Red Cliff’s Christmas wish: a bond
December 17, 2003
Those systems have been in periodic violation of both wastewater-discharge permits and drinking-water permits for a number of years and the cash-strapped town of 350 residents doesn’t yet have the means to correct it. In fact, the town’s tiny $400,000 annual budget is pinned in place by an accumulation of loan payments that make it nearly insolvent.
Last month a key part of the town’s new water plant broke forcing operators to flood city mains with untreated water. The Colorado Department of Public Health and Environment issued another in what has been a series of boil orders over the last few years for drinking and domestic water.
And in August, the state issued a cease and desist order to Red Cliff because its antiquated wastewater plant had violated clean water standards seven or more times in the last year.
“We still want to work with them,” said Glenn Bodnar of the health department. “(Town Administrator) Guy Patterson has a real desire to make things work, but has limited means.”
Contributing to the cash crush are Red Cliff’s high property taxes and few retail and commercial operations to generate additional tax revenues.
Red Cliff’s municipal budget is one of the smallest in the state, and the town’s property-tax rate – or mill levy – is 51.548, the state’s highest. Property tax on a $200,000 home there is $1,485. Vail’s mill levy, by comparison, is 4.717 and Eagle’s, 3.
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As required by the state, Patterson last week provided state officials with a laundry list of steps being taken by the town aimed at both short- and long-term solutions to the problem.
Health department environmental protection specialist Ginny Torrez said the Red Cliff case is unique enough that it will require everyone involved to “think outside the box.” What recommendations will emerge from the meeting isn’t clear, but state officials acknowledge that something clearly needs to be done.
Red Cliff’s Patterson, however, thinks he has a plan that will both stretch the town’s annual budget and may provide a long-term solution to the town’s water and sewer woes.
Over the last three decades the town has received a number of federal loans to keep its water works functioning. Two years ago it entered into a lease-purchase for its new $460,000 micro-filtration water plant that has intermittently provided clean drinking water to residents.
All that debt along with lease payments are gobbling up much of the town budget, Patterson said, leaving little if any wiggle room.
He’s proposing consolidating the town’s $558,000 debt under a single, $750,000 long-term municipal bond. The current annual debt service for the town is $109,000 annually, Patterson said. The annual bond payments would be reduced to $31,527 over 20 years.
“I think we can get ahead of the debt,” he said. “The current debt load leaves no money for operating, insurance or salaries. We aren’t breaking even. We were getting crushed.”
The town is working with the Denver-based bond house George K. Baum, and Patterson said he is hopeful a deal can be struck later this winter that will breathe some live into municipal financing.
The town has six U.S. Department of Agriculture loans, some dating back to 1971 that total $98,422. The money was used to improve and maintain water lines and water treatment systems, Paterson said. If the new bond is secured, the town will also pay off $313,000 on the remaining principal for the new water filtration plant.
Some of the bond proceeds will be used to make repairs on the water and wastewater systems in attempts to bring them into short-term compliance with state and federal standards, Patterson said.
Once the town’s debt service leakage is consolidated it will create some operating reserve and will give the town a chance to literally plug the leaks in its water and wastewater systems, Patterson said.
There’s a leak in the town’s 108,000 gallon water-storage tank that needs to be plugged, but the cost of repairs isn’t yet known, he said. The tank could require a simple plug or possibly something much more expensive.
More urgent is the town’s need to upgrade its sewer and wastewater drainage system. Periodically there is enough infiltration of ground water that it overwhelms the capacity of the sewer plant, Patterson said. That causes the plant to push marginally treated sewage into the Eagle River.
“We need to fill in some of the holes in the collection system,” he said.
On top of that, Patterson said he’s going to recommend that the town increase the $70 monthly fee it charges residents for water and sewer treatment.
In succeeding meetings this and next month, the Red Cliff Town Board will be setting a new budget and reviewing a bond agreement.
“We’re definitely heading in the right direction, ” Patterson said.
Cliff Thompson can be reached at 970-949-0555 x450 or email@example.com