An ordinance to increase water rates in the Eagle Point for the first time since 2003 will be presented to the City Council in early in May.
City Administrator Henry Lawrence said the increase is necessary to stop the drain on the city's water funds, caused by the city having to spend about $300,000 more a year than it receives, just to keep the water system going and pay off its system debt.
Lawrence and City Finance Officer Melissa Owens presented a proposed increase at Tuesday's city council meeting.
The proposal would increase the base water rate by $4 over the current rate of $10.31 and add 30 cents to the cost of each thousand gallons of water used by a customer.
"As an example," Owens said, "for a residence using 9,000 gallons of water, their increase would be $6.70 per month. For a large commercial user, using 100,000 gallons, the increase is going to be $34 a month."
Owens said the city has had to use its water reserve fund to make up the revenue shortfall and said that fund is dwindling and without a rate increase is expected to be exhausted within three or four years.
"We should have raised rates earlier than 2003," Lawrence said. "It's not easy to do that, it's a painful discussion to have, so we're having that discussion now. We need to plug this leak and not continue to drain our cash reserves."
Lawrence explained that payoff of the system debt was structured so that 75 percent would come from SDC charges and the remaining 25 percent from users.
"Some time ago, when the debt was taken on," Lawrence said, "there was an assumption made that 50 houses would be built annually and at that point we had been building 100 or 200 houses a year. €… Lo and behold, the recession hits in 2008-2009, and last year we did eight and we'll probably hit 20 by June 30 of this year."
Lawrence said even if SDC funds were coming in at previous higher levels, a water rate increase would still be needed because costs have risen. An increased revenue stream also could enable the city to refinance some debt related to the water system and take advantage of lower interest rates.
Lawrence said he would present a proposed rate increase ordinance at the council's next meeting on May 14, but noted that the council might have other ideas about a rate structure.
If an ordinance is passed, the water rate would increase 30 days later.
— Bill Miller
Read more in Thursday's Mail Tribune.