By Mary Alice Murphy
The main topic of discussion at the Grant County Water Commission meeting on Dec. 20, 2017 at the Santa Clara Village Hall was whether to approve the commission to submit a United States Department of Agriculture application for the Grant County Regional Water Project remaining phases.
Southwest New Mexico Council of Governments Executive Director Priscilla Lucero said at the previous meeting of the commission, Kathy Pfiffner from the USDA had said it would be possible and more cost effective to fund the remaining phases of the regional water project in one go.
"Alex (Brown, Silver City Town Manager) and I had discussed it with her to do it in one application, instead of each community doing it in phases," Lucero said. "Kathy suggested each member of the water commission go back to their councils and get a feel for whether the water commission should apply on behalf of all the entities."
Pfiffner said at the previous meeting that she would like to see the application come into her office. She said she could put her entire allocation to fund all the rest of the phases. She thought she could also get funds that were reverted from other states and fund items already on the list.
"Today we want to get feedback," Lucero said. "I will say that if we decide to proceed, the goal is to have the application in by June next year. Then we can have a discussion on other opportunities for funding."
Water Commission Chairman Gabriel Ramos said the County Commission, of which he is a member, would vote on the issue at the regular meeting on Thursday, Dec. 21. "I think we're all on board."
"I have concerns about the rates," Lucero said. "If we do it on behalf of the water commission, it may not reflect the poverty levels we have in some of the municipalities. Those levels have an impact on the amount of the loans. But you have ability to deny what USDA comes back with. If you accept it, we will talk about how to set the rates. You do have the ability not to accept."
Hurley Town Councilor Esther Gil said some of the councilors, especially Ed Stevens, had concerns, but they voted for it.
"We will support it," James Marshall, Silver City assistant town manager, said.
Bayard Mayor Charles Kelly said: "We're for it, too, but we do have questions."
Bayard Clerk Kristina Ortiz said she had talked to Sandra Alarcon, USDA loan specialist out of the Las Cruces office. "She told me: 'All in all, it's a good project and we support it.' Sandra also noted it had pros and cons, but the strongest pro is one project, one application. I've dealt with USDA on a lot of projects and some of the scopes."
Gary Berg of Occam Engineers Inc. said the design is done to Hurley, but anything north of Hurley is conceptual.
Ortiz said, for the application, it would be necessary to have operations laid out, as well as preliminary costs. Berg said he had rough numbers for capital costs.
"If we go forward and have the water commission take over the project, each entity will have to set aside funds for engineering," Ortiz said. "The request for proposal for engineering would have to meet federal standards. We would have to decide who would be the fiscal agent and who would take on the debt. The water commission would need staff to manage the project, as well as liability insurance, audit costs and operator costs. As part of construction, it would be a grant with a loan component. The best I've seen is 75 percent grant/25 percent loan."
Berg said the cost to Hurley, Phase 1A, which is paid for, has totaled about $12 million, with another $1.3 million needed for a secondary well and solar. "Another $4 million to Bayard, $2 million to the Santa Clara tank and $2.7 million to Arenas Valley."
Ortiz said: "Figure on $12 million, that leaves a $3 million loan. As part of the wastewater treatment plan, we pay $74,000 a year for a $1.3 million loan at 3 percent. A USDA loan is generally at 3 percent to 4 percent. The impact would be an easy $15 increase per customer."
"I will throw out there that Gabe and I have had conversations with Anthony (Gutierrez, executive director of the New Mexico Central Arizona Project Entity) about the entity's thoughts of changing the JPA to allow it to put funding toward other projects, in addition to the diversion," Lucero said. "We understand the costs, so we prefer 100 percent grant, but we have to think about all our opportunities for funding the project. What if the award is $2 million short? We can go back and amend the numbers after the award is made. If we have the opportunity to minimize costs to the customer, that is always what we want."
Ortiz said a loan is not a one-time cost, but ongoing.
"I don't have the answers to what might happen," Lucero said.
"As part of the design, we have to consider where we put valves, as well as relief valves, so we can flush the lines," Ortiz said.
Berg said the system would be SCADA (Supervisory control and data acquisition) controlled. "The operator would give a few thousand gallons to each entity every week to flush the lines."
Ramos said he thinks a lot of questions will be answered by the application and what comes back from USDA. "I appreciate all the points you raise. Kathy was so optimistic about getting it done in one go."
Ortiz agreed that she is good at what she does.
"Her viewpoint was instead of doing it five times creating applications, do it once," Lucero said.
Ortiz said the application will take a lot of work.
Lucero suggested each member take on piece. "I attended the New Mexico First Water Town Hall. I got approached by regular people and legislators from outside the area supporting this project." She said the perception was that the NM CAP Entity couldn't do it through an amendment through its JPA, but "legislators told me: 'But we oversee the Interstate Stream Commission.' Seems like there is a lot of support for this project."
