4/30/09
City of Española officials have once against resumed discussions on a long-delayed hike in utility rates.
The City Council has been contemplating rate increases as high as 23 percent since at least mid-2007 and in November it discussed, but never voted on, a proposal to raise rates in February. This time around, Acting City Manager Veronica Albin is pushing to enact the increase, which would apply to both commercial and residential users, by July 1.
In its most current draft, the rate schedule Albin plans to present to the Council in May calls for a 7 percent water rate increase this year for commercial and residential customers, another 7.2 percent increase next year and annual increases tied to inflation each year after that. A tentative sewer rate increase for all customers calls for a 7 percent increase this year, with yet-undetermined increases after that.
At those rates, a $50 utility bill under today’s rates would increase to $57 after July 1.
According to the most recent data available from the state Environment Department, Española’s residential water and sewer rates were among the top 10 highest in the state as of 2007. That year, its commercial water rates were the second-highest in the state after Albuquerque and commercial sewer rates ranked 19th in the state.
The rate hike would increase the Water Department’s revenue for this year from $2.6 million to $2.79 million, according to a rate proposal. Revenue would increase to $3 million in 2010 and continue increasing by about $140,000 annually thereafter.
The Sewer Department’s revenue for this year would increase from $1.99 million to $2.13 million.
Mayor Pro Tem Alice Lucero was skeptical of the proposed increases when Albin presented them to the city’s Public Works Committee.
“We’ve already taxed our citizens enough as it is,” she said. “We have to be careful from here on out. We have to make sure it’s enough to cover costs, but we shouldn’t be making a profit.”
The bulk of those departments’ revenues are budgeted toward covering Water and Sewer Department salaries and operating costs, and for paying off existing bonds and loans. A 10 percent chunk of revenues would go into the city’s general fund to cover “administrative overhead” and a smaller fraction would be used to cover operating costs for new water and sewer treatment systems.
“Those new systems were all federally mandated,” Albin said.
Water Director Marvin Martinez said the increased water revenue would cover rising operating costs in his department plus operating costs for three new and proposed projects: an arsenic treatment system on Well 1 completed last month, a planned system to blend water from wells 4 and 7 and a planned water line loop along Highway 84/285 and State Road 106.
Albin said the increased rates are also needed to hire new sewer plant employee, cover the operation of proposed new treatment systems at the sewer plant and buy new vehicles for the two departments. Her proposal also sets aside about $100,000 of the annual revenue for water and sewer system maintenance funds. In addition, the city must start making $350,000 annual payments next year on a series of bonds issued in 1999, 2002 and 2007.
The city has raised rates twice since 2002, the year that former mayor Richard Lucero’s administration campaigned for and won a permanent increase in the gross-receipts tax. At the time, administrators promised voters that such a tax would take the place of a rate hike.
Because the rate increase would require passing a new ordinance, the Council would be required to hold still-unscheduled public hearings before approving it.
Besides increasing utility rates, Albin is proposing within the ordinance several policy changes, most of them addressing new customers hooking up to city lines. Albin said the changes were designed to goad new customers into hooking up to city utility lines.
Councilors in the city’s Public Works committees praised the policy changes.
“The people I talk to, even those who make a decent salary, they would be horrified by the costs (of hooking up),” District 1 Councilor Danielle Duran said. “I’ve been through that process, and it’s one of the least consumer-friendly experiences I’ve ever had.”
NEW WATER/SEWER RULES
Acting City Manager Veronica Albin proposed to the city’s Public Works committee the following water and sewer policy changes, which would be included in an ordinance increasing utility rates:
• Utility rates for customers outside city limits are currently twice that of regular customers. The ordinance would replace that double rate with a $10 flat fee for users outside city limits.
• Rather than charging a variable hook-up fee based on the actual cost of materials and labor, the city would establish a flat, $2,700 hook-up fee. The ordinance also sets up a loan program — either administered directly by the city or through a participating bank — allowing new customers to spread hook-up fees over up to 12 monthly payments.
• The city currently charges customers who exceed a certain usage limit a “water conservation fee” that varies according to drought conditions. The ordinance would set a single, fixed fee.
• Residents within 300 feet of existing utility lines who neglect to hook up would be assessed an “inactive service fee” of $16.40 a month for water and $18.83 for sewer. A current ordinance requiring those residents to hook up is not enforced.
• The city currently charges a $1,330 “water rights fee” for new hookups, but does not automatically transfer a corresponding amount to the city’s water rights fund. Under the new ordinance, $240 from each new hook-up would be automatically transferred to that fund.
• The city would no longer waive the water rights fee in exchange for accepting water rights from new customers. Instead, the city would charge the fee, and purchase water rights as a separate transaction.
Current Utility Rates
The city would acquire 17 privately-owned lift stations within city limits and make them part of the public utility system.
Residential water rate: $3.55 per 1,000 gallons, plus a $14.55 service fee
Residential sewer rate: $18.22 for the first 3,000 gallons, $4.86 per 1,000 gallons after that
Commercial water rate: $6.29 per 1,000 gallons, plus services fees from $28.47 to $595.56, depending on the size of the business and the type of meter it uses.
Commercial sewer rate: $18.22 for the first 3,000 gallons, rates depending on the business size and type range from $5.10 to $5.63 per 1,000 gallons