May 25Th , 2021 TO: Town of Rico Board of Trustees FROM

Rico Board of Trustee’s Memorandum

Date: May 25th , 2021

TO: Town of Rico Board of Trustees FROM: Kari Distefano, Rico Town Manager SUBJECT: Request for Congressional Spending

On Friday afternoon I got an email from John Whitney. He is Senator Bennett’s staff person. The email was soliciting projects for Congressionally Directed Spending consideration for this year’s federal budget. There is a form that needs to be filled out that includes a support letter from the community. The requests are due June 4th, but Mr. Whitney said in his email that the sooner we could submit, the better. I emailed the letter earlier, but I wanted to explain why I chose the sewer project rather than a water project even though according to the infrastructure survey, the community placed a higher priority on water. There are more opportunities for grant funding for water projects. The Colorado Water Conservation Board has funding. The Department of Local Affairs has funding and Rico will be the recipient of some stimulus money that can go toward water projects. The Board can raise water fees at will, but any increase in the sewer fund must go to the voters. There is another reason that I picked sewer instead of water. It is likely the projects will be judged at least in part by how well prepared the community is to implement the projects. We are more prepared to engage in a sewer project than we are in a water project. I have attached a copy of the questions on the application along with my answers for your review. There are also detailed budget questions. Fortunately, the sewer committee did enough work on budget to answer those questions thoroughly.

TOWN OF RICO INCORPORATED OCTOBER 11, 1879 2 North Commercial Street Post Office Box 9 Rico, Colorado 81332 Office # 970.967.2861 https://townofrico.colorado.gov/

May 24, 2021

The Office of Senator Michael Bennet 261Russell Senate Office Building Washington DC 20510 Via email

Dear Senator Bennett, Please accept this letter as a declaration of community support for the Town of Rico’s Congressionally Directed Spending request for funding for a central sewer system in the Town of Rico’s historic core. Rico is an historic mining community located in southwestern Colorado on the San Juan Scenic Byway midway between Dolores and Telluride. Rico is home to 232 full-time residents according to the Department of Local Affairs (DOLA) 2019 estimate. In addition to the full-time population, approximately 55 homes belong to part-time residents or are used as vacation homes. Since the establishment of the Telluride Ski Area in 1972, Rico has provided affordable housing and opportunities for ownership to resort workers, tradesmen, teachers, healthcare workers and the other middle-income employees that are necessary to functioning communities. Currently the residents and commercial operations make use of septic systems, and in some cases even cesspools for wastewater disposal. While there is broad recognition amongst community members that a central sewer system is desirable, Rico’s tax base is so small that the cost of a central sewer system places an oversized burden on the taxpayers. Funding for a central sewer system in Rico’s commercial core would serve the following benefits to the community as well as the region:

• Affordable Housing. The old Rico Townsite was divided into 25’ by 100’ (2,500 square feet) lots. Area needs for septic systems require a minimum of 5000 square feet (two lots). A central sewer system for the town would allow more density and hence more workforce housing. • Vibrant Commercial Core. Since the mining days, Rico has struggled to maintain a vibrant commercial core. This is in part due to the fact that a number of the historic buildings on Rico’s main street, Glasgow Avenue, don’t have adequate space on their lots for updated septic systems. A central sewer system in the commercial core would promote economic growth, which in turn would increase Rico’s sales tax base and help to retain our existing small businesses. • Historic Preservation. There are a number of buildings in Rico’s core that are historic. Three, the Dey Building, the Rico Town Hall and the William Kauffman House are listed on the National Register of Historic Places. There are eight other buildings in the commercial core that were built in the late 1800s and retain their historic nature. Of these buildings, four do not have sanitary facilities and are falling into disrepair because they are not being used. Three others have inadequate wastewater treatment facilities and cannot be used full-time. A central sewer system in the commercial core would provide opportunities for greater use of these delightful old buildings. • Environmental Sustainability. The Dolores River bisects the Rico. Septic systems are a threat to that fragile riparian ecosystem. When sludge build-up reduces the tank and leach field’s capacity or causes it to fail entirely, bacteria and viruses accumulate in the soil, seep into groundwater and run into the river. Constructing a central wastewater system will allow Rico to properly treat waste. The Town of Rico has done a great deal of research and preparation into the need and cost of a central sewer system in the commercial core. In 2018, the Town received a grant from DOLA for a Preliminary Engineering Report (PER) that conformed to the requirements of USDA RUS Bulletin 1780-2, “Preliminary Engineering Reports for the Water and Waste Disposal Program”. This report could easily be updated. In 2019, the Town received another grant from DOLA that funded a wastewater infrastructure economic analysis. A copy of the presentation that was included in that analysis is attached to this letter. In 2020, the Town appointed a sewer committee to examine alternatives to traditional systems in an effort to find a more affordable solution for wastewater treatment in the historic town core. Based on that analysis, we believe that the Town of Rico could construct a Septic Tank Effluent Pump (STEP) system that would serve the historic core for $8,979,221. This system would eventually be expandable to serve the rest of the town, but we believe if Rico were to be able to accomplish this first step, we could construct the remainder of the system with funding that would come from increased prosperity. Thank you for giving us this opportunity to submit a request for Congressionally Directed Spending. Sincerely, Barbara Betts, Rico Town Mayor

