Santa Fe water utility faces multimillion dollar deficit

Nov. 2, 2000
The latest blow to Santa Fe's troubled water utility, news of an estimated $3.4 million deficit lingering from operations and expenses last year, could cause officials to rethink informal plans discussed earlier this year to crimp growth.

By MIGUEL NAVROT

Nov. 01, 2000 (Albuquerque Journal)—The latest blow to Santa Fe's troubled water utility, news of an estimated $3.4 million deficit lingering from operations and expenses last year, could cause officials to rethink informal plans discussed earlier this year to crimp growth.

Sangre de Cristo Water Co., which the city purchased in 1995 with $78 million in bonds, isn't meeting revenue projections bond holders had expected. The revenue shortfall and expenses to replace aged infrastructure combined for the multimillion dollar deficit.

"They are very concerned," Finance Director Kathryn Raveling said Tuesday of bond insurers monitoring the activity of the city's water company.

While administration officials eye unspent reserves for a solution to cover last year's deficit, utility officials say the graduated four-year water rate increase approved by city councilors earlier this year could help prevent future shortfalls.

The problem is, that increase and its revenue target also assume an annual increase in the number of customers on the system. Ultimately, the package assumes a 2 percent annual growth rate, or about 600 homes each year.

But the subsequent drought and water shortages spawned calls this summer from Mayor Larry Delgado and other lawmakers to limit growth. City studies estimate the 600-home annual growth average would exhaust Santa Fe's water supply by 2004.

Councilor Karen Heldmeyer, who Monday called suggestions to address revenue concerns through growth "overly optimistic," stood firm Tuesday, recommending instead that money from other sources be found to pay for equipment the utility needs.

"We have not really tried to do that much, frankly," Heldmeyer said, suggesting state and federal funds be sought for Sangre de Cristo. "Staff really needs to be focusing on seeing where other money is available."

Heldmeyer also cited continuing problems the water department is having with bills, suggesting more be done to collect payments for water consumed.

Sangre de Cristo's predicament began at the beginning of the year with billing software glitches, officials said, which caused some customers to receive incorrect bills — or no bills at all. Similar problems have resurfaced in recent weeks with another 500 customers not receiving bills. Utility staffers say they are working to remedy the situation.

As of Monday, about $4.3 million worth of water bill payments are outstanding, Public Utilities Department Director Dennis Gee said Monday. The normal amount of uncollected bills usually totals $2 million at any time, Gee noted.

But City Councilor Cris Moore said any possible limits on growth will likely cause other financial hardships for City Hall, not just the water company. If the city ultimately imposes such limits, Moore said, he hopes it will be done in a "rational way" that would continue collection of hookup fees to the water utility, which lawmakers also increased alongside rates.

"Any time you limit growth, people say that it also limits jobs in construction and frankly, that's true," Moore said.

Moore also pointed to a plan recommended in September by the City Planning Policy Commission, which suggested 250 acre-feet of water be budgeted for new growth annually. Though just a recommendation, that plan would allow for 625 new homes annually, Moore noted, suggesting the city could collect hook-up fees and some growth could continue.

Mayor Delgado didn't return messages left for comment Tuesday, and City Manager Frank DiLuzio was out of the office.

As city councilors will soon have to deal with water scarcity and construction industry interests, they'll also be called upon to decide how to pay the existing debt.

"At this point, we're not even contemplating defaulting on the bonds," Raveling said.

Some possibilities include sifting through any additional revenues not already earmarked for potential — and unrelated — legal expenses, cutting city expenses at the mid-year budget review, or scrapping plans to build roads or parks outlined in the $18 million capital improvement bond issues last year.

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