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Ratepayer activists accuse council members of conflict of interest on tap fee issue

click to enlarge Councilmembers Scott Hente and Tom Gallagher.
  • Councilmembers Scott Hente and Tom Gallagher.

Members of the Colorado Springs City Council who depend on campaign contributions from developers -- or who work in the development industry -- have a conflict of interest in deciding whether to raise connection fees charged by Colorado Springs Utilities on new homes, two utility ratepayer activists are charging.

Council members, meeting as the Utility Board next Wednesday beginning at 9 a.m. , could vote on whether developers and builders should pay more to hook up new homes to the city's utility system. Currently, ratepayers subsidize most of these costs through their monthly utility bills.

But council members may not have ratepayers' interests in mind, argue local activists Walter Lawson and Dave Gardner, who have been agitating to increase the hookup fees.

The two note that most council members received more than half of their campaign contributions from the housing and building industry when they ran for election last year.

Moreover, two of the council members work in the development industry -- Scott Hente, who is a homebuilder, and Tom Gallagher, who is a land surveyor.

"It's a strong conflict," Lawson said. "They're making billion-dollar decisions based on money buddies."

Council members, meanwhile, rejected the conflict-of-interest charge.

"I'm not going to recuse myself" from voting, Hente said in an interview. While the decision on hookup fees might impact his bottom line as a developer, Hente said it would also affect him as a utility ratepayer.

"I don't recuse myself from a rate decision because I'm a ratepayer," he said.

Gallagher, meanwhile, pointed out that the building industry didn't endorse him when he ran for office. He said he isn't beholden to any special interests.

"I call it like I see it," Gallagher said.

78 million gallons a day

A utility subcommittee has for the past several months been developing a proposal that would raise the hookup fees.

On average, it costs Springs Utilities about $25,000 to extend services to a new utility customer. But developers pay only about $11,000 of this through existing fees, leaving ratepayers to pick up the rest.

Over the next decade, Utilities plans to spend $1.6 billion on system expansions and improvements made necessary exclusively by new development. These expansion projects include the Southern Delivery System, designed to pump 78 million gallons of water per day to Colorado Springs from the Pueblo Reservoir.

Of the $1.6 billion, builders and developers will pay only about $500 million, while ratepayers will fork over $1.1 billion. [A detailed report on this issue, titled "Screwed," appeared in the Independent May 6 and can be read at www.csindy.com.]

As a result, by the year 2013, the average monthly residential utility bill will include a $43 charge just to help cover the cost of the city's growth, according to Utilities' own projections.

Lawson and Gardner call this a "growth tax" that ratepayers have no say in approving.

In cities with private utilities, ratepayers are represented by public utilities commissions that are charged with protecting their interests, the two note. But because Colorado Springs has a municipally owned utility, ratepayers' only recourse is to the City Council.

That worries Lawson and Gardner, in light of the council's close ties to the development industry.

"Who is this council representing?" Gardner asked rhetorically. "We have a council that represents big business."

Not far enough

The subcommittee charged with studying hookup fees has arrived at a proposal that, if approved by Council, would raise some of the fees.

But the proposal would have only a minimal impact on ratepayers, reducing the expected growth in the average monthly residential bill by just $2 or $3.

Even with that reduction, the average monthly bill is projected to skyrocket to about $250 by 2013, compared with $158 currently.

Lawson, Gardner and others who have advocated fee increases say the proposal doesn't go nearly far enough and that developers should pay the entire cost of new growth.

Representatives for the development industry, on the other hand, strongly oppose any fee increase, saying it would make new homes less affordable for buyers.

Some council members say they wonder whether it's worth raising the fees -- and thereby the price of new homes -- if it's not going to help ratepayers much.

"Long term, it has such little effect on the rates," Hente said.

The proposal that's now on the agenda was developed quickly so that it could be taken into account during upcoming deliberations of the city's 2005 budget. However, Hente and Gallagher now say they're inclined to spend more time studying the issue.

"I don't think I have enough information," Gallagher said. "I believe in making good decisions, not fast decisions."

-- Terje Langeland

Survey says ratepayers want developers to pay If City Council members want to follow their constituents' wishes, they should make developers and builders pay more of the costs to provide utility services for new homes, a survey suggests.

In an analysis conducted in April by Colorado Springs Utilities, 50.5 percent of the ratepayers surveyed said the cost of building new utility infrastructure to accommodate growth should be "included in the up-front price of a new home or business."

Another 26.3 percent said the costs should be "charged to all customers through utility rates," while 23.2 percent said the costs should be "balanced between utility rates and up-front charges included in the cost of a new home or business."

The survey, which included 100 random ratepayers, has a 10-percent margin of error.

-- Terje Langeland

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