12/28 Article in The Castle Pines Connection - "There Is No Free Lunch"

http://www.castlepinesconnection.com/pages/news/2011/qtr1/cpc/treasurer.html

Let's Saddle Up - Comments on the 2011 Draft City Budget

Our City has an unfunded liability of seven million dollars - the cost to bring the surface of the streets up to like-new condition. In fairness, we might not want to bring the streets to like-new conditions, but a bigger concern is that we have no idea what costs lie beneath the surface of the streets. This is not something we have to address by noon, but we do have to address it. Let's saddle up as part of our 2011 budget process. Here's how:

$25,000 should be budgeted for a robust study to combine the surface and subsurface street needs numbers. Then the community could discuss how to pull together a TABOR election in March 2012 to approve a property tax to fund a capital program to address maintaining the City's assets in proper condition. Let's ask Council to consider including this $25,000 in the 2011 budget. Our acting City manager has said including this item in the budget would be very helpful.

Ahead of the results of that study, the City will need to spend +/- $610,000 every year to keep the streets from getting worse while we're figuring out our capital program. That expenditure keeps our roads at a slightly worse condition that the average community in our region. If we do not properly fund, the streets will fall into a state of greater disrepair. The current draft budget includes only $300,000 for this item, a shortfall of $310,000. $300,000 is an imprudent approach to this need. The budget instead funds other initiatives. I beleive this is cross-threaded. I believe we should fund the upkeep of what we are already responsible for before we take on new initiatives. So, where could we get the $310,000 to fully fund this item? How do we pay for our streets?

a) We could pay $90,000 for City management, rather than the $180,000 suggested by the current draft budget. If we combine managerial skills with the Metro District, $90,000 is a very real number. So long as water is Job 1 in Castle Pines (North), let's not hire a City manager to supervise the Metro District. Let's instead hire a Metro District manager to also supervise functions of the City. If you add $90,000 to what the Metro District will pay for a manager, you can attract an individual to perform both tasks. This change provides $90,000 for streets.

b) We could pay only $96,000 for legal fees, rather than $192,000. If the City dissolution petition goes away, a lot of legal fees go away too at both the Metro District and the City. We might have to curtail some City initiatives if we spend less money on legal fees, but as slow as this economy is, what's the big rush? Rather than cancelling these initiatives, let's just wait to see if revenues prove higher than forecast. If and when we have the money, then we could ask the attorney to pursue those initiatives. The change provides $96,000 for streets.

c) We could pay only $37,500 for communications, rather than $75,000. We don't have any impact metrics to support an expenditure of this magnitude. Is the problem with the issues we're trying to communicate, or with how we communicate them? Until we find out, blogs are free. Facebook is free. Costs to keep fresh news flowing is about $2,000 per year. Website maintenance costs are small, as are costs to send E-mail blasts. If the Master Association stages events to support our sense of community, and if the Chamber advocates for the businesses in the community, why would we want to pay $75,000 for communications? This change provides $37,500 for streets.

d) We could pay only $36,000 for parks rather than $72,000 for parks. It's suggested the cost would remain the same for the park whether we combined forces with the Metro District or not. Rather than looking at incremental costs for one park, look to apply a single budget to all park management functions. See what you get. For example, installing more efficient rotary nozzles to irrigate the parks could reduce water costs and fund operation of the new park. The Metro District is budgeting $200,000 for the Dissolution process. What could the community derive instead from an investment of $200,000 in more efficient irrigation? This change provides $36,000.

e) We could pay only $24,360 for bookkeeping services rather than $48,720. $48,000 is a lot of money to keep our books, write checks, and help budget. Our current bookkeeper works with HOAs, and has no real expertise with other Cities. Let's offer Metro District staff an additional $24,360 to do our books too, and see if they'll say yes. This change provides $24,360 for streets. (While we could combine bookkeeping, we would need to conduct separate audits.)

f) We could pay only $21,200 for office space rather than $42,400. Let's take out a measuring tape and see how much square footage the City now leases, then measure the space in the upstairs loft of the Metro District (including the store room). Let's see if there's a fit. This change provides $21,200 for streets (and puts money in the Metro District's wallet).

If you total up the savings, that's an additional $305,060. If we need an additional $310,000 for streets, that's pretty close. Think about what we would have to give up to get our streets properly funded. It's really not very much. And if someone has a better idea on how to fund the streets, let's do that.

A fair question is, "How firm is this +/- $610,000 number?". Earlier in the year a study of the streets was scoped, and a vendor hired. The vendor drove all the streets, measuring the needs of the pavement surfaces. The results of the draft report were worked for a period of months to make sure they reflected reality. The draft was brought to final report. Still, this is a planning number. Actual costs could be $550,000. Actual costs could be $750,000. We cannot know for sure. However, it is prudent to take action to fund our best estimate. If we do not pursue adequate effort, the downside is steep. The $7 million figure will go much higher if the proper work is not performed. If costs are not in fact as high as suggested, funding can then be reprogrammed to other initiatives. If costs are higher, we may have to tighten our belts in other areas to provide for the needs of our streets. Let's act in good faith on this effort, and fund our best estimate at $610,000.