Town of Rico Wastewater Infrastructure Economic Analysis Presented by RPI consulting & The Town of Rico

The Town of Rico is not thriving. We are not even sustaining.

§ We are concerned about the fiscal condition of our community

§ We are concerned about the condition of our historic buildings

§ We are concerned about water quality

§ We are concerned with the continued reliance of septic systems as regulations get more restrictive shuttered businesses

CLOSED

CLOSED downward trend in Rico’s sales tax revenue

Sales Tax $100,000 $90,000

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0 2014 2015 2016 2017 2018 2019 school closed

CLOSED downward trend in Rico’s property tax revenue

Property Tax $100,000 $90,000

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0 2014 2015 2016 2017 2018 2019 Source: Colorado Municipal League rising costs of things needed to keep Rico functioning

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0 2014 2015 2016 2017 2018 Total Town Expenses § Fuel – up approximately 5% from 2014 § Insurance – up 44% from 2014 § Rico Town Hall maintenance $111,971 since 2014

How would installing a central wastewater treatment system affect prospects for business growth and new households?

Methodology

§ Tracked Rico’s current trajectory

§ Collected local/regional market indicators

§ Conducted an onsite business survey

§ Business & residential development feasibility with & without central sewer

§ Determined business & residential growth scenarios

Reliance on septic systems also known as on-site wastewater treatment systems (OSTS) is problematic.

Here’s Why: § Many homeowners do not adequately maintain their systems

§ Sewage discharges from multiple small lots may mean soil cannot adequately treat wastewater

§ Poor draining soils, high ground water, proximity to river risk surface water and ground water contamination

§ Steep slopes, shallow bedrock, rocky soils are other factors that increase the risk of water contamination.

§ Mine shafts and tailings can “short-circuit” untreated waste water to the surface

Septic system for a small cafe Septic system for a residence on 4 town lots 10,000 sq. ft. on 4 town lots 10,000 sq. ft. 2,500 Sq. Ft. Townsite Lot 25’ X 100’

10 ft Setback

Area Remaining for OWTS = 5 ft x 80 ft ft

10 ft 10 ft Setback Setback Setback

5,000 Sq. Ft., Two Townsite Lots 50’ X 100’

10 ft Setback

1,500 sq. ft. Building Area Remaining Footprint for OWTS = 40 ft x 30 ft 10 ft 10 ft Setback Setback

10 ft Setback Supportive Supportive Physical Assets Environment for Quality core public Business infrastructure with Support existing capacity to serve businesses’ efforts to growth improve and grow Buildings, spaces and Support for start-ups development sites Entrepreneurial Marketing to bring that are ready for Ecosystem more customers to businesses to occupy local businesses Placemaking Access to financing, infrastructure mentors, networking Internet and opportunities. telecommunications Human capital – infrastructure residents, employees.

The cool factor.

Expanded Livelihoods and Self-Sufficiency Rico Markets Base Drivers

Regional Tourism Telluride/San Miguel • Entrepreneurs Telluride region Jobs and Housing visitation • May serve local, • Outdoor recreation regional, national, Market • and touring global customers Job continue to grow • • Highway traffic • Locate here because Housing supply gaps • Day trips by regional they want to live here forecasted • population Increased commuting

Growth Projections

Rico Business and Housing Growth Scenarios Overnight Visitor Spending

Source: Colorado Travel Impacts 2000-2017p, Dean Runyan Associates & Colorado Tourism Office Total Overnight visitor Spending (2002-2017) Dolores, Montezuma, San Miguel & Ouray Counties ($Millions) $400 $372 $346 $350 $336 $294 $305 $300 $242 $256 $250 $220 $225 $201 $200 $184

