Ward 2 Councilman and Utilities Committee Chairman Dennis Boose predicted three months ago residents would likely see a significant rate increase in their sewer bills this year or next. The rate increase possibilities presented at the Utilities Committee meeting he held June 17 were staggering: from a minimum 10 percent this year to as much as 50 percent next year.
He said April 14, “Everything I’ve heard points to a residential rate increase, but no one is talking about it.”
City administrators definitely are now.
Boose, along with committee members Nancy Buescher (Ward 1) and Bernadine Butkowski (at-large), met via teleconference June 17 with the city-hired consultant who provided a sewer rate model update. Listening in were North Ridgeville Mayor Dave Gillock, Safety Service Director Jeff Armbruster and City Auditor Chris Costin. The consultant, Keith Bishton of CH2M HILL, explained how two city accounts – Sewer Fund 650 and Sewer Improvement Fund 690, which are at critical risk of being depleted – are derived.
“Sewer Fund 650 revenues come from user charges, what the customers pay monthly,” Bishton said. “Revenues (for the Sewer Improvement Fund) come from the connection charges, the one-time payment when a sewer connection is made to the system.”
Driving sewer rates are the costs of French Creek’s plant services, the city’s sanitary sewer debt service, connection charge revenues, water consumption and beginning balances in the fiscal year 2010 accounts, he said. His findings indicated debt service “will have to be funded by both the Sewer Fund and Sewer Improvement Fund … but the question is, when?”
The rate options he presented were:
1. A zero-percent increase to residential and commercial rates in 2010, with 68 percent in 2011 and 5 percent in 2012.
2. A 10-percent increase in 2010, with 50 percent in 2011 and less than 5 percent in 2012.
3. A 45-percent increase in 2010, 10 percent in 2011 and 5 percent in 2012. Using a monthly average usage of 5,000 gallons (600 ccf), the cost would rise from $19.52 to $27.50, effective July 1. This is the best option, Bishton said, because it “immediately starts to address debt service funding.”
Bishton said his calculations were “to make up a deficit in the improvement fund, such that there is enough money to address any capital fund emergencies for capital projects or for other needs.” The Sewer Improvement Fund is generally kept at the “target reserve of $1 million,” according to Bishton’s report. Without any rate increase, that fund’s 2010 ending balance is projected at less than $70,000.
He recommended educating residents to mitigate the impact.
“When faced with difficult decisions such as these, they are never easy,” Bishton said. “A communication strategy (might help), where you’re talking with the citizens of North Ridgeville and helping them to understand what the value of water is, why rate adjustments are necessary and helping them understand some of the projects that the city is going forward with.”
Before residents can learn, however, Boose said he and the committee need to better understand Bishton’s report.
“There are several recommendations on the table, and the committee has not committed to any recommendation at all,” he said. “We just passed three city levies (for police, fire and streets; all replacements) and a school levy. (This sewer rate increase) just sticks in my craw. I still think we should have been looking at other parts of the budget. For this year, because people didn’t know this was coming out of their pockets … I think we should be looking at everything.”
Boose, who was the only City Council member to vote “no” on the city budget March 15, questioned Bishton Thursday about why the report, which is normally issued much earlier in the year, was not ready, as well as what the 45 percent increase would have been if it had been instituted months ago.
“Effective March 1, the increase would have been 30 percent,” Bishton answered.
Boose didn’t buy into the idea of the report’s “complexity” leading to the issuance delay, which Armbruster raised as a means of explanation.
“It wasn’t like we could have made that presentation three months ago,” Armbruster maintained.
“I don’t know that,” Boose replied. “These numbers have been gathered earlier before, and I’m not sure why they weren’t this year.”
The mayor said he believed “you can’t seriously heal these funds in two years.”
“When you compare our rates to surrounding communities … how do we compare?” Gillock asked. “Our residents are looking at the bottom line, and they’re looking at the dollars and what other communities are doing.”
Current sewer charges, based on 600 ccf in average usage per month, according to CH2M HILL’s report, are $19.52 for North Ridgeville, $19.56 for Sheffield and $22.57 for Avon.
Costin suggested the city consider “a multi-year projection.”
“It would make life so much easier if we had an escalator clause,” he said. “On an annual basis, it would take effect early in the year. If we don’t need the increase then, we waive it.
“Here’s what’s important,” he continued. “We’re going to have to face reality and pass something (i.e. rate increase legislation) soon. If we postpone, that amount is going to hurt even more next year. We relied on the tap-in fees too long … and now it’s time to face the music. It’s time to catch up.”
The Utilities Committee will hold another meeting when CH2M HILL has revised its calculations based on changes in some variables. Committee members eventually will decide which, if any, rate increase they will recommend for approval by City Council.