Central Arkansas Water took a major step toward becoming the water provider for Maumelle on Thursday when the utility's commissioners unanimously approved a proposal to consolidate with Maumelle Water Management.
The agreement next goes to Maumelle Water Management's Board of Commissioners for consideration at a special meeting to be called for late next week or early the week after, Maumelle Water Management General Manager Barry Heller said after attending the Central Arkansas Water meeting.
Consolidation would mean Central Arkansas Water picking up about 10,500 metered customers from the Maumelle utility.
Maumelle residents would see a net increase of $16.99 on their monthly water and sewer bills during 2016-17 through a surcharge fee to pay off the Maumelle utility's existing $8 million debt. The surcharge would then decrease in 2018 by $7.64, according to the proposal.
If approved, Central Arkansas Water would assume management and ownership of the Maumelle water operations March 1.
The Maumelle utility provides water and wastewater services, but Central Arkansas Water wouldn't manage the wastewater portion. North Little Rock Waste Water is studying an option to manage Maumelle's wastewater, or the Maumelle utility could remain in place to handle only the city's wastewater services.
Even if the deal becomes effective March 1, a transition period to complete a 30-inch transmission line to Maumelle would mean another 30 months before "CAW water" flows to Maumelle consumers, Central Arkansas Water Chief Legal Counsel Tad Bohannon said. Maumelle water rates would continue for two years before Central Arkansas Water rates would begin.
"Maumelle Water customers will continue to be provided with Maumelle water" during the transition period, Bohannon told Central Arkansas Water commissioners Thursday.
Maumelle's three-member water board has the final say on the proposal. The Maumelle City Council isn't required to vote on the merger, but it could offer support through a resolution, Mayor Mike Watson said.
"Legally, the City Council doesn't get to approve or disapprove of the proposal," said Watson, who sat in on Thursday's meeting. "If we wanted to have a public hearing before the council and give a presentation, I think that would be good. It's a community issue. It involves the whole community."
The quality of Maumelle's drinking water, which is drawn from a series of wells, has long been a contentious issue with the city's residents. Central Arkansas Water, often cited for its high water quality, uses Lake Maumelle and Lake Winona as its primary water sources.
Maumelle has about 10,500 metered customers, about 7,200 of which are residential customers. Central Arkansas Water has 125,000 metered customers in Pulaski, Saline and Grant counties, with its main customer base in Little Rock and North Little Rock.
Customers outside of those two cities pay Central Arkansas Water's outside city rate, which is higher than the inside city rate. Maumelle customers would pay the outside city rate.
"We get 10,500 accounts overnight," Bohannon told commissioners of the benefits to Central Arkansas Water. "It would take us a number of years to grow by that much. That's an 8.4 percent growth. And that's year-round revenue. It helps offset our declining water demands."
Benefits to Maumelle, Bohannon said, are long-term ones, including the ability to meet capacity and peak water-usage demands, and rate stability over time. The new 30-inch transmission line will be able to provide 12 million gallons of water to Maumelle daily, Bohannon said. Maumelle's long-range, projected peak usage is 10 million gallons daily, he added.
"This takes care of all long-range capacity problems," Bohannon said, noting Maumelle Water Management had to curb sprinkler usage during a summer drought in 2012. "It also changes Maumelle water to CAW water."
A water surcharge fee of $19.21 monthly would be needed for Maumelle customers to pay off the $8 million in debt owed by Maumelle Water Management, Bohannon said. Another surcharge estimated at $6.03 would be for wastewater, according to the financial model used in the proposal. A $8.25 debt service fee Maumelle Water Management now charges would be erased, for a net increase in monthly bills of $16.99 for the next two years, according to the proposal.
A 9 percent increase for water and sewer services took effect this month for Maumelle Water Management customers, with the debt service fee being raised from $7.86 to $8.25. Sprinkler meter rates also went up 15 percent. Those increases will appear on October bills.
Heller cautioned about speculating on what Maumelle's rates would be under the consolidation proposal "till we see something in writing." Central Arkansas Water and Maumelle Water Management use different formulas for figuring their rates.
The Central Arkansas Water figure concerning wastewater rates used in Thursday's presentation "are not a rate proposal, but more of a financial model of what we assume would happen," because of the different options for wastewater treatment providers, said John Tynan, Central Arkansas Water's customer relations director.
Metro on 09/11/2015