8/20/09
After more than two years of work, and 19 drafts, the Española City Council voted unanimously July 28 to amend the city’s utility ordinance and raise water and sewer rates for both residential and commercial customers.
A larger increase in rates failed in June, falling one vote short of the two-thirds majority needed for the Council to pass it.
After that meeting, Acting City Manager Veronica Albin said she worked the numbers to the point where municipal utility customers will pay the minimum amount possible to allow the city’s utilities to operate in the black in the upcoming years. Without these increases, the city would experience significant deficits beginning next fiscal year, according to city documents, even though the most recent state Environment Department statistics show that Española already has among the highest utility rates in the state.
The latest increases are partially based on cost of living increases, which show water and wastewater costs rising a little over 6 percent from this time last year based on the most recent Consumer Price Index figures for public utilities, which were released July 15. For water, this figure is sufficient, meaning water rates will rise for both residential and commercial customers 6.6 percent to cover cost of living increases. Sewer rates for both residential and commercial customers will rise another 4 percent in addition to the cost of living increase, for a 10.6 percent increase. For the average residential customer, this amounts to a monthly increase of just under $5 for both services, according to figures Albin provided at the meeting (see sidebar). City utility customers will see these increases on their bills beginning this month.
Water rates will continue to rise over the following three fiscal years to cover cost of living only. Sewer increases will also continue during that time, but do so by a decreasing rate each year: 9 percent in fiscal year 2011, 8 percent in fiscal year 2012 and 7 percent in fiscal year 2013. The city currently estimates a Consumer Price Index increase of 5 percent per year, but as the most recent increase shows, this number can change, Albin said. That increase was up to 6.6 percent from a projected 3.5 percent that was based on increases from previous months.
These changes will bring the Water Department $143,271 in additional revenue during the current fiscal year, with increases between $150,000 and $180,000 annually over the three following fiscal years, according to budget documents. Wastewater will see an initial $192,846 revenue increase, with additional increases between $194.598 and $186.660 over the next three fiscal years, according to city documents.
While the same members of the City Council who were unhappy with previous increase proposals were still reluctant to raise utility rates at all, they eventually accepted that some kind of hike was necessary to keep the utility fund from operating in the red.
“When this was proposed, these percentages were quite a bit higher,” Mayor Pro Tem Alice Lucero said. “We lowered them as much as possible. We don’t really have much of an alternative.”
Along with raising the rate for wastewater, $175,000 of water revenues will go to subsidize wastewater operations initially, with the amount steadily decreasing for the next three years to minimize rate hikes and keep those operations out of the red. After that time, enough of the approximately $93,000 operating deficit incurred by the city’s new wastewater treatment plant should be paid off that the wastewater division will be self-sufficient, Albin said.
District 3 Councilor Chayo Garcia, who had objected in the past to versions of this proposal that raised commercial rates even more steeply, noted at the Council meeting that for now at least, these rates would also apply to commercial users. Further increases to commercial utility rates and procedures will be discussed at future Public Works committee meetings, the Council agreed.
Along with the rate increases, 10 other changes were made to the city’s procedures regarding hook-up charges and processes. These changes were intended to streamline the process and encourage residents to become city utility customers, Albin said (see related story).
The most hotly debated of these was the change that replaces the double rate charged to users of city services that live outside city limits with a $20 monthly surcharge. Currently there are 58 water users and 36 wastewater users outside city limits. While the idea behind the change was to make it less of a financial burden for out-of-city customers to become Española utility users, the $20 surcharge does not completely make up the 1 percent of city revenue that the double charge represented.
Other changes to the ordinance included charging residents, who could hook up to city utilities but don’t, pay the same basic service rate as if they had; taking over the maintenance of all wastewater lift stations within city limits some of which are currently owned and maintained by property owners; and reducing the residential hook-up fee from the current average of $2,700 to $2,400 (see sidebar for a complete list).
“The idea with these is that we make up the lost revenue by attracting new customers.” Albin said. “These numbers are based on a conservative estimate of how many new users we’ll get per year.”
Albin’s calculations assume 10 new customers per year until all in-city users who can currently hook up to city utilities have done so, she said. Her figures have about 200 of these potential customers, meaning the city is assuming these revenue increases for about 20 years. The rate hikes go into effect immediately, but several of the procedural aspects, in particular charging inactive users, will not be practicable until the city can organize enforcement measures.
Only one resident came to the final public hearing on the ordinance, which was held the night it passed. Weldon McCullough, owner of the Western Holiday Motel, requested clarification regarding privately owned lift stations. In a planned expansion of city utility lines, he is slated to have a lift station built on his property. When presented with the city’s compromise that he would pay electricity costs to operate it but the city would assume all other costs, he did not object and raised no further questions. Lift stations are used when a house or business is in a position where gravity alone won’t direct sewage into the wastewater system, such as downhill from a sewer line. In such cases, a lift station pushes the sewage against gravity and into the system.
“As long as that’s all I have to pay, that’s all right with me,” he said at the meeting.
One landlord who did not attend the public hearing, but has concerns about rate increases is Preciliano Gurule, who rents property on North Prince Drive. Even before the rate increase, Gurule had problems attracting and keeping tenants because of steep utility rates.
“Right now we’re having trouble renting because (tenants) cannot afford the utilities,” he said. “I have had my property vacant since May.”
These changes have been in and out of committee meetings, public hearings, and Council meetings for the past two years before being passed. The first versions were worked out chiefly by engineering firm Souder Miller and called for rate increases several times higher than the latest increase. The city contracted with Souder Miller for around $30,000 to figure out the most effective and efficient ways to amend the ordinance. Albin took primary responsibility around the fourth incarnation, after presentations by the firm fell short of Council expectations.
“I couldn’t believe we’d paid $30,000 for what we’d gotten,” Albin said. “It really needed to be someone who had a better understanding of the operations of the city.”