$150 Millions $

$100

$50

$0 2002 2004 2006 2008 2010 2012 2013 2014 2015 2016 2017 • Visitor Spending in the Region Grew $21 million per year 2010-2017 San Miguel County Annual Lodging Tax Collections 2012-2017

Source: San Miguel County 2% Lodging Tax Collections $594,449 $614,756

$446,076 $368,598 $395,109 $309,067

2012 2013 2014 2015 2016 2017

• Lodging Tax Collections grew $61k per year between 2012 and 2017 • Best indicator for overnight visitation Total Skier Days by Season Source: Telluride Mountain Master Plan, 2016

Telluride Skier Days Visitation By Season 600,000 505,592 478,211 500,000 454,259 423,621 423,927 420,362 400,000

300,000

200,000

100,000

0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

• Skier days increased by 21k per year 2010-2017 Growth Projections: Regional Tourism Sources: Colorado Tourism Office, San Miguel County, Town of Telluride, Telluride Ski Resort Master Plan

2019 Projected Annual 2034 Projection Estimated % Change Visitor Spending ($Millions) $414 $730 3.9% Skier Days 590,822 889,127 3.1% Lodging Tax San Miguel County $737,031 $1,654,097 5.8% Town of Telluride Sales Tax Revenues $6,836,000 $13,076,000 4.6% Average Daily Trips Highway 145 2,067 3,067 2.7% Average Annual Percent Change All Indicators 4.0%

Growth Projections

High Growth Scenario Growth Projections: Jobs and Population

2019 2034 Projected Annual Estimated Projection % Change San Miguel County Jobs 7,736 10,004 1.9% Unincorporated San Miguel County Population 3,327 3,903 1.2% Average Projected Percent Annual Change 1.5%

Growth Projections

Moderate Growth Scenario Housing Need in San Miguel County

Existing Forecasted Need Total Current Need by Type Need (2016-2026) Need Housing need by Tenure (Current Reported distribution of housing tenure types) Rental 176 130 306 Ownership 265 195 460 Subtotal 441 325 766 Housing Need by Type (Preferred home type for SMC residents) Single-family 344 253 597 Condominium 22 16 38 Apartment 31 23 54 Townhome/Duplex 26 19 45 Other 18 13 31 Subtotal 441 325 766

• San Miguel County Regional Housing Authority added 17 units per year to its affordable housing inventory between 2011 and 2017 • Employment growth in San Miguel County will increase commuter households • Largest forecasted gap for single-family homes.

Alma Colorado

§ 17 Miles from Breckenridge over Hoosier Pass

Oak Creek Colorado

§ 21 Miles from Steamboat Springs $250,000 Town of Alma Sales Tax Collections $158,571 $150,000 $109,578

$50,000

-$50,000 2013 2014 2015 2016 2017

Town of Oak Creek Sales Tax Collections $184,458 $200,000 $129,738 $100,000

$0 2013 2014 2015 2016 2017

Town of Rico Sales Tax Collections $100,000 $88,340 $72,625

$50,000

$0 2013 2014 2015 2016 2017

The 21 Rico businesses responded to a business survey produced by RPI

Business Type Number Dining & beverage establishments 3 Construction related operations 4 Providers of technical or professional services 4 Retail (food, liquor, convenience) 2 Real estate companies 2 Communications operations 1 Lodging Establishment 1 Entertainment & Leisure 3 Other 1 How did your business start?

5% Started from scratch in Rico by 11% current owner Was purchased from former owner

16% Current owner moved the business 68% here from another community Opened as a branch by a business based elsewhere

How long have you been in business?

20 years or more 21% 21% 10 to 20 years

5 to 10 years 21% 26% 2 to 5 years

11% Less than 2 years How many employees did you/will you have at your Rico location at your peak employment in 2019?

26 17 26 24

Owners Full-time Part-time Seasonal Total Employment

In the next two years do you plane to increase or decrease the number of employees you hire?

