West Granby residents seek explanation for water rate increase

RV sites sit behind a pond at Sun Outdoors Rocky Mountains in Granby, which is in the West Service Area water district, where residents have seen steep increases in water rates.
Kyle McCabe/Sky-Hi News

Smith Creek Crossing and Sun Outdoors residents started making public comments at Granby Board of Trustees meetings in April expressing concerns about their water rates increasing from $10 per thousand gallons to $50 per thousand gallons. 

At the second meeting with public comments dominated by residents of the Sun Outdoors’ properties, the trustees decided to hold a workshop session during their May 9 meeting to discuss the West Service Area water system, which serves Sun Outdoors and its residents.

Town Manager Ted Cherry included a memo in the board’s meeting packet that outlines the history of the West Service Area and its water rates. When Sun bought its property from the town in 2018, it agreed to make necessary improvements, including to the water system, Cherry said.

“In that original agreement, it does say that the town would eventually take ownership of the water system,” Cherry said. “There’s been a number of amendments to that contract, but that piece has really stayed the same throughout these amendments.”

Cherry’s memo states the agreement also requires Sun to cover all the costs involved with operating the West Service Area system.

In February 2021, SGM, the town’s engineers, completed a draft rate study for the West Service Area. It used estimates for water usage and total cost of operation provided by Sun, according to Cherry. Those figures came in at 69,562,125 gallons and $527,900 for 2023, respectively.

SGM used the number to estimate that 2023 potable water rates in the West Service Area would be $7.59 per thousand gallons.

When Sun later applied for initial acceptance of its water system improvements, it prompted a final rate study, which SGM completed in August 2022. Cherry wrote in his memo that the study used updated figures for water usage and total cost of operation based on data collected by the town. 

The usage for 2023 dropped significantly to 9,537,736 gallons. Cherry said in an interview that the usage estimate in the draft reflected a larger expected build out of Sun’s properties than currently exists or is likely to be completed by the end of this year.

Sun did not respond to questions about why the estimated usage ended up being over seven times higher than the actual water usage. 

Cherry also said what he listed as the final draft’s 2023 total cost of operation in his memo — $397,913 — was incorrect. The total cost was actually $527,913, an increase of $13 from the draft rate study in February.

In the final study, one table lists $397,913 as the total cost, which is where Cherry got the incorrect number. Another table that breaks down the total cost lists the number as the operation and management costs, which is one of four factors that combine to create the total cost of service. 

With the decrease in usage and a slight increase in total cost, the price of water per thousand gallons greatly increased from the draft to final rate study — $7.59 in the draft turned into $55.35 in the final. 

The nearly 630% increase went into effect in December 2022, Cherry said at the May 9 meeting. The West Service Area does not charge Smith Creek and Sun Outdoors residents directly — its only customer is Sun, which did not start charging its residents more than $10 per 1,000 gallons of water until May 1. 

An email from Sun to Sky-Hi News quoted Stacie Parrish, the division vice president of operations and sales for Sun, as saying that state regulations require Sun to bill residents based on what the West Service Area charges them.

Sun did not respond to follow-up questions about what state law regulates what it can charge its residents. In an email to Sky-Hi stated the company could delay the implementation of the town’s rates onto its residents.

“In an effort to lessen the impact of the rate imposed by the Town on our residents, we opted to delay the implementation of the increase until May 1,” Parrish wrote.

Parrish also stated Sun has “opted to pass through Town imposed charges at a lesser rate until September.”

An email Sun sent to its residents March 1 stated their rate would increase from $10 to $42 per thousand gallons May 1 before increasing again to $55 per thousand gallons September 1.

Cherry highlighted other items of consideration in his memo, including the town turning down, due to safety concerns, a proposal from Sun that the business maintain private ownership of the water system and town staff suggesting Sun consider a flat monthly fee instead of a per 1,000 gallons fee.

The rate studies calculate the flat fee, or alternate base rate, based on the total cost of service. With only a slight change in the total cost between the studies, the draft listed the base rate at $43,992 per month and the final study listed it at $43,993 per month.

Cherry said town staff suggested Sun adopt the alternate base fee because they believed it would make the billing process easier for both parties.

“What we also brought forward to them to kind of back that up was to say, ‘You can then turn around and charge a resident over there, say $60 a month or $100 a month for water,'” Cherry said. “That could be added to their lot rent or be a separate charge, however they want to do it.”

Sun decided to stay with the per thousand gallons rate structure and did not respond to a question about why it chose that structure over the alternate base rate.

No representative from Sun attended the May 9 workshop, and several public commenters expressed frustration about their absence. Cherry said he sent emails a week in advance to three Sun representatives.

“As the billing changes come directly from Granby, we encouraged our residents, in writing, to attend,” Parrish wrote in response to a question about Sun’s absence from the meeting. “This allowed them to hear directly from the town.”

Several trustees and town staff said they would attend a meeting with residents and Sun representatives if residents could organize one, and Parrish wrote in an email that Sun intends to hold a meeting with residents “to provide details that do not appear to have been shared during the workshop with the Town.”

Cherry wrote in a text message that he does not know what information Sun may be referring to in Parrish’s statement.

Other business:

  • Paul Backes of McMahon & Associates presented the town’s 2022 audited financial report.
  • The board approved a bid from R&R Ink to do electrical work in the new metal storage building at the South Service Area Water Treatment Plant.
  • Trustees approved an ordinance that changed town code regulating petty crimes Granby Police have observed increase recently, including noises disturbing public peace, harassment, dining and dashing, reckless endangerment, public interference and duty to clear sidewalks.
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