Big wins for Craig water: Grant revenue, loan refinancing to net water fund more than $500K
January 4, 2018
CRAIG — The city water enterprise fund will benefit from a flush of funds in 2018. The windfall is the result of $250,000 in grant revenues and savings of more than $260,000 over 10 years, the latter of which resulted from the refinancing of a 2016 loan.
"It's always good to have that kind of capital come back into the fund. We have so many capital projects due to regulation changes," City Water/Waste Water Director Mark Sollenberger said. "This will allow us to improve water quality and pressure."
The city water fund is an enterprise fund, separate from the city's general fund.
"The revenues and expenses generated from this fund are not generated from property or sales taxes. The revenues are generated from water and sewer rates," City Manager Mike Foreman said.
The water utility is expected to generate revenues of $3.381 million from operations. Those revenues include a $250,000 grant from the Department of Local Affairs to be used for water main replacement.
"Every time we receive a DOLA grant, it's a win-win, especially when we can invest in our aging infrastructure. We'd like to see more of that in the future. The staff is doing a great job," Mayor pro tem Derek Duran said.
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The DOLA grant was matched by the city, generating a half million dollars to replace about 2,500 feet of old water main.
"We have about 80 miles of water main under the city of Craig, 50 percent, or about 40 miles, of which are older mains," Sollenberger said.
The department plans to tackle three trouble spots: the main in the area near 13th Street from Barclay Street to Yampa Avenue, the main under Country Lane along the bypass, just off Moffat County Road 7, and the line near Hospital Loop Road, which needs to be retied into the Shadow Mountain subdivision line.
Water mains must be buried deep, six feet or more, and often require excavation and reinstallation of pavement and other infrastructure that overlays the water main, Sollenberger said.
Accordingly, the majority of the budget will be spent on installation, with materials making up only a fraction of the cost.
"At least 75 percent or better will be installation," Sollenberger said.
The four-person city water crew is unable to handle the large scale of the project. It will be put out for bid by contractors later this year.
"We will put it out to bid like we did with Shadow Mountain. We expect local crews will bid on it," Sollenberger said.
The second windfall is savings that will result from the refinancing of bonds issued in 2016 to pay for upgrades to the water treatment plant.
"We will refinance the existing loan. That will create savings over a 10 year period. The cost to refinance is built into this year's budget. The savings from this year will pay for that refinance cost. Then, we will save about $26,000 each year, for the next 10 years," Foreman said.
The savings might seem modest, but over time, it adds up to more than a quarter of a million dollars.
"With the financial situation we are in, whenever we can find a better deal — a deal that can accommodate the city — we are going to make those deals," Duran said.
City Finance Director Bruce Nelson approached City Council about refinancing the water bonds in November. At that time, the estimated savings was about $100,000 higher.
"It was impacted by the change in the tax law," Foreman said. "Staff is always looking for ways to save money. Bruce Nelson did a great job looking out for opportunities to take advantage of this savings."
Contact Sasha Nelson at 970-875-1794 or snelson@CraigDailyPress.com.