To keep ahead of the costs of repairing an aging water system and other capital improvements, the city of Durango is considering asking for about a 10 percent increase in the water rate for 2014 with similar rate increases to follow in the years to come, according to a preliminary discussion by city officials Tuesday.
A residential customer consuming 2,000 gallons a month, which is the minimum rate for a city water charge, could see a rate increase from $12.46 month to $13.67 a month. The commercial rate could increase from $24.92 a month to $27.41 a month.
The city then would pad its water-fund revenue of about $5 million by an extra $121,211. But Steve Salka, the city’s utility director, has identified about $6 million in capital needs for its water-treatment plant and the underground pipes and infrastructure.
As an example, Salka said the city needs to replace 123 valves at a cost of $4,500 a piece.
During a study session with the City Council on Tuesday, Salka acknowledged the city must be realistic in asking for incremental rate increases and not hit the consumer all at once with a big rate increase.
He also would tweak the rate structure to protect senior citizens and smaller water consumers.
A big reason why the city has fallen into a financial hole is that it has not kept up with preventive maintenance and necessary adjustments to the water rates through the years, officials said.
The city’s current water rate is low in comparison to the state average of $42 a month, officials suggested.
Councilor Sweetie Marbury said she could recall that her water bill in the mid-1970s was always “$10 a month,” no matter how much water she used.
Greg Hoch, the city’s director of planning and community development, recalled that was a period when the city regularly subsidized its water fund with revenue from its overall general fund.
Salka, who said he has been aggressive in going after water thieves, said he wants people to appreciate the value of water.
“It’s not something that’s always going to be there if we don’t take care of it,” he said.
It also is difficult for the city to qualify for state grants for needed projects if Durango cannot demonstrate that it is raising sufficient revenue on its own.
Because of an aging infrastructure, Salka projects capital needs will go up to $14 million for water by 2016 with the city water funds depleted to less than $1 million under the current rate system.
The suggested water rate increase would follow a doubling of the sewer rate this year. Salka expects he also will have to ask for another sewer-rate increase for 2014.
“There’s too much to fix,” Salka said.
Any rate increases will have to be subject to public hearings this fall before they could be formally adopted by the council.
Officials also acknowledge that they will prioritize needs before presenting a formal proposal for a balanced budget for 2014.
The discussion Tuesday was to prevent sticker shock, officials said.
The city also will have to make priorities for fixing its roads.
If Durango wanted to upgrade its entire road network in one year, it would cost about $18.6 million, according to Levi Lloyd, its street supervisor.
Overall, despite the appearance of some street cracks that look like the back of an alligator, pavement condition is rated at 64 percent “good” in Durango, Lloyd said.
To manage the costs of preventive maintenance, Lloyd suggested that the city might look at an eight- to 10-year plan instead of a five-year plan.
jhaug@durangoherald.com
