Water fight could leave consumers soaked

City, Mount Werner and Sanitation District fight hits only residents

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— When local developer Craig Rathbun applied for a building permit to begin construction on a new office/medical building just next to Alpine Bank in Central Park Plaza, he knew he would have to pay the piper for the toilets and faucets he installed.

But when he went to get his permit, expecting to pay the Mount Werner Water and Sanitation District about $8,800 for his sewer tap fees, he learned there would be two pipers to pay and that the total cost would be closer to $11,200.

Although the checks will go into the pockets of two different organizations the city and Mount Werner Water the financial reality for Rathbun is a 28-percent increase in utility costs. That extra cost, he added, will likely to be passed on to whomever purchases the property.

"It's not right. To increase virtually overnight the cost of a utility is very damaging. That cost gets passed on to consumers," Rathbun said.

The most recent struggle between the city and Mount Werner Water has begun to impinge on the pocketbooks of the city's residents, initially hitting those in the real estate industry. And while the city and Mount Werner both claim to be acting within their rights and both point accusatory fingers at the other, the taxpayers are left perplexed, pointing at a bloated bottom line.

"The community has a right to expect not to be blindsided by a dramatic increase," Rathbun said. "Public hearings are warranted prior to an increase."

In the past, Mount Werner collected tap fees in the mountain area and gave a portion to the city for capital costs.

Now, the city has begun to collect tap fees from mountain residents on top of Mount Werner's fees. That could have added up to a doubling of tap fee costs an immediate unannounced 100 percent increase but the board of Mount Werner decided last week to reduce its fees to account for the city's policy shift.

The Mount Werner district roughly encompasses the area south and east of Fish Creek Falls Road, with the rest of the city being served by the city of Steamboat Springs. The Mount Werner District was founded when the mountain area had not yet been annexed within the city limits.

Residents and businesses in Steamboat pay for water and wastewater services in two ways. Monthly water bills pay for water and sewer operations costs.

Tap fees, on the other hand, require a one-time payment, collected when a new development comes to the city for a building permit and has to get hooked up to the water and sewer systems.

Sewer tap fees for a unit in a condominium complex, for instance, can come to about $1,000, said Mount Werner District Manager Dan Birch.

The money that is collected from tap fees pays for capital construction costs, such as the cost of the $11 million wastewater treatment plant expansion currently being built by the city.

Tap fees in the city are collected by the city. Tap fees in the Mount Werner were collected by Mount Werner until recently.

The city, after allowing Mount Werner to collect the fees and send the city a percentage for capital costs for facilities the two groups share, such as the wastewater treatment plant, decided to collect the entire fee up front after talks of sharing the costs of the plant expansion dissolved in January.

That means that instead of giving a check for the full amount of the tap fee to Mount Werner, which would give a percentage to the city, developers are now handing the check to the city and then having to hand another check to Mount Werner for an added 28 percent of the cost.

The conflict between the city and Mount Werner revolves around Mount Werner's role in paying for the wastewater treatment plant expansion. Because the city is going to pay for the plant by taking out a low-interest loan and going into debt, it is relying on tap fees, some of them from the Mount Werner district, to pay off that debt. Although the city owns the treatment plant, Mount Werner uses it and the city relies on Mount Werner's tap fees to be able to build the plant.

The city, after calculating the cost of going about the plant expansion without getting cash up front from Mount Werner, felt that it couldn't trust Mount Werner to send it enough of the revenue from its tap fees to pay the city for its share of the expansion.

Mount Werner, which took in more than $700,000 in tap fees in 2000, sent $75,000 of that money to the city toward the plant expansion, Birch said. The rest it kept for its own capital construction needs, such as the upkeep of its sewer lines.

The city recently demanded Mount Werner pay $705,000 to the city for the treatment plant, asking for virtually all of Mount Werner's proceeds from tap fees in 2000.

Public Works Director Jim Weber and City Councilman Ken Brenner both said the $75,000 is not nearly enough to pay for Mount Werner's share of the expanded treatment plant.

Birch, however, said he thinks the terms need to be discussed before Mount Werner shells out such a large sum of money.

While Mount Werner does owe the city money for the wastewater treatment plant expansion, it cannot simply hand over money it needs for its own capital construction, Birch said.

Birch proposed setting up a meeting with the city and representatives from Mount Werner to sort things out. In the meantime Mount Werner has placed $705,000 in an escrow fund as a show of its good faith and willingness to work things out, Birch said.

"What we're saying is we're not disagreeing with there being some additional amount due. Let's just see what's fair and reasonable," Birch said.

Brenner said the City Council will have to discuss the issue in an executive session before deciding whether it should enter into negotiations with Mount Werner about the $705,000. After the cost-sharing deal fell apart in January, the city declined to renegotiate with Mount Werner.

The city is also currently undergoing a rate study to determine if tap and user fees will need to be increased, Weber said.

To reach Avi Salzman call 871-4203

or e-mail asalzman@steamboatpilot.com

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