WSPI 2—another $10m water project, another rate increase

Mayor Rolf Hechler, at the Sept. 22 meeting, explained that “the more success we have” at getting grant/loans to fix the city’s water system, the more money the city needs.

“We will look at rate increases,” Hechler said. “How else are we going to pay for it? We want to improve our community.”

City Commissioner Merry Jo Fahl agreed. “People think we have this big pot of money. We can’t do any more improvements,” she said, implying there is no spare money.

“I will tell the legislature about our plight,” Hechler said.

“All communities have this problem,” Fahl said.

From Hechler’s and Fahl’s comments, one could surmise that the city hasn’t already significantly increased water rates in recent years.

In October 2019 water rates went up about 50 percent, and since then rates have gone up each year in July. Increases are tied to the Consumer Price Index. July 2020 the CPI was 9.7 percent, therefore rates went up about 60 percent within a year. In 2021 the CPI was 4.7 percent, in 2022 it was 8 percent, in 2023 it was 4.1 percent and in 2024 it was 3.2 percent.

At the end of Hechler’s and Fahl’s discussion, the city commissioners voted unanimously to “publish” an ordinance (give public notice via a legal ad in the Sentinel) that, in layman’s terms states the city will take out a $1.06 million line of credit with the local Bank of the Southwest for up to two years.

The city’s long-time financial advisor, Chris Muirhead, an attorney with Modrall Sperling of Albuquerque, characterized the line of credit loan as a “bridge loan.” Southwest will charge 5 percent interest on what the city “draws down,” Muirhead said. The bank is also charging a 10-percent $10,660 loan origination fee. At the end of the loan the city will pay the bank the $1.06 million principal amount.

The city needs the money because it doesn’t have the cash to pay for the “pre-development” or pre-construction costs of the “WSPI 2” or Water System Performance Improvements Phase 2 project, which it must pay in order to get a U.S. Department of Agriculture grant/loan. The city applied to the USDA a year ago, submitting a preliminary engineering report done by Wilson & Co.

The project includes replacing nearly 2.6 miles of water pipe. A long stretch of 6-inch pipe under Riverside will be replaced with 8-inch pipe. Water pipe under Veater Street and two side streets will form an elongated “U” connecting with Business Route 25, replacing existing 6-inch with 10-inch pipe. New “gate valves,” meters and hydrants are also part of the improvements.

The USDA recently agreed to grant the city about $7.2 million and loan the city about $2.7 million over 40 years at about 2.125 percent interest, making the WSPI 2 a $9.9-million project.

A recent letter of conditions from the USDA estimates Wilson & Co. will charge about $790,000 for final design and $186,000 for “engineering administration.”

The same USDA letter estimates the city will pay $171,200 “interest” to Bank of the Southwest for the bridge loan.

If the city succeeds in satisfying the conditions of the USDA grant/loan, then that federal agency will pay for the bridge loan out of the $2.7 million USDA loan.

I cringe to see the lack of coordination, communication and reporting on these multi-million-dollar projects as well as the blitheness with which city commissioners raise utility fees and taxes to “improve our community,” never acknowledging their own neglect of city infrastructure and bad management. Without consciousness and accountability and identification of problems and errors, correction and better management is not likely.

Instead, the city increasingly hires for-profit engineering firms, trusting them to design and prioritize projects in the best interest of the people, not their corporate bank account.

I have no such faith. WSPI 2’s Riverside Drive waterline replacement is the same location where the city put in a “vacuum” sewer system about 30 years ago that was designed to suck out sewer tanks on boats in harbor. It has been falling apart ever since and is failing regularly, with sewage backing up into houses and yards for five years, at least. Does it make sense to tear up the streets and only replace water lines and not replace the sewer system?

Not only are sewer and water projects not coordinated, the cost of tearing up streets and repaving them are not considered.

WSPI 2’s Veater Street is similarly plagued with sewer leaks and lack of sewer line capacity, according to Water/Sewer Director Arnie Castaneda, who mentioned the issue briefly a few months ago.

City Manager Angela Gonzales recently told me that Veater Street is in such bad shape that perhaps the $16 million the city received for critical waterline repairs from the New Mexico Environment Department last winter should be used there. But WSPI 2 was in the works a year ago? This shows that city staff and the city commission have no clear overview of where projects are in the pipeline, what their funding sources are and which projects should be a priority and why.

Several times I have written and stated at the mic during public comment at city meetings that the city needs to hire a city engineer to hire a firm and then oversee the master planning of water/sewer/street projects and then to coordinate and report on those projects.

We are facing about $240 million in water and sewer repairs because of long-term neglect and who knows how much in street tear-up and re-pavement costs.

It’s crazy to attack these massive repairs piecemeal, with no master plan, no city-salaried engineer, but with a private engineering firm which gets paid a percentage of each project. We will be sliced and diced into paying three times as much, racking up debt for three or more generations to come.

I beg to differ with City Commissioner Fahl. Not all communities have this problem of long-term infrastructure neglect. Well-managed cities plan, based on good reporting, record keeping and ongoing asset-management plans authored by qualified city directors. They raise rates and taxes in a gentle curve to meet monetary goals for infrastructure projects five, 10, 20 years out. They identify mistakes and management problems. They own up to them and communicate to their constituents a corrective-action plan. They don’t expect their constituents to pay ever-higher rates and taxes without a clear plan. They don’t wonder where they are going to get the money. They planned for that expense and put money aside.

The $1.06 million bridge loan will go to public hearing, if anyone wants to go to the mic, most likely on Oct. 9 or Oct. 23.