From The St. George News (Mori Kessler):
The Washington County Water Conservancy District can generate sufficient revenue to repay the cost of the Lake Powell Pipeline Project over the coming decades through a series of rate and fee increases, according to a state audit released earlier this week.
However, the audit, released by the Office of the Legislative Auditor General, also notes that much of the water district’s repayment model for the 140-mile pipeline – estimated to run between $1.2 and $1.8 billion – is largely predicated on continuing future growth. It also points out other concerns, such as the impact of possible future recessions and a reduction in water use due to increased water rates.
“It’s nice to have an independent party look at what we’re doing and confirm that the finance plan we have will produce enough revenue to pay for this project,” Ron Thompson, the water district general manager, told St. George News Friday.
However, in response to some of the concerns raised in the audit released Wednesday, Thompson said, “We can’t have a ‘the sky is falling’ attitude in the water community or we’ll completely jeopardize the economy of this county.”
Being in the middle of a desert, Thompson has previously and repeatedly stated water use is one of the foundations of Washington County’s economy and its ability to grow, which underlines the need for the pipeline.
The water district plans to repay the state for the pipeline through increases in impact fees, water rates and property taxes over the coming years and decades.
“The finance model is designed to let growth pay for a significant portion of the project,” Thompson said.
Impact fees are slated to cover 70% of project costs.
As a part of the plan to have impact fees cover the costs, the water district is adding $1,000 annually to its impact fees through 2026. The water district’s impact fees for new construction were set at $7,417 in 2017 and will ultimately rise to $15,448.
Washington County’s impact fees are already among the highest in the state, according to the audit.
Reliance on impact fees is contingent on continuing growth as well, which the audit said, along with other factors, the water district has no control over. If there is a population slowdown, that could also impact the water district’s ability to repay the state.
However, Karry Rathje, public information manager for the water district, said there isn’t so much a worry about the county’s rise in population slowing down as much as it outpacing state projections, which it has on a routine basis.
“While that is a potential risk, we consider the greater and more likely risk to be growing faster than projected – as we have done for the past 50 years – and having an inadequate water supply to support our population and economy,” Thompson wrote in the water district’s official response to the audit. “Growing at a faster rate would increase planned revenue, which is not stated in the audit.”
Wholesale water rates, which the water district has been adding ten cents to annually since 2016 per 1,000 gallons, will eventually rise to $3.84 per 1,000 gallons by 2045. From the original wholesale cost of $0.80 in 2016, the eventual cost will hike water rates an estimated 357%.
Though the audit states Washington County currently has low water rates when compared to other cities in other states, it also states increasing water rates will likely cause consumers to use less, which can impact the amount of revenue the water district anticipates collecting from this source…
The 140-mile, 70-inch diameter Lake Powell Pipeline will run from Lake Powell to the Sand Hollow Reservoir with a projected route that will snake across the Utah and Arizona border over public and private land, carrying around 77 million gallons a day to 13 communities in Kane and Washington counties.
Local water and elected officials have repeatedly stated the needs for a pipeline due to continuing growth, as well as the economic benefit it is expected to generate in the long run.