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Water/sewer rate hike hearing — Jan. 11

The last time the city raised water and sewer rates it was September 1993.

Although it looks like Williams City Council will impose a water/sewer rate increase within the next two weeks, the specifics are still being worked out. A public hearing is required to pass a city ordinance increasing water/sewer rates and is scheduled 7 p.m. on Jan. 11 as part of the regularly scheduled council meeting that night.

Under consideration now is an across-the-board 12 percent increase in January, with a 2 percent increase per year for the next three years. Also under consideration are two regressive rate increase plans, which would charge high volume users more than low water users. (To find out how these proposed increases stack up against current rates, see the chart page 12B.)

"Council is considering a regressive rate structure to give an economic incentive to conserve water," said Joe Duffy, city finance director/assistant city manager.

Duffy has prepared a 14-page report, which analyzes water and sewer rates including proposed increases.

"The current water/sewer rate structure does not give the consumer an economic incentive to conserve water," his report states. "The existing rate structure only increases 4 percent after the first 10,000 gallons are used."

Under the regressive rate structure customers would pay a higher rate for every 5,000 gallons used. One scenario will increase the rate by 3 percent for each additional 5,000 gallons consumed, the second increases the rate by 5 percent for each 5,000-gallon increase.

Duffy said a rate increase can legally take effect 30 days after it is approved by city council. But he said Williams residents and business owners won’t see an increase until their March bill.

WIFA stipulation

Duffy said when the Water Infrastructure Finance Authority of Arizona (WIFA) agreed to loan the city the $3 million for water development, its board stipulated an 18 percent water and sewer rate hike over the next three years as a condition of the loan.

"When we brought the loan agreement to council after the election, a rate increase was one of the stipulations the WIFA board put on the city prior to agreeing to the loan," Duffy said. "After reviewing our finances, WIFA determined to have sufficient income to pay off the loan, we need a 12 percent sewer/water increase in the next fiscal year and a 2 percent increase each year for the next three years."

Emergency water rate

An emergency rate will also be built into the ordinance under consideration Jan. 11.

"Part of the ordinance will cover an emergency water rate should the city have to haul water from an outside source," Duffy said. "We plan to structure that rate to cover only the direct costs of providing water if we have it trucked in."

At 3 cents a gallon Duffy pointed out it will cost $90 for a truck hauling 3,000 gallons. If 300,000 gallons were consumed daily, the cost would be $9,000 a day.

"The state may contribute up to 75 percent of that cost from emergency funds, but there is no solid commitment," he said. "At 75 percent it would bring the cost down to $2,250 per day, which will be spread between all the water users in the system."

Enterprise fund

"The City of Williams Utility Fund is responsible for providing water and sanitary sewer service to the community," Duffy’s report states. "The fund is accounted for as an enterprise fund."

Duffy said enterprise funds are financed and operated similar to private business enterprises where the intent is that the costs of providing the goods and services to the general public on a continuing basis be financed or recovered through user charges.

However, at present, he explained, even though the utility fund generates a strong net operating income each fiscal year ($217,403 for fiscal year 1999/2000), it doesn’t generate enough cash to cover its debt service requirement. For example for this same FY, debt services costs amounted to $540,329. Duffy’s chart on expense revenue’s and summary shows the city was able to offset that amount with an additional $499,159 transferred from the city-owned electric system but still showed a loss for FY 1999-2000 of $176,233.

Report available

Duffy’s report also contains a revenue and expense summary, current rates and customer profiles, utility fund debt, proposed rate increases, an emergency water rate, other municipalities fees and a debt service summary. Copies are available at the counter in city hall as well as at Williams Public Library. Both facilities are housed in the building located at 113 S. First Street.


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