SHEPHERDSVILLE - Faced with an annual debt service payments of $2.1 million for the next 20 years before turning on the first light or paying the first employee, Shepherdsville city officials knew they would have to do something to generate revenue.
However, customers may be shocked to see that the “something” could mean rate increases approaching 100 percent starting next month.
The Shepherdsville City Council will meet at 6:30 p.m. on Wednesday, June 29, to decide both the sewer rates, as well as finalizing its 2011-12 budgets.
Prior to having a rate study done by Carryn Lee of Lee Utility Consulting, officials knew that past debts had to be repaid and the interceptor line completed to meet federal EPA mandates.
But no one ever considered that the rates would be doubling.
In her recommendations, Lee set out two scenarios for the city - to meet the minimum necessary to meet the budget and to meet the work mandated by the EPA.
Under the less taxing scenario, customers would be facing rate hikes of 52-66 percent. In the more demanding picture, sewer customers would see increases of 87-104 percent.
Currently, the minimum bill for the first 2,000 gallons of water usage would be $12.77 a month.
Under the proposal, rates for the minimum 2,000-gallon customer would be $25 per month, an increase of over 90 percent. For every 1,000 gallons of usage over that minimal bill, it would be an additional $10.
For example, a customer using 7,000 gallons a month would be paying $75.
Sewer rates are based on the amount of water consumed.
Lee said she was concerned that a large number of customers were delinquent in paying their sewer bills. Since Louisville Water Co. does the billing, it will not turn off water for non-payment of sewer customers.
She provided the city a list of delinquent accounts.
Also, she provided a partial list of businesses that could be subject to surcharges due to the type of products they put into the sewer system.
She added the city had not put any money into a depreciation account and she did not make that mandatory in the recommendations. However, she said as the financial crisis improves, it is something that should be done.
Another deficiency Lee pointed out was the lack of manpower. To meet the EPA mandates, she said at least 15 employees would be needed for the sewer department.
During its budget discussion later in the meeting, councilmembers recognized the city should generate another $750,000 in revenue.
Mayor Scott Ellis said there is no way the city could go from six employees to 15. However, the council agreed to place two additional technicians at $10 an hour into the budget.
The council added dollars for utilities, plant maintenance and lift station maintenance to the budget, which will be voted upon tonight.
Councilman Bernie Brown said he would like the proposed increases to only affect those customers inside the city limits. The lone customer outside the city - Beam Distillery - has contributed a major portion to get a main line room south of Shepherdsville and is making enough payments each month to pay bond payments on that project.
Faith Portman, another councilmember, was upset that she didn’t know that the original proposal of a 30 percent sewer increase suddenly went to nearly 100 percent.
“I’d appreciate a heads up prior to the meeting,” said Portman.
Resident Steve Larimore said he was most concerned about all the customers who haven’t paid their bills and continue to receive service.
“Folks, you don’t know what your actual revenue is in the sewer system,” said Larimore.
He felt the council should evaluate what is owed and how that might impact the revenue and the need for such a large rate increase.
“I don’t believe you guys have done your homework well enough,” he added.
Marty Brown, working with the city for Public-Finance.com, agreed that the officials really don’t have a good handle on their own operations.
“You have the responsibility,” Larimore told the council. “It’s ridiculous. If there was a way to vote you all off the council today, I’d do it.”
The city is also looking at ways it calculates rates on multi-family dwellings on a single meter, as well as connection fees.
Marty Brown said the note had closed and Judy Construction, Peoples Bank of Bullitt County and Publishers Printing had been paid with the proceeds.
The city also has money to be utilized to pay certain bills with proper documentation, said Brown.
The city’s debt, which has been rumored to be as high as $4.5 million, centered around a number of large scale projects, such as the interceptor line, not being completed and overspending over the past several years.
The city council had not voted upon an audit for the past two years.
And many bills had become past due in the past year.
The issues came to light in early January when Ellis took office.
An investigation is currently underway by state and federal officials.
The meeting on Wednesday will begin at 6:30 p.m. in the government center on Conestoga Parkway. It is open to the public.