MOUNT WASHINGTON — Water and sewer rates are going up and city officials agree there is no way to avoid it.
Mount Washington has few options for financing a new sewer treatment plant, Louisville water rate hikes and other rising water and sewer expenses.
Mayor Joetta Calhoun said the city cannot bear the costly burdens alone and that equals unprecedented rate hikes for its water and sewer customers, estimated at 17.5 percent for the second half of 2009 and another increase of 17.5 percent in 2010.
“We shouldn’t feel alone in our pain,” Calhoun said, stating that many other cities are having the same problem.
For a customer living in the city limits who uses the minimum amount of water — 2,499 gallons or less a month — a 17.5 percent increase will raise the bill by $4.75.
For those rural water customers who live outside the city limits, the minimum increase would be $2.69 in 2009.
City Engineer Dave Derrick presented the proposed increases at a special city council meeting Wednesday night, painting a rather grim picture for council members.
“That’s the crux of the problem,” Derrick told council members. “Where are we going to get that money?”
Derrick said several issues have compounded to create the need for a steep increase, including an estimated 15 percent rate hike from the Louisville Water Company in 2010.
The city purchases its bulk water from Louisville and cannot afford to subsidize the increase, Calhoun said.
But the biggest financial burden weighing on the city currently is how to pay for a new, state-mandated sewage treatment plant estimated to cost between $15 and $17 million.
Derrick said the city’s plant currently is at capacity and often surpasses capacity on rainy days.
The proposed new plant is estimated to last for at least 20 years — the same amount of time the current plant has functioned sufficiently.
According to Derrick, if the city does not begin construction on by 2010, the project could be taken over by the federal government and the city fined $1,000 a day until it is in compliance.
Derrick told council members he felt confident the city would be ready to begin construction by 2010, if not earlier, but the city must have a solid plan as to how to finance the project before officials in Frankfort will approve it.
“It’s extremely important that we move on as quickly as possible,” Calhoun said.
Derrick said Mount Washington is currently a good candidate for a state revolving loan, which would provide $10.5 million of the project’s cost. The loan would have a 20-year term with a 3.2 percent interest rate. Payments would be made semiannually.
However, it is not certain that the city will receive those funds yet. The loans are awarded to cities based upon need and how prepared the project in question is ready to proceed.
The last time Derrick checked, he said the city was number 12 on a list of 12 cities receiving the loans.
“I’m optimistic,” Derrick said.
Calhoun said if the city doesn’t receive the revolving loan, other financing options carry considerably higher interest rates, adding that she would do whatever necessary to insure that the project was on schedule.
The other estimated $4.5 million needed for the project would come from a $1 million state legislative grant approved last year and $3.5 million from the city’s reserve fund.
Calhoun said the city cannot afford to allocate any more of its reserve fund, or money from the general fund for the project.
The city would have $1 million remaining in the reserve fund if the $3.5 million is used for the treatment plant.
“It wouldn’t take long to eat into that if we have a major problem,” Calhoun said.
Although Calhoun is pursuing the possibility of obtaining a portion of Kentucky’s federal stimulus package, Derrick advised it would be difficult.
“The stimulus money for this type of project is not that much,” he said.
The council agreed Wednesday that if a 35 percent increase was needed, it should be implemented as gradually as possible, before the treatment plant payments and Louisville water rate increases become due.
“There’s no way that I could vote for a 35 percent increase at one time,” Councilman Dale Walter said.
Councilman Barry Armstrong said it was difficult to explain to the public that the city had no other options but to increase rates.
“I understand that we don’t have much of a choice here . . . but that’s not going to make it any easier on the people,” he said.
Councilman Dennis Griffin suggested a lesser increase spread out over a longer period of time, however, Derrick said that wasn’t possible because loan payments on the new plant would come due before the needed rate increase would be fully applied.
Derrick added that when formulating his estimations on the needed increases, he factored in water and sewer repairs, labor and the rising cost of materials. “We’ve got a lot of catch up. We’ve got a lot of old (sewage lift) stations that aren’t in very good shape.”
Derrick and many council members agreed that the city might not be so desperate for water and sewer funding if rates had been gradually increased over the past 15 years.
Calhoun and Derrick agreed that for many years only the minimum increase was levied and it didn’t take into account increases in materials, labor or needed repairs.
After discussing all the options and deciding that there were no better alternatives, council members reluctantly agreed Wednesday that the 17.5 percent increase for both 2009 and 2010 were unavoidable.
“There’s no other way to do it,” Armstrong said.
“We’re under a (state) order,” Derrick added.
In order for those increases to take affect, the council must formally approve a rate increase ordinance.
Rates are predicted to increase in July.
There will be a public hearing scheduled to discuss the proposed rate increase and the new sewage treatment plans on March 11, 7 p.m., at the Mount Washington City Hall Annex on Branham Way.
The public is encouraged to come and voice its opinions.