Water, sewer customers are given the opportunity to protest rate increases at Dec. 10 public hearing
By Paul Myers @PaulM_SGN
EXETER – If there is one thing Exeter has learned over the last few years is their water and sewer system is in need of some significant care.
The dreary state of the Exeter water and sewer system has been well documented in recent years, the only way to fix it is with significant capital. For residents, that means higher rates on their monthly bills. Exeter City Council set a Prop 218 public hearing for Dec. 10, giving residents 45 days to formally protest starting this month.
If 50% plus one of Exeter’s water and sewer customers protest the rate increases, the proposed rates cannot be implemented.
As proposed at the Exeter City Council’s Sept. 24 meeting last week, rates will have to jump from a base water rate of $24.26 per month for a single-family residence to $47.74 per month over five years. Over the same five year period base sewer rates will jump from $22.18 per month to $49.68. By 2023 single family residences will pay a total of $97.42 for their sewer and water services.
Council members were sympathetic to the stark rate increases, recognizing new rates would be a dramatic change.
“That is a tremendous jump over five years,” councilman David Hails said. He went on to ask if they could extend the increases beyond five years into seven years or more. Councilman Frankie Alves said that would affect the City’s ability to keep up with much needed maintenance over time.
Councilman Jeremy Petty noted that the cost is a big increase and expressed concerns over whether the public would be willing to approve the new rates in addition to a sales tax increase shortly after. Hails went on to say that it is a necessary increase when the state of the infrastructure is so fraught.
“The system needs to be upgraded it needs to be maintained. We can’t just kick this can down the road… To Jeremy’s point to the tax it might influence the tax, it might influence people’s decision on that later. But if we don’t have water. If we don’t have sewer. That’s our basic infrastructure. Without that, what do we have to offer,” Hails said.
Alves said that the problem has been kicked down the road long enough and leaving the decision to future councils in later years is precarious.
“It’s either we bite the bullet and do the tough stuff or we kick the can and hold our breath,” Alves aid.
If the public does not defeat the Prop 218 process, and the Council votes in favor of the new rates, the cost for sewer will rise year over year by 8.5% while cost for water will rise by 8.7%. That represents a 5.5% and 5.7% increase over the current 3% consumer price index increase per year set in 2015.
Exeter city manager Adam Ennis said it is the best option is to raise the rates if the City wants to save on replacement and capital improvement projects in the future.
“The reality is that in the long term this is the least expensive way to do it…without doing some of these things you are going to pay a huge price because you’ll have a lot of stuff that is in really bad shape,” Ennis said.
Council members noted during their discussion that rates paid into the water and sewer fund must be used to pay for the activities of that fund.
“We aren’t going to raise their rates and use it to pave Palm,” Hails said.
Petty said that increasing rates will give the public the indication that the system should work without interruption. Alves added that it is the Council’s job to oversee that it does. However, Ennis said that repairing the system will not happen overnight, and should not be expected to. Although, it is reasonable to expect improvement over the next five years.
“We can make some significant ground over that time…but the condition of our system is in, it will take some time to turnaround,” Ennis said.
The last time the City approved a Prop 218 was in 2015 when the Council decided to increase rates by a consumer price index, 3% per year for five years ending in 2020.
To do list
As of now the City has six active wells, 325 fire hydrants, 995 water valves, a 100,000 gallon water tank, 47 miles of pipelines and 3,832 water service lines and meters. To replace it all and fit the system with up to date piping and connections, the cost would be approximately $65 million.
The City’s sewer system collects, treats and disposes sewage, has 36 miles of collection lines ranging form four to 36 inches in diameter, has eight lift stations and a waste water treatment plant. To replace the system would cost approximately $60 million.
Exeter contracted with FG Solutions, LLC to run the numbers on the rates, and evaluate costs for the system. Art Griffith from FG Solution, who presented to the council last Tuesday, recognized that public works staff need to make weekly repairs to their sewer lift stations, costing an untold amount of staff time. Ennis added during council discussions that the City has lacked the ability to keep up both water and sewer systems.
“There has been nothing put toward replacement or regular maintenance. For either water or sewer for I don’t know how long,” Ennis said.
Expenses for existing water system operations and management, debt service, new maintenance, new capital improvement projects and new replacement would go from $1.7 million in the 2019-2020 fiscal year to $3.2 million by the 2023-2024 fiscal year. The largest expenses would be for replacement of wells and pipes in the distribution system.
For sewer, the cost would more than double from $1.1 million in 2019-2020 fiscal year to $2.3 million for the 2023-2024 fiscal year. The largest expenses that would be phased in over time include the lift station upgrades and upgrades at the treatment plant.
Exeter’s water and sewer master plans published in late August and outlined the need for improvements. During last Tuesday’s presentation, Griffith noted that the City needs to replace water valves to provide stabilization and greater control of the water system to maintenance staff. Greater control means faster response times for repairs, saving money over time and decreased water system shutdown times for customers.
Exeter’s water system requires more regular maintenance to clean the pumps at their treatment plant. Griffith said that currently pumps at the headworks which are the initial stage of the cleaning process that reduces the level of pollutants in the incoming wastewater, are failing. Grit is pulled into the pumps, causing damage and requiring more repairs and maintenance. The plant must be shut down during the cleaning, making repairs time consuming.
Cleaning the grit reduces the amount of grit getting into the headworks and subsequently reduces the number or repairs needed to keep the equipment running.
Griffith noted that Exeter’s single family residences have the lowest combined cost for sewer and water compared to Woodlake, Farmersville, Porterville and Lindsay. He noted as well that the line item can be somewhat misleading considering that it is unclear how each city is investing in their infrastructure. The numbers alone do not tell the whole story as some cities may use their revenues for water to pay down debt service instead of upgrading the system.
Griffith’s presentation noted that Woodlake charges the most for both sewer and water at $93.41 per month, Farmersville charges $77.61 per month, Porterville charges $72.59 per month, Lindsay charges $67.05 per month and Exeter charges 46.44 per month. Exeter’s proposed 2020 rate would climb to $53.84 per month.
Commercially, Exeter stands in the middle between Porterville, Lindsay, Woodlake and Farmersville’s restaurants and retail. In total, Porterville charges a combined base rate of $304.20 to their restaurants and $207.70 to their retail stores. Lindsay charges $277.81 to their restaurants and $132.81 to their retail stores. Exeter charges a flat $177.27 for both where as Woodlake and Farmersville charge a flat $161.70 and $102.08 respectively, for both.
Under Exeter’s proposed 2020 rates, they would charge a combined flat rate of $205.97.
Attacking their cash flow from both ends, the Council also approved a measure to explore refinancing their water fund debt. Refinancing their debt could free $24,000 per year in interest over the life of the loan. According to the related staff report, realizing the savings in interest costs, may enable the City to move towards other necessary cost for the City’s water system.
The report notes that interest rates for their current loans is 4.38%. The current market interest rate is approximately 3.5%. Net lifetime savings would reach as high as $650,000 by refinancing, while also not extending the term of the loan, ending on Oct. 20, 2044.