TWC’s FINANCES

Tucson Water Company & Government Regulations –

Tucson Water Company operates under numerous and complex government laws and regulations:

1) IRS & Tax Law – as a nonprofit Colorado corporation TWC files federal income tax statements each year under the homeowners association provisions. These provisions are not the same as those used by a tax-exempt organization. TWC has elected not to become a tax-exempt organization in order to preserve some liquidation options beneficial to the company’s owners. Under the homeowners provisions our bookkeeping is a checkbook style ledger identifying all income and expenses. As a non-profit homeowners association we are allowed to accumulate a cash balance (when income is greater than expenses) without income taxes. TWC has never paid federal or state income tax.

Our employees are actually volunteers and any enumeration that they may receive is considered a voluntary gift for a voluntary donation of labor. Therefore it is excluded from income taxes under the gift rules up to $10,000 per year. Volunteer recipients may choose to report these gifts as income if they choose. Normally they are limited to gift certificates for restaurants or American Express gift checks. In a few cases larger amounts have been paid to self-employed independent subcontractors who are responsible for their own tax reporting, self-employment taxes, and withholding.

2) EPA & CDPHE – the main area of regulation for TWC has to do with the domestic drinking water supply and distribution system. By law we are classified as a quazi-municipal authority and a public water supply system. Federal laws and regulations administered by the Environmental Protection Agency (EPA) are assigned to the State of Colorado under a provision called “primacy”. The Colorado Department of Public Health and Environment (CDPHE) enforces the federal law by legislative statue. This burden has grown tremendously during the past 15 years under the Safe Drinking Water Act and the Amended SDWA.

The CDPHE requires us to have a licensed water plant operator for our drinking water system. This position is called the “operator in responsible charge” (ORC). The ORC oversees all of the water testing, (they call it water monitoring) compliance reporting, requests for information, system operation, bla… bla… bla… required by law or by CDPHE policy. We used to have two licensed operators in the neighborhood but presently only have one. If we ever have to contract this work out, estimates are about $5K+ per year (or about $12/month per home).

We perform about 28 water tests and submit ~ 6 reports to the CDPHE throughout the year.

3) Colorado DWR / OSE, DMG, and DNR – The Division of Water Resources (DWR) within the Colorado Department of Natural Resources (DNR) enforces and administers most of the water rights of the State of Colorado. All of our wells are permitted through DWR and their use is determined by legislative statute, the Division I Water Court, and DNR administration / policy. The main area of regulation has to do with our shallow wells pumping from the South Platte River alluvium (this is called “surface water”) but our deep wells into the Lower Arapahoe and Laramie Fox-Hills aquifers (“Ground Water”) also require administrative and regulatory support

Within DWR is the OSE, Office of the State Engineer, also called the SEO, State Engineers Office. Most of our issues are worked through this office. In addition they also test and license well drillers and pump installers. Under the law, TWC qualifies as a private well driller and a private pump installer, and we have agreed to become certified in this area under new 2003 regulatory requirements that allow us to do some of our own well work (previously licensing was not required). Certification is pending.

The Division of Minerals and Geology (DMR) regulates gravel mining that directly affects our alluvial water table. DMG has been supportive of our problems, but the DWR is responsible for enforcing water rights and they have been less than helpful in our battle with a local gravel mine. They claim they are restricted by statute and that we must hire our own lawyers and engineers, then file a civil court action if we think we have been damaged by another’s mining / pumping operation.

4) Colorado Water and Wastewater Facility Operators Certification Board – Maybe under DNR, this board tests and licenses water plant operators and provides accreditation for continuing education training units (TUs) required by our operators for recertification.

5) OSHA – As with all private companies we fall under the dominion of OSHA. They are charged with workplace and employee safety. Although we do not have any employees volunteers and subcontractors that we hire are included in our responsibility to comply with the safe workplace practices.
Water work is dangerous work having among the highest accident and death rates among the industries regulated by OSHA. The main area of regulation here has to do with excavation and confined workspaces. We have the most dangerous of all soil types for excavation, sugar sand. Volunteer workers can be and have been trapped in 3’ deep trenches; all of our pump houses and water tanks are considered confined or constrained workspaces. In future years OSHA will also have authority over government workplaces and employees.

6) US Department of Homeland Security – and corresponding State of Colorado offices regulate Municipal Water Providers under legislation enacted as part of the protection of our national infrastructure following September 11, 2001. At this time, because of our size, our reporting and compliance is voluntary. However, we have joined “Infragard” and participated in State Risk Assessment training. The trend is to push these requirements downward so it is possible that we will be required to comply in future years.

7) Colorado State Electrical Board (SEB), Department of Regulatory Agencies (DRA) – In our part of Adams County this is how we get an electrical permit and inspection. We had a little fight with them in 2003 while installing our new well. They first issued a permit then withdrew it when we called for an inspection. We were later able to convince them that under Title 12, Article 23, Part 111, Paragraph 3 [12-23-111(3)] we qualified for a corporation exemption entitling us to work on our own corporate property without a electricians license, electrical contractors license, and without the need for an inspection or permits.

8) Adams County Building Department and other County Departments – Up to this time we have not needed to work with the Building Department because our new facilities have been underground and not required a permit. We do work with the Clerk and Recorders Office on property deeds, records, and mechanics liens. We also support the Adams County “free dump day” and “Hazardous Chemicals Roundup” program.

9) Colorado Division I Water Court, Greeley – We are involved in one pending water court case and one regular case that comes up every six years. The last one, case 2004CW143, involves due diligence, a claim to make absolute, and a petition to continue our conditional (unused) water rights for our two irrigation wells #420-R and #421-R-R. The pending case 2008CW023, is for our own Augmentation Plan to backup and enhance our primary replacement water plan provided by CCWCD.

10) U.S. Department of Labor – although we have no employees we are required to post various employee notices. These are located inside the Salem Street pumphouse.

11) Colorado Department of Revenue – Sales taxes and sales tax exemptions are granted by this department. We do not have a tax-exempt license although many vendors have given us this status. We are in the investigatory phase of obtaining a license but have received conflicting opinions from the department regarding our ability to qualify. (A fight for another day.)

12) Colorado Department of Transportation (DOT) – has an office that runs the Adopt-A-Highway trash pickup program that we have participated in for almost 10 years. We also try to follow the E-470 development impact and planning for the Hwy 22 / 85 intersection and railroad work.

13) Utility Notification Center of Colorado – as a water provider we are required by Colorado statute to join and participate in the “call before you dig” program administered by UNCC. We have email for notification and must provide locates within our service area normally within 48-72 hours. We are also required to pay a small fee proportional to the number of locates ordered for our area. Providing locates is a trick because we have no tracer wires installed in our system and no equipment to locate the tracer wires if they were installed.

Every homeowner should call for a locate before any excavation on their property, call 811 for a location request (this is a national number for locations).