Ramos said he didn't know if it would make sense to go after USDA and CAP Entity funding at the same time.
"The only difficulty is that the USDA says their money is supposed to be spent last and the ISC says theirs is last," Lucero said.
"The USDA loan component is the first thing to be spent and then it goes to the grant funding," Ortiz said. "We would need an agreement first."
Marshal said it made sense that the USDA would be approached first, then have the match from the CAP Entity.
Kelly noted that item 5 of the Grant County Water Commission JPA stipulates that everything it does has to be approved by each entity.
Santa Clara Mayor Bauch said he had not been able to attend the prior month's meeting because of a village council meeting that same afternoon. "I didn't approach the council about this. I can go back and make a presentation. At this point, I think we would not support it. We're already connected with Silver City at Arean Valley. I don't think we will want water from two different sources and the costs involved. What's important is getting water to Hurley."
Ortiz said the way forward is with one application. The debt will be with the commission, not with the individual entities.
"With the other large loans we've taken out, it would be a significant increase per household—$12, $15 or $20 or more a month," Bauch said.
Lucero pointed out they didn't have those numbers yet.
"If we don't look at projects when grant money is available, later there may be no grant money and then each entity would have to take on debt," Lucero said. "I think this project to provide water to everyone from this end would create a loop. What guarantees do you have that water will flow from Silver City?"
Berg said a couple of the supply lines in Silver City are "not so good. There can be an emergency at any time. Into Hurley at this point we're going into business with one well."
Ortiz said she understood why the mayor feels the way he does.
Ramos noted that the major cost would be only at the time of usage of the water. Ortiz clarified that there would be a monthly or annual payment from each entity to the water commission for operational and maintenance costs.
"If we can purchase at bulk prices, the rate might be better," Bauch said. "Right now, when we buy from Silver City, it's at regular commercial rates. If we can get water at bulk rates that changes things."
Ortiz said Bayard is providing water to Hanover at bulk rates, although Hanover hadn't needed water since summer. "The original plan was to charge the same rate as our customers pay, but they couldn't afford it. It's not fair that Hanover is getting the water for less than our residents."
Marshall said the questions to the agenda item couldn't be answered until the water commission puts in an application. "With the current JPA, any one of us can stop the process at any point. We should move forward to explore the options. With this option, for Santa Clara, you get to help set the rates. Right now, you're on contract with Silver City."
"We would never borrow the whole $14 million," Marshall said. "We would get the grant part and then go to the CAP Entity to get the $3 million or $4 million. This is another avenue to explore."
Kelly agreed that the Hurley's need for water is the greatest. "Bayard has a system, but I find it attractive to have a line going by that would be a link to our neighbor."
Lucero said New Mexico Tech is about to start studies on the level of the aquifer in the area.
"It's about water security," Marshall said. "It provides us being interconnected to move water both ways."
Ortiz suggested it might be more feasible to connect Bayard and Santa Clara.
Berg noted that both Bayard and Santa Clara have water trouble sometimes. "You have bad years. The problem is finding wet water. These two municipalities have spent a lot of money to get a grasp on water. But both are continuously working on infrastructure."
Bauch asked for clarification that doing an application is just exploring the possibilities. The answer was yes. Ortiz added that the operating budget would have to be submitted with the application.
"Would it be more cost-effective to get Santa Clara and Bayard connected?" Ortiz asked.
Marshal said the recharge water credits are substantial. "If we don't use them, they are stranded at the airport."
Kelly said although Hanover is not using Bayard water right now, "they were using 150,000 gallons a month up to 300,000 gallons in the summer."
"I think we will support the application to explore the possibilities," Bauch said.
Ortiz reminded everyone that the application would have to have the operating costs, audits and insurance.
"The USDA had technical assistance providers," Lucero said.
"We can have a meeting with the USDA on the work load we're taking on," Marshall said.
He moved to approve the application and Kelly seconded it. Kelly suggested the old JPA be addressed, in case any group wants to bail, "because then we can't do it."
Lucero suggested it be on the agenda every meeting. "We don't want to be faced with putting all our eggs in one basket. We must stay updated. There are a lot of what ifs."
The approval t move forward with an application was unanimous.
Lucero suggested bringing Pfiffner and Alarcon back to the next meeting. Later in the meeting it was decided the first meeting should be with the member entities' clerks, because they might bear the burden of the application.
In discussion about the JPA, Marshall noted the current JPA is a developmental document. "If we decide to be operational, we can start the discussion, but we cannot run an operation requiring unanimous approval. It doesn't work for a business."
He suggested one entity to run the system and another entity to address other water issues.
"Let’s let this one lie until we know what's going to happen," Kelly suggested.
The next meeting is set for 3 p.m. Wednesday, Feb. 21, to take place at the Grant County Administration Center, after the legislative session.