Albuquerque weighs new capital investment fee to bridge infrastructure funding gap

Albuquerque weighs new capital investment fee to bridge infrastructure funding gapFaced with failing mid-century reservoirs and groundwater wells, the Albuquerque Bernalillo County Water Utility Authority is exploring an $8 monthly fee and extended debt terms to generate $30 million annually for critical capital projects.

The utility faces an unmet capital need of $50 million to $100 million over the next eight years, driven by aging assets including 950 miles of 1950s-era cast-iron pipes.

A proposed $8 monthly capital investment fee per single-family equivalent, slated for potential implementation in FY28, would generate $30 million annually specifically for capital projects.

Officials are exploring a shift in the utility's capital funding policy from a 50/50 cash-to-debt ratio to 60% debt, alongside extending revenue bond terms from 12 to 15 years.

The proposed $92 million FY27 capital improvement budget allocates $78.5 million for basic rehabilitation, though emergency repairs are increasingly draining available funds.

The Albuquerque Bernalillo County Water Utility Authority is weighing new financial mechanisms, including a dedicated capital investment fee and altered debt policies, to tackle a mounting structural deficit in its infrastructure rehabilitation budget. During an April 22 presentation of the fiscal year 2027 budget and decade plan, utility staff revealed a widening gap between capital needs and available funding. Centralized engineering division manager David Laughlin noted a shortfall of $50 million to $100 million over the next eight years, warning that emergency repairs are increasingly consuming planned rehabilitation funds at two to three times the cost. Chief Operations Officer Joel Berman highlighted the severe degradation of the system's mid-century infrastructure. Over 50% of the utility's 60 active potable groundwater wells are 50 years old or have already failed. This presents a critical vulnerability as drought conditions force the utility to rely heavily on groundwater during the summer months. Additionally, concrete and steel reservoirs dating back to the 1920s and 1950s—such as the 1923 Burton Reservoir and 1955 West Mesa Reservoir—are showing structural failures, while 950 miles of 1950s-era cast-iron pipe require replacement. To bridge the funding gap, rate consultant Carol Molesky of Stantec introduced a proposed $8 monthly capital investment fee per single-family equivalent. Slated for potential implementation in fiscal year 2028, the fixed fee would generate approximately $30 million annually. Revenue would be strictly ring-fenced for capital projects, and the fee would be indexed to the Engineering News-Record Construction Cost Index to keep pace with escalating project costs. Alongside the new fee, Chief Finance Officer Marta Ortiz outlined potential administrative policy changes to leverage existing debt capacity. The utility's outstanding principal currently sits at $517 million. Proposed financial strategies include shifting the utility's standard 50/50 cash-to-debt ratio for capital project funding to a 60% debt and 40% cash split, as well as extending the repayment term of revenue bonds from 12 years to 15 years. While the proposed FY27 operating budget is balanced at $285.7 million with no immediate rate increases, the $92 million capital improvement program allocates $78.5 million to basic rehabilitation. However, staff stressed that without the new fee and policy adjustments in upcoming cycles, the utility will struggle to outpace the failure rate of its aging assets.