EAGLE POINT — An ordinance to increase water rates for the first time since 2003 will be presented to the City Council in early May.
City Administrator Henry Lawrence said the city spends about $300,000 more a year than it receives in revenue just to keep the water system going and pay off its system debt.
Lawrence and City Finance Officer Melissa Owens presented the 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 that without a rate increase, the fund would be exhausted within three or four years.
"We should have raised rates earlier," 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 said payoff of the system debt was structured so that 75 percent would come from system development 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 30th of this year."
Lawrence said even if SDC funds were coming in at previous higher levels, a water rate increase would be needed.
"You still run into a deficit, just with normal operations, cost-of-living increases, cost of water, cost of materials, and all that. Since 2003, it's continued to escalate," he said.
"We're also anxious to refinance some of our debt and take advantage of some of these lower interest rates. We can't do that right now because we cannot show that we are bringing in enough revenue to justify it to the banking community."
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.
"Before our next meeting," said Mayor Bob Russell, "we all need to be concentrating on what we will be facing as far as a water rate increase. The writing is on the wall. We need to do something."
Writer Bill Miller lives in Shady Cove. Reach him at firstname.lastname@example.org.