WILLMAR -- A Willmar City Council member is wondering why revenue being raised to help build a new wastewater treatment plant hasn't kept pace with sewer rate increases.
The disparity may be due, however, to a decrease in water usage as wastewater rates are based partly on water consumption, according to city officials.
The council in 2001 approved a study that recommended increasing wastewater rates 6.35 percent per year to pay for the local share of a new treatment plant to be built west of the city by 2010. But revenue is increasing only 4 percent a year, according to a consultant's report.
"That seems like an awfully wide disparity to me,'' said Denis Anderson, chairman of the council's Finance Committee. "I thought we would have had more water usage as the city grows. Something has happened that our revenue didn't go up.''
Anderson was reacting during the committee's meeting Monday afternoon when the final funding and financing report for the new treatment plant was presented by Sam Lahanis, program manager for project consultant Donohue and Associates.
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City Finance Director Steve Okins said the 2001 study recommended increasing rates to provide sufficient cash reserves to cover a minimum of six months of operating expenses and one year's worth of debt service for a new plant.
Donohue's report said the 4 percent revenue increase so far is somewhat lower than what was recommended in the 2001 study. However, the city has a cash surplus of $4,160,099, which is much higher than was recommended in the study.
For 2005, the city has about $1.9 million on hand to cover six months of operating costs and one year of debt service, the report said.
"Therefore, the city has plenty of cash on hand for the initiation of projects. However, the actual rate of annual revenue increases needs to be reviewed again to ensure that sufficient revenues will be available in the future as the project proceeds,'' the report said.
Lahanis said the recommendation of Donohue and Associates is to review the rate structure once final funding numbers have been determined.
Okins said the study projected the annual 6.35 percent rate increases would get to a point of funding the future anticipated bonds, but that is based on water consumption.
"If water usage is less than what was anticipated, that would account for a 4 percent increase in revenue,'' he said.
City Administrator Michael Schmit said he did not know why usage is down, "but clearly it was, because revenue is down.''
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Committee member Steve Gardner suggested users may have cut back on consumption due to improvements in plumbing fixtures and other reasons.
Lahanis said the purpose of the funding and financing report is to identify funding sources that may be used by the city to pay for construction of the treatment plant. The report says nine potential sources have some possibility of supporting the project. Other sources will be identified in next year's facility plan.
