Location: San Miguel, Dona Ana County, New Mexico
Problem: The community’s water system needed numerous upgrades and a rate study to qualify for U.S. Department of Agriculture (USDA) funding
Outcome: RCAC staff completed a rate study, which the water board adopted in May 2018, and which allows the community to qualify for USDA funding.
Alto De Las Flores Mutual Domestic Water Consumers Association (MDWCA), a five-member board, serves San Miguel, New Mexico, an unincorporated agricultural community in the Mesilla Valley near Las Cruces. The community is a designated colonia. In 2016 residents earned an estimated Median Household Income (MHI) of about $37,500, compared with the state average of about $47,000.
Alto De Las Flores MDWCA received a letter of conditions for $3.367 million in USDA funding (including $1.847 million in grants) to complete infrastructure improvements to its water system. Proposed improvements include a new storage tank, existing well upgrades, upgrading a distribution line, new water meters, water treatment and hydrant installations. These improvements will ultimately enhance water quality, meet projected demand, increase operating efficiency, and comply with existing fire code standards.
RCAC staff conducted a water rate study for the system to meet the USDA loan and grant letter of conditions. The study’s recommendations, presented to board members in March 2018, highlighted significant findings, including that the MDWCA was not generating enough revenue to meet the USDA funding conditions. To receive the funding, the association had to demonstrate financial capacity to pay for the new debt service, required reserves and operation and maintenance.
RCAC staff recommended increasing the monthly residential base rate by 56 percent to meet USDA lender requirements. The residential base rate increases from $20 to $25 the first year, then to $31.25 the second year. The board unanimously adopted the recommended rate increase and implemented it in May 2018. As a result, the association met the grant conditions and qualified for a 40-year USDA loan.