Don Bobeda made a pitch for Council to grant $10,000 to the Chamber of Commerce, and $5,000 for the Economic Development Council. I suggest the City provide that grant funding in 2011, one-half that amount in 2012, and tell the organizations now that they need to find their own funding from 2013 onward. This approach empowers the organizations to stand on their own feet, while giving them a chance to get started. Funding to support our community organizations is included in the draft budget. Let's not micromanage the efforts of these organizations, nor spend hours debating $5,000. Let's grant the money, with the proviso that it's going away, and so make hay while the sun shines. Empower the organizations to create successful futures for themselves. If in time their membership does not see value in their efforts, they should fail and try something else that can work.

Lastly, a good first step to a brighter future for the citizens of the community is to put the City's Dissolution Petition in our rearview mirror. It's time to saddle up and move on along. Let's offer sincere congratulations to the Metro District for their efforts on the interconnect pipeline with Centennial Water and Sanitation District. The news that this pipeline is completed will be the best news the citizens of this community have ever had! This interconnect is Job 1 for the citizens of the community. Let's support it, and not make it more difficult to achieve.

Is That What Cities Do?

I attended the City Council meeting on November 8th. While the meeting lasted over 3 ½ hours, there was not a great deal of substantive discussion.

The 2011 budget was presented to the public, with the hearing continued to the next meeting. Next year's budget will likely be adopted at the December 14th meeting.

The cost to maintain our streets, at the current average pavement condition index rating of 69, has been determined by a pavement study to be $610,000 per year. (The cost to make all repairs identified in the study is $7 million. The City doesn’t have anywhere near that much money. The City currently has no plan to provide for that capital need.) The current budgeted amount to go towards this need in 2011 is $300,000. How can we find the other $300,000 in the budget to properly fund this obligation? Or, would you like to see the streets fall into further disrepair?

$180,000 is aimed at a City manager. (Do we need $180,000 worth of city management? In a separate discussion it was asked why we have a Court. The answer was, “That’s what cities do”. Other cities pay managers $180,000, so we should too?) When the Dissolution Petition that the City has filed goes away, the Metro District can hire a new manager. Could the District pay their manager a few extra bucks to manage City operations too?

Legal fees increase to $192,000 for 2011. Regular attorney fees increase to $144,000, plus special counsel is budgeted at an additional $48,000. At $175 per hour, that’s 1,100 hours worth of lawyering. Is that what cities do? Would it be wise to back off on being so aggressive about ramping up every function a city does?

We're contemplating $372,000 for legal fees and a manager. Are we spending more on this than on keeping our streets in good shape? Is that what cities do?

$75,000 is targeted towards communications. If the Chamber of Commerce is going to represent the merchants in the area, and if the Master Association is going to stage community events, what exactly does the City need to spend $75,000 to communicate?

Parks maintenance is $72,000. I thought the Metro District maintained the parks, and did a pretty good job of it. Why do we need to add another layer of government to maintain our parks?

The cost of financial services is $48,720. Maybe we could pay the Metro District half that much to have their staff do our books too. What we do is not terribly complex, and their staff is good at minding the books. (If we hired such services from the District, we would have to have a different auditor from the District.)

The City Hall, yes the “City Hall” lease is $32,400. Could we lease the upstairs of the Metro District building for half that? Would the dividers in City Hall fit nicely in the Metro District loft?

If we halved these costs we would find the $300,000 that’s needed for the streets. That money would then go to pay for what cities really are supposed to do. From there all we have to do pull together a capital plan to fund the big expenses, present the need to the citizens, and ask for the taxes needed to pay the bill.

CPN - Where We're At/Where We're Going/How We Want to Get There

Let’s take a look as a community at where we’re at, where we’re going, and how we want to get there.

