After years in multiple committees, the Española City Council unanimously passed a funding plan for expanding water and wastewater to more than 200 residences that are not hooked up to city utilities.
This is the first major step taken toward making the project a reality since a flurry of planning two years ago. At that time, the city’s Public Works Committee organized more than 30 streets into a series of phases, and outlined possible funding for the first three of them. The plan that passed at the last regular Council meeting, held Aug. 25, was the finalized outcome of that discussion.
The city set aside more than $7 million in past and future tax revenues for expanding water and sewer lines, and almost $900,000 for possible street improvements, according to city documents. That amounts to around 40 percent of the total cost of expanding utilities to all city streets, which is more than $17 million and would involve over 100 streets.
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.
In order to come up with these funds, the city will tie up millions of dollars generated from its municipal infrastructure three-eights gross receipts tax for years, enter into millions of dollars worth of debt for the next three decades and depend at least minimally on a source of revenue it doesn’t actually have yet.
Consistent with his past statements, District 2 Councilor Alfred Herrera said he was glad to finally see the plan come before the Council.
“We’ve been working very hard to get this funding before the City Council,” he said. “There are $17 million of needs within the city. This is a huge policy decision for this Council, but more importantly it is a huge development within the city.”
Mayor Pro Tem Alice Lucero, who has historically expressed concerns over the project’s costs, echoed Herrera.
“Ever since I became a Councilor back in 2004, this has been a dream of ours,” she said.
The line extensions were a campaign promise of Mayor Joseph Maestas’ slate, of which Herrera was part and Lucero was a supporter, when they were elected to office in 2006. Now, with an election looming ever closer (next March), the city is barely in the project’s design phase, which accounts for a little over a million dollars of the funding plan.
Maestas had objected to tying up so much of the gross receipts tax revenue for the line extensions when the plan was proposed earlier this year, but he did not attend this latest meeting.
The plan calls for the city to sell $3.8 million in 30-year tax revenue bonds and securing a $1.4 million, 25-year loan from the state Finance Administration that would be repaid with future gross receipts revenue. The bond would allow the city to raise $3.8 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 30 years.
The bulk of the funding for the rest of the plan will come from a little over $1 million in cash balances from the gross receipts tax and state and federal grants.
Additionally, should the city decide to include road improvements in the final project, the funding also includes a contingency plan to bond a portion of the gross receipts tax dedicated to streets for $1 million.
The three-eighths gross receipts tax generates just over $1.3 million per year. This money will be dedicated to the project beginning at the time ground is broken on the first street, and end when the project is complete.
The funding plan will bring the city’s debt balance to around $36 million from its current $31 million, according to city documents. The city’s debt could rise to as high as $42 million if a bond issue for a new library is approved by voters in March.
No time line has been set for securing the loan, selling the bonds or actually starting work on the line extensions.
Some residents have been waiting for municipal utilities for decades. Calle Gallegos residents, the street slated first to benefit from the expansion, have been petitioning the city since 1992. Residents of North Prince Drive, one of the streets in the project’s third phase, have been doing the same since 1986. And it still could take years more, Herrera cautioned.
“It’s going to take a while to move in that direction,” he said at the meeting. “It’s not going to take overnight.”