A 30-percent hike in Eureka Springs water and sewer rates is a done deal, provided residents don't bring a petition for referendum challenging the new rate and bond ordinances. At least three members of the council predict a challenge is fairly certain.

The special meeting at which the two rate-hike ordinances and the $2 million bond ordinance were passed on a second and third reading Tuesday was preceded by a sparsely attended public hearing. Public Works Director Kirby Murray and Finance Director Diane Murphy made presentations.

Murray explained that progress has been made on reducing inflow into the city's sewer system, but heavy rains will still cause bypasses and occasional overflows at the sewage treatment plant. The city is under mandate by Arkansas Department of Environmental Quality (ADEQ) to stop overflows of sewage into the receiving stream. Fines and a possible ADEQ takeover of the system are threatened.

Per council's request, Murray reported on the cost of bringing the west end of the city into the sewer system. The west side uses septic tanks, though sewer connections have long been promised.

The cost of sewering the west side is estimated at $2,630,786 Murray said, up 27 percent from 10 years ago. Repairs to be paid for by the new bond issue do not include sewering unsewered areas of the city.

Murphy explained half the proposed rate increase will be used to cover increased operational costs and would be needed even if the city did nothing to repair the system. She countered comments by Alderman Kelly Simon at the previous meeting that a 1998 voter-killed $5 million sewer bond project would have required rate increases less than 30 percent. Rather, Murphy said, the increase started at 50 percent and stepped up to 100 percent.

"Is there anyway to earmark part of the property tax millage for sewer repairs?" asked Alderman Kathy Harrison. "A 30 percent increase in one year is a hard pill to swallow. Many residents are on fixed incomes."

Murphy said diverting existing millage is not an option and she didn't know if there's room to increase millage.

Bond attorney Dennis Hunt explained he had looked at a variety of finance techniques, and noted he would have recommended a sales tax increase, but because of low interest rates, bond companies are reluctant to use sales tax to secure bonds.

"User fees are the fairest way to go," said Alderman James DeVito. "I hope this will make people start thinking about conservation."

Alderman-elect Bill Ott suggested a surcharge on hotel rooms to pay for repairs, but was told that is not authorized under state law.

Alderman Kelly Simon noted a one-cent sales tax for two years would cover the costs. Murphy agreed but noted that would leave no room for a sales tax to support parks.

"Sales tax is already an issue in the city," DeVito responded. "We're talking about $5-a-month for most residents. Most wouldn't have a problem handling that. It's a Big Mac a month."

"This is a town of 2,000 that needs an infrastructure for 25,000," Simon said, suggesting tourists should bear more of the costs.

Suggestions were made to increase motel rates as an alternative.

Alderman Gayle Money said she knows the rate hike will be taken to referendum. "The people don't want a 30 percent increase," she said.

Simon said he wanted more options before passing the increase. City Administrative Assistant Kim Dickens said there are no other options and that the bond ordinance had to be finalized immediately or the deal was off. The council reluctantly approved with Simon dissenting.

Asked why the bond had to be approved Tuesday, Dickens said the 28-page ordinance had dates built in and if not approved, the ordinance would have to be modified and read in its entirety again.