a) Here’s a song that describes how our community organizations currently interact today:

http://www.youtube.com/watch?v=d2nfgp3Ga80&feature=related

b) As to how we want to get to where we want to be, here’s a song that embodies the spirit of how things could run if we banded together, albeit a bit differently. This is a song about a big 18 wheeler steaming down the road with a head of steam, the hometown coming into sight. Notice Tom Petty is still the front man, but he’s switched roles and is playing bass instead of rhythm guitar. Mike Campbell is comping in the background to give the arrangement a full sound. A new guy is playing lead guitar. He’s not as good as Mike Campbell, but so what? A new drummer is getting the job done. Same keyboard player, still top shelf. The Heartbreaker’s utility player isn’t in this band. They all sing in harmony on the main themes. It works. It adds new textures. It’s a little toe tapper that sounds pretty good:

http://www.ilike.com/artist/Mudcrutch/track/Six+Days+On+The+Road

c) As to how to get to where we want to be as a community, we need to go through some sort of process to come together. That process can take the form of a crisis, like the bankruptcy, or we can work to figure it out, like our approach to renewable water. Crisis is inevitable if we don’t figure things out. Thus far nothing has worked on the community harmony front because nobody actually wants to work together. Sometimes in life you have to give up on being right in favor of choosing to be happy. In the CPN saga, everybody wants to be right, but nobody is happy. I suggest a dance party! Pick your favorite member of “the other side” (by that I mean the person you love to hate the most) and let’s go dance dance like it’s the last last night of our life life. Let’s build social relationships upon which the necessary community business discussions can take place. Imagine all the combatants letting go of their pet affront, and getting together to celebrate what makes our community special by dancing together to Usher’s song, DJ Got Us Falling in Love Again. (The rap is by Pit Bull, and we should change that hat at 1:26 from The Dodgers to The Rockies.):

http://www.youtube.com/watch?v=C-dvTjK_07c&ob=av2n

Any band worth their salt knows how to play all three of these simple songs. It’s just a matter of deciding which one they want to pursue. Somebody is going to win on Ballot Question 300 on Tuesday, and someone is going to lose. While both sides are expending energy for the final votes, I’d like to ask the winners to extend the olive leaf to the losers.

Colorado Congressional Delegation Supports Efforts for Chatfield Study

A study process concerning how water can best be stored at Chatfield Reservoir will soon be moving forward to invite public comment. The effort at Chatfield has brought together farmers in northern Colorado, municipal water users in Douglas and Arapahoe Counties, as well as recreational and environmental users throughout the Metro Denver area. “This sort of cooperation is unprecedented”, said Jeff Shoemaker, Executive Director of The Greenway Foundation, an environmental advocate for Front Range water issues.

Colorado’s federal elected officials have been instrumental in the success of this process. All nine members of the delegation recently pulled together in signing a letter of support for the completion of the study in a timely fashion. Sen. Udall’s staff helped pull together this joint letter effort. Sen. Michael Bennet personally made telephone calls to help facilitate communication with Federal agencies. Congresswoman Betsy Markey directed her staff to attend meetings with the Chatfield supporters to talk out issues with federal agencies. Congressman Ed Perlmutter worked hard to make sure the Chatfield study is completed, not lost in the shuffle with other Federal initiatives. Congresswoman DeGette and Congressman Coffman directed their staff to participate in conference calls on important interagency cooperation. Congressman John Salazar and Congressman Doug Lamborn have been untiring in their support for good process and successful completion of the study effort. Without this support and teamwork from our Federal elected officials, this important cooperative study of a Front Range water project may not have been possible.

The state is the local sponsor of the effort. Special thanks to Gov. Ritter for his letters of support.

The study will determine if additional water can be stored at the existing facility, without having to perform any new construction on the existing dam facilities. The study will consider mitigation of environmental impacts as well as recreational modifications that will be required at the facility. “This is a Win-Win-Win situation for the environment, for recreational users, and for water users. It could be water supply for farmers to grow crops, and water for families along the Front Range” said Shoemaker, who also heads the Foundation for Colorado State Parks. The process is being directed by the US Army Corps of Engineers in partnership with the Colorado Water Conservation Board, and water users with service areas that stretch from Park County, through the Denver Metro area, to Ft. Morgan. Invitation for public comment on the process is expected early next year.

Streets of Fire

I attended the 10/12 City Council meeting. The highlight of the work session was a first presentation of a notion for the 2011 budget. Property values are anticipated to decline 14% at the next evaluation, so the City will see a decline in revenue of $100k. (Impacts to the Metro District will be far greater.) For the first year of the valuation, that's OK because the City will not have to repay the Master Association $144,000 for the cost of incorporation. The budget assumes the County will provide the same level of service for a price that is 14% lower. While it never hurts to ask, this assumption is unlikely to become truth.

The budget is largely flattish, save for unbundling of services that will be provided by employees, and maintenance of the surface of the streets. We learned the condition of the streets is currently rated at 69 (on a scale of 100?). While the budget anticipated $200,000 for surface street repairs (which would take the rating to 54), we learned an expenditure of $610,000 is needed just to continue the surface conditions of the streets at the current level. Council advised that letting the condition of the surface of the streets become worse than current levels is unacceptable. An additional $410,000 will need to be added to the budget just to maintain streets at current levels. If we wanted to repair all of the problems with the surface of the streets, the cost would be $7,000,000. The City does not have that kind of money, and is not likely to.

