Council considers raising water, sewer rates by 30 percent
The Eureka Springs City Council is taking action to prevent the city’s finances from going down the toilet.
On Monday night, the council voted to raise the water and sewer rates by 30 percent each. Mayor Butch Berry explained that the rates need to increase because the city’s proposed 1 percent sales tax was rejected by voters in November. Revenue from the tax would have been used to fund repairs and improvements to the city’s water and sewer infrastructure, as well as help fund operation of the Auditorium.
Berry said the city needs to raise water and sewer rates to catch up on its bond payments. The city will need to pay an extra 20 percent on each payment, he said, to get caught up. He presented the city’s 2016 and 2017 budgets, saying the city needed to increase water and sewer rates by 17.22 percent in 2016 to make the payments.
That number has jumped to 26.75 percent this year, he said. Berry said another alternative is raising the sewer rate by 67 percent with no increase to the water rate. Alderman David Mitchell pointed out both proposed increases wouldn’t go as far as the proposed tax would have, and Berry agreed.
“All of this is to meet the bond covenants as required. It’s got nothing to do with fixing our infrastructure,” Berry said. “It only does the bond covenants. It will not allow us to fix our water leaks or do any more than we’re doing now.”
Alderwoman Peg Adamson said both proposed increases are significant.
“That’s a whopper. Is it legal to raise it that much?” Adamson said.
Berry said it is.
“We can raise one. We can raise both. We can raise it half,” he said. “It doesn’t matter as long as it meets our bond covenants.”
Mitchell said he’d like to see how the proposed increases will affect residents and business owners in Eureka Springs. Knowing the percentage the rates will increase, Berry said, should be clear enough.
“This is easy. Whatever your sewer bill is, multiply that by 26.75 percent,” he said.
Alderwoman Mickey Schneider said she wanted to see a sample bill, too. She said finance director Lonnie Clark could draw it up.
“Why don’t we just ask Lonnie…to do a simple breakdown of the minimum bill and the increases so you can see a minimum bill will be $35 and do the various additions?” Schneider said. “Then we can see how much of an increase it will be. That would be so much easier. People could relate.”
Alderwoman Kristi Kendrick said the council had two options: raise the water and sewer rates by 26.75 percent or raise the sewer rate by 67 percent. If the council agreed to raise the sewer rate by 67 percent, she said, that would take a $9.50 bill to $15.90.
“My position is we just raised the water rates significantly and I don’t think it is fair to raise them again,” Kendrick said. “I think that we ought to just raise the sewer rates.”
Whatever the council chose to do, Mitchell said, it should do more than help the city meet its minimum bond payments.
“I’m still not too sure about the 67 percent increase in sewer, but …I’m for keeping it simple,” he said. “Instead of just a little bit here, a little bit there … let’s just fix it.”
Kendrick agreed, and alderman Terry McClung said he couldn’t support raising the sewer rate only. He pointed out that some residents don’t use the city’s sewer system.
“What you’re doing is you’re putting the burden on those who have sewer,” he said.
“I object to raising the rates on the water, because we just raised water rates and this will charge more for water than it costs to produce it … a lot more than it costs to produce it,” Kendrick responded.
Schneider said she’d still like to see an example of how the proposed increases would affect the average resident’s bill.
“I’d really like to see a couple of sample bills. I’d like to see those figures and how much it would matter,” she said. “At this point in our life, no, $6 or $7 is not going to hurt me. When we were raising six kids, hell yes, $6 would have killed us.”
Berry said the proposed increases could be up for discussion until everybody on the council comes to a consensus.
“All this is is throwing out for discussion and explaining to you guys the options,” Berry said.
Kendrick said she wanted to take care of the matter sooner rather than later.
“The longer this gets drawn out, the more serious financial position the city gets into,” she said.
“We’ve heard from our director of finance … I’m on my fifth year here, and I’ve heard it every year that we’re not meeting our bond covenants,” he said. “We thought we could put the meters in to hold them off. It’s probably time, folks, to step up to the plate and fix the problem.”
McClung pointed out that the proposed increases won’t help the water and sewer infrastructure.
“I think it’s wise to go up to a 30 percent flat rate to allow for contingencies. It’s like building a building. You always figure at least 10 percent contingency,” McClung said.
Mitchell concurred and moved to increase the water and sewer rates by 30 percent each. The council voted, unanimously agreeing to the increases.
The decision isn’t set in stone yet. The council will have a public hearing on the increases at its next regularly scheduled meeting 6 p.m. Monday, Feb. 27, at City Hall.