions regarding the district’s participation in the Loop water reuse project and discussions with Classic Homes. No action was taken following the executive session.

**********

The next meeting is on Nov. 11 at 1 p.m. Meetings are usually held on the second Monday of each month at 1 p.m. at the district office at 1845 Woodmoor Drive. Please see www.woodmoorwater.com or call 719-488-2525 to verify meeting times and locations.

James Howald can be reached at jameshowald@ocn.me.

Other Woodmoor Water and Sanitation District articles