City Council votes for smaller-than-projected increase in water rates in 2013

11/20/2012 5:15 PM

11/20/2012 8:58 PM

Wichita residents and businesses will pay more for water and sewer in 2013 — but less than feared after a 2010 water fund crisis — under a new one-year rate plan approved Tuesday by the City Council.

The plan will raise residential rates by about 3 percent — $1.19 to $7.74 per month depending on use — and business and industrial rates by about 7 percent, said Alan King, the city’s public works director. That’s far below the 10 percent to 15 percent hikes projected in 2010 when city officials discovered a major shortfall in the city’s water fund.

Tuesday’s vote covered an increase only for 2013; projected increases beyond that still must be approved by the council.

The vote was grudging, with council members requesting a water and sewer utility public assistance program in response to the hike.

“We have to find a way to help those who need to eat first and pay their bills second,” council member Lavonta Williams said.

The 2013 rate increase will raise city revenues by almost $6.5 million, or almost 6 percent. Included in the plan is a two-year delay in growth-related capital projects to match city development trends, driven largely by the standstill in new housing projects, King said.

And public works staff has been directed to improve the water and sewer bottom line by 3 percent by reducing expenses and by growing revenue not related to rates. Staff will work to minimize energy, chemical and other expenses, and an ongoing five-year plan to automate and replace water meters around the city should increase revenue by providing more accurate readings, King said.

The 2013 rate plan is lower than 2011 projections because existing debt has been restructured, saving $9.3 million, and the city has seen increased irrigation because of dry summers, raising revenue in 2011 by $9.2 million more than estimates. City officials believe that the dry summer of 2012 also will produce higher-than-expected water revenues.

The new rate structure also reduces a gap between the rates residential users pay and what business and wholesale clients pay.

City staff said a cost-of-service study last year found residential customers pay about $2 more per month than it costs the city to provide them service, meaning they essentially subsidize other water customers. The new rate structure advances a five-year plan to phase out that differential, so residential customers face lower increases than the city’s business or wholesale clients.

New revenue is required to finance critical infrastructure projects and repair, including the expansion of treatment and supply capacity, King said.

Water main breaks around the city have been above national averages since 2010, King said. In addition, although sewer blockage reports are down since 2007, they remain 8.5 percent higher than national averages.

“What happens if we don’t approve a rate increase?” council member Jeff Longwell asked King. “Around town, I’ve been telling people that we’re almost forced to.”

“If the rate increases aren’t approved by the amounts we’ve talked about, then we’re going to underfund our renewal and replacement program ... and we’ll be creating some jeopardy for covering our existing debt and putting at risk the ability for us to invest back into our infrastructure,” King said.

Several council members expressed doubt about approving a rate increase, given the economy and financial pressures on their constituents.

Williams took that doubt a step further, asking City Manager Robert Layton to look into the mechanics of an assistance plan for Wichitans who can’t afford their utilities.

Williams said a check of United Way assistance requests revealed 799 utility assistance requests in one Wichita zip code that she didn’t identify from the bench.

“In another zip code, utility assistance was the highest-rated call,” she said. “That’s telling me we have a problem with utility assistance.

“People do have a problem with their utilities, with Westar seeking to go up and we’re going to increase as well. We still have a group of people on a very fixed income and at poverty level and below that live in each of our districts and have a problem with utility assistance.

“I have not in the past wanted to vote on an increase,” Williams continued, “but I know we need to do that. I can only do that if I have the assurance that we’re going to look at a feasible way to help those 799 people in only one zip code ask for utility assistance.”

Council member James Clendenin echoed those concerns.

“This is not a small problem in our city by any means,” he said. “We have pictures this summer in our city of people camping in their driveways because they can’t afford utilities.”

Layton committed to studying an assistance program, but was noncommittal about whether one can be enacted in Wichita.

The 2013 water and sewer rate discussions began in February, when the council reviewed nine different scenarios. Staff and the city’s advisory council developed a rate model, then sought public and council input in 14 meetings before Tuesday’s vote. The city has a decade-long plan to raise water rates; future increases will depend on the water department’s financial performance, King indicated.

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