Eagle River water district preparing tax question for ballot
February 26, 2014
EAGLE COUNTY — May elections don’t usually have far-reaching effects. The Eagle River Water and Sanitation District is different.
The district’s boundaries include Minturn, East Vail and Edwards, which means almost everyone in the upper valley depends on it for water and sewer service. The size of the district also means it has some big bills, particularly regarding meeting various state and federal water-quality regulations.
The district’s board is set to vote today on a measure to put a property-tax increase on the May ballot. That tax increase is intended to raise as much as $25 million to pay for upgrades to the district’s wastewater treatment plants. Those improvements will help the district meet new standards regarding the amount of nitrogen and phosphorus that can be released from wastewater treatment plants.
The board today will also decide whether to send voters another ballot question about exempting the district from some of the requirements imposed by the Taxpayers Bill of Rights, or TABOR, amendment to the state constitution.
District spokeswoman Diane Johnson said the two ballot questions are intertwined.
What does it do?
At its most basic level, TABOR, passed by state voters in 1992, limits the taxing and spending ability of virtually every government in Colorado and requires a public vote to increase taxes. To meet those objectives, the amendment has a number of complex requirements.
According to the law, the district doesn’t need a vote to issue “revenue bonds” — repaid from tap fees and monthly bills. But it does need voter approval for “general obligation bonds,” which are repaid from tax revenues.
Board chairman Rick Sackbauer said the decision to issue bonds repaid through taxes was fairly simple — at current rates, the tax-repaid bonds would save taxpayers $1.8 million over 30 years. And, according to an email from Johnson to Vail Homeowners Association Director Jim Lamont, voters would still have to approve any future increases.
But, Johnson said, the district needs to exempt itself from some TABOR requirements to raise taxes enough to pay for the bonds. The exemption from TABOR mandates will also allow the district to seek state and federal grants to help pay for the wastewater treatment improvements. Those grants could help offset the amount of tax money needed, Johnson said.
Even if the district needs the entire $25 million, the tax increase won’t be especially dramatic for most district residents.
Johnson said the district has a bond issue expiring in 2016. If voters approve, taxes from the May ballot issue won’t be imposed until 2017. The May ballot issue would, in essence, continue the tax assessment now being used to pay off the current ballot issue, along with a small increase. That increase is currently estimated at about $25 per year on a home with a market value of $500,000.
Sackbauer acknowledged that some people who own expensive real estate may see the property tax increase as unfair — and property owners are eligible to vote in the district election. But, he added, he believes most district residents will see the property tax as a logical way to fund needed improvements.
Sackbauer said if not for the regulatory requirements, the district wouldn’t need to ask for more money.
“When they change the regulations, we have to meet them,” he said.
But because of the regulatory requirements, the need for additional money isn’t negotiable. That means if voters reject the May ballot issue, the district can, and will, issue revenue bonds to pay for the work. That will mean higher rates.
From his perspective, Sackbauer said the decision to seek approval for a bond issue was a good business decision in light of the savings over the life of the bonds. He also praised the district’s staff for finding what he said are sensible solutions to a big problem. When the board first saw the plan for meeting new requirements, “it was a $96 million problem,” he said. “We’ve broken it into smaller bits.”
Given the combination of the costs, the size of the district and the regulatory requirements, Sackbauer said the district’s staff has come up with a plan that “makes this (option) the least painful as possible.”
Business Editor Scott N. Miller can be reached at 970-748-2930 and firstname.lastname@example.org