Springdale to consider phasing in rate increases

SPRINGDALE -- Officials are looking to phase in possible utility rate increases instead of implementing them all at once.

Officials had been planning a 25-cent increase per 1,000 gallons for water and the same increase for sewer. Heath Ward, executive director of Springdale Water Utilities, said the new structure would have a 10-cent increase for the first year, a 10-cent increase for the second year and a 5-cent increase for the third year.

City Council committee action

Aldermen forwarded the following items to City Council at Monday’s City Council Committee meeting:

• Using $500,000 from capital improvements program money to restore the interior of Shiloh Meeting Hall.

• Authorization to acquire land and relocate utilities for a project to widen and improve drainage on Cambridge Street.

• Authorizing a change order be added to the Johnson Road project for the section from Chapman Avenue to West Sunset Avenue.

• Approval of a construction contract for Bobby Hopper Park.

Source: Staff report

Utility officials had met with large water consumers, Ward said. Phasing in the rate increases was mentioned during the discussions.

The Springdale Water and Sewer Commission then held a special meeting Monday morning. Commissioners gave their approval for the new structure to be brought to the aldermen and to offer an alternative ordinance.

The first increase with the new structure would take effect Oct. 1, 2015, the second would take effect Oct. 1, 2016 and the third would take effect Oct. 1, 2017, according to a long term financial planning summary. The utility's fiscal year goes from Oct. 1 to Sept. 30 of the following year, said Terry Phillips, chief financial officer and director of administration for the utility.

Ward said in June that the increases are needed because of population growth. They are also needed to pay for additional projects, Rick Pulvirenti, chief operating officer and director of engineering for the utility, said in June.

The utility is also expecting to see an incremental increase of up to 12 cents per 1,000 gallons over the next five years added to the utility's cost from Beaver Water District, Phillips said in June. Springdale buys water from the Beaver Water District, which treats water from Beaver Lake, then distributes it to Northwest Arkansas customers.

If there is no rate increase, officials will either have to put off projects or pursue bonds, Phillips said in June.

The summary also shows the utility's reserve money would drop from about $16.76 million during the utility's 2018 to 2019 fiscal year to about $6.84 million during the utility's 2019-20 fiscal year if they take the phased-in approach. The reserve fund would then go back up to about $10.56 million in the 2021-22 fiscal year.

Ward said it's desirable for the utility to have $10 million in reserve money. That money is for emergencies. However, he said the balance of that fund increases the year after it drops below the $10 million mark.

Utility staff also discussed the changes with aldermen at Monday evening's Springdale City Council committee meeting.

Alderman Jim Reed asked if something could go astray in the future, causing the utility to ask for another increase. Ward said that could happen. He said they would have to either cut projects or raise rates if something catastrophic happened.

Ward also said it's a goal to not have another rate increase for five years, though it's not a guarantee.

No action was needed at Monday's committee meeting, said Ernest Cate, city attorney. There will be a public hearing about the sewer rate increase at the City Council meeting on Aug. 25. There will be revised ordinances at the meeting.

NW News on 08/18/2015

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