A water and sewer study commissioned by the City of Soldotna has concluded that utility rate increases are necessary over the next five years to meet current and projected operation and maintenance costs.
The study, which was conducted by HDR Engineering, Inc. and cost the city more than $30,000, considered a multitude of factors -- Soldotna's future capital plans, necessary infrastructure upkeep, and current water/sewer expenses and revenues -- before making a carefully calculated suggestion on how the rates should be adjusted.
Shawn Koorn, the associate vice president of HDR Engineering, presented the study findings to the city council Wednesday evening during a work session. He advised, based on his company's research, that water rates increase by an average of 2.5 percent and sewer rates increase by an average of 6.5 percent each year for the next five years.
The 2.5 and 6.5 percent increases established by the study are averages, meaning that some customers would hypothetically pay less or more than others. Koorn took into account how much more money needs to come in to maintain equilibrium between revenue and expenses and distributed the burden in a "fair and equitable manner" across the different customer classes, i.e. single-family homes, multi-family homes, duplexes, trailer courts, etc. Most residential homes are not metered and pay flat rates, which the study suggests should be adjusted based on the varied assumed usage rates for each class.
"This is their recommendation," said City Manager Larry Semmens, clarifying that this rate increase is merely a suggestion. "The city council is responsible for setting the rates.
"What we're going to do with this study is use it as a tool for going forward to evaluate our rate structure."
Semmens pointed out the water and sewer fund is projected to be $150,000 deficient in fiscal year 2012, and that he does intend to recommend that the council increase rates, but not necessarily by the amounts determined by the study.
A major reason for the proposed rate increase is to cover water and sewer maintenance projects, which were put on the back burner last year when other city improvements took priority.
"Last year's budget -- the year that we're in right now -- we had a number of capital projects going on so we didn't spend much money on maintenance," Semmens said. "We need to spend more money on maintenance in fiscal year 2012."
"It's just like your car," Koorn explained. "You can drive it forever without changing the oil, but at some point it's going to come back and bite you. Same thing with the utility infrastructure: you can put duct tape and Band-Aids on things for a long time, but pretty soon that doesn't work anymore."
Mayor Peter Micciche said the study would help Soldotna avoid the "horror stories" of some other cities, which due to poor planning experienced major increases every single year, outraging customers.
"We want to understand what it costs to run the system," Micciche said, "so that if we have increases they are small, incremental, based on facts and data, and not a shock to our voters when they come out."
Karen Garcia can be reached at email@example.com.
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