At least 227 households on almost 100 streets within Española city limits lack access to water and sewer lines.
How many of them get access to those services anytime soon depends on whether Mayor Joseph Maestas and the City Council agree to a funding plan Acting City Manager Veronica Albin presented to them at an April 24 meeting.
The plan coasted though a Public Works Committee meeting earlier this month. But it later ran into objections from Maestas and Mayor Pro Tem Alice Lucero due to a provision that would tie up almost a third of the city’s three-eighths gross receipts tax for water and sewer projects in bonds and loans for the next 25 years.
“That loan debt payment does concern me,” Lucero said at the April 24 meeting. ”We have to be fiscally responsible.”
But after several false starts on its utility expansion programs, the residents who would be served be the new lines are losing faith.
Española resident Valeria Archuleta said she bought a new mobile home years ago and placed it on her Calle Gallegos property, but has not been able to occupy it because her current well and septic system can’t support a new home and the city has fallen short on promises to install new lines.
The city had selected Calle Gallegos last year to be the first out of 25 to 30 streets that would receive new utility connections. Installation did not move forward because the city had not obtained easements from residents and the city had no funding for sewer projects, Water Director Marvin Martinez said.
“After 10 years of waiting, I gave up on the city,” Archuleta said. “They keep saying (the new lines) are coming soon, but they never do anything.”
Bringing water and sewer lines to all households without service would cost the city up to $17.5 million, according to city documents.
The cost for each connection varies, according to how many households are on each street. On streets with multiple households, the cost per connection is as low as $5,275, according to city documents. For some private drives with only one home, connections cost up to $242,359 each. Those amounts reflect the cost of installing new water or sewer lines and extending them to unserved homes, and would be paid by the city. Each customer would then be responsible for fees to connect their home to those lines.
The financing plan Albin presented would fund the first three of eight phases of the project, providing about 230 new utility connections for a cost of about $7.5 million.
In the plan, a “connection” refers to each new water and sewer line that reaches a home. For example, a home reached by both new water and sewer lines would count as two connections.
The first phase, estimated at $658,186, would bring water lines to five homes and sewer lines to seven homes on Calle Gallegos.
The second phase, estimated at $3.5 million, would install 124 new connections along State Road 76, North McCurdy Road and a handful of other streets. The third phase would create about 100 new utility connections to more than a dozen streets, including North Prince Drive, for $3.4 million.
The city currently has about $2 million available for those three phases — $1 million from existing water and sewer tax cash balances and roughly another $1 million pieced together from other grants, loans and cash balances. For the rest, the financing plan relies on securing a $2.5 million, 30-year loan from the state Finance Authority that would be repaid with future tax revenue, and selling $3.5 million in 25-year tax revenue bonds.
The bond would allow the city to raise $3.5 million immediately by hiring a bank to sell that amount in bonds. The city would then pledge to repay that amount, plus interest, with sewer and water tax revenue over the following 25 year.
But together, the loan and the bond would tie up $320,000 — about 27 percent — of the average $1.2 million in annual revenue from the water and sewer tax.
The idea did not go over smoothly with Maestas, who said the funding plan deviates from the purpose of the water and sewer tax.
“It’s not responsible to obligate the entire (tax) for debt without leaving some for future matches,” he said. “And we haven’t even obtained a final reconciliation of how we’ve spent much of that money.”
The city passed the water and sewer tax in 2002, selling it to voters as a funding source for utility improvements, which would in turn keep utility bills low. The city is currently studying a utility rate increase (see related story).
The tax has since been used for other purposes, including payroll checks and a legal settlement. And Albin said much of it has been used to repay loans taken out years before the tax was passed, which had been to used to pay for non-water projects, such as road work. That means the city may never know to the last dollar what the tax has been paying for, because many transactions are obscured behind layers of refinancing, Albin said.
District 2 Councilor Alfred Herrera took issue with the objections, and faulted the Council.
“We keep talking about it, and I quite frankly am getting sick and tired of all this talk,” he said. “Here’s an opportunity to move forward with work staff has done, it’s gone through committee, it’s been vetted, and now we keep throwing more monkey wrenches at it, more obstacles. I say let’s bite the bullet and get it done.”
The Council ultimately settled on discussing the plan further in a Finance Committee meeting, likely in May.