Council adopts water and sewer rate plan

Wednesday, September 21, 2011

The Cassville City Council adopted a plan to develop new water and sewer rates at its regularly scheduled meeting on Sept. 19. The council also voted to hold a public hearing regarding a proposed rate increase on Monday, Oct. 24.

"We have had a dozen citizens and businessmen and a few members of the council meeting on a fast-paced basis since we received Missouri Rural Water Association's (MRWA) recommendation," said Eugene Dilbeck, city administrator. "After looking at the need and the costs, the infrastructure task force took a couple of the proposed plans and came up with their own hybrid. This is their recommendation for the council."

Dilbeck presented the council with a rate plan that will increase the base rate for residential water from $10.27 to $11.50 and the per 1,000-gallon usage charge from $1.80 to $5.25. The base rate for sewer service will decrease from $8.09 to $7, and the usage charge will increase from $2.92 to $7.50.

Cassville households that use 5,000 gallons of water each month currently pay $19.27 for water and $22.69 for sewer services. With the rate change, residents who use 5,000 gallons will pay $37.75 for water service and $44.50 for sewer service, which is an increase of $40.29, or 96 percent, over the current rates.

In addition to increasing the residential water and sewer rates, the plan increases the base rate for commercial water services. Businesses that use one- to two-inch meters will pay a base rate of $23, and businesses that use three- or four-inch meters will pay a base rate of $28.50.

The commercial water usage rate will be the same as the residential usage rate, and the basic and usage rates for sewer services will mirror the residential rates. Surcharges may apply to businesses that require pre-treatment of wastewater.

"These rates put control of the water bills in the hands of the consumers," said Dilbeck. "The rates also offer an incentive for the conservation of water."

To be grant eligible, the city must bring in around $1.8 million in water and sewer rate revenue, said Dilbeck. The rates included in the plan would provide the city with more than $1.5 million.

"With cost-of-living increases, we could get grant eligible in three to four years," said Dilbeck.

Alderman Terry Heinz pointed out two areas of concern regarding the water and sewer rate plan.

"I don't like this recommendation," said Heinz. "First, the methodology that MRWA used skipped a major step, which is the asset inventory. My understanding is that the city elected not to do this because of time constraints.

"It is time consuming to do an inventory and set a useful lifespan for assets," said Heinz. "MRWA just threw in some hypothetical numbers. If we were to do an asset inventory, there is no way of knowing if we would come out the same, above or below, but I prefer to do this correctly. It is a possibility that MRWA's end result could be flawed."

Dilbeck admitted that an asset inventory would be time consuming.

"However, scenario number one provide by MRWA has nothing to do with assets," said Dilbeck. "It is based on our audit and cost of operating the system and actual expenses."

Heinz also pointed out that he is not comfortable with the water and sewer rate plan, because the city will be charging more than is currently needed to cover operating costs.

According to Darelyn Cooper, city finance officer, the city currently receives $873,486 in revenue from water and sewer fees. Operating costs associated with the water and sewer systems are $1,165,805, which leaves a shortfall of $292,319.

The annual expenses for the city's water and sewer departments also include a $359,984 debt service for the bond payments for funds used to make improvements at the wastewater treatment plant, complete the Southern Hills and Sherwood Forest sewer expansion projects and pay for the Walmart developer's agreement and the 2010 certificates of participation.

The city receives $399,026 from a one-half of a cent capital improvement sales tax, which has been used to pay for the debt service. City officials have indicated that they are interested in using the capital improvement sales tax funds to make improvements to city streets, parks and other facilities.

With the debt service, the water and sewer operating costs total $1,525,789. Without the addition of the capital improvement sales tax revenues, the city shows a $652,303 shortfall for water and sewer revenues.

An infrastructure task force rate plan proposal released by the city on Tuesday indicated that the proposed water and sewer rates will generate around $1,579,330.34. This would provide the city with an additional $53,541 in revenue per year and free up nearly $400,000 in capital improvement sales tax revenue each year.

"What the task force has recommended, to me, asks us to charge more than what we need," said Heinz. "We don't know what major expenses there will be if any. We are asking our residents to pay for things that may happen in the future.

"I am more inclined to stay with scenario number one," said Heinz. "Then, within the next year, complete our water meter replacement project, make sure our well heads are working properly, use our camera to find some of our inflow and infiltration problems and work on our asset inventory. We need to get some true numbers instead of acting on assumptions."

After the discussion, Alderman Jeff Parsons voted to accept the water and sewer rate plan. Alderman Bill Hill seconded the motion, and Parsons, Hill and Alderman Darrell Ledenham voted to adopt the plan. Heinz opposed the adoption of the plan.

The council set a public hearing at the Cassville City Hall on Monday, Oct. 24. After the hearing, aldermen could revise the plan using feedback from community members.

The council will approve the first and second readings of the ordinance that includes the new rates at two consecutive council meetings. The new rates will likely be put in place in December and appear on the January bills.

In other business, the Cassville City Council:

* Heard that Tractor Supply Company, of Brentwood, Tenn., plans to begin operating out of a portion of the old True Value Hardware building on Old Exeter Road sometime next year.

* Approved building permits for Rockhill Estates, which will be constructed on County Farm Road north of Cassville.

* Heard that a Missouri State University plan and design class will visit Cassville on Sept. 28 to develop a plan for a farmers' market.

* Approved a $14,536.67 purchase order for the city's cost share for the DREAM initiative and a $34,548.80 purchase order for Kenny Singer Construction for bore services in the Southern Hill subdivision.

* Honored Don Cupps, who has served as Cassville's city attorney for 30 years.

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