If the next budget includes the true cost of County services and the cost to maintain the surface of the streets at current conditions, we likely to not have enough revenue to fund the budget. We can dip into the annexation fees, but that is one time money. I fully support maintaining the surface of the streets at 69 or better, and support asking residents if they will pay a tax to continue the surface of the streets as-is or better. We did not talk about money for street issues below the surface, or for the maintenance of other assets owned by the City. I asked that $25,000 be put into the budget to understand what our financial obligation is to maintain these assets, as well as looking at the cost of their replacement over time. When you read articles in the paper about how the City is in great financial shape, you might want to ask a couple questions about that claim. Once we get a true number for costs, we can come back to citizens and ask how they want to pay for it.

The highlight of the regular session was a debate over establishing a policy for spending money out of the annexation fee that is over and above budgeted and appropriated dollars. Not to exceed expenditures of around $70,000 were approved for additonal street sealing. I believe this is money well spent, even if we don't have it in the budget. We need to protect our streets, and keep costs from skyrocketing next spring due to neglect.

As to cutting expenses in order to balance the budget, I've sent a note to the manager for consideration in preparation of the next budget draft. We should eliminate the utility consultant because we are not in the water business. We should look at hiring an in-house attorney, or be realistic about billable hours for pursuits that are not going to happen. Our legal expense is way, way too high. We shoudl stop chasing the Metro District, as we have no standing in their issues. Taking on management of a new park is puzzling, but operating a water feature given our water issues and the lack of revenue from the park is imprudent. If that's not enough to balance things, we simply need to ratchet down the City operations until such a time as voters approve taxes to support a higher level of service by the City.

In the "Man Bites Dog" category, our communications committee suggested we hire CH2MHill to be out communications provider. This is really weird. We're trying to unbundlge and move away from CH2MHill. The search for a communciations provider began with the CH2MHill communciations consultant saying their costs are too high, and we should hire a small local firm to help us out, as our needs are modest. Instead there's a request to increase the budget form the low $60,000's to $70,000 to pay for this notion. This is really dumbfounding. Someone isn't getting the memo.

We did have some voluneteers come forward to serve on the finance and public works committees. They sounded qualified, and it was good to see fresh faces wanting to help out the volunteers already serving on Council.

The Risks of an Aging Water Infrastructure

Every day, nearly 1500 water mains break across the country. Most occur without any noticeable impact. But there's a greater impact than just the inconvenience of going without water for a few hours. These breaks are cause for alarm and pose a significant threat.

Last month, a burst water pipe shut down a plant in Fort Worth, Texas that produces F-16 and F-35 fighter jets. According to the Star-Telegram, the plant uses over 300 million gallons of water per year and the pipes that provide the necessary water for its operations are over 20 years old. Going without water brings the plant to a screeching halt and causes delays and additional expense for our military production.

What happened in Fort Worth should be eye-opening. While it turned out to be a minor disruption for only a few days, we face significant risks across the country as our aging water infrastructure begins to crumble. And in some areas, the water infrastructure is over 200 years old. Industry relies on water and so do we.
Beyond the economic consequences, there are also environmental impacts when the pipes carry waste water. Billions of gallons of raw sewage are dumped every year as these old pipes burst. The sewage ends up in our groundwater, our streams and rivers, and requires us to exhaust additional energy and resources to clean it to drinking standards.

In a 1941 article titled “Water Supply Facilities and National Defense” in the American Water Works Association Journal, then-FBI Director J. Edgar Hoover noted that our water infrastructure is imperative for security because of the “strategic position they occupy in keeping the wheels of industry turning and in preserving the health and morale of the American populace.”

Old pipes are not the only infrastructure that need help – over 15,000 dams are rated “potentially high hazard” by the Army Corps of Engineers and need to be repaired. Remember the consequences of the broken dam in Lake Delhi, Iowa when hundreds of homes and businesses flooded in July and factor that by thousands across the country.

The cost of repairing and replacing our water infrastructure is billions of dollars. But the cost of waiting is even greater.

We must invest heavily in our infrastructure as part of our national security strategy in the 21st Century. As J. Edgar Hoover said 60 years ago, “In this great undertaking, water supply facilities occupy a key position, and, therefore, it is essential that they operate without interruption.”

We don't have to wait for the federal government to act – we can act locally. You can invest in water saving devices for your home to use less water on a daily basis – look for EPA Water Sense appliances like toilets and faucets, and replace your sprinklers with more efficient rotary nozzles. Check with your water provider for rebates when doing so. And support your water provider as they seek additional funding to make the necessary upgrades to your system. For the cost today is far less than what consequences of inaction will be in the future.

Douglas Campbell is the Education Coordinator for the Douglas County Water Resource Authority (www.dcwater.org) and a fellow for the Truman National Security Project.