In a moment, we’ll listen to a couple of speeches that took place at the Archuleta Board of County Commissioners meeting last Tuesday afternoon, March 3, regarding a proposal that the BOCC make a provisional $250,000 loan to the Pagosa Area Geothermal Water and Power Authority (the “PAGWAPA” board, on which all three County Commissioners sit) so that PAGWAPA can help solve some cash flow problems for the non-profit organization, Pagosa Waters, of which PAGWAPA is a member, so that Pagosa Waters can pay the drilling contractors under the direction of for-profit corporation Pagosa Verde LLC, while waiting for promised reimbursements to arrive from the U.S. Department of Energy (DOE) and the Colorado Department of Local Affairs (DOLA).
But first, I’d like to spoil the suspense, and explain that the $250,000 loan from the taxpayers of Archuleta County to this risky yet somehow appealing exploratory venture needed to be matched (we were told) by a companion $250,000 loan from the taxpayers of the Town of Pagosa Springs (who happen to be essentially the same folks as the taxpayers of Archuleta County) and that matching loan was unanimously approved a few hours later at Town Hall, during a regular meeting of the Town Council. (Illegally approved, in my opinion. But that’s just my opinion.)
Unlike the BOCC, who had made their loan continent on receiving certain guarantees and promises from Pagosa Verde LLC, the Town Council voted to hand over their $250,000 without asking for any written guarantees, not even a specific timeline for when the money might be repaid. It sounded to me, from the discussion between the Council and the representatives of Pagosa Verde LLC — Jerry Smith and Kirsten Skeehan — that the loan might be repaid in full within 12 months or so. Maybe sooner.
Considering the amount of the expenditure, I was pleased that Mayor Don Volger allowed the public to comment on the proposed loan, on which occasion a local member of the press (me) brought up a little question about the Town Charter, the document that supposedly defines how the Council is allowed (and not allowed) to do business:
“So, I’d like to see this bridge loan made by the Town. And I’d also like to see the Council follow the Town Charter. The Town Charter, in section 3.7, states…”
In addition to such Council acts that are required pursuant to the Colorado Constitution or this Charter to be by ordinance, every action creating an indebtedness, authorizing the borrowing of money, levying a tax, establishing any rule or regulation for the violation of which a penalty is imposed, disposing of any municipally-owned real estate, including water rights or mineral rights, repealing a prior ordinance, placing any burden upon or limiting the use of private property, or approving an eminent domain action by the Town, shall be by ordinance…
“So I wanted to be clear, whether this is an ordinance that you are passing today?”
Administrator Greg Schulte admitted that the action proposed was not ordinance. An ordinance requires certain types of special actions on the part of the Town government, and those special actions were not taking place on March 3, as far as I could tell. But, as I mentioned, neither Mr. Schulte nor anyone on the Council felt that a $250,000 loan to PAGWAPA — a water and power authority jointly created and governed by the Town of Pagosa Springs and Archuleta County — created an indebtedness. At least, not the kind of indebtedness implied by the Town Charter.
As mentioned, the Council attached no requirements to the loan — and, from what I could tell, was not requiring anyone to sign any documents, which is perhaps not so shocking, since they were sort of loaning the money to themselves.. for the benefit of all the citizens, of course, who might someday be able to purchase their electricity from Pagosa Verde LLC… if, in fact, a sufficient and consistent quantity of 200-degree geothermal water can be discovered somewhere near downtown Pagosa… and if Pagosa Verde LLC can then attract enough investors to fund the $26 million power plant project.
Oh, what the hell, let’s include the interest payments and call it $40 million.
A few hours earlier, the BOCC had voted to approve a similar $250,000 “bridge loan” to PAGWAPA. The discussion between the BOCC, Pagosa Verde LLC, and various members of the public had lasted about 22 minutes… meaning that the conversation was worth approximately $11,400 per minute.
Commissioner Clifford Lucero had voiced his support for the loan this way:
“We’re in a partnership right now… the Town and the County… PAGWAPA… Pagosa Waters… we’re all in a partnership, trying to move forward with this project, and it’s important that this happen. Obviously, we have a cash-flow crunch right now, and it’s important to get this resolved. We have some more work to do on this, and we’ll get it done. It’s important to work together to solve some of these problems, because we’re in a partnership and I think it’s really important that we do this together and move forward together.”
Commissioner Michael Whiting was the only elected official — between the Town Council and the BOCC — to vote against the loan. He stated that the loan “was not a part of the project that we were sold.” and he commented on the lack of due diligence that PAGWAPA has “been able to apply to the project.” He explained that he’d used his powers as BOCC chair to insure that certain promises and guarantees were attached to the loan proposal.
“We don’t have any kind of assurances that this will be the last time we’ll be asked [for additional funding.] So why, then, would we do this? So I thought long and hard about this over the weekend. This is Pagosa’s little version of ‘Too Big to Fail.’ We all have too much invested in it, emotionally; we all have too much money invested in it. And we know that, today, if we say ‘No’ to this loan, we kill the entire project. This isn’t just a little pick-up; this is the entire future of the project, that hinges on a miscalculation of cash flow. That’s disconcerting to me.
“Additionally, this decision was made already, on February 25 at the PAGWAPA meeting, with a 6-to1 vote.
“As BOCC chair, I allowed this on the agenda, only because I have very strong feelings about the potential of geothermal. I allowed it onto the agenda just yesterday; I’d threatened not to allow it, to force a higher level of accountability and security for this bail-out, from the people who are about to spend it. I allowed it on the agenda because I had to, based on our circumstances. And I apologize to the taxpayers for that.”
Commissioner Lucero then made a motion, in order to “move forward together and get this done.”
“I move to approve the loan to PAGWAPA in an amount not to exceed $250,000, continent upon the execution of the promissory note by PAGWAPA, and the guarantee by Pagosa Verde LLC as prepared by the County.” The vote was 2-to-1, with Michael Whiting voting against.
I was told later that the County had failed to properly publish a notice of the loan proposal in the local newspaper, as required by state law, and that the vote will have to be retaken at the next regular BOCC meeting.
I appreciate it, when our local elected officials obey the law, meticulously and thoroughly. We all make mistakes on occasion. Our society is improved when we attempt to repair those mistakes, it seems to me.