Pueblo Board of Water Works is trying to work out the details to finance Bessemer Ditch water rights acquisitions

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From The Pueblo Chieftain (Dennis Darrow):

Nick Gradisar [board chair], addressing the Greater Pueblo Chamber of Commerce’s monthly luncheon at the Pueblo Convention Center, said the utility is considering a combination of rate hikes, outside water leases and the sale of Pueblo’s interest in the Columbine Ditch on the Western Slope. The increase in local water rates could amount to 10 percent a year for two years, Gradisar said. The extra revenue would go toward repaying a $22 million bond issue the utility is considering as the last piece needed to finance the deal.

The water board recognizes the hardship an overall 20 percent rate hike could cause on low- and fixed-income homeowners in particular, Gradisar said. To further emphasize his point, he shared census statistics about Pueblo’s high poverty rates and low household income levels. Accordingly, the board welcomes public feedback on how to possibly limit the rate hikes, particularly for low-income people, Gradisar said. One idea he wants studied is a so-called “lifeline” discount rate that some utilities charge their poorest customers, Gradisar said…

Overall, though, the board views the rate hike is justified by the long-term value of the water the utility would acquire, Gradisar said. The deal would keep the Bessemer water at home, lessen the utility’s reliance on Western Slope water and aid the recruitment of businesses, Gradisar said. Also, local water rates are currently among the lowest in the state and other communities such as Colorado Springs are spending at even higher levels to strengthen their water resources for the next half-century, Gradisar said…

The rate hike would be in addition to the utility’s continued reliance on water leases and also the sale of the Columbine Ditch, Gradisar said. The ditch sale – either to the city of Aurora or, if that city declines, to a Minturn resort developer – is expected to generate about half of the needed money for the deal, or about $30 million cash, he said. On water leases, Gradisar said the lease program, including a lease deal with Aurora that is the target of criticism by some in Pueblo, currently makes up a significant portion – about 19 percent – of the utility’s current revenues. If not in place, local water rates would need to rise another 19 percent to keep the books balanced, he said. One Aurora lease that nets $550,000 a year is set to expire by 2011.

More Coyote Gulch coverage here and here.

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