Eureka Springs city council staged a public hearing regarding a proposed increase in sewer and water rates March 29 at the Auditorium. The six aldermen sat at a table onstage alongside Mayor Butch Berry and City Clerk/Treasurer Ann Armstrong, and they outnumbered the number of citizens eight to seven.
Berry explained the proposed increase would address the 2016 shortfall in the cost of sewer operations of $166,804. In addition, Berry intends to meet the bond covenant, which requires the city to recoup 123 percent of operational costs of the water and sewer systems. He said meeting the covenant has been a longstanding goal which the city has never accomplished.
The city paid $349,820 toward bonded indebtedness in 2016, so another objective of the proposal is to work toward eliminating two bond debts. Berry’s figures indicate, under his plan, one debt would be paid off in less than three years and the other in 2024, which would be three years before maturity. Accomplishing this would mean the city would be debt-free, and available funds could be refocused toward repairing the city’s water and sewer system.
Berry also maintained the proposal is fairly distributed, and asked for feedback from those in the audience.
Harold Myer said there were questions about the proposed rate increase Berry had not answered. He claimed the city should have enough money because sales tax revenue has increased by 25 percent over the past few years. He also asked how many of the new water meters were still not installed. He said he has heard rumors some large users still have the older, less reliable ones. He insisted the rate increases would not fix the leaky water pipes, but fixing the delivery system would help the budget considerably. So he wondered, “Where’s all the money going?”
Chris Fischer asked Berry to explain the tier system the city uses to set rates. Berry replied the rate structure is divided into three tiers based on consumption. According to Berry’s chart, users who consume up to 2000 gallons are in Tier 1. The second tier includes consumers of 2001-10,000 gallons, and Tier 3 is for those who use more than 10,000 gallons.
In the proposed plan, sewer rates would increase by 21 percent just to meet the requirements of the bond covenant. Water rates would not be increased at all, so customers who buy water but do not have access to city sewer would not pay for an increase in sewer rates.
Berry’s plan addresses reducing bonded indebtedness by adding an Infrastructure Improvement charge for each tier. For Tier 1, the I&I charge would be $5, meaning a net monthly increase in an average bill of $6.99 per month. For Tier 2, the I&I charge would be $10 meaning a net monthly increase of $15.63, and for Tier 3, the I&I charge would be $50 which would make the average net monthly increase $350.42.
Berry’s chart displayed on the onstage screen indicated the changes would bring the city into compliance with the bond covenant, meet state law requiring sewer rates to cover operational costs, provide an achievable schedule for paying off the debts, and fairly distribute the increase across all tiers.
Eric Knowles was not convinced. He stated, “Water and sewer rates based on tiers make no sense.” He claimed users in Tier 1, for example, must pay a rate for 2000 gallons used whether they use that much or not. He suggested the city figure out what a gallon of water costs. Add all factors expended for water together to get one sum and divide that number by the number of gallons sold in a year. He said his calculations indicate the city spends just under a half cent per gallon for water. For sewer rates, he said, “Sewer rates can be done similarly except the costs for the sewer system include an extra $277,800 each year to pay off the sewer bond. When added to the cost to run the system, the cost per gallon of water introduced to the sewer is just over one cent per gallon.”
He also said the I&I charge, which he considered arbitrary and made no sense, should be figured into the cost for water.
These three were the only citizens who spoke. In looking back on the public hearing, Berry later commented city staff had looked at several scenarios to come up with a final way to address bringing sewer rates into compliance with bond covenants and be equitable to the entire community, not just residents but upper-end users, and this proposal achieves his goal.
Mayor’s assistant Kim Stryker said there must be another public hearing because state law requires, when raising sewer rates, for the city to have an ordinance introduced before city council that establishes the proposed rates and for the rate increase to be published ten days before the public hearing.
Council held a special meeting Thursday afternoon, March 30, and set the next public hearing to be at 6 p.m., Monday, April 24, just prior to the regularly scheduled council meeting. Berry distributed the proposed ordinance, and alderman Terry McClung moved to establish it as the ordinance to be published and discussed at the public hearing. Vote was unanimous to approve his motion.
Alderman Peg Adamson moved to have the April 24 budget workshop, public hearing and regular meeting in the Auditorium. The vote on her motion was 3-3, aldermen Mickey Schneider, David Mitchell and McClung voting No, and Berry announced the motion failed for lack of a majority, so the workshop, public hearing and meeting will be held in the jury room on the second floor of the courthouse.