Council set to review sewer rate options

The Cape Girardeau City Council isn't finished discussing sewer rates.

The council's annual retreat will provide an opportunity to vet sewer bills in light of an updated rate study.

The council uses its yearly retreat time to discuss projects, initiatives and budget planning. The daylong meeting, set to start at 8 a.m. on April 26 at the Osage Centre, also allows council members and city staff to present ideas and suggestions and receive feedback from one another.

City manager Scott Meyer said a main component of this year's meeting will be the presentation of a sewer rate study. The results could prompt a decrease in sewer bills for residential and commercial customers now that a major piece of the new wastewater treatment plant's construction is complete.

In 2011, 80 percent of voters passed two propositions that extended a quarter-cent capital improvement sales tax and authorized bonds to build and operate a new wastewater treatment plant and sewer line improvements.

The city determined a new plant was needed when it had to bring its more than 50-year-old plant into compliance with state and federal standards for untreated wastewater. The current plant also faces problems with capacity.

Sewer rates were increased in 2011, though not to the full amount allowable by city ordinance, to fund the ongoing construction of the $55 million plant and operations once the plant is completed next summer.

The flat fee charged to sewer customers is $13.19 per month, from $4.50 in 2011. An additional $3 per month is charged per hundred cubic feet of usage. The fee for water usage has been raised the full amount allowed, from $1.35 to $3.

With the wastewater treatment plant's foundation now finished, the city can better evaluate where to set rates, Meyer said. Jacobs Engineering of St. Louis, the firm that designed the plant, will give the council information to consider when looking at sewer rates, including estimating the remaining construction and future operating costs of the plant. A rate study done in 2010 shows total expenses were estimated to be $10,388,188 for the year 2015, which will be the first year the full cost of the operations for the new wastewater facility begin to appear in the budget. This includes all operating expenses, annual capital outlays and debt service for the wastewater treatment facility and the sanitary sewer maintenance division, the stormwater maintenance division and the levee system division, all of which are all funded by the sewer fund.

"I'm anxious to see what kind of savings we can see and pass on to the taxpayers in the form of reductions in water and sewer bills," said Councilman Mark Lanzotti.

Lanzotti said the city needed time before sewer rates were evaluated to be sure there were no construction issues with the foundation that would create a significant cost overrun, since the site sits on bedrock with varying levels of stability. The plant will be located on Southern Expressway adjacent to the city's public works building.

In 2011, the council based sewer rate increases on estimates of "worst-case scenarios" for design and construction of the plant, and, according to Councilman John Voss, assumed any additional revenue would go toward incidentals.

"We knew it was going to be a political gamble," Voss said of the council's 2011 decision on the rate, "but we said, 'let's lean in, and the couple hundred thousand dollars that we are going to collect is less money we have to borrow.' "

The latest available figures on sewer rate increases show the average residential cost increase at $19.38, of which $17.87 is charged for sewer and the remainder for water. For commercial customers, the average is $79.97, of which $67.57 is for sewer and the remainder for water.

Meyer said the council will evaluate if the rate should be lower based on recommendation from city staff and the estimates provided in the study. Council members have requested the study include rates charged by cities of comparable size.

"I'm hopeful we are able to adjust rates down for the long term," Lanzotti said.

Voss said he also plans to bring up an idea of sending customers a rebate that could come from revenue the city received from the first eight months of Isle Casino Cape Girardeau's operation. Lately those revenue have been coming in higher than projected.

City staffers have told the council that sewer rates can't be lowered by paying for the bonds directly with casino money since it isn't considered a stable revenue stream by bond issuers.

The city expects to receive at least $2.2 million before the end of the fiscal year, which is June 30.

"We've got extra revenue right now," Voss said. "It would be a one-month, probably one-time reduction in sewer costs."

Voss said if rebates are a possibility, he would like to see them disbursed at the end of the year to help customers pocketbooks around the holidays.

The council has had discussions at recent meetings of how casino revenue could be used to offer rebates to sewer customers.

So far the council has approved two sets of projects to be funded with the $2.2 million, at a cost of $714,000 and $906,000.

During the April 1 council meeting, Meyer told the council it would cost $204,000 annually to reduce each customer's bill by $1 per month for 12 months.

Councilwoman Loretta Schneider said she has concerns whether a rebate would actually matter to customers unless the rebate was a substantial amount when compared to their monthly bills. She said she hopes what the city can offer instead is a reduced rate based upon the results of the study.

Meyer said the council will not make a decision on changing sewer rates at the retreat, but likely will address changes in upcoming council meetings as the city formulates its 2014 budget. The city will hold a public hearing on the budget on a yet-to-be determined date in May and must approve it before July 1.

eragan@semissourian.com

388-3627

Pertinent address:

401 Independence St., Cape Girardeau, MO

1625 N. Kingshighway, Cape Girardeau, MO

2007 Southern Expressway, Cape Girardeau, M