Editorial: Water And Sewer Rates Likely To Continue To Rise

By / Editorials / الأربعاء, 07 شباط/فبراير 2018 00:34

By WILLARD KILLOUGH III
Managing Editor

The Town of Carolina Beach has in recent years embarked on large scale infrastructure projects to address aging water and sewer lines as well as stormwater drainage improvements, sidewalks and other related improvements such as paving streets following completion of work.

With the possibility that rates are likely to increase each year over the next ten years, perhaps it is time for the Town to change their rate system to match the tiered system used by neighboring Kure Beach.

According to the Town's adopted budget for fiscal year 2017-2018, the Council  initiated  a  water  and sewer study several years ago which  serves  as  a  plan  for  future infrastructure improvements.  In  order  to  fund  the  current  infrastructure improvements, the town sold $31,443,643 worth of Revenue Bond  Debt  in  June  2016. The  Revenue  Bonds were to be paid for through an increase in the water and sewer rates by 11.5% and a $2.00 per ERU (Equivalent Residential Unit) increase in the stormwater utility fee for Fiscal Year 2016-2017,  2017-2018 and 2018-2019, along with an increase  of  5%  in Fiscal Year 2019-2020 and 2020-2021. During the budget process last year, the Town analyzed future projections in revenue and expenses to determine if  the potential rate increases in  future fiscal years could be reduced. Due to that analysis the town was able to provide for a 1.5% reduction in the projected increase in the water, sewer and  stormwater  rates leading to a 10% increase rather than an 11.5% increase.

The Carolina Beach Town Council held a "retreat" on January 18th, at the Carolina Beach Fire Department to discuss goals, review accomplishments and discuss various projects prior to beginning the budget planning process in March.

During the Council's January 18th, retreat Garza explained, "It's my understanding, the bonds for the infrastructure, part of that was put in place required us to increase the water and sewer fee every year for how long?"

Cramer explained, "We had it down for a five year plan but that is just for the revenue bonds that we put in place. For instance, when we get money from the state in a low interest loan, those are things that are not calculated into that."

Garza asked, "How many more years do you have that we will continue to increase the water and sewer fees?"

Cramer explained, "Right now, my guess is you are going to continue to increase revenue fees for probably ten or more years to get all of these construction projects done. We've only planned out for the revenue bond portion of it for five years total."

Garza explained, "We've roughly increased it 10% each year since then. Is that what's it's going to look like for the next ten years if that's what we're thinking?"

Cramer explained, "My estimate is yes."

Council member Leann Pierce said, "I think we talked about... we had not increased fees forever and so they were really under a lot of other communities fees so we felt like that was something we could do to raise money for that infrastructure."

Cramer said, "And it's a complicated issue and we'll get into a lot of the finance stuff when we talk through the budget type of things" and, "This is our ten year Capital Improvement Plan (CIP). These are things that we are expecting that we will have to repair, replace or build new in that ten year time frame. All total, some $38 million dollars. That does not necessarily include any of the revenue bonds that we did. That's in addition to primarily. Those are all things that we talked about when we went out for the revenue bonds and determined, ok, we only want to bite off $25 to $30 million dollars worth of revenue bonds right now. We don't want to go and bite off $54 million dollars. So these are all projects that have been on the books and things that we need to fix as we go along."

Pierce said, "So much of the infrastructure had been band-aided for so long that it was just failing and the residents weren't use to having any increases so now we are having to explain to them why we are doing so much work now."

Cramer said, "We are also taking on a lot in the utility fund that isn't necessarily 100% utility fund. To give you an idea we do a street and we have water, sewer and storm water. Well, you pretty much tore up the whole street so we are repaving the entire street when we get done. That's a charge that goes against that water and sewer fund because you had to disturb the street for those other infrastructures. You could do it in other ways. You could take the street aspect and the sidewalks out of the project and say we are going to fund that through General Fund which means you still have to go out for a loan and that loan payment goes against your tax rate so then you have to decide how much you are raising taxes and so forth."

Cramer said Council will discuss those infrastructure projects when they begin planning for the 2018-2019 budget in March. That budget has to be adopted by the end of June to start July 1st.

On Tuesday January 23rd, Cramer elaborated on the discussion during the January 18th, retreat. He explained, "In 2016 the town issued a revenue bond for water/sewer/stormwater infrastructure improvements.  In order to pay for the additional debt we anticipate we will need to increase water/sewer/stormwater rates by approximately 10% each year for five years. (2017 – 2022)  The discussion at the retreat involved how to pay for all of the other water/sewer/stormwater infrastructure improvements that were not part of the revenue bond issuance.  Projects include, Phase C, D and E of the five phase infrastructure plan, a new water tank, a new water treatment plant, the Northend improvements and improvements to Canal Dr.  We currently have a 10 year CIP that includes these items and that may cost around $40,000,000.  I was asked what I could see as the potential increase after the five year revenue bonds increases were over.  I indicated that we might see a continuation of 10% increases, but no analysis has been done at this point to validate that feeling.  I guess what I would say to you is that if we continue to improve our infrastructure we will continue to need revenue to pay for those improvements."

Minimum monthly water and sewer charges (which include up to 2,999 gallons used) applies to all users, residential and multifamily, for the duration of use. (A single meter pays one base rate only). For the smallest meter at 5/8” x 3/4” the base water rate is $16.98. The base sewer rate is $30.68.

If over 3,000 gallons are used each month, the fee is  $4.78 per 1,000 gallons of water and $8.12 per 1,000 gallons of sewer. Sewer is calculated based on water consumption.

If Cramer and the existing (and future) Council's come to the conclusion that increases as much as 10% are required each year for ten or more years, the Council should consider changing their rate structure to one that matches the structure adopted by the Town of Kure Beach several years ago.

It's a tiered system that encourages conservation and rather than placing the burden upon every customer, those who use the least amount of water pay much less than those who use more.

That's a way to lessen the impact on people with limited incomes such as people working in the service industry, senior citizens living on fixed incomes or social security (which does not often adjust upwards for the current increased  cost of living or rising cost of health care.)

Bottom line: If in fact the Town of Carolina Beach raises water, sewer and stormwater rates 10% each year for the "next ten years or more" that's going to bring an economic ripple effect impacting the affordability of the already decreasing number of affordable rental units available on the Island. To be clear, we're not talking about a $10 per year increase, it has and could continue to be a 10% annual increase. Each year it's an increase of 10% over what you paid the prior year. That escalates year after year. As painful as it is to make such an argument, in terms of rising cost and the vast dollar amounts involved, the Town should consider the impact on those who have a hard time to paying their bills now, and how much the high-use properties can afford to pay. The latter will suffer less of a burden than the first. One example is the price of land and the cost of utilities just north of Snow's Cut Bridge in the unincorporated area of New Hanover County. It cost less to live just over the bridge and for many people, that might end up being the best option.

Currently, most Town Employees - including some upper management - don't live on the Island.

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