Truckee Donner PUD increases water rates again |

Truckee Donner PUD increases water rates again

Water rates will go up 6 percent for Truckee residents beginning the first of the year.

But the 3-2 decision by the Truckee Donner Public Utility District’s board to raise water rates by 6 percent in 2007 ” and by an additional 6 percent in 2008 ” didn’t come without some serious debate and discussion over the district’s future in the face of a precarious financial situation.

The move to increase water rates for the second time in six months occurred in response to the fact that the PUD is currently undertaking major pipeline replacement projects that will cost upwards of $17 million to complete. An additional $10 million is also needed for repayment of existing loans and technology upgrades.

To finance the projects, district staff recommended to the board that it issue $27 million in certificates of participation. The COPs, however, could be difficult to obtain because of the district’s current financial situation, and bolstering the general fund is what staff say will be the remedy.

“The COP approach would address some immediate concerns and provide a stream of dollars to resolve some issues, such as pipeline replacement,” said board president Ron Hemig. “This idea is big and it’s kind of all or nothing. It is a prerequisite to acquire favorable financing and we must show financial security.”

The PUD currently has just over $100,000 in its general fund, a far cry from the $3.2 million to $3.7 million needed to prove the district’s financial stability to investors. It is the district’s intention that 3 percent of the 6 percent increase will go toward building a prudent reserve fund, said general manager Steve Holzmeister, while the other half of the increase will be spent on operations and maintenance.

At 3 percent a year, the operating reserve should reach $3 million in six years, Holzmeister said.

“The water department is a cashed-strapped utility and it’s not a pretty picture,” Hemig said.

More than a few customers at Thursday’s board meeting asked why the district is in crisis now and where was the board five years ago when the financial state of the district began to reflect an uncertain future?

“How many times has this issue come before previous boards and how often as no action been taken?” asked Geoff Stephens, general manager of the Glenshire/Devonshire Residents Association.

Board members did not provide a concrete answer to the question, though all were very clear in stating that they were aware of the dire financial straits and dismayed that the situation has come to boil, but that they strongly desired to get the problem resolved.

“The board and staff have been addressing this long-term problem for close to five years,” said Hemig. “I think that the board and the district should have been on this several years ago. Now I think we’re at a point where the board has its back against the wall.

“The PUD could have been more affirmative with this issue. We have not had a comprehensive plan to adopt and we have dealt with the problem in a piecemeal fashion.”

That inability to commit to change now means that the district could be paying off debt through 2021.

“I don’t want my kids dealing with this problem; we’ve got to deal with it,” said board member Tim Taylor. “Status quo is not an option. Long- and short-term financing, and looking to the future is where we need to go.”

Donner Lake residents will be hit even harder by the 6 percent rate increase. The Truckee Donner Public Utility District also approved a $6.65 per month surcharge for customers there.

The surcharge, needed to assist with repayment of borrowed funds used to purchase the Donner Lake water system, will remain in place for 30 years or until the debt is paid.

$12 million for the PUD’s three-year pipeline replacement program

$8.5 million to refinance a 1996 debt

$3.5 million for the new Brockway Road pipeline

$1.5 million to complete the Donner Lake water system

$180,000 worth of equipment and

$400,000 to upgrade SCADA, the automated system that monitors water and electric system

The new 6 percent water rate increase will be used by the PUD as follows:

– 3 percent will go toward building reserve funds to prudent levels

– 3 percent will go toward operating and maintenance costs

Beginning on Jan. 1, 2007 the average customer will see an increase of $3.22 on their monthly water bill. On Jan. 1, 2008 bills will rise again by an average of $3.42.

Pat Davison, Exec Director of the Contractors Association of Truckee Tahoe

We can support the three percent for reserves but cannot support three percent for operating costs. More discussion could be beneficial to all of us. We have some real concerns about this and we ask that you put in place some controls and mechanisms that can give customers some sort of comfort level.

I’m overwhelmed by another rate increase proposal. You’re a protected monopoly growing like straw. We’ve got everything hitting us at one time: The [Truckee Donner Recreation and Park District] department is hitting us up for a bond, we have a whole list of fees that is overwhelming to some of us. I beg of you to give every avenue your best study before you pass this rate increase.

My problem is the solution and funding it fully with debt”we’re looking at fronting $27 million. Come up with something that will work; consider reducing expenses. Get rid of broadband, it’s sucking money out of the district. It’s traumatic, but it’s my opinion that there isn’t a need for it anymore. These are serious implications and maybe we need to do something more serious.

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