Wichita is raising the city’s water rates by 4.15 percent this year while grappling with how to minimize expected yearly rate hikes for the next 20 to 30 years.
The rates are rising now and in the future to pay for a new half-billion dollar drinking-water treatment plant and the cost of complying with new regulations for “biological nutrient removal,” a euphemism for getting more of the dirty stuff out of the sewage water before discharging it back into the environment.
The current water treatment plant is more than 80 years old. It’s plagued with minor problems already and is at risk of major failure in the near future, city staff has said.
This year’s increase will add about $2 to $5 a month to homeowners’ combined water and sewer bills, depending on how much water they use.
City staff had recommended a larger increase of 4.85 percent, although the council backed a smaller hike after comments from Mayor Jeff Longwell.
“We have almost 15,000 households in this city today that are paying over 50 percent of their monthly income just to put a roof over their head,” Longwell said. “We don’t want to put our community in a position — where many of them are struggling just to put a roof over their head — to burden them with higher ongoing utility bills.”
“And so when we talk about the impact that $3 or $1 makes, it can be traumatic to a lot of households,” he added. “We probably get more e-mails on a $1 water rate increase than we get on anything else.”
Longwell initially sought to put off the rate hike to continue to look for ways to pare down annual increases projected to be at least 3 percent a year until 2038.
He suggested it might be more equitable to spread the payback on the treatment plant and sewer improvements over 30 years instead of the 20 currently projected.
That, he said, could bring about more “generational equity,” in essence shifting more of the cost to future generations that will get most of the use out of the improvements long-term.
“We’ve got to pay for infrastructure and it probably should have been started 20 years ago,” Longwell said. “I get all of that, but I just don’t want to put that burden on one generation. We’ve got to figure out a way to balance our needs with the generation right now that quite honestly won’t see much of a benefit.”
City Manager Robert Layton cautioned that spreading the water and sewer debt payments over 30 years is “a two-edged sword.”
It would address the generational equity issue, but would also cost a lot more. Interest rates would be higher on 30-year debt than 20-year debt, and the city would pay those interest charges longer.
“We have to go in with our eyes open just understanding that the total cost will increase (if it’s spread) over the customer base for a longer period of time,” Layton said. “That I think is a great policy discussion to have.”
He said he wants to take the next year to go through the various alternatives with the council in workshop meetings so they can decide how much to raise rates and when, and what consequences would result from longer or shorter payback times.
In the meantime, he said the city could delay some borrowing scheduled for this year into 2020, reducing the need for an immediate rate hike. That, he said could reduce the increase from 4.9 to about 4.14 percent.
“We should be OK unless we have a significant emergency that would require a cash contribution that’s not anticipated,” he said.
The council jumped on that recommendation, rounding the overall increase to 4.15 percent.
”I can live with a one-year rate adjustment, although it’s difficult,” Longwell said..
Council member Cindy Claycomb said she could support 4.15 percent because the rate increase proposal had started at nearly 8 percent before staff and council members worked to pare it down.
She said she could vote comfortably “knowing we really worked to analyze that rate and bring it down for the ratepayers.”