11% Don't know/Unsure

42% Stay about the same

47% Increase the number of employees Which best describes the challenges your business faces? (Select all that apply):

Need better access to broadband / internet 28%

Need additional/improved options for 11%

Seasonal swings in revenues 56%

Not enough volume of sales 56%

Employment / hiring challenges 44%

Limitations due to individual septic system 44%

Deficiencies of in-town infrastructure 44%

Vacant buildings and façade upkeep 44%

Having the appropriate space / location 6%

Need add'l/improved childcare/early 6%

National / global market conditions 11%

No major challenges 17%

Other 39% Which of the following best describes the effect that utilizing an individual septic disposal system (ISDS) has had on your ability to plan for and make improvements to your business's building(s) or site? (Select all that apply)

Our ISDS functions well and serves the needs of 28% the business

Reliance on an ISDS has been a limiting factor for 6% making building or site improvements in the past

Reliance on an ISDS is a limiting factor for building or site improvements I would like to make in the 50% future

Not Applicable 17%

Some comments included:

§ Prohibitive state regulations preclude construction of new buildings § No septic system on property § Recently installed septic tank has to be pumped – tank precludes expansion § Septic systems are expensive to maintain § I may need to build an expensive septic system and then pay to hook up to sewer § This property has a holding tank – very limited Which best describes how the installation of a central sewer system serving Rico's commercial areas would affect your ability to improve or grow the business?

Central sewer would NOT AFFECT the 21% business either way

Central sewer would be a POSITIVE FACTOR 84% in my ability to improve or grow the business

Central sewer is NECESSARY for improving 32% or growing the business

Unsure 5%

Other 11% Phase 1 Wastewater Service Area Residential Inventory and Development Potential % of Residential Parcels - Physical Constraints Rating

Difficult, 18% Inventory Developable, Residential Parcels with Occupied Structures 18 49% Developable Residential Parcels with Vacant Residence 3 - Moderately Vacant Residential Parcels 19 Difficult, 33%

Development Potential - Central Wastewater System or Individual Septic Systems

New Residences Possible New Residences Possible with Individual Septic Systems with Central Wastewater

Residential Vacant Parcel 24 50 Residential Lots with Primary Structures 0 16 Total 24 66 Phase 1 Wastewater Service Area Commercial Inventory and Development Potential

% of Commercial Parcels - Physical Inventory Constraints Rating Commercial Parcels with Occupied Structures 18 Difficult, 10% Commercial Parcels with Vacant Structures 6 Vacant Commercial Parcels 32 Developable Developable , 49% - Moderately Difficult, 41%

Development Potential - Central Wastewater System or Individual Septic Systems

New Primary Structures New Primary Structures with Individual Septic with Central Wastewater Systems Commercial Vacant Lot 30 82 Commercial Lots w/ Primary Structures 0 10 Total 30 92

Rico’s Historic Trend

Rico with Moderate Growth

Rico with High Growth Scenarios: Rico Sales Tax Collections

Rico Sales Tax Collections Growth Scenarios $140,000 $116,200 $120,000 $95,500 $100,000 $85,100 $80,000 $78,900 $60,000 $63,300 $40,000 $65,800 $20,000 $0 2019 2020 2021 2022 2023 2025 2026 2029 2030 2031 2032 2033 2024 2027 2028 2034 Rico Sales Tax Rico Sales Tax Rico Sales Tax High Growth Scenario Historic Trend Moderate Growth Scenario

Annual Growth Scenario Growth Projections Based On Rate Historic Trends -0.8% Projection of Rico Sales Tax Trends Moderate Growth 1.5% San Miguel Population and Jobs High Growth 4.0% Regional Tourism Indicators Scenarios: Rico Employed Persons

Rico Employed Persons Growth Scenarios 300 262 250 215 192 200 177 150 100 141 131 50 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

Rico Employed Persons Rico Employed Persons Historic Trend Moderate Growth Scenario Rico Employed Persons High Growth Scenario

Annual Growth Scenario Projections Based On Growth Rate Historic Trends -1.5% Projection of Rico Employed Persons Moderate Growth 1.5% San Miguel Population and Jobs High Growth 4.0% Regional Tourism Indicators Scenarios: Rico Population Rico Population Growth Scenarios 500 438 400 360 320 300 295 263 200 263 100

0 2019 2020 2021 2022 2023 2025 2026 2029 2030 2031 2032 2033 2024 2027 2028 2034 Rico Population Rico Population Rico Population High Growth Scenario Historic Trend Moderate Growth Scenario

