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In an instant, water is everywhere.

It floods streets, gobbles the banks of creeks, and chokes drainage channels. But when the sun comes out and our dirty stormwater runs downstream to Pueblo, most Springs residents aren't willing to fork over the money to fix the city's failing drainage system.

Currently, two groups are looking to change that. A regional task force led by El Paso County officials is examining the problem. A city group, meanwhile, may be putting the finishing touches on a partial solution that could be in place by the beginning of 2013.

What's the group been looking at, exactly? Well, if you assume it's taken its cues from Mayor Steve Bach, it probably has its sights set on Colorado Springs Utilities.

"It's a $1.2 billion-a-year budget — you'd hope there'd be some money there," Bach said back in March of the city-owned enterprise.

At that point, Bach — who could not be reached for this story despite several days' notice — shared no details about how he might offload city stormwater responsibilities. And the ensuing months haven't brought more clarity; even recent questions to city public works went unanswered.

But now, some close to the issue are explaining how such a plan might work.

A puzzling proposal

When Bach began talking about dumping the city's stormwater maintenance and capital needs — to the tune of about $15 million a year — onto Utilities, many were puzzled.

Utilities can't simply write the city a check; that breaks city code. (Known as "Issue 300," the law banning such gifts was written by anti-taxer Douglas Bruce and passed by voters in November 2009.) And under city ordinances, Utilities can't just tack on charges for services for which it has no tariffs.

Utilities could create a new tariff for stormwater — essentially creating a new business — but it's questionable whether a $500 million liability with no existing revenue stream could really be called a business. Plus, as local attorney and longtime former City Councilor Randy Purvis notes, such an arrangement is likely to have negative financial consequences.

"The [bond] rating agencies are constantly on the lookout in a municipal utility for a city dumping city obligations onto a utility," Purvis notes. "It has impacts on the bond rating; it has impacts on the credit rating of the Utilities. When you have several billions of dollars in bonds issued, outstanding, that can have a big impact on the cost of operating the utility."

But that probably isn't what the mayor has in mind, says Larry Small, former vice mayor and current executive director of the Fountain Creek Watershed Flood Control and Greenway District.

City Council, Small notes, already collects an annual payment of "excess revenues" from Utilities, OK'd by the city's legal department. The revenues, previously known as "payment in lieu of taxes," are meant to reimburse the city for use of its property for electric infrastructure, such as streetlights.

In recent years, City Council has clarified that "excess revenues" — which the city budget pegged at $31.6 million for 2012 alone — should be determined via a specific percentage of every kilowatt-hour of electricity Utilities sells. Rates have been adjusted accordingly. Most households now pay pocket change on their bill due to the arrangement.

But the calculation isn't set in stone. With Council's help, Small notes, Bach could change it, and most households wouldn't notice much difference.

"If Bach wants to collect $15 million more from Utilities, one way to do that is to reopen that resolution, compute a new per kilowatt-hour factor which would yield $15 million more than he's getting now ... and have Council pass that," Small says.

Small, who hasn't talked directly with the mayor on the issue, says the idea has merit, especially because Pueblo is threatening legal actions that could nullify Utilities' hard-won contracts to allow the building and use of the Southern Delivery System water pipeline. Pueblo argues that the Springs isn't keeping up with stormwater maintenance, in violation of those permits.

"The reason [Bach]'s putting pressure on Utilities is, he's saying, 'Look, you're the beneficiary of the permit, even though the city has the problem,'" Small says, "and therefore he feels Utilities should help contribute to the solution of the problem."

Hold on a second

Not everyone sees that as a win-win.

Council President Pro Tem Jan Martin says she, too, expects Bach to propose increasing Utilities "excess revenues," likely when presenting the 2013 city budget Oct. 1. But given that Bach has also said he wants to keep Utilities rates the same, Martin assumes the mayor won't want an electricity rate increase.

"I think, legally, we probably could [execute the plan], but asking Utilities to absorb $15 million without raising rates is just not reasonable," she says. "Just as the city can't raise $15 million without raising money, neither can Utilities."

Martin says even if rates are raised to cover the change, making Utilities fund a city service will hurt the city. She predicts that big businesses, which use a lot of energy, could see hundreds of thousands in increased charges, and companies looking to relocate here might think twice.

Martin would rather wait for a regional solution to stormwater, which would likely include a voter-approved funding stream. And that's true even though such a solution will take longer, putting SDS permits at greater risk.

"I think if we work together we will get it done," she says.

stanley@csindy.com

  • How might Mayor Bach pay for expensive stormwater improvements? Here's one prediction.

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