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City explored alternatives to rate hikes

When the City Council adopted utility rate increases in May, a repeated question we heard was: Have you considered other alternatives? The answer is yes, quite a few. And the following are just a few examples.

Debt: Some claim that debt is a viable alternative to raising rates. However, it’s not really an alternative. That’s because we would have to raise rates anyway — not only to qualify for a loan, but also to pay it back.

Furthermore, a 2010 ballot initiative requires voter approval for any debt above $1 million. And that approval couldn’t happen until 2017 at the earliest. Moreover, approving only a few million would barely put a dent in the $100-plus million needed over the next decade.

Still, debt can be a useful tool. And now that we’ve raised rates sufficiently to actually qualify, it’s probably worth exploring further to militate against future rate increases. But given the vocal opposition in public comment and the millions more in interest we’d have to pay, it remains to be seen whether debt makes sense and, even if so, whether voters would approve it.

Solar revenue: Others have urged us to use solar lease revenues rather than raising rates. However, most existing solar revenues are already spoken for, currently paying over one-third of our general fund budget ($8 million to $10 million annually). So if we instead deflected those funds to utility projects, we’d have to find other revenue sources to pay for general services and programs. Robbing Peter to pay Paul doesn’t work.

Nevertheless, if solar revenues increase over time, we can certainly examine whether it makes sense to use some of those increases to help defray utility costs.

Capital improvement fund: Twenty percent of the city’s land sale and lease revenues (including solar) goes into the capital improvement fund. With voter approval, we can then use those funds in a variety of ways as they become available, including for utility projects.

Ballot questions approved in 2014 and 2015 authorized us to do just that. And by voting yes again this November, you can authorize use of capital improvement plan funds to pay the existing raw water line debt, thereby freeing up even more money in the utility fund for badly needed utility projects.

Golf course land sales: You also approved two past ballot initiatives authorizing use of proceeds from the sale of land near Boulder Creek Golf Club for utility infrastructure needs. As you might expect, those approvals also helped us keep rate increases lower than they otherwise would have been.

It appears city staff is still on track to send at least some of that land out for bid later this year, and the resulting revenue, though modest compared to our overall utility needs, will nevertheless be a welcome help as it trickles in over the next few years.

Cash on hand: Because, in part, of our conscious decision to accelerate debt payments, last year’s utility fund balance was up significantly from prior years and is expected to end relatively high again this year. So it appears that at least a few million dollars will be available to kick-start some utility projects even before rate increases begin.

We obviously need to keep a prudent amount in our operating and reserve accounts to cover ongoing cash flow needs and unexpected contingencies. But once we’ve determined a reasonable amount to keep in reserve, our only remaining task will be figuring out how best to spend the surplus. And that’s a nice luxury to have.

Other: The list of other potential funding alternatives is probably as limitless as our imaginations and might include developer funding and grants, for instance. But it remains to be seen whether any such prospects will become viable opportunities over time. We are constantly exploring the possibilities and encouraging others to help us find creative solutions.

In closing, I want to assure you that the current City Council members remain committed to exploring these and other alternatives going forward. I stand firm in my belief that the future of Boulder City is a very bright one. With your help and support, I am supremely confident that together we will find sensible solutions.

Rod Woodbury is mayor of Boulder City. He has been serving on the City Council since 2011 and is the president and managing shareholder of his law firm, Woodbury Law.

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