Washingtonville council looks at water rate increases
WASHINGTONVILLE — Village council is considering a recommendation to increase water rates in order to break even in providing the service.
Council on Feb. 3 will consider action on the recommendation to increase the minimum fee $7.50 this year, which would move the village toward a balanced budget in the water department and help pay for a new water tower.
Joseph Lawrie, senior rural development specialist with the Rural Community Assistance Program (RCAP), this week presented council with a completed water asset management plan that satisfies Environmental Protection Agency (EPA) regulations. The plan includes the rate increase recommendations that suggest not only an increase of $7.50 in the minimum fee this year, but an additional $7.50 each of the following two years, $6 in the fourth year and $5 in the fifth. At that time, council should begin considering increases to the usage rate, he said.
The village’s current rates are $19.50 base minimum fee, $8.25 per 1,000 gallons for usage. The minimum fee is approximately 61 percent of the average bill. Lawrie said council should assess the increase to the minimum because if it is placed on the usage, customers are likely to begin conserving water, which would decrease the amount of money the rate change would generate.
Lawrie noted once the rate cycle is complete, customers will still be paying under 2 cents per gallon, and even though the water rates will seem high, the village has a limited number of customers, so there is not a large consumer base to share the cost.
Regarding the rate analysis, Lawrie said at an October meeting he completed a five-year review of the history of expenses versus revenue to develop a 10-year projection. He said he looked at the historical track record and future costs. The village has approximately 350 customers, with 16.9 million gallons of revenue and 3.78 million gallons non-revenue, meaning leaks for which the village is not receiving money. Both are stable.
Lawrie said the village is losing money on 21 percent of usage the past two years, including necessary flushings, and pays $61,000 to Salem for water, an amount contingent on the city’s rates. The village has also been losing money at a rate of $20,000 per year between 2014 and 2018.
He said the rate increase recommendations are just a suggestion and council has the final decision in enacting them. He noted, however, if council elects to enact smaller increases, the projects included in the management plan will be pushed further into the future.
The rate increases will also help improve the budget’s carryover which is need for continued maintenance of the $4 million system, the costs of which are always increasing, Lawrie said. He also noted adjusting rates makes a positive impression for securing grant funding because it shows council is trying to help itself.
And the department is already operating with low costs and low rates for the size of the system, Lawrie said.
“So essentially we need to bring rates up to where they should have been,” stated Mayor Herman Frank. “We have to make up for what previous councils should have been doing.”
In October, Lawrie told council the water tower, which is in disrepair, can be replaced, repaired or maintained through a contract. His estimate to build a new tower is approximately $1.2 million, which he previously said is cost prohibitive for the village. But this week he reported the project is a finalist for an Ohio Public Works Commission small government grant of $500,000, with the remaining $700,000 to be covered by a zero percent loan.
Lawrie said his rate increase recommendation includes the the water tower project if the village receives the full $500,000 and obtains the zero percent loan for the remainder, or if council receives partial funding through the OPWC or other grant programs such as the Water Supply Revolving Loan Account (WSRLA) or Community Development Block Grant (CDBG).
Other projects in the management plan include leak detection every five to 10 years since the village purchases water from Salem and any loss is a cost that cannot be recovered; a water audit to determine where the water is going and how to correct it; a billing software update; complete meter replacement; and replacement of the interconnection pit with Leetonia. There are also projections for maintenance costs both repetitive– ones that need completed more than once over an extended period of time such as valve exercising and water tower inspections/painting– and short-lived– special projects that require 20 years or less of funding.
Lawrie said the plan anticipates loans for some of the projects including at least $700,000 for the tower, but they are mostly budgeted into the new rate recommendations.
Council contracted with RCAP to develop a water asset management plan per EPA requirements. Lawrie explained that an Ohio Senate bill requires an asset management plan for water systems, and the EPA comes up with rules and review. He said the required plan for water systems is a moving target, but has settled of late.
Lawrie said the plan looks at what the village has, the shape it is in and how to maintain for the next five, 10, 20 years.
Since the village’s only source of revenue for the water system is the rates, council has to adjust them as needed to balance the fund, which has dropped from $145,000 in 2013 to $75,000 in 2019, the decrease being absorbed in operating costs. Lawrie reminded council members that the water rate is not a tax, but a cost to operate and provide the service.