Annual Growth Scenario Growth Projections Based On Rate Historic Trends -0.03% Projection of Rico Population Trends Moderate Growth 1.5% San Miguel Population and Jobs High Growth 4.0% Regional Tourism Indicators Scenarios: Rico Housing Units Rico Housing Units Growth Scenarios 500 414 400 340 300 274 254 200 212 100 212 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Rico Housing Units Rico Housing Units Historic Trend Moderate Growth Scenario Rico Housing Units High Growth Scenario

Annual Growth Scenario Projections Based On Growth Rate Historic Trends .1% Projection of Rico Housing Units Moderate Growth 1.5% San Miguel Population and Jobs High Growth 4.0% Regional Tourism Indicators § Central wastewater is a critical component of the ‘ecosystem’ needed to support economic growth. Rico has access to growing markets Telluride/San Miguel Jobs and Housing Market Entrepreneurs Regional Tourism § Workforce Housing is a critical need § Rico’s trends are flat or declining § Similarly positioned communities show recent growth § Dependence on individual septic systems is restrictive and presents difficulties for business growth and improvements § Installing phase 1 central wastewater would roughly triple the future commercial and residential development that is possible using septic. § Moderate 1.5% growth is achievable with investments in infrastructure and concerted efforts to build an entrepreneurship ecosystem. Provide a brief description of the activity or project for which funding is requested. (1,000-character limit including spaces) The Town of Rico does not have a central sewer system. The community seeks to build a central sewer system that would serve Rico’s historic core. Currently residents and commercial operations use septic systems, and even cesspools for wastewater disposal. Most structures have septic systems but as many as 27 buildings including the Town Hall may still be using cesspools. Cesspools no longer meet the CDPHE requirements for the disposal of wastewater.

The EPA document “Environmental Effects of Septic Tank Systems” recognizes that “less than one-half of all systems in use today perform satisfactorily for the system life of fifteen to twenty years”. Several buildings in the historic core are unusable due to septic system failures or the lack of a wastewater system altogether as there is insufficient land available for a leach field.

The Town of Rico believes that a central sewer system is vital to Rico’s sustainability as a town.

Describe how the proposed project is consistent with the activities and mission of the federal agency which would fund the project. * According to the USDA website, the USDA has “a vision to provide economic opportunity through innovation, helping rural America to thrive; to promote agriculture production that better nourishes Americans while also helping feed others throughout the world; and to preserve our Nation's natural resources through conservation, restored forests, improved watersheds, and healthy private working lands”.

Rico with a population of 232 full-time residents is undeniably rural.

This project would provide economic opportunity through innovation and help our community to thrive by supporting the community’s efforts to enhance:

This project would also support the mission statement by improving Rico’s watershed in the following manner:

• Environmental Sustainability. The Dolores River bisects the Rico. Septic systems, especially aging systems are a threat to that fragile riparian ecosystem. When sludge build-up reduces the tank and leach field's capacity or causes it to fail entirely, bacteria and viruses accumulate in the soil, seep into groundwater and run into the river. Constructing a central wastewater system will allow Rico to properly treat waste. Why is this project a good use of taxpayer funds? * In December of 2020, Region 9 Economic Development District released a Comprehensive Economic Development Strategy for Dolores County. Rico is part of Dolores County. This document referred to Governor Pollis’ “Rural Economic Blueprint”. Included in the seven priority areas listed in this blueprint are “Leveraging the unique assets of rural Colorado” and “Make critical investments in community infrastructure”.

This document is a reflection the value that Coloradoans place on their rural heritage. Rural Colorado is uniquely vulnerable to infrastructure shortcomings. The costs associated with keeping infrastructure maintained, updated and functional often exceed the ability of local taxpayers to fund. As the economy in the Denver Metro area has prospered, residential tax assessments have gone down. Since most properties in rural areas are assessed at agricultural and residential rates, many rural areas have seen a steady decline in tax revenues.

Lack of affordable housing is at the forefront of many discussions across the State. Funding a sewer system in Rico would facilitate more density. With more land becoming available by eliminating the need for soil treatment areas, Rico has the potential for not only alleviating some of the pressure for affordable housing in the neighboring resort town of Telluride, but also locally and to the south in the Town of Dolores.

How will it benefit the state of Colorado? * This project will benefit the State of Colorado by supporting an increase in construction of more affordable housing. It will lead to increasing vibrancy in Rico’s historic commercial core, which in turn will bring more sales tax to the State. It will help preserve the historic buildings in town by making them more useable. It will promote environmental sustainability by protecting the Dolores River from pollutants generated by inadequate wastewater treatment.