The Pagosa Springs Town Council met last night to deal with a few local issues involving money, and in one case, hot water.
PROJECT: Approval of Second Amendment of the Hot Springs Resort Geothermal Water Tap and Economic Development Agreement
…Pursuant to the terms of the proposed Amendment, the Geothermal Fund will receive an annual payment of $12,000 at the beginning of the calendar year through at least 2028 and adjusted thereafter according to the terms of the proposed Amendment. That represents an additional $12,000 per year the Geothermal Fund is not receiving now. Renewing the Agreement through the Amendment also serves a vital economic interest for not only the Town of Pagosa Springs but the community at large. The Springs Resorts is one the county’s largest employer and is also one of our community’s most significant direct generator of lodgers tax and sales tax. The fiscal impact for the indirect revenue generated by retail, services, restaurants, and activities purveyors (among others) is difficult to calculate but is quite meaningful. Approval of this Amendment continues to nurture the mutually beneficial relationship…
The amendment would allow the Springs Resort to continue using up to 450 GPM (gallons per minute) of municipal geothermal water from the Town’s PS-3 and PS-5 wells located behind the old County Courthouse. Since the Resort operates year round, the extraction and use of valuable geothermal water could total up to 284 millions gallons per year, according to the calculator at ConvertUnits.com
In exchange for this generous provision of valuable geothermal water, the Springs Resort would pay $1,000 a month.
There can be no doubt in anyone’s mind that the Springs Resort is an important player in the Pagosa Springs economy — thanks, in large part, to previous Town Council members who thought it wise, years ago, to pump vast quantities of taxpayer-funded municipal water over the pedestrian bridge behind the old Courthouse, for a relatively low payment.
I don’t mean to belittle the investment the Resort itself has made, to serve tourists. It has been substantial, and is continuing.
On page 3 of the Town’s revised fee schedule for the downtown homes and businesses that use municipal geothermal water for heating purposes, we find that, next year, each of our downtown public schools will be charged $1,050 a month for heating services through the Town’s Geothermal Heating System. A seat-of-the-pants estimate of how much water it takes to heat the Pagosa Springs Elementary School during the winter months? About 20 GPM.
According to the proposed lease presented to the Council last night, the Springs Resort would receive up to 450 GPM while paying less than the Elementary School will be paying for heat.
I personally find this rate to be embarrassingly low, considering the benefits provided to the Resort by the taxpayers. But let’s hear what our elected officials at the Town Council had to say last night, about providing municipal geothermal water to a private company, forever into the future.
Our new Town Manager David Harris did a quick introduction of the proposed “tap agreement” amendment.
Then we heard from several Council members.
Council member Mat deGraaf:
“The Springs Resort just increased their fees by 92%? Or 94%? At this point it feels like… it makes visiting that wonderful amenity ‘out of reach’ for local people, including myself. Why don’t we just increase our fee by the same percentage? If we need a metric, we can use that.”
Council member Gary Williams agreed with Mr. deGraaf, and noted the increased fees people now have to pay for a yearly pass to the Resort.
“So I was thinking back to what I used to pay for a pass, many years ago; it’s essential tripled, or more. And I was thinking about [then-interim Town Manager] Tamra Allen, when she was here working for the Town, and when this agreement was first signed, in 2009, she was pretty disappointed in the Town’s negotiators…
“I’m thinking about the rate increases that we’ve approved for our other utilities, and I’m thinking about the rate increases, specifically, for the Geothermal Heating System. Because it’s not paying for itself…”
Mr. Williams is referring here to, among other expenses, the deferred maintenance that the heating system has suffered from for many years, and the maintenance bill that may be coming due shortly.
“So from 2022 to 2023, we increased the Geothermal Heating fee for [large commercial users] by 100%, and then, the following year, it was set to go up again, by 50%. It would seem to me, logically, that it’s a geothermal utility we’re operating, and we’ve raised the prices for commercial users, significantly…
“And then I was thinking, as I read the 62 pages that came with this [proposal], they talked of the geothermal water we send to the Springs as ‘waste water.’ Well, that’s a term of art for Colorado water law, but in reality, the water we send [to the Resort] is worth much more than it is in our geothermal system, where we run it through a heat exchanger. Because the water we send to the Resort has 13 critical minerals in it, that they advertise as being beneficial for your health. So not only do we send 118 degree water, that they can use, we are also sending the minerals with it.
“That’s something they can put in their brochures…
“So, I think we have a valuable commodity here, and we’re not serving our utility well if we don’t increase the rates like we did for everyone else.”
Other Council members also chimed in, either agreeing or disagreeing with Council member Williams.