Centerville City is considering a increase in water rates for just the second time since 1990 and the first increase for operating expenditures since that time. A comprehensive study was completed in 2002 of the City water system and financing plan. In 2002 the City water department began implementing a major capital facilities plan. Over the last 5 years approximately $1,885,000 in projects have been completed , including the Parrish Lane reservoir, upgrades to several well and pump station facilities, and injection of fluoride into the City water system. This capital facilities plan was financed from bonds issued in 2002 and 2003. Debt service for these bonds did not require a water rate increase. In 2002 $1.00 a month was added to the water base fee for a capital reserve for repair and replacement of existing waterlines. No increase for operational costs was implemented in 2002.

The 2002 plan anticipated an additional round of capital projects and anticipated an increase in water rates to pay for the capital facilities and operational increases after 5 years. The Centerville City staff has reviewed and updated the capital needs for the water system for the next 5 to 10 years. This plan calls for $1,613,260 in capital costs over the next five years. It is recommended that $660,00 of these projects be paid for from existing cash, or future revenues. An additional $953,260 is recommended to be paid for with a bond issue in 2009. The annual debt service is estimated to be $93,000 annually. Water rates are recommended to be increased by approximately 7.5% to provide funding for these projects and to cover annual debt service.

In the last 5 years operating costs have increased an average of 2.21% annually and total operating, equipment and debt service costs have increased an average of 4.27%. In this same time frame, revenues from water sales have only increased an average of .87% annually, and total revenues have increased an average of .96%. Future projections indicate that operating revenues may not cover operating costs in the next 5 years. Also, there is no available funding annually for unanticipated repair or replacement projects. Therefore it is recommended that water rates be increased by an average of 4.62% to cover increase operating costs and provide funding for capital projects. It is also recommended that the City assess the finances of the water system annually to assure that the water system has proper funding for operations and capital needs. Future small increases in water rates may be recommended.

In 2002 a monthly $2.30 fee was charged per residential unit or equivalent to cover the cost of fluoridation equipment and operation. Equipment cost were financed through a bond that was issued in 2002. $1.43 of the monthly fluoride fee covers the debt service for this equipment. The remaining $.87 is an operating and maintenance fee that was intended to cover operating cost of fluoridation, supplies, labor, etc., and the cost of replacement of equipment. The operating and maintenance fee generates about $50,250 annually. The actual cost of fluoridation has averaged $55,750 annually which includes some equipment replacement. It is anticipated that equipment replacement costs will escalate, as the estimated life for much of this equipment is 7 to 10 years. It is proposed the fee charged for fluoridation be increased by $.25 per month. This would generate an estimated $14,000 annually.

The total typical residential monthly bill would increase by $2.35 per month or approximately 11.49%.

 

Proposed 3/4" connection fee change
	Current	Proposed	%
	Rate	Rate	Increase
Base	$12.75	$13.90	9.02%
Flouride	$2.30	$2.55	10.87%
Total "base"	$15.05	$16.45	9.30%
first 5,000	$0.60	$0.70	16.67%
5,001 to 9,999	$0.80	$0.95	18.75%
10,000 +	$1.00	$1.25	25.00%
Impact for "typical" residential 3/4" connection
	Current	Increased	%
Average Usage - *8,000	Average Bill	Average Bill	Increase
Base	$12.75	$13.90	9.02%
first 5,000	$3.00	$3.50	16.67%
5,001 to 9,999	$2.40	$2.85	18.75%
10,000 +	$0.00	$0.00	0.00%
flouride fee	$2.30	$2.55	10.87%
Total	$20.45	$22.80	11.49%
	Monthly increase	$2.35
	percent increase	11.49%
Revenue Impact from fee increase
Total New Annual Revenue from Water Sales		$140,000
Total New Annual Revenue from Flouride Fees		$14,000
	Total	$154,000