Officials consider rate and sewer tap fee increase
Water and sewer rate increases might be in the future for Craig residents if City Council backs a 20-year financial plan presented by city staff at a workshop Tuesday.
The plan calls for a water plant expansion due to growth, and necessary upgrades to both the water and sewer plants. Overall, the recently completed water and wastewater systems master plan calls for more than $16 million in water plant and system upgrades and more than $6 million in wastewater system upgrades.
According to City Public Works Director Bill Earley, most of the necessary upgrades are growth-related, so he presented a philosophical question to Council how did it want to pay for the upgrades, by increasing tap fees and placing the burden on those who caused the growth or by increasing water and sewer rates placing the burden on existing customers?
“It’s not really fair for existing rate payers to pay for future growth,” Earley said.
The discussion came about a year after a 50 percent water rate increase that most customers opposed and protested. Because of the backlash for the last rate increase, both city staff and Council members viewed the decision as political as well as financial.
“People are just now starting to heal from the last increase,” Councilor Bill Johnston said.
Several council members chose not to comment on the plan. Earley said it was lot of information to digest which was why he was not pushing for an immediate answer.
The general consensus was increases should come in both forms tap fee and rate increases because some of the capital needs were operations- and maintenance-related and others were growth-related.
“People who are moving in should bear the burden of this growth in my opinion,” Johnston said.
Earley suggested Council members consider a $1,000 increase in sewer tap fees, double the current rate, but making Craig competitive with surrounding cities. He also suggested a yearly rate increase matching the percentage of inflation, meaning that if expenses increased 1.5 percent, so would rates.
“I’m a firm believer that rather than wait eight, 10 or 12 years and do a 50-percent rate increase, we should increase rates in tandem with the growth rate,” he said.
An increase based on the growth rate would be minimal to customers, City Finance Director Bruce Nelson said.
The last rate increase was the first in 25 years, which is why consumers saw such an increase. At a 1.5 percent increase the average customer’s bill of $32.20 would increase by 48 cents.
“If we don’t raise rates to cover operating costs, we have to start using savings to cover those costs and don’t have money for capital improvements,” Earley said. “Then the system fails and that’s really a hit to taxpayers.”
Sewer tap fees haven’t been evaluated in almost 18 years and the rate in Craig is lower than every surrounding town except Grand Junction.
In presenting this information to City Council, Earley and Nelson showed the information in relation to three growth rate scenarios. In all but the slowest growth rate, 1.5 percent, a water plant expansion project will be needed at an estimated cost of $6 million if done within the next five years and $12 million if done in 20 years. To complete the project, officials believe voters will have to pass a bond issue. A separate bond issue will be needed to complete ongoing capital projects and line improvements.
The plan is dynamic because it can change at any time, Early said. Council can decide to push some capital improvement projects back or extend bond payments to make the financial burden less. If the city sees a low growth rate, many of the anticipated capital projects may not be needed within the next 20 years.
According to Earley, more than $5 million of the anticipated $6 million in wastewater system improvements are growth-related and may not be necessary if the anticipated growth does not occur.
“This is just a plan,” Early said. “It’s not fixed in concrete.”
Any rate increase may not be soon. The decision remains the Council’s and Earley said there is much to consider before making a final decision.
“It’s a big commitment and they need to feel comfortable with it,” he said.