Minor: Decrease the water rate hike

Wednesday, August 4, 2010

Lewisburg Water and Wastewater Department officials were told last week to recalculate their proposed rate hike to protect city customers and shift the cost to those who buy the services, but are not residents of Lewisburg.

Councilman Robin Minor presented a broad outline of his plan on Wednesday afternoon last week, explaining he's concerned, not just for rate-payers, but also for property taxpayers of the city that has its own water and wastewater plants.

The council considered the presentation, but declined to act, largely because more calculations are required. As a result, another meeting of the council was scheduled to convene at 4:30 p.m. Tuesday afternoon this week. Wednesday editions of the Tribune are printed at about that time.

Under the proposed plan, water customers in Cornersville, and those served by the Marshall County Public Utility District could face a greater rate hike than those under the utility's original plan. Minor developed the broad concept after researching the situation and reaching a conclusion that a compromise is needed.

"I've had more calls about this rate increase," Minor said, describing many of them from senior citizens who are on a fixed income and can't afford to pay more for anything.

He also acknowledged an October 2005 order from one of the division directors in the Tennessee Department of Environment and Conservation who told the city utility to greatly increase its sewage treatment plant's capacity. State delays in approval of the construction plans occurred when Lewisburg bought Cornersville's utility, thereby taking on more debt. Minor noted that and other utility projects were financed with a bond sale then, and now the city must raise $13 million to increase the sewage treatment plant, or face state fines.

To raise money for the sewage plant expansion, Lewisburg's Water and Wastewater Board has recommended increasing water and sewer rates by approximately $7-8 per month for the average household. The rate increase would pay off a utility bond sold on the money market.

Under Minor's plan, water rates wouldn't go up as much for city residents, but they would go up even more for utility customers beyond the city line.

"Will it generate the same amount of money?" Mayor Barbara Woods asked.

Nobody could answer the question when the council met last week. The number of customers in the city is different from the number of customers beyond the city line. Minor suggested a range of dollar amounts by which the rates could be adjusted, and suggested that details be generated by utility officials.

Utility Superintendent Kenneth Carr responded to Minor's points about borrowing money for other projects -- including a water pipeline paralleling Lynnville Highway to the county line, when it was known that the city would be forced to expand its sewage plant.

Expansion of the customer base is a basic, long-term way to increase revenue to a utility, Carr said.

The utility faced another problem. After it responded to the state's directive for plant expansion -- complete with engineering plans, "The state sat on it for 20 months," thereby stopping that project for almost two years," Carr said.

During that time, Cornersville's town manager was exposed as a thief and that town's utility needed reliable management, so Lewisburg bought the system that immediately increased its customer base. The immediate past town manager is in a state prison.

"I don't like being backed up against the wall when $3 million could have been spent in Lewisburg," Minor said in a reference to a bond sale that was, in part, money borrowed to buy the Cornersville utility.

Beyond that, Minor is concerned about the prospect of city property taxpayers becoming liable for the utility's debts and fines.

Carr replied that a fine is possible only if the city does not respond to state environmentalists. Currently, the deadline for the completion of the sewage treatment plant expansion is Dec. 31, 2011.

Councilman Ronald McRady asked if the city could get grants to help repay money borrowed through a bond sale. Carr replied that's possible.

"We are in line to get one, but we can't without this council approving this ordinance" to raise the rates on water and sewer service, Carr said.

McRady and Carr then discussed the reserve account -- sometimes called a rainy day fund, and the interest rates that the utility might pay on the money it borrows.

The continued discussion included an observation by City Treasurer Connie Edde: The council isn't subjecting the utility to any greater scrutiny than faced by other departments as the 2010-11 city budget was assembled before July 1 when the fiscal year started.

Ultimately, it was Minor who moved to defer the council's decision on whether it should accept or reject the recommendation from the utility board. Councilman Odie Whitehead seconded the motion.

"You are compounding the problem for the people in the county," McRady noted.

Minor replied: "I'm elected by the people in the city."

All, or the vast majority, of the residents beyond the city border get water service only, Woods said. Without a sewer bill, their cost increases would, in dollar amounts, not be as much.

"The people of Lewisburg feel they don't need to be treated the same," Woods said.

Minor insisted that he wants a "compromise" that will reflect a middle ground on the costs to repay the state-mandated expansion of a sewage treatment plant.

Joining Minor, Whitehead, Stewart and McRady in voting to defer the utility rate hike decision, was Councilman Hershel Davis, chairman of the utility board.