The wait is finally over: the Gallup city council approved a wastewater rate change during their July 23 regular meeting.
City staff recommended a 25% increase for fiscal year 2025, and then a 3% increase for the following four years, ending in 2029.
The city’s goal with raising the wastewater rate was to try and 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. City staff expect the rate increase to provide sufficient cash flow to fund debt payments as well as capital investment.
PAY HOW MUCH MORE?
During the meeting, Gallup’s Chief Financial Officer Patty Holland estimated how much each Gallup resident would see their wastewaters increase by. She said the people who use the least amount of wastewater may see an increase of anywhere from $4 to $7 on each bill. Someone who uses a bit more might see a price jump of $10-$15 on each bill. And someone who uses a lot of wastewater could pay $20 to $25 more.
Holland compared the rate increase and the improvements the city will be able to make to the wastewater treatment plant with the additional money to buying and operating a new vehicle.
“Your cost to operate your vehicle goes down when you buy the new vehicle,” she said. “Once you get it paid for, then it’s much more efficient, it’s easier to maintain, and that’s what we’re doing. We’re asking for this [rate increase] so that we can buy that new ‘vehicle.’”
Holland also took time to share what residents in other municipalities across the state are paying on a yearly basis. Gallup’s rate is the highest, with the average customer paying $336 a year. Rio Rancho residents pay about $226, people in Roswell pay $231, Farmington residents pay $288 and Santa Fe residents are paying $155.
However, the low cost is putting Santa Fe in a difficult spot. The city’s wastewater system is failing, and now they’re having to take out loans to make the necessary improvements. Holland said they’ve been in violation of multiple Environmental Protection Agency rules for years now, and the New Mexico Environmental Department has now become involved.
Holland said that Gallup could be in a similar situation if the city doesn’t start making improvements to the wastewater system.
“[Santa Fe is] kind of our future if we don’t realize that we need to invest in this,” she said.
But there is a small light at the end of the tunnel for Gallup. The NMED has seen the city’s predicament, and offered to pay a loan of $21 million to help the city improve its wastewater system. The loan would have a 0% interest rate, and they’re also willing to provide a $1 million grant to help the city start investing back into the wastewater treatment plant.
The only catch?
NMED wants to see the City of Gallup increase its water rates before they give them the money. Holland expressed how important the loan would be for the city.
“I really hate to [do this increase], but I also look through the budget and I also see the struggles we have,” she said. “And this loan is the best opportunity we’re going to have for a long time. I really like having that. This is going to free up $20 million to start putting back into our system.”
The average residence in Gallup has a ⅝-inch meter. Holland said the service rate is based on the size of the meter. According to the ordinance, a ⅝-inch meter would add a $10.40 increase to a resident’s bill.
CURRENT PROBLEMS WITH THE WASTEWATER TREATMENT PLANT
In an interview with the Sun, the city’s Water and Sanitation Director Clark 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.
One of the biggest concerns is the wastewater 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.
As of June 1, the roof of building where the belt press machine is housed was severely damaged, and there is now a giant hole in it. This makes it unsuitable for the workers, and for a while they weren’t allowed inside.
Tallis explained what not having a proper building for the belt press machine means for the city’s Water and Sanitation Department.
“Having money sooner rather than later will help us reconstruct a belt press building,” he said. “If we continue to not have a belt press building that’s meant to control some of the environmental temperatures for that belt press, we’ll have to contend with freezing issues, which might be more difficult and more expensive than the wastewater treatment operation [itself].”
The council ultimately approved the rate changes. And even though they didn’t do so until July 23, the ordinance states that the rate change would go into effect at the beginning of Fiscal Year 2025, which started on July 1.
As for a water rate, an outside agency is currently conducting a water rate study for the city. It’s not expected to be finished until the fall, but it will give the city some insight into how much they should charge different groups, such as businesses and residents.
Once the study is complete, the agency will meet with the council to suggest appropriate rate changes.
By Molly Ann Howell
Managing Editor
