City still mulling over wastewater expansion

— The city, after choosing to go it alone on the wastewater treatment plant expansion, will decide on whether to approve a low-interest federally subsidized loan agreement tonight for $6.3 million.

In January, the city decided to break off negotiations with Mount Werner Water and Sanitation in favor of completing the state-mandated expansion on its own. Mount Werner Water will continue to use the city's wastewater plant, though it will do so on a pay-as-you-go basis rather than fronting some of the money for the expansion.

The city and Mount Werner had been involved in negotiations to share the costs of the nearly $11 million expansion, though those talks broke down early this year, primarily due to conflicts over the control of allocation and other growth-related issues. The city is taking care of a portion of the costs using $1.3 million of its reserves, though much of the expansion will be paid for through this loan and another $2.9 million loan taken out in 1999.

City Council will vote tonight on whether to apply for the low-interest $6.3 million loan from the Colorado Water Resources and Power Development Authority to pay for the expansion. The city will have to go into debt to finance the project, though it does not need to go to the voters to approve the bond, because wastewater treatment costs are part of an enterprise fund, not the city's sales tax-based general fund. Under state law enterprise funds are seen as business activities that ostensibly can pay for themselves.

All the debt, in the spirit of self-financing, will be paid back by the tap fees the city charges to hook residents' houses up to water and wastewater facilities, Finance Director Don Taylor said.

Debt payments are estimated at between $500,000 and $550,000 a year, Taylor said.

The city is undergoing a rate study to determine whether tap fees and user fees are high enough.

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