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Council delays rate hikes; study reveals need to boost utility costs, but officials want to consider options

City Council members Tuesday night tabled three agenda items including potential utility rate hikes, the development of a 15-lot residential community at the end of Northridge Drive and the possibility of moving municipal elections to even years.

The largest topic of discussion at the 7 p.m. meeting at City Hall was a study conducted by the Public Works Department that analyzed spending and revenue associated with the city’s utilities and presented rate hike options to close the gap between the two.

In a nearly 20-minute presentation, a senior associate at EES Consulting, Anna Falcon, spelled out the city’s spending on water, wastewater and electricity and presented two 10-year financing options for each utility that would increase customers’ rates, but would shrink the deficit between revenues and expenses.

Falcon said the city is expected to have a collective $5.5 million shortfall in utility expenses in 2017.

Public Works Director Scott Hansen said the study’s results demonstrate the need for rate increases.

Falcon said her firm also looked at the city’s reserve policy, which sets aside “cash” to cover potential expenses such as major equipment failures and investment projects, including a $15 million wastewater project scheduled for 2023. She said shortfalls can be covered by reserves, rate increases or debt-financing.

“If you have on hand a kind of buffer, then you don’t have to go to rates” to pay for projects, Falcon said.

Councilman Cam Walker interrupted her to ask if collecting $50 million over five years for a system with a depreciative value of only $34 million was reason enough to burden customers with such severe rate hikes.

“I think the community doesn’t want to see us looking at 50 percent, 40 percent, 30 percent or 15 percent rate increases,” Walker said.

The city has a lot of assets at its disposal and the community has entrusted the council with exploring other options, he added.

“I want to reassure the community that this is a long way from saying we’re going to raise rates right now,” Walker said. “We don’t need a brand-new system all done on the ratepayers’ backs in this short period of time.”

Councilman Duncan McCoy agreed but said the study kicks off the process of a “realistic assessment” of how the city pays for utilities, which have been subsidized through the general fund for quite some time. “It has to be able to pay for itself,” he said of the utility fund.

Councilwoman Peggy Leavitt said it’s council members’ responsibility to talk to residents about the utility situation and make tough calls.

Mayor Rod Woodbury said he’s also open to more discussion, “but this just affirms what I’ve said for a while; this just isn’t a sustainable system as is.”

Even though the city is selling land, “it’s a drop in the bucket compared to what we need,” he said.

The report will be discussed more thoroughly in upcoming budget meetings, which Woodbury encouraged residents to attend.

At the same meeting, members were appointed to the Historic Preservation and Regional Flood Control District’s Citizens Advisory committees.

Kiernan McManus was appointed to replace Chris Frausto on the Historic Preservation Committee. Frausto is moving and has vacated the seat.

Jason Gross was recommended by City Clerk Lorene Krumm for the flood control district’s advisory committee, whose last member, Jim Beneda, no longer lives here.

The council moved an item discussing a 15-lot residential development to the March 29 agenda and decided moving municipal elections to even years would not be on the December ballot, but would be discussed at a later date.

Contact Kimber Laux at klaux@bouldercityreview.com or 702-586-9401. Find her on Twitter: @lauxkimber

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