New utilities supervisor Kelvin Stone is expected to help bring Center’s utility system into the 21st century and provide needed managerial and administrative skills to his department.

SAGUACHE — Center residents heard findings from a study conducted by utility master Stephen Duree Oct. 21 confirming that while Center’s utility department was mismanaged and undermanned in the past, remedies are now in place.

Federal magistrate Judge Craig Schaeffer presided at the hearing. Attendance was hampered by snowy weather, but town officials from the various departments and boards were present.

Duree was appointed to conduct the study after an agreement was reached in the Martin Palma suit against the Town of Center. Palma sued Center nearly two years ago over what he believed were excessive utility bills.

The order to conduct a review of Center’s utility system was issued April 29 this year in U.S. District Court.

In a report handed out at the hearing dated Sept. 22, Duree states that, “Evidence supporting the proper classification [of funds] is no longer available.” He added that insufficient financial information makes it impossible to either “determine the proper classification of individual fund activity” and to evaluate “the town’s related utility costs” for 2006-2007.

More than once in the report, Duree refers to the fact that because of inadequate accounting and management information, it is difficult to say if his recommendations for reducing utility rates actually will reduce them because he has no basis for comparison.

Main findings:

Because property taxes were withheld by Saguache and Rio Grande counties for several years for Center’s failure to submit their audits in a timely fashion, the town was unable to pay its utility providers. As a result, Center owed $170,000 to Excel for electrical and power transportation, $80,000 to Seminole Energy for gas and $70,000 to the IRS for past due payroll taxes.

A loan from First Southwest Bank enabled Center to repay these amounts by years-end in 2006. But “accounting entries associated with this borrowing were not timely made in the Town’s accounting system,” according to Duree’s Sept. 22 report.

The loan amounted to approximately $325,000 and had to be repaid. The Sept. 22 report states: “A significant portion of the debt was for the repayment of gas and utility costs. The accumulation of cash sufficient to repay the debt required an increase in utility rates. Such rate increases were a requirement of the loan.”

At the same time, gas prices were on the rise. The increase necessary to cover debt repayment coupled with the rise in natural gas prices, then, accounts for the higher cost of utilities in 2006-2007. The report credits Town Clerk Bill McClure in obtaining the loan, since this was the only thing that allowed the town “to function as well as it has,” seeing that no one else “was truly inclined to provide administrative management.”

Duree made it clear, however, that he was working on what Center statistics were available from 2007-2008, not data from 2005-2006 when Center was not in good shape utility-wise or financially.

The report cited the need for renegotiating current gas and electric contracts to possibly save approximately $31,000 a year. It also mentioned “the critical need for competent utility management,” advising that the town hire a utilities supervisor with proven administrative and managerial skills. Both the report and a summary of the situation for the hearing, under the heading “Mr. McClure’s Comments,” noted that utility shutoffs seem to have been made in a reasonably compassionate fashion. The sampling of instances studied suggested that the town’s policy was more lenient than those of other municipalities. The report suggested, however, that McClure should be willing to discuss any shutoffs in which the utility board has an interest. Also listed under “Mr. McClure’s Comments” the report states that the last increase in utility rates was in 2006; rates were reduced several times in 2007 and 2008; as of August, Center’s electric rates were lower than Excel’s and gas rates were only modestly higher than Excel’s. Duree stressed the necessity of mapping, however, which requires the updating of the town’s antiquated metering system to avoid future problems and ensure accurate billing. Rates will be formally re-evaluated in 2010 and the results will be available in early 2010. Center also was advised to conduct a customer needs survey. Overall, Center has resolved most of its problems the report notes, and is expected to keep accurate records from here on out, improve its financial situation, install new meters, and has hired a well-qualified utility supervisor with a full complement of linemen. If Center follows the recommendations given, Duree feels confident that utility costs can be kept in line and that town policies will continue to be acceptable. He thanked the town for their cooperation and urged all in the room to listen and cooperate with each other, even if this has to be done through mediation. Palma’s attorney comments “I think it was a victory,” Martin Palma’s attorney David Medina said from his Aurora office earlier this month. “It proves that residents’ suspicions about bad management were not off the wall. I think the town owes its residents an apology — they should try to make amends.” Medina said the hearing results should be further addressed at the next town board meeting Nov. 3.