HOT SPRINGS -- The $17.73 monthly debt service charge that ratepayers inside the city pay to finance capital improvements that move the regional wastewater system closer to compliance with the Clean Water Act will increase by $6.75 over the next three years.
The new rate structure, which the Hot Springs Board of Directors adopted last week, will secure an additional $45 million of debt for capital improvements, one of the board's six goals for 2022. The new debt is in addition to $90 million of debt-financed improvements the city has made to its collection and treatment systems since entering into a consent administrative order with the state Office of Environmental Quality in 2008.
The city has asked the state to extend the agreement, which protects the city from fines but obligates it to make improvements that will get the wastewater system into compliance with the Clean Water Act. The agreement required the city to pay a $100,000 fine in 2008 for hundreds of sewer system overflows caused by the infiltration of stormwater in the collection system.
The city has said other wastewater systems under similar mandates have chosen to challenge them in court, but the city has chosen compliance as its way to get out from under the state mandate.
The $90 million of improvements made since 2008 shored up the Stokes Creek and Fairwood basins of the collection system. According to a letter that Crist Engineers, the city's utilities consultant, sent the city in July, the improvements helped reduce overflows from 18 per 100 miles of gravity sewer line to three per 100 miles.
The city said most of the additional $45 million of debt will shore up the collection system's Gulpha Basin. City Manager Bill Burrough told the board this summer that most of the debt will be used to upgrade the pump station on Catherine Heights Road.
Sitting at the low point of the Gulpha Basin, the station serves as a pass-through for more than a third of the regional wastewater system's flow. Prolonged, heavy rainfall often overwhelms the pump station, causing flow to come out of a nearby manhole. The city reported overflows of 65,000 gallons and 70,000 gallons from the manhole in February 2020.
The monthly debt service charge for residential ratepayers in the city will increase $2 next year and in 2023 and $2.75 in 2024, raising the charge to $19.73 next year, $21.73 in 2023 and $24.48 in 2024, according to the ordinance the board adopted Nov. 16.
The debt service charge for residential customers outside the city, where most of the city's more than 35,000 meters are located, will increase to $27.39 next year, $30.13 in 2023 and $34.05 in 2024. Three percent increases will be assessed for customers inside and outside the city in subsequent years.
The 2022 budget that the board adopted Nov. 16 appropriated $19.75 million from the wastewater fund for next year's wastewater expenses, including $2.67 million to service existing debt.
Last year's refinancing of $38 million of debt provided $17 million for capital improvements, most of which will be made at the Davidson Drive plant that discharges treated wastewater into upper Lake Catherine. The upgrades will expand the plant's 12 million-gallon a day capacity to 48 million or 52 million gallons, volumes the plant receives when runoff from prolonged periods of rain enters the collection system.