By Lynn Janes

On May 28, 2026, the commission had a regular meeting at the city annex building. Alex Brown, chairman, called the meeting to order.

The board approved the agenda and minutes from past meetings

New business

Karl Pennock of RCAC (Rural Community Assistance Program), had a presentation on the rate study for the regional project. He had done one previously a few years earlier and this would be an update on the rate analysis for the project. He said RCAC works with about thirteen states and provides rural community assistance. "I am what you call a small utility consultant." Pennock's background is in financing, and industrial engineering and he looks at an entity's financial capacity building through rate studies and developing budgets. He will be speaking to the revenue needed to cover the costs.

He developed this projection by looking at the revenue needed to sustain and cover the costs to operate the system with the current costs of building the system.

This project will provide water security for the whole Grant County area. Pennock asked Brown to speak to the water rights in the area. Brown said the city has 747 acre feet of recharge credits at the airport well fields with an additional 193 acre feet of regular water rights making a total of 950. Freeport McMoRan has donated 250 acre feet to Santa Clara and 200 acre feet to Hurley for this project. Currently they have three operating wells at the airport. Soon another well will come online in Santa Clara and soon will have another well started for Hurley. Raymond De la Vega, Stantec, said they had done the slag well testing and then will be doing the design for that well.

Pennock said that would be a little more than 1197 acre feet identified. He wanted Pricilla Lucero, Southwest New Mexico Council of Governments director, to talk about the special funding opportunities they would have. He knew they had an abundance of opportunities for funding the project. The Water Trust Board has been providing financial incentives for regionalization. Other opportunities will be Colonias funding, Department of Finance and Administration, New Mexico Unit Fund and a few others. The updated cost of the full project will be about $95 million. In 2024 it had been about $91 million.

De la Vega said that estimate has been based on the level of design that has been completed.

Lucero wanted to backtrack some to provide updates on funding. For the New Mexico Unit Fund, they would hold a workshop in June with a turnaround time of 60 days for the submittal of the application. The Colonias Infrastructure Fund will have $98 million this year and expect that same level of funding for the next. She talked about the debt capacity of the municipalities and how that could be addressed. The Water Trust Board has just released 100 percent grants for design. It could help the project finish the design process which has a 60 percent completion. They also do not have to put funding through the legislature approval any longer. The Capital Project Development Fund goes back to capital outlay reform and if there's any reversions of any of the capital dollars for the purposes of funding larger dollar amount projects, which several communities received. They have cut down on the number of reauthorizations and if communities don't meet the timeline those funds will be awarded to other projects of larger scale.

The project has been awarded funds for technical assistance and part will be used to develop the 40-year water plans for all the municipalities in the project. They will all also be doing asset management plans which will be instrumental in securing funding. Another requirement will be a preliminary engineering report (PER), which they already have.

Pennock pointed out they know what all the assets will be. He went back to the cost of $95 million and the project being done in four phases. The construction will be set to start in 2027 and the remaining three phases done over the next few years through 2030. De la Vega said the first phase would be the Hanover transmission line and Hurley. Next would be the highway 180 pipeline and then finish up the west side pipeline.

The idea of this will be to forecast the needed revenue over a multiyear period, five or six years. It will be to cover the true cost of water, day-to-day water operating expenses, debt service and reserves needed. Water sales will be the primary source of revenue with minor sources being service charges, late fees and connections ,but 90 percent will be water sales. He did encouraged them to look into other sources such as cell towers and mentioned a few others. Pennock said they would have about $142,000 in operating costs. He added they would have administrative costs and thought that would be the JPA (joint powers agreement) when it became formed.

They did need to remember a 3 percent inflation as the project continued. At the current cost of $95 million the annual loan payment would be $315,000 a year without any 100 percent grants. He did acknowledge they already had $15 million at a 100 percent grant for phase one. They continued to discuss the cost of inflation and the fluctuations. Pennock had numerous calculations and graphs for the board to review.

The fixed cost will be shared among everyone attached to the system and currently has been calculated at $5.47 for each tap connection, worst case scenario. They discussed starting with a lower amount because they would have many 100 percent grants. It could also be worked into a tiered structure and those using more would pay more than the others. The more people engaged in the system the lower the cost will be. Many factors in the end will alter this number per tap. The discussion had always been that the cost would be shared equally on the fixed cost with the variable being to the consumer.

Brown said this would be a good start and will be refined better as they reach completion. This analysis also does not include the acreage Bayard recently purchased that will have water access and they would probably see many other changes come. The commission will be working on legislative actions to support the commission and its unique circumstances, with a bill being drafted. Tony Trujillo said this would not be a water system, but a distribution system and the legislation would need to reflect that.

De la Vega said they had not had a water operator meeting at this time. He had talked with a few of the operators about having a meeting to do a deep review of the plan.

They have not had a JPA subcommittee meeting, but Brown said they might need to change that to a legislative subcommittee. Brown asked all members to have their comments back on the legislation so it could be passed on to the attorney. They will be doing a presentation to each council and the Grant County Commission to provide a good explanation of where the water commission stands with the project. They looked at the current draft and discussed some of the language that would need to change.

Next meeting will be June 25, 2026, at 3:00 pm

Adjourned