The construction of new homes slowed in the U.S. this summer.
From the National Association of Home Builders website, August, 2026:
Housing starts fell in July as economic uncertainty, rising construction costs, labor shortages and elevated financing expenses continued to challenge builders. Overall housing starts decreased 12.4% in July to a seasonally adjusted annual rate of 1.24 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau… The multifamily sector, which includes apartment buildings and condos, decreased 16.8% to an annualized 431,000 pace and are down 8.9% compared to July 2025…
The construction industry has also slowed in rural Pagosa Springs, Colorado.
A friend in the construction industry told me a couple of weeks ago that he has lowered the asking price on a spec home he built this summer. Homes aren’t selling in Archuleta County like they did — at a somewhat frantic pace — during the COVID crisis.
Nationally, the slowdown has been credited, by some, to rising mortgage interest rates, which threaten to continue increasing as federal financial policies shift to address inflation worries.
But other factors are also at play.
I’m reminded of 2009, when the construction industry in Pagosa Springs came nearly to a standstill during the Great Recession, and skilled tradesmen moved away, looking for work in other communities. The development slowdown took many of us by surprise. Especially, perhaps, government officials.
But looking back at the building stats, the slowdown had actually started in 2006. We just hadn’t noticed.
The Pagosa Area Water and Sanitation District (PAWSD) will hold a board meeting tonight at 5pm at 100 Lyn Avenue, and these two items are on the agenda:
5. 2027 Draft Budget Public Dissemination
6. Scheduling Public Hearing – 2027 Draft Budget
The budget discussed tonight will not be the ‘final budget’ for 2027, although I expect the board to approve the draft for public publication. The public is invited to address the board about their concerns.
You can download the proposed budget here. The budget proposes a 15% increase to monthly water and wastewater fees.
Disclosure: I currently serve as a volunteer director on the PAWSD board, but this editorial series reflects only my own opinions and not necessarily the opinions of the PAWSD board or staff.
One of the things affecting proposed PAWSD budget for 2027 is an expectation of less Capital Investment Fee (CIF) revenues than were collected in 2024 and 2025. In 2024, the board adopted a new policy: that maintenance and expansion of the water and wastewater systems ought to be split “50/50” between existing customers (monthly bills) and new development (CIF). This policy decision led to dramatic increases in the CIF fees.
The Water System Capital Investment Fee went from $5,353… to $8,958 per equivalent unit. (A single family home is considered “one equivalent unit.”)
The Wastewater System Capital Investment Fee increased from $1,179… to $15,697 per equivalent unit.
For a new single family home using both water and wastewater services — mainly in the Pagosa Lakes area — the total CIF went from $6,523… to $27,655.
On the wastewater side of the ledger, during 2023 PAWSD had been barely meeting its expenses with its various fees. And the future outlook was worse. The following graph from the Stantec consultants suggested that, without fee increases, the PAWSD wastewater fund would be almost $20 million in the red by 2032.
In 2023, the monthly fee for PAWSD wastewater customers was $32.80. The suggested fee for 2025 was almost double that amount, at $64.29, which would be higher than the monthly fee then charged by the Town sanitation district. (The Town has since increased its monthly sewer fee.)
As time passed, the PAWSD board did increase monthly water and wastewater fees, but at a somewhat lesser percentage than what Stantec had recommended.
But with the decline in building permits in Archuleta County came a decline in PAWSD CIF revenue. In 2025, PAWSD had expected to collect $2.3 million in total water and wastewater CIF. The actual CIF revenues amounted to only $1.6 million.
Ouch.
This is not just a local problem, as indicated by the quote shared above, from the National Association of Home Builders. Home construction has slowed nationally.
But when a water district budgets $2.3 million from CIF to help cover maintenance and upgrades — expenses which are subject to annual inflation — and collects only $1.6 million, we are in trouble.
Enter, Stage Right, a 70-acre subdivision proposal from Los Angeles-based Modern Community Builders LLC… potentially, hundreds of new homes and lodging units that will have to pay PAWSD CIF fees and connection fees… and then, monthly water bills. (But not sewer fees. The Town’s sanitation district would provide the sewer services.)
What government could ever say “No” to such a windfall?
Well…
…the Town Council, at their October 6 meeting, looked at a proposed Planned Development Agreement, brought forward by the Town Planning Department and Modern Community Builders, that would over-write the ‘Rural Transitional Zoning’ on those 70 acres and actually allow hundreds of homes and lodging units to be built there. The current zoning is low-density and does not allow for hundreds of new homes and cabins.
The Town Council did not say, “No”.
Not exactly.
But it was apparent from the October 6 discussion that the Town’s sanitation district — Pagosa Springs Sanitation General Improvement District — was not yet verified that it could accommodate hundreds of new homes and lodging units through its (struggling) sewer pipeline. That pipeline began, on 2017, pumping the Town’s sewage 7 miles uphill to the PAWSD Vista Treatment Plant, and has been nothing but expensive maintenance headaches ever since.
The Town is now planning to abandon that uphill pumping system, eventually, but a new downtown sewage treatment plant is not likely to be ready for service for many years.
So the possible approval of the Ponderosa Mountain subdivision agreement was ‘continued’ to a future Council meeting, to allow for additional expert input from PSSGID staff.
And to allow the Council time to ponder, further, other aspects of this massive proposed change to the downtown community.
But let’s pretend for a moment that the Council does approve the Planned Development Agreement, later this month. Modern Community Builders LLC woould still have to present, for approval, a full development plan that pleases both the Town Planning Commission and the Town Council.
Read Part Three… tomorrow…
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can't seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.