The Future Cost Of Water In Payson



Recent news reports indicate that the Blue Ridge project to expand Payson’s water supply will cost $34 million. A federal grant has been processed to pay for $10.6 million worth of pipe for the project, the water department at last estimate has $2 million to $4 million in reserve, the town has (awarded) contracts for over $1.2 million of construction and plans on putting out bids for an additional $7.5 million. Meanwhile, a recent newspaper comment indicates that the town may not qualify for the anticipated low-cost, 40-year financing from the federal government, and other than the water department money, the town has minimal cash on hand and still owes the water department for a $1 million loan. So, in the short term, six months/year, where will the money come from to pay for these construction commitments and at what financing cost?

In the longer term, how will this project be paid for? How accurate is the latest $34 million cost estimate? With the $10.6 million federal grant and estimated $4 million+/- water department money, that leaves $20 million+/- to be accounted for, namely through financing, water impact fees and/or increases in Payson water rates. Due to the lack of new construction, little can be expected from water impact fees, with the possible exception of the building of an ASU campus in Payson, which the town has said could generate $6 million of impact fees. If so, that would leave $14 million+/- to be accounted for. If the town will need to go for conventional financing and/or selling bonds, how much will it qualify for, and at what annual cost including the repayment of principal?

The bottom line is: How will the end result of the above variables and their timing affect future water rates in Payson? The average monthly water bill in Payson is in the $40 to $50 range. In some locations in California, the water bill for a family of four is $400+/- per month, which most Payson residents certainly could not afford.

Payson residents have a right to know what to expect in the future for water rates dependent upon the estimated outcome of the above variables. A financial model should be prepared by the town and presented to demonstrate the impact of the above variables and the strategy the town is following to deal with them.

Meanwhile, statistics indicate that the current water supply, consisting of town wells, is sufficient to support the current population and its annual usage of 1,800 acre-feet (est.) of water with a safe-yield factor in the 90 percent range.

Jim Hippel


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