FORT SMITH — Water rates for Fort Smith residential customers need to be increased by 10 percent and sewer rates by 20 percent, a consultant told city directors this week.
Ted Kelly with Burns and McDonnell of Kansas City, Mo., is part of a team conducting a study for the city to determine whether water and sewer rateswere sufficient to recover operating and capital costs.
According to preliminary findings, Kelly told directors Tuesday, water rates will have to go up by 5 percent this year and 5 percent next year. The first rate increase could come as soon as April.
City Utilities Director Steve Parke said Thursday he expected the rate study to be finished in two to three weeks.
Under another scenario, Kelly said the directors could raise water rates by 5 percent this year and use a sales tax instead of the 2012 rate increase to raise the rest of the needed revenue.
On the sewer side, rates will have to be increased by 20 percent to bring revenue in line with sewer expenses and to pay for continuing sewer system improvements. Now,according to City Administrator Ray Gosack, water rates are subsidizing sewer system operating costs.
Also, Tuesday, city directors Pam Weber and Phil Merry asked that an efficiency study be conducted to see where costs can be reduced without reducing services.
Parke said Thursday he would search for a firm to conduct the study, which wouldtake six to eight weeks, and take it before the directors for their approval.
In a memorandum to directors, Parke wrote that the water system must raise money to pay for increasing water transmission line capacity. The city is completing an expansion of its water treatment plant at Lake Fort Smith from a production rate of 34 million gallons a dayto 40 million gallons a day but needs more pipeline capacity to move the additional water to Fort Smith.
The first 6.5 miles of additional pipeline will cost about $15 million, Parke wrote, and must be in place by next year in order to meet the anticipated water demand. Fort Smith will have to sell bonds to raise money to pay for that work.
The final section of the line, about 12.7 miles, must be in place by 2020, Parke wrote. He estimated the cost to be about $30 million.
The city also is involved in a program to replace about 70 miles of old, undersized anddeteriorating water service lines throughout the city, a necessary job that will take decades to complete. Those costs must be paid for through water rates as well, Parke wrote in his memo.
A 5 percent increase to water rates will add about 80 cents to the bill of a residential water customer using 500 cubic feet of water, the charge increasing from $16.37 to $17.17 a month, according to figures presented by Kelly. Customers using 1,000 cubic feet of water a month will see their bills increase by about $1.55 from the current $31.17 to $32.72.
Sewer bills for Fort Smith residential customers using 500 cubic feet a month would increase by $3.60, from $18.10 to $21.70, according toKelly’s figures. Sewer bills for customers using 1,000 cubic feet a month would increase by $6.94, from $34.70 to $41.64.
Besides helping align revenue with expenses, the sewer rate increase is needed to fund continuing wet weather improvements to the system that are required by the federal Environmental Protection Agency.
The city has been under orders by the EPA for years to increase the wastewater treatment plant capacity to accept water runoff from heavy storms rather than letting that storm water bypass the plants untreated into the Arkansas River. Also, the city has been ordered to eliminate inflow and infiltration of water into the wastewater collection system.
Parke said it will cost the city between $90 million and $100 million over the next 10 to 15 years to pay for the improvements.
City water customers already are seeing the effects of a rate increase in their bills. A 5 percent increase each for water and sewer services went into effect Jan. 1. and were put in place to return the level of water and sewer revenue, minus maintenance and operating costs, to 110 percent of the amount that the city is required to pay toward the bond debt each year.
The rate increases added about $1.50 a month to the bill of a residential water and sewer customer using 500 cubic feet of water a month.
Northwest Arkansas, Pages 7 on 02/25/2011