Gypsum mulls sewer rate increase to expand plant capacity
Estimated cost for wastewater plant expansion is $28 million
GYPSUM — Wastewater treatment is something the state of Colorado takes very seriously.
The state imposes discharge level specifications, stormwater drainage rules and dozens of regulations for treatment plant operations. And when a treatment system reaches the 80% daily capacity mark, the state wants to see an expansion plan design. For many providers, that means when systems record daily capacity levels above the halfway mark, it’s time to get serious about future planning.
That’s where the town of Gypsum is now.
“From our standpoint, we are running at more than half of capacity enough of the time that we need to get going on this,” said Jim Hancock, the town’s engineer.
Gypsum officials estimate a wastewater treatment plant expansion will cost around $28 million. The expansion would add daily capacity for an additional 500,000 gallons to its 1 million gallon plant.
Therein lies the challenge. The town has to engineer a plant expansion and figure out how to pay for it. Considering Gypsum’s entire operations budget for 2019 is approximately $10 million, that $28 million figure is a challenge. This week, it was the topic of discussion for members of the Gypsum Town Council.
Last year, Gypsum completed a master study of its wastewater treatment system. That work led to a rate study. This week, consultant J.P Joly of an analytics platform called Waterworth, presented his initial work to the town council members.
In basic terms, a 6% increase in monthly sewer rates for 10 years could finance the expansion cost. Currently, Gypsum charges a flat monthly wastewater rate for both residential and commercial accounts. That cost is $24. For the first year, the rate would jump to $25.44. By the end of the 10 year period, the rate would hit $42.98 per month.
For comparison, the current base residential monthly sewer rate in Eagle is $58.82. The base monthly rate for Eagle River Water and Sanitation is $34.84.
“Our base rate is extraordinarily low right now, so 6% in dollar terms is not a big number for residents,” said Gypsum Town Manager Jeremy Rietmann. “But this discussion is by no means at an end.”
“We were wondering how to do this. This is a way to do it,” Hancock said.
Hancock noted that Gypsum could also increase revenue for a plant expansion by moving from a flat rate structure to a consumption model for wastewater billing. He noted the town could develop that model based off its current, consumption-based water rates. That’s how sewer billing is set up in Eagle, where the monthly sewer charge is calculated by units. A single-family home is charged as one unit. Operations that use more wastewater service are charged additional units. A drive-through restaurant is charged two units, while a commercial car wash is charged 10 units.
Hancock noted that the town initially started looking at its wastewater treatment capacity back in 2009. “At that point, we didn’t think we had that much time,” he said.
But Gypsum got a reprieve when growth rates slowed during the Great Recession. “We did get a lot more time, but growth is coming and we need to be ready,” Hancock said.
The questions for Gypsum’s leaders include when to increase rates and how much to charge.
“We are trying to address the growth issues and get ahead of them,” Hancock said. “It is very evident that it is much more expensive to make up for them after the fact.”
“Personally, I am in favor of getting the money upfront as much as we can,” said Councilman Tom Edwards during this week’s discussion.
After this week’s presentation, board members requested more information about extending the repayment model out longer to seek if rate increases could be reduced. They also asked about the impact of tap fees.
“Tap fees don’t do much in the model because they are a one-off thing, and it is difficult to forecast on tap fees,” Hancock said.
Town staff members said they will flesh out their research and present the findings as the town council finalizes Gypsum’s 2020 budget. That work will happen this fall.
“We are definitely planning to discuss this at our 2020 budget retreat,” Hancock said. “The sooner we start, the better it is. We will make that case and discuss the options, for sure.”
“We are trying to be proactive, doing this now,” Rietmann said. “It’s like retirement savings. The earlier you start, the better.”