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Willmar, Minn., panel nearing end of discussion about best method to increase sewer rates

WILLMAR -- The Willmar City Council's Finance Committee could be nearing the end of its discussion on proposing higher sewer rates to pay debt service, operation and maintenance of the $83 million wastewater treatment facility.

The committee asked finance consultant Springsted Inc. of St. Paul to study the effect of shifting more of the increase onto the water meter charge. Whatever revenue can be captured on the meter charge could be reduced on the consumption charge.

City Administrator Charlene Stevens has asked the committee for the past couple of months to set rates at a level to cover debt service and operational costs. Also, the new rates would stem the decline in the wastewater reserve fund.

According to Springsted, the reserve has declined from $9 million in 2010 to $6.8 million in 2012. Without near-term action, city residents will face an even sharper rate increase to bring the system back into balance, according to Springsted.

Wastewater rates are based largely on water consumption. Consumption has declined from 186,460,830 cubic feet in 2008 to 156,952,700 cubic feet in 2011.

Kathleen Aho, Springsted president, said the financing plan on which the rate structure was established relied on fairly constant consumption with projected increases of only 1.5 percent a year.

Instead, consumption fell 16 percent. The decrease relates to a drop in revenues, which the wastewater operation can't sustain, according to Aho.

Rates are also based on the size of the water meter: the larger the meter the greater the charge.

At the last meeting in late April, the committee asked Aho to study the effect of increasing the meter charge by $1 to provide a more stable source of revenue.

At a return visit last week, Aho said an additional $1 would raise about $100,000, but would disproportionately affect residential users. With revenue totaling nearly $6 million, a rather significant change in the meter fee would be needed to have a material effect, she said.

Committee Chairmain Denis Anderson asked about the effect of increasing the meter rate by possibly $10 to $15 to provide a more predictable revenue number. Anderson suspected the increase would upset individuals that don't use much water and he didn't want to overburden any one sector.

"Maybe you don't make up the full amount,'' he said. "I just like the idea of it being something that's kind of stable.''

Committee member Audrey Nelsen remembered a comment made during the last meeting that people will continue to use less water "and how do we deal with that unless we have additional businesses or housing.'' The increased meter charge might be a compromise, she said.

Committee member Tim Johnson was hesitant to think the point has been reached where people cannot reduce their use any further. He agreed with adding some onto the meter rate.

"The problem is the total cost is going to go up regardless,'' he said. "It's just if there's more on the meter, we've got more of a buffer (on) reduced consumption.''

Anderson said the committee should set Sept. 1 to enact the increase. Anderson said the city moved the plant out of town, solved the odor problem "and we're doing a terrific job on what we're discharging into Hawk Creek.''

Johnson suggested the city enact rates now and revisit the rate schedule in a couple of years.

Committee members agreed to have Aho investigate the effect of a greater meter increase and return to the committee the last week of May or first week of June.

Stevens said rates are established by ordinance. She said the city needs from 60 to 90 days to have the city attorney draft an ordinance and hold a public hearing.

"I think it's worthwhile. One more time,'' said Anderson.

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150