Citing annual decreases in water usage and increases in operating expenses, Maumelle Water Management commissioners on Tuesday recommended raising average monthly bills by $25.01 over the next three years.
The request will be forwarded to the Maumelle City Council for its consideration and a public hearing. Maumelle Water Management customers pay for water and sewer services on a combined monthly bill.
The increase is proposed to allow Maumelle Water Management to fund all short-term capital improvement projects, including three new wells and a new 2.5 million gallon storage tank, and fully fund its reserve account and 75 percent of its depreciation costs by 2018.
The average residential combined monthly bill is $51.61, which includes a $7.86 debt service fee. The proposed increases would raise the average monthly bill by $18.02 to $69.63 in the first year, by $4.54 to $74.17 in the second and by $2.45 to $76.62 in the third year.
The debt service fee would rise from $7.86 to $11.79, effective the first year, as part of the overall increase.
"This is going to be a shock to the community," board Chairman Dave Kaufman said just before the 3-0 vote.
The recommendation came after a presentation of a rate study by Aaron Benzing of Hawkins Weir Engineers Inc. that showed average daily water demand decreased by 21 percent in 2013 and by another 13 percent in 2014. Meanwhile, operating expenses have increased by an average of 6.5 percent every year since 2007, Benzing said.
"The budget shortfall is expected to increase by half a million dollars every year," Benzing told commissioners.
Benzing presented two options to the board. The second option would have raised monthly bills by $14.20 to $65.81 in three years but would only fund immediate needs of the utility, Benzing said.
Barry Heller, the utility's general manager, said option 2 would be "a patch" for the utility's needs. The staff recommendation was for the first, higher-cost option.
"It's the hardest pill to swallow, we understand that," Heller said of the recommended option. "But, it gets us what we need to become more stable as a utility and gets us the money we need to do the projects we need to do."
In making the motion for approval, commission member Ralph Kearney said the first option also allowed the board the ability to "come back and re-evaluate in three years."
If approved by the City Council, the water and sewer rate increase would be the first "significant rate increase" since 2010, Heller said. The utility's rates have gone up by 1.5 percent starting with April's bills and by 1.5 percent also last spring. Both increases were based on the consumer price index.
Maumelle Water Management and the City Council have been at odds for years on whether the city has authority to decide rate increases set by the commission, a power based on a 1995 ordinance passed by the City Council. An ordinance to repeal that ordinance was tabled by the City Council at last week's meeting, leaving the council's authority in place to review and decide on any proposed increase.
The rate study will be added to the utility's website, maumellewater.com, as soon as possible, Heller said, for customers to review. Commissioners also requested that Benzing give his rate study presentation at a coming City Council meeting.
Metro on 06/10/2015