Englewood board approves $3 million emergency loan from sewer fund to shore up stormwater account

Chair Moore and utility staff told the Water and Sewer Board on Jan. 13 that the storm drainage fund faces a near‑term cash shortfall caused by final invoices and debt service tied to multiyear capital projects.

Deputy Director Peter and Sarah presented a proposal to bridge that gap with a $3,000,000 interfund loan from the City of Englewood sewer enterprise fund to the storm drainage fund for a one‑year term and a 3% interest rate. Staff said the loan would cover outstanding obligations, maintain operations, and avoid an immediate rate increase for stormwater customers.

Staff detailed the components of the shortfall: final invoices and retainage related to the South Englewood flood reduction project (about $1.6 million), payments on the Old Hampton utilities stormwater work (about $632,000 paid in December and roughly $850,000 remaining in contract work), and near‑term debt service including an SRF debt payment of $810,000 due in May. After those payments, staff reported a book balance in the storm drainage fund of roughly $300,000 (expected to rise to about $600,000 when December revenues post), with outstanding obligations of roughly $2.6 million plus operations and contingencies.

Peter told the board that staff has negotiated with Mile High Flood District to retroactively apply funds the district has been holding for joint projects. If Mile High Flood’s directors approve the staff proposal, the city could see approximately $8,000,000 returned to the city’s stormwater fund in late spring; staff described that return as the primary path to repaying the interfund loan.

Deputy City Attorney McDermott advised the board on the legal path to an emergency ordinance under City Charter Section 41, noting emergency findings tied to cash flow and debt deadlines and that an emergency ordinance would take effect the day after second reading if the council follows that route.

Board members pressed staff on the root cause of the shortfall, why the sewer fund (rather than the general fund) was selected as the lender, and whether using sewer reserves would improperly shift costs to Littleton, a joint owner of the South Platte Renew facility. Staff said the sewer fund has a strong reserve (projected to remain above $10,000,000 after the loan) and that the loan would not affect the city’s obligations to the joint South Platte Renew budget. The deputy city attorney said there is no statutory requirement for a particular interfund interest rate; the board discussed a 1% precedent from 2019 and ultimately set the loan at 3% to better reflect a reasonable return and reduce perceived cross‑subsidy.

Chair Moore moved and the board seconded a motion to recommend City Council approve an interfund loan of $3,000,000 from the sewer enterprise fund to the storm drainage fund for one year at 3% interest. The motion passed and the chair declared it carried.

Staff said the loan is intended as a temporary bridge while staff completes projects and pursues the Mile High Flood District approval process; if Mile High Flood declines or delays approval, staff said it would return to the board with alternatives. The board directed staff and its council representatives to follow up with detailed financial modeling and to provide the Council with an emergency‑ordinance request to meet near‑term payment deadlines.

Next steps: the board recommended council consider the loan as an emergency ordinance so the transfer and loan terms could take effect promptly. The board indicated it would continue oversight of the stormwater fund and requested additional review of departments transferred into Utilities during the recent reorganization.