Council to pursue 1.7 percent utility rate increase

Wednesday, October 31, 2012

The Cassville City Council will be pursuing a 1.7 percent water and sewer rate increase following a vote in favor of the measure during a special meeting on Oct. 25. The proposed increase will be used to boost reserve funding for maintenance, repairs and improvements on the city's water and wastewater systems.

"No one likes to see water and wastewater rates increase, but council has the responsibility to periodically review and adjust rates to ensure that the rates being charged for water and sewer are adequately providing the revenue needed to meet the debt service obligations as well as provide funding for operations, maintenance and replacement of our aging infrastructure," said Mayor Bill Shiveley. "Unlike the general fund, which is funded by general sales tax revenue, the water and wastewater departments are funded through the user fees or rates charged for water and wastewater treatment.

"Because small annual or biennial adjustments are easier to handle and budget for by the consumer than a large adjustment all at one time, council has determined that it will review the rates being charged for water and wastewater annually to determine if an adjustment is needed," added Shiveley. "Council has successfully taken steps over the last year to control expenditures."

Those steps have included decreasing the city's fee in lieu, which is similar to a franchise fee, from 5 percent to 2 percent, establishing a revised system for accounting for man hours worked by each employee to more accurately account for time worked in each department and using city staff for maintenance and repair of equipment and city-owned facilities.

"As council and staff began working on the 2013 budget and reviewing where the city stands with the 2012 budget, it was evident that with the increase in water and sewer rates earlier this year and with the reduction in expenditures there will still be a deficit of approximately $118,000 in the wastewater budget reserve requirement," said Shiveley. "It also appears that the water will have a small positive balance at the end of the year but not enough to build reserves for replacement of the aging infrastructure to handle a major breakdown in equipment."

Shiveley pointed out that the city has a responsibility to pay its debt service, provide safe drinking water for citizens, meet current and future Department of Natural Resources (DNR) requirements and maintain adequate reserve funding for maintenance and repairs.

The council reviewed a rate review report compiled by Steve Walensky, public works director. Walensky used year-to-date totals for 2012 and 2011 actuals to complete the report.

According to the report, Walensky assumed that 2013 water and sewer gallons sold would be equal to the number of gallons sold in 2012. He forecasted that 105,860,267 gallons of water and 84,036,941 gallons of sewer would be billed by the end of the year.

Walensky added a 1.7 percent inflation rate to adjust the base and usage rates. Walensky's report also included a water usage rate increase of 20 cents per 1,000 gallons and a sewer rate usage rate increase of 30 cents per 1,000 gallons.

The report showed that the base rate for residential water will increase from $11 to $11.19 per month and the usage rate will increase from $3.25 to $3.51 per 1,000 gallons. The base sewer rate will increase from $8 to $8.14 per month and the sewer usage rate will increase from $5.98 to $6.38 per 1,000 gallons.

Based on the increases used in the report, utility rates for residential customers who live inside the city limits and use an average of 5,000 gallons of water each month will increase $3.63 per month.

The base rate for water users who live outside the city limits will also increase slightly, from $23 to $23.39, and the usage rate for customers outside the city limits will increase from $6.55 to $6.86 per 1,000 gallons.

Base rates for commercial 1 and 2 customers will increase from $23 to $23.39 per month, and base rates for commercial 3 and 4 customers will increase from $28.50 to $28.98 per month.

"This will not get us to the $118,000 all at one time," said Shiveley. "To do that, the rates would need to be three times what they are. This will begin the process of looking at the rates annually."

Shiveley reminded the council that the city is facing an increase in its debt service in 2015 and the impending inflow and infiltration improvements that are mandated by DNR. It is estimated that the inflow and infiltration improvements will cost around $3.5 million.

The proposed rate increases will provide the city with an additional $31,047.37 in the water fund and an additional $36,292.78 in sewer funding next year.

The council will hold a public hearing regarding the proposed rate increases at 6 p.m. on Monday, Dec. 10. The council's monthly meeting will be held immediately following the public hearing.

In other business, the council voted to amend a resolution for a Missouri Department of Transportation (MoDOT) grant application that would be used for sidewalk improvements in the downtown area.

During the council's Oct. 8 meeting, aldermen approved the application for a total of $300,000 in grant funding. The amended resolution will allow the city to apply for a total of $375,000 in grant funding.

If the grant is approved, it will require a 20 percent, or $75,000, match in funding. The Cassville Main Street Association plans to raise money for the match requirement.

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