The Town of Pagosa Springs didn’t always have a sanitation system… and didn’t think it needed one.
Back in the 1950s, people here were still using outhouses and septic systems as their primary sanitation methods. As far as I can tell, the downtown residents and businesses got universal access to a municipal sewer system in the 1960s.
Since then, the Pagosa Springs Sanitation General Improvement District (PSSGID) has had its ups and downs, dependent to some degree on rules promulgated by the federal Environmental Protection Agency (formed in 1970) and the Colorado Department of Public Health and Environment (CDPHE, which got its start in 1947).
Pretty much any health-related system needs ongoing maintenance, repairs, and upgrades, and PSSGID is no different.
And of course, that maintenance, and those upgrades, have a cost.
Tonight at 5pm, the Pagosa Springs Town Council will convene in a ‘special meeting’ as the PSSGID Board of Directors, to hear more about those costs, and where the money might come from. A significant portion will come from taxpayers’ pockets.
But which taxpayers?
The Town Council recently hired Joey McLiney, of McLiney and Company, to help guide the complex financial process.
From the agenda for tonight’s meeting:
The Town’s Municipal Advisor, Mr. Joey McLiney, has discussed with staff options for financing the needs of the sanitation district. Currently there is an urgent need to repair failing sewer lines in the amount of $4.5 million. Mr. McLiney has researched options including Revenue Bonds, General Obligation Bonds, and a Sales Tax solution. The G.O. Bonds and Sales Tax solutions would require a vote of the people at a November 2025 or April 2026 election. Mr. McLiney has also reached out to bond counsel and received estimates for those costs. He will share that information during the meeting and ask the council to give direction.
We notice here a few important details.
“An urgent need to repair failing sewer lines in the amount of $4.5 million…”
“Revenue Bonds, General Obligation Bonds and a Sales Tax solution…”
“A vote of the people at the November 2025 or April 2026 election…”
The $4.5 million figure is merely the “urgent” part of the picture.
Here’s the total picture, as estimated by certain engineers:
That’s $44.8 million, if we assume that the best solution for the rules being promulgated by EPA and CDPHE is a brand new wastewater treatment plant near the High School. The $10 million price quoted for the “San Juan River WWTF” might seem ridiculously low for a modern wastewater treatment facility, but I suppose that price assumes Pagosa Area Water and Sanitation District (PAWSD) would help pay for the new WWTF.
So we have a couple of possible prices to work with. $4.5 million for “urgent” repairs, and $44.8 million for the whole enchilada.
And we have a choice of ways to pay for these repairs and upgrades.
“Revenue Bonds, General Obligation Bonds and a Sales Tax solution…”
Before we get into those funding mechanisms, it will help to understand a few other details. The PSSGID serves some of the homes and businesses within the Town of Pagosa Springs, but some homes and businesses — such as those located uptown, like for example Walmart and City Market and the surrounding homes and businesses — are outside the PSSGID district and are served by PAWSD. That leaves about 1,600 connections that pay monthly fees to PSSGID.
As of this year, each connection pays $66.50 per month or about $800 a year, with businesses like hotels and restaurants paying for multiple connections.
According to my pocket calculator, if 1,600 connections were to pay for $44.8 million in repairs and upgrades, then each connection would pay $28,000. Plus interest payments on the loan. So make it $50,000? Or $2,500 a year, if spread over 20 years.
Ouch.
Tonight, the PSSGID Board (Town Council) will consider at least three possible ways to pay for the proposed debt.
A Revenue Bond is typically funded with monthly customer fees as the source of payments. Sometimes “connection fees” are also part of the promised revenue. Some government agencies can take out revenue bonds without asking voter permission.
A General Obligation Bond is typically funded by an increase in property taxes, which requires voter approval.
As I understand these two options, the PSSGID customers (myself included) would be the only ones paying off the loan. We’re perhaps 15% of the Archuleta County population.
Then we have “a Sales Tax solution”.
Pagosa Springs and Archuleta County have a somewhat unique arrangement for sharing the local sales tax revenues. In many Colorado communities, the city or town collects the majority of the sales tax, but here, the 4% local sales tax is collected by Archuleta County and shared 50/50 with the Town of Pagosa Springs, under a mutual agreement. The Town has no sales tax of its own.
But the Town could have its own sales tax, that would not be shared with the County. In fact, back in 2014, the Town Council attempted to create its own sales tax to fund a proposed recreation center. The voters rejected the proposal.
I expect that Mr. McLiney will explain more about how a Town-only sales tax might work as a possible method for funding millions of dollars of PSSGID repairs and upgrades.
The notes that have been provided to the PSSGID Board (Town Council) suggested that a half-penny sales tax (0.5%) might generate about $2 million per year.
I believe this estimate is too high, for several reasons. But I’m willing to be proved wrong.
However, the “Sales Tax solution” would certainly spread the burden of repairing and upgrading the PSSGID system across a much larger population, because much of Archuleta County (pop. 14,500) does their shopping within the town limits, and would thus pay a portion of a new 0.5% sales tax. And visiting tourists would also contribute to the revenue stream.
Disclosure: I’m a Town resident, and my family currently pays about $800 a year for PSSGID service. I would rather not see our PSSGID bill increase to $3,000 a year. This editorial series will likely reflect those personal concerns.