There is no way around it: The city of Durango must increase water and sewer rates next year and follow up with annual rate increases going forward, according to city officials.
For water rates, the city proposes an average monthly increase of $2.80 for residential accounts and $16.76 for commercial accounts. For sewer rates, the city proposes an average monthly increase of $9.18 for residential accounts and $78.14 for commercial accounts.
The city, which has a number of significant water infrastructure projects planned for the next decade – including a $35 million to $40 million replacement of the pipeline that delivers Durango’s drinking water – expects its water fund to be $3 million in the red by the end of 2030, officials said.
The sewer fund requires a rate increase just to meet operational expenses, which are projected to exceed revenues next year.
City Council and staff members discussed the need to increase funding for water and sewer operations, maintenance and replacement of 100-year-old infrastructure at a budget retreat last week.
The Public Works Department is recommending 10% and 20% increases to water and sewer rates, respectively, to be followed by annual increases yet to be determined.
What residents should expect of annual rate increases will be informed by a rate study outlined in pending water and sewer master plans to be completed in 2027, said Bob Lowry, interim Public Works director.
“We’re making up for decades of rate increases that probably haven’t been passed at the level that they were recommended,” said City Manager José Madrigal.
Had the city incrementally raised rates annually “since Day 1,” current rates would be significantly higher. If rates aren’t raised soon, larger increases will be necessary later on, and utility customers will feel them all the more in their pocketbooks.
Lowry said it’s best practice to review water and sewer rates annually and to adjust them no less frequently than every other year.
Durango’s average base water rate for commercial and residential accounts is $31, compared to surrounding cities’ average base rate of $48.40, he said. Its flow rate per 1,000 gallons starts at $2.41 to $8.18, with the rate rising as more water is used.
Durango’s average base sewer rate is $23.72, about half the average base rate of $50.44 for surrounding cities. Its flow rate is a flat $11.39.
Gloria Platt, chief financial officer for the city, said sewer fees have increased 2% over the past five years and water fees have been reduced 2% in the same time frame.
Statewide, water and sewer fees have risen by nearly 5% in the past five years, she said. Likewise, trash collection fees have risen by 4.5%, cellphone bills have risen by nearly 5% and natural gas bills have risen by 7%. La Plata Electric Association’s rates have risen by 1.5%.
A 2014 rate study for the city recommended a 2% annual increase for water and sewer fees, which were implemented in 2019. Another study that year recommended a 3% annual increase for water and sewer, which wasn’t implemented, she said.
She said the former Infrastructure Advisory Board recommended a water rate reduction and a 10% increase to sewer rates in 2022, and rates haven’t been adjusted since.
Madrigal said previous intentions for the water fund were to build a second water treatment plant and a Lake Nighthorse pipeline. The former Infrastructure Advisory Board recommended that since the city had a large fund balance, it could reduce its water rates.
But maintenance and line replacement was not considered, he said.
Rising costs are a major driver of Public Works’ recommendation to raise rates. Platt said operating costs rose by 20% between 2019 and 2024.
In the same five years, the costs for contracted services rose by 185%, a consequence of the city’s aging and failing infrastructure, she said. Repair and maintenance costs also rose an average of 56%.
Lowry said the city’s biggest single investment is its public works infrastructure.
“The reality is, everything we have in the ground is going to have to be replaced over the next 50 years,” he said. “We have pipes in the ground that are more than 100 years old, and when they fail, we have a problem.”
He said a broken home water heater can be fixed in a day. A major sewer line failure may take weeks to repair. Replacing a line requires “extensive long-term planning, design and construction.”
“If you assume everything has a 50-year life, you’re looking at an average annual investment of $16 million a year just to start replacing what we have right now,” Lowry said. “And that’s in 2025 dollars. You start adding inflation to that, you can see where it’s going.”
Some of the city’s upcoming major water projects include:
- The replacement of the 9-mile Florida pipeline that delivers drinking water from the Florida River to the city reservoir and treatment plant.
- Building a new 3 million-gallon water tank to drain an existing 7 million-gallon tank that Lowry said has “significant deficiencies.”
- The $5 million to $8 million replacement of a major water line along U.S. Highway 160.
- Major rehabilitation of the city’s 75-year-old water plant, planned for five to eight years out.
“Right now, sewer financially needs more help than water. But over the next five years, the water projects are going to require substantially more funding than the current rates will generate,” Lowry said.
Even with rate increases, the city will need to get creative to fund its upcoming major infrastructure projects. Madrigal said the city is looking at infrastructure funding in the 2025 sales tax (the 2005 sales tax renewed by voters in April), 2019 sales tax and the 2015 sales tax funds.
“Do we also look at using lodgers tax … because of the impact that visitors bring into our infrastructure?” he said.
cburney@durangoherald.com
