Council reviews alternative rate plan

Wednesday, December 7, 2011

On Monday night, Alderman Terry Heinz presented the Cassville City Council with a new set of proposed water and sewer rates. The proposal, which was developed by a committee of five Cassville citizens, is similar to Scenario One presented to the council by the Missouri Rural Water Association (MRWA) on July 25.

According to the new proposal, the base water rate would be $12.59, and the water usage rate would be $3.25 per 1,000 gallons of water. The base sewer rate would be set at $8, and the usage rate would be $5.98 per 1,000 gallons.

The rate increase would provide the city with $1,268,680.75 in revenue each year, which is around $306,000 less than the increase recommended by the infrastructure task force.

The new proposal would increase the current base water rate by $2.32 and the usage rate by $1.45. The base sewer rate would decrease nine cents and the usage rate would increase $3.06.

Although the new proposed base rates are slightly higher than those recommended by the infrastructure task force, the usage rates are lower than those proposed. The water usage rate is $2 per 1,000 gallons less, and the sewer usage rate is $1.52 less than the rate proposed by the task force.

Under the new proposal, a utility bill for 2,000 gallons of usage will increase $11.25 per month from $27.80 to $39.05. A utility bill for 5,000 gallons of usage will increase $24.78 from $41.96 to $66.74.

The new proposal represents a smaller increase on monthly water bills than proposed by the infrastructure task force. Under those rates, a utility bill for 2,000 gallons of usage would increase to $44 per month and a bill for 5,000 gallons of usage would increase to $82.25 per month.

"Scenario one and the committee's recommendation are somewhat similar," said Heinz. "If we maintain our present rates, we will fall short of our expenses by $461,664.83.

"The committee changed the lower end, so that (those residents) don't share such a disproportionate share of the increase," said Heinz. "We see this as a temporary rate increase. We believe a cost service study should be completed within the next year."

Heinz said that the committee was also recommending a complete study of the rates and an effort to develop a five-year plan for capital improvements and major maintenance. The committee also hopes to see many of the city's water meters replaced and engineering studies completed for major projects.

"We definitely believe there should be an annual rate review," said Heinz. "I don't know how that can be made mandatory, but we want to stress that it is an important thing to do. If this had been done each year, it would have probably amounted to a 15 cents per year increase."

Mayor Tracy Holle pointed out that the committee's proposal and scenario one recommended by MRWA only cover the city's current operating costs and routine maintenance.

"There is no provision for major maintenance or capital improvements," said Holle. "I feel that is a critical mistake, but the committee refers to this as an interium rate. I feel we should look at it and move forward. It is a step in the right direction.

"I supported the task force's recommendation in respect for the time and effort that they put into this," said Holle. "It was a starting place for our public hearing and the council to work from. I understand that the task force's recommendation has lost favor with the council."

Holle said that one of her concerns is how the committee's rates will impact senior citizens who live in Cassville. She reported that she is a member of the Barry County Senior Services Tax Fund Board and advocate of the Cassville Senior Center.

"I asked the staff to develop something to help the seniors," Holle said as she distributed another rate plan to the aldermen. "This would offer some rate relief for our seniors."

Holle asked the council to approve the proposal as an addendum to the rates recommended by the committee of five citizens. Under the proposal, seniors who are 65 years of age or older, live in Cassville and own their own home or reside in a senior housing facility, will be charged a flat fee of $20 for the first 2,000 gallons of water and sewer.

"If usage goes above the 2,000 gallons, they will be charged the same rate as other users," said Holle. "This will offer a 28 percent decrease for seniors."

The proposal will decrease the amount of water and sewer revenue the city will receive. Holle recommended increasing the water usage rates recommended by the committee by 2 cents and the sewer rates by 3 cents in order to offset the loss of revenue.

"I like the idea," said Alderman Bill Hill. "It shows we are concerned about the citizens. One of the major things people have been talking about is how this is going to hurt the elderly people."

Hill made a motion to amend the rates recommended by the committee of five citizens with the senior plan.

"I think it has merit," said Heinz. "I want to look at it more. I have concerns about qualifying people."

Heinz pointed out that the senior plan will decrease the city's water and sewer revenues by around $60,000. Eugene Dilbeck, city administrator, said in order to implement the senior plan and recoup the funds, the water and sewer usage rates recommended by the committee would need to be increased by 30 cents.

"We can't meet the needs of all the people," said Holle. "This is a tremendous concern for the seniors. I asked the staff to check into something we could offer."

Alderman Darrell Ledenham asked Dilbeck how the city will be impacted if it has a major maintenance expense and no reserves available.

Dilbeck reported that the city has $225,000 available in certificates of participation (COPs) from the lease purchase agreement and $360,000 in the water and sewer reserve fund and $500,000 in the general operations reserve fund. The council has the authority to use those funds if necessary.

"The repercussions of dipping into the reserve funds are that the auditor will write us up in the management letter, reporting that we have not maintained adequate funds," said Dilbeck. "Also if the city has to go out for bonds tied to sales tax it could impact the interest rates we receive."

Holle asked for a motion to place the water and sewer rate increase on the agenda for a second reading.

"I personally would like to move on this tonight," said Holle.

"I would too, but you have thrown another thing in," said Heinz. "We need to make the numbers match. A $60,000 spread is too much. I'm not saying this is bad. It may be great. I don't know."

"I vote that we move forward on the plan recommended by the committee of five," said Alderman Jeff Parsons. "It is a good idea. It is fair and equitable. I don't think you are going to find a plan that is more fair and equitable."

"I've never been so confused," said Ledenham. "I am so confused over all of these figures."

"It boils down to, do you want to give the senior citizens a flat rate?" asked Holle. "Do you want to include that in the plan?"

Hill asked if the council could vote on the rates recommended by the committee and implement a senior rate plan at a later time. Dilbeck said that if the change is made later, the council will be required to hold another public hearing.

Ledenham made a motion to place the rate increase ordinance on the agenda for a second reading. Hill seconded the motion, and all aldermen voted in favor.

"Are you willing to include the senior citizens flat rate?" asked Holle.

When the aldermen could not come to an agreement on including the senior rate, Holle stated that the council was not ready to vote on the rate increase. She asked for a motion to table the ordinance, which was made by Ledenham and seconded by Hill.

The council also reviewed the 2012 budget, which estimates that the city will receive $4,338,835 in revenue and spend $4,537,132 next year. The budget will be drastically impacted by a water and sewer rate increase.

The aldermen plan to hold a budget workshop meeting at 6 p.m. on Thursday, Dec. 15, and a special meeting to approve the amended budget on Dec. 22. The council hopes to approve a water and sewer rate increase at its next meeting on Dec. 19.

During administrative reports, the council heard that Officer James Eric Brattin received the Cassville Police Officer of the Year Award, and Darelyn Cooper, finance officer and city clerk, and Steve Walensky, public works director, shared the Employee of the Year Award.

The City of Cassville hosted its annual employee awards ceremony on Dec. 2. Other award recipients included: Officer Danny Boyd, Attitude Award; Stan Patton, heavy equipment operator, Teamwork Award; and Keith Gregory, public works employee, Rising Star Award.

In other business, a group of students from Missouri State University presented information on a Cassville farmers market site planning project they conducted this year.

The students offered information on four sites including the downtown square, the city park, the intersection of Highways 37 and 76/86 and Fasco Road near the Aquatic Park.

The group determined that the city park and the site on Fasco Road were the best locations for a permanent farmers market facility. Drawings and three-dimensional models of the planned sites were presented to the council.

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