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Cañon City could face 45 percent hike in stormwater rates

Posted at 10:30 PM, Nov 05, 2018

CAÑON CITY – Ratepayers will likely have to fork out more dough in 2019 to help pay for a massive backlog of stormwater projects.  City Council Monday night gave initial go-ahead to a plan that would increase stormwater rates by 45 percent, or $4.23 per month for a typical 3,688 sq. ft. home and $21.79 per month for a 19,000 sq. ft. commercial structure.  They also gave initial approval to a 3 percent hike in municipal water rates, or about $1 extra per month for a home consuming 10,000 gallons of water per month.

City Administrator Tony O’Rourke told Council members that there is currently a $75 million backlog of necessary stormwater infrastructure repairs and new construction accumulated over decades of inaction and insufficient funding.  In order to begin to tackle the massive backlog, Councilors approved a resolution authorizing city staff to begin the steps necessary to obtain $8 million in financing through so-called Certificates of Participation, or COPs.  Revenue generated from the increased stormwater rates would service the debt and help pay principal and interest.

Typically, any incurred government debt in Colorado must be approved by voters due to the Taxpayers Bill of Rights, or TABOR.  But COPs have proven to be a court-tested work-around.  In this case, city-owned buildings are used as collateral for financing in a mortgage-type of arrangement.  “This is a very common form of financing,” O’Rourke said.  “The City Hall, for example, was built on Certificates of Participation and they’re 20-year terms.  You just pay them off annually like a home mortgage.”  An increase in stormwater rates each year for the next five years would service the debt created.  Future iterations of the City Council could amend the terms of the COPs or cancel them altogether.

“As far as I’m concerned, a COP is kind of the left-handed way of avoiding putting to a vote something that otherwise would be a TABOR issue,” said former long-time City Council member Dennis Wied.  He told Council that it should put the stormwater rate increase question to a vote of the people — a proposal he envisions would “go down in a ball of flames,” he said.  After the voters have their say, he suggests, re-evaluate the necessity and priority of the projects, and then demonstrate the dire, last-ditch need for COPs.

O’Rourke, on the other hand, suggested that once voters see the tangible results from projects paid for by the COPs, they might be more inclined to voluntarily approve a tax increase measure to fund even more projects and improvements.

The 3 percent water rate hike does not require voter approval because the Water Department is a city enterprise.  A 9 percent hike was enacted this year after a decade of no rate increases.