LOWELL -- Water will cost more in the next five years for the four large cities in Northwest Arkansas.
The Beaver Water District Board approved a five-year plan to increase the cost of water .12 cents per 1,000 gallons in 2 cent and 3 cent increments. The board voted to set the first of those segments to roll out Oct. 1. The 3 cent per 1,000 gallon increase raises the wholesale water price to $1.29 per 1,000 gallons of water.
Water increase history at Beaver Water District
Beaver Water District supplies water to Bentonville, Fayetteville, Rogers and Springdale at wholesale price. There have been six rate increases from Beaver Water District in the past 10 years. A presentation to board members Thursday declared Beaver Water District’s prices as far than national peers that were between 60 cents and $2 higher per thousand gallons of water.
Water cost per 1000 gallons*Price to cities
2006-2007*$1.16
2008*$1.18
2009-2010*$1.20
2011*$1.22
2012*$1.24
2013-2015*$1.26
October 2015*$1.29
Source: Staff report
The district sells water wholesale to Bentonville, Fayetteville, Rogers and Springdale. Those cities resell water to some other smaller cities in Northwest Arkansas and to customers in their cities.
The wholesale cost increase may or may not affect end users, board members and district officers said.
All cities respond differently to increases based on their individual needs, said Bill Watkins, board president.
All city managers were notified in advance of Thursday's vote, said Alan Fortenberry, chief executive officer for Beaver Water District.
"It is needed. It is a prudent way to plan for the future," Fortenberry said.
Springdale planned a water and sewer increase that will go before the City Council this fall, said Chris Weiser, chairman of the Springdale Water and Sewer Commission and vice chairman of the Beaver Water District Board. It won't have a big impact on homeowners' bills, he said.
"For the average water user, which is all of us in our homes, it'll be less than $1 a month," Weiser said.
Springdale's planned increase isn't just about the wholesale increase, but about having enough money on hand to keep the system in good repair. When Springdale found a leak in a section of old sewer pipe that stretched from one manhole to the next they were able to pony up the $700,000 it took to fix it. Some cities or districts could face months of delay or large-scale projects if they don't have money set aside to fix issues as they come up, Weiser said.
The increase at the district is partly because the district hasn't raised prices to keep up with inflation, said Adam Motherwell, chief financial officer.
A growing demand for water meant has more money was coming in and allowed the district to postpone increases, Motherwell said.
"We can't do that indefinitely," Motherwell said.
Fortenberry said there was one year the board put off a needed increase because of the region's sluggish economy.
A financial report for the district projects a 3.6 percent increase in the cost of electricity used to run the plant and a 3.8 percent increase in the cost of chemicals in the next year. Personnel and general operation and maintenance items have been growing at about 3 percent, Motherwell said.
"If you wait until later you're going to have to raise rates higher," Motherwell said.
The district will develop a detailed asset management plan for next year's financial report. That report will detail the age and end-of-life expediencies for equipment and allow the district to make a more precise budget for replacement and refurbishing equipment.
The board also heard a report from Brad Hammond, president of McGoodwin, Williams and Yates, on a a western transmission line that will bring water closer to the western cities served by Beaver Water District.
City representatives were unable to tell him exactly when they would need the line, Hammond told the board. The firm checked the proposed line for construction projects that may make it more difficult to construct in the future.
The line will cross Old Wire and Spring Creek Roads to follow the future 412 bypass. Both those roads are scheduled for improvement, but Hammond recommended the district wait and not put in the encasement for future lines while the ground was open. Boring underneath the finished road projects would give the district flexibility with the line size, precise location or depth in case city needs change in the next few years, he said.
The final project will take two or three years to build, plus time to design it and line out finances.
The financing goal for a major project would be to pay for 40 percent of the project from reserve, while not dipping into the $10 million set aside as fall-back reserve, Motherwell told the board.
The district's last bond issue will be paid off in 2023, accordign to report given to the board.
An auxiliary power project this year that is projected to cost $6.8 million is being paid for through reserve.
"Eventually we're going to have to sell bonds again," he said.
NW News on 05/22/2015