Higher water, sewer bills expected
Jamestown residents can expect to pay higher water bills over the coming several years to meet new state regulations, according to David Bebyn of B & E Consulting.
But the good news is, he added, the town should manage to avoid any sharp spikes in the cost of water service.
Bebyn on Aug. 5 delivered a general-rate study for the water department before the town councilors, who were sitting as water and sewer commissioners.
His study did not address the sewer department, he said. According to Finance Director Tina Collins, Jamestown has never conducted a sewer study. However, it will do so next year, she said.
The councilors also received the budget proposals for the water and sewer departments for the upcoming fiscal year. They call for rate hikes of 8 percent and 5.5 percent, respectively.
According to Town Administrator Bruce Keiser, the increase will pay for the debt service connected to improvements at the watertreatment plant.
Keiser says the amount of the increase was anticipated and falls in line with earlier projections.
“No surprises,” Keiser said.
Nonetheless, the councilors held off on a vote to approve the spending package until their September meeting.
The reason for the delay was because the councilors had just received the proposed new budgets and wanted additional time to review the financial picture and satisfy themselves they have not overlooked a better alternative.
Councilor Blake Dickinson said he had not seen the budgets prior to the meeting and wanted an opportunity to examine the documents thoroughly.
“If someone were to ask why I voted for something,” he said, “I’d want to give specifics.”
He did not want to vote while “in the dark about something,” he added.
Council President Kristine Trocki said she did not mind waiting an additional month because the bills are not going out yet and the councilors do not have to act until September.
Trocki also said the councilors would take the rate study under advisement.
The caution is to be expected, Keiser said. Any time a rate increase is in the works, the council does not want to act “overly quickly.” As long as they had the luxury of another month, they decided to use the time to advantage, he said.
According to Keiser, residents last saw an increase in their water bills in 2011, but there was no increase in 2012 because the council made the decision not to raise rates two years in a row. Sale of the building at 44 Southwest Ave. netted about $250,000 and helped keep the water rates steady, Keiser said.
However, those sale proceeds have now been all but exhausted.
Bebyn said a small amount leftover could be applied to the 2014 water budget, but after that, the sale money would be all gone.
Bebyn’s projections call for the water rate to climb by 8 percent in 2014, by 4 percent in 2015, and by 8 percent again in 2016, largely to finance new work on the town dams.
He is recommending the schedule based on capital needs in the future, to take Jamestown through 2018.
“You have to do a pretty substantial project in the next five years for the dams,” he said. By borrowing the money, he added, and not trying to use the “pay as you go” system, the councilors could keep the water rates lower for the residents.
The 8 percent hike would amount to $27.92 a year, or a little under $7 per quarter.
Bebyn also said the town should raise the fire rate, which historically has been “pretty low.” He recommended raising the amount from $125,000 to “at least $160,000.”
However, he was not recommending any increase in the current fiscal year budget for the fire rate because it was too late in the cycle. Bebyn recommended transitioning the higher rate into the budget by 2015.
Councilor Eugene Mihaly asked, “What’s the logic of raising the rate $40,000?”
Bebyn replied that costs were related to water pressure requirements from fire.
“That cost needs to be recovered from fire,” he said.
Bebyn also pointed out Jamestown’s water department needs to maintain an operating reserve fund of about $7,500 and an emergency fund equaling 10 percent of the revenue stream. The emergency reserve is a new state requirement, he said, and indicated the water department should set aside $20,000 starting in 2015 to build up the emergency fund by 2019.
The reason, he said, is to compensate for declining revenues.
“Throughout the state, there are numerous water companies that have seen a decline in consumption,” he said. Bebyn speculated that new water-saving devices on the market is one reason.
“Conservation,” Trocki said.
In fact, Bebyn said water prices should be “more conservation based,” as people who use more should pay more. The same justification does not apply to sewer rates, he said, because sewer plants are designed so there’s no actual cost for extra capacity. There can be different costs for commercial and residential sewer rates, due to different water treatments, he said.
Also, for the first time this year, the sewer budget will designate money for capital improvements, Collins said.
According to Town Engineer Mike Gray, the sewer budget includes $20,000 for new alarms to alert the department to after-hours emergencies. If there is money leftover, he said, the funds might be used to for siding on the sewer department building.