For the past 29 months, city staff have tried to get the council to agree on wastewater and water rate changes. Now, Gallup citizens may finally see a change.
A LONG JOURNEY
In May 2022, city staff proposed a water rate increase of 22.5% for 2022 and 2023. At the time, Councilor Sarah Piano, Dist. 3, balked at the number, so staff reconvened and came back with a different number in August 2022: raising rates by 10% each year for the next four years, and by 5% for each of the two years after that.
The city is trying to balance replacing and repairing lines that are past their life expectancy – causing dozens of breaks around the city every year – with making the rate increase palatable to residents and business owners.
In an effort to finally agree on a rate change, the city council held a work session on May 14. Interim City Manager J.M. DeYoung told the council that staff was asking to come out of the meeting with some sort of number they could work with.
Gallup’s Chief Financial Officer Patty Holland once again expressed how much delaying a decision affects the city.
“The unfortunate piece when you delay it like that is that the need is still there and the need is growing because we do have an aging infrastructure and we do need to give it some attention,” she said. “We want to provide high-end service to our customers, but we’re not able to do that with the funding that we do have based on the needs of the system.”
AGING EQUIPMENT
In an interview with the Sun, the city’s Water and Sanitation Director Curtis Tallis explained the importance of the wastewater facility.
“The waste that is produced by a residential home has the potential to be a health risk or danger to health,” he said. “If you look at history or even some places around the world, if we don’t contend with the wastewater there is potential to put some of the public at risk because of what they may come in contact with. So, we’ve got to be able to take that waste and transform it into a condition where it’s not harming the public or the environment.”
One of the biggest problems with the wastewater treatment plant’s current situation is that a lot of the equipment is outdated – some of it was installed in 1972.
City staff have been working with RBC Wealth Management, a company that helps organizations manage their financial goals, to determine how much money the city would need for the wastewater treatment plant’s repairs.
During the May 14 meeting one of RBC’s Managing Directors Erik Harrigan told the council that about 10 months ago they had thought the plant would need about $90 million worth of capital improvements. After receiving some feedback, the city staff reconfigured that number and brought it down to $45 million.
Tallis and his staff said one the top items that needs replaced is the plant’s belt press machine. A belt press machine sorts through wetter solids and squeezes fluid out from them. The solids are then transported to a landfill.
One thing that may help pay for the facility improvements is a $23 million federal loan the city is looking at. City Attorney David Eason said $1 million of that amount would be a grant, but the rest would only be a loan. It would have a 0% interest rate though.
There is one problem though: in order to get the loan, the city has to have a debt coverage rate ratio of 1.5, meaning they have to have enough financial security in the future to pay the loan back one and a half times over.
After much discussion, the councilors decided on a 25% increase to wastewater rates in FY25, which starts July 1. After that, there will be a 3% increase each year for the next four years.
A WORK IN PROGRESS
After spending most of the meeting on wastewater, the council then turned to water rates.
The council was slightly hesitant to make a decision on the rate because an outside agency is currently conducting a water rate study for the city. DeYoung said the study won’t be ready until the fall, but it will give the city some insight into how much they should charge different groups, such as businesses and residents. It could even look at Gallup’s elderly population, since a majority is under a fixed income.
Once the study is complete, the agency will meet with the council to suggest appropriate rate changes.
But for now, the council is on their own.
They ultimately decided on a 15% initial rate increase for water in FY25, and 3% increased over each of the following four years.
After the water rate study is complete, the council will be able to review their decision and make any changes they see fit.
Just because the council made decisions on the water and wastewater rates doesn’t mean it’s over yet. City staff still have to draft up an ordinance with the rate changes in it, and then the councilors will have to approve thar ordinance. DeYoung said the ordinance will likely appear on either the June 11 or 25 council meeting agendas.
