Purdy Council to raise sewer rates

Wednesday, January 27, 2021

City looking to meet financial obligations

Purdy city leaders are seeking to implement what it hopes to be a temporary rate hike for sewer services to ensure it can make ends meet until July 2022, when the city will pay off its water bond debt.

City officials directed staff to draft an ordinance that would bring the average sewer bill up by $15 in the city of Purdy to be considered at a future council meeting in either February or March.

Currently, Purdy residents are paying $30 for the first 1,000 gallons of sewage disposed, and $10 per additional 1,000 gallons.

City Clerk and Manager Debbie Redshaw said city residents average about 5,000 gallons a month. That means the average Purdy resident is paying about $70 a month for sewer services.

Redshaw said the sewer rate was last raised two years ago. The current rates charged to customers are not adequate to cover costs on a USDA Rural Development loan the city received in 2018 to fix the city’s sewer system by pumping waste to the Monett treatment plant.

“It’s not good guys, it’s just not good,” Redshaw told the City Council, explaining that Purdy is required to begin paying on its loan in July, and simply didn’t have the revenue to cover those costs.

She said that the city, for the past two years, has been required to pay interest on the loan, and has been able to cover those costs.

With the loan payments beginning in July, Redshaw said the city would need to receive an additional $13.50 per customer, per month to cover those payments.

She also said the USDA requires the city, under the terms of the loan, to maintain a $32,760 debt service reserve, and put $22,000 per year into a replacement fund for the life of the debt.

“In 20 years, when the debt is paid off, we will have money to make the repairs when the system starts to crap out,” Redshaw said.

East Ward Alderman Scott Redshaw proposed raising the sewer rate to $35 for the first 1,000 gallons and $12.50 per 1,000 additional gallons. That rate increase would provide the $13.50 needed to meet the city’s financial need, while also providing the city an additional $1.50 per customer, per month.

“That makes a buffer in case we lose customers, so we can still make those payments,” Scott said.

The four-member council agreed that a rate hike is a tough decision to make, but it was necessary.

“Looking at the other side of the coin, this bill has to be paid,” East Ward Alderman Robert Moser said. “Adding $5 to the minimum payment doesn’t hurt me, so I’m assuming it doesn’t hurt anyone else.”

While she expects that some residents will not be happy with a sewer rate increase, Debbie said there may be a light at the end of the tunnel. The city is set to complete making debt service payments on a water tower in 2022, at which time the city may be able to afford reducing its water rates.

If the city council votes to approve the proposed rate increase in February or March, the new fees will likely go into effect in May. That schedule would allow the city to begin making payments on its loan in July, as scheduled.

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