Faced with an annual debt load increasing by 18 percent created mainly from building the new Wapakoneta Water Treatment Plant, city leaders plan to balance the books with a water rate increase.
Wapakoneta utility consumers should see a 5 percent increase in their water bill starting Sept. 1 and then every Jan. 1 thereafter if Wapakoneta City Council members pass an ordinance read for the first time at Monday’s council meeting.
Councilor-at-large Steve Walter, who chairs the Utilities Committee, explained the increase is due because of additional debt the city assumed to construct the new $10 million freshwater treatment plant which can process 5 million gallons of freshwater per day.
“The increase in debt associated with the new water treatment plant is 18 percent of gross receipts so we have an 18 percent shortfall to make up for and we also anticipate some inflation in operating costs in the future,” Walter told the Wapakoneta Daily News. “At the low 5 percent rate it will be a minimum of four years before we catch up with the debt. Raising it 5 percent each year is a way to ease the increases in rather than take the entire 18 percent at one time which we think would be an excessive penalty for our consumers.”
Under the proposed legislation, residential water rates would increase to $8.11 from $7.72 for each unit of water, or 748 gallons, for the first two units of water, and increase to $3.41 from $3.25 for each of the next 11 units of water.
The increase should raise water rates by approximately 75 cents, Walter said.
Walter said future Utilities Committee members should review the fund and automatic rate increase to determine if additional rate increases are necessary or if the increases could be implemented at a lower rate or at a slower rate.
He explained the city fell behind because old debt was retired as new debt had to be paid and the new debt was not part of the budget forecast — the difference being 18 percent.
Walter said the city is not in crisis, but without the increase the Water Fund’s reserve funds would be depleted during 2014. The reserve funds are being used to help phase in the increases.
“This plan should take the reserve fund to below 35 percent of the total fund and then it will come back up and then the rate increases could be re-adjusted,” Walter said. “We need the 5 percent increase for at least four years if not five years — that averages out to be approximately 75 cents per month for the first increase.”
Wapakoneta 1st Ward Councilor Jim Neumeier stirred some confusion regarding the increase when he presented his utility bill as evidence. He explained he used four units of water and was charged $14.22 — less than the $21.94 he should have been charged under the existing rate structure that should be in force and less than the $23.04 he would be charged at the rates in the proposed legislation.
“If the rates in the bill are lower, we may have been undercharging all along or if the new rates are instituted then we will be raising the rates more than 5 percent,” Neumeier told fellow councilors. “I really hope we determine where the problem is and get it corrected before this comes up for a vote.”
Walter and Councilor-at-large Tom Finkelmeier Jr. explained the increase was based on gross receipts so the rate increase would reflect the rates used to currently bill consumers.
Council President Steve Henderson charged Mayor Rodney Metz and Safety-Service Director Bill Rains to investigate the discrepancy and report their findings to councilors at the June 4 meeting.
Metz said he hopes residents and consumers understand the rate adjustment is necessary and if a discrepancy exists between the billing rate and the rate in legislation then the legislation needs corrected.
“We have to keep the rates low and be responsible to the consumers, but residents have to realize we have to have enough funds to take care of the system,” Metz said.
“We also have to take a look at where the billing discrepancy is as Jim pointed out to us today (Monday),” the mayor said. “Bill and I will be working on that Wednesday. It could be a problem with the numbers in the software or it could be a problem with the data entry into the consumer software.”
If it is determined that the error is in numbers in the software program, Metz said there will still be a 5 percent increase because the city needs that additional revenue to cover bills but the increase would be based off the current rate of billing and not the numbers in the proposed legislation.