The Pine Strawberry Water Improvement District faces an uphill battle in its effort to repair an aging water system that fell into disrepair after 50 years of neglect before the district bought the system from Brooke Utilities.
That’s what came out of a March 28 PSWID board meeting in which former Assistant Gila County Manager John Nelson told board members that 94 percent of the water mains in the two towns are 4 inches or smaller and therefore inadequate for a delivery system.
Nelson delivered an even more perplexing forecast, telling members that if the PSWID budget and rates are not revamped, the district will lose about $178,000 next year.
Nelson, who just retired from Gila County and is considered a financial guru, is volunteering to help the district work through its financial problems.
Nelson appeared before the board to receive input from the members about what they consider important in crafting the new budget.
Members said setting reasonable water rates customers can afford remains their top goal, but they also want to re-establish a contingency fund and set up a capital improvement budget.
Much of the discussion centered on what the contingency fund should include.
Some members pushed for $500,000, but co-chairman Gary Lovetro favored $750,000 in case of emergencies.
The board didn’t make a decision, however.
“John will submit to us an amount that meets the needs, but bears in mind that we cannot indiscriminately raise rates beyond the public’s acceptance,” said board president Ray Pugel.
Board members also discussed the best ways to generate revenue to keep the district solvent and pay for much-needed improvements, including boosting property taxes, raising rates or asking voters to approve a bond issue.
“Taxes is a stable way to know that funds are in place to implement improvements,” Pugel said. “Property taxes are also tax deductible.”
A bond, Pugel added, “would raise taxes on property for the next 20 years and no one likes their taxes raised.”
However, Pugel and some board members agreed a bond would provide the money to make improvements more quickly, including installing fire hydrants that could reduce homeowners’ insurance costs. Acting quickly would also reduce waste. Currently, 30 percent of the water in the system leaks out before it reaches customers. Moreover, a bond issue would lock in today’s lower interest rates.
“We would be locking in our costs and paying off the debt with tomorrow’s inflated dollars,” Pugel said.
Nelson will take into consideration the members’ concerns and on April 25 submit a recommended budget to the board.