Water and sewer users would face 9 percent rate increases next year under proposals from the heads of both departments, which are expected to be included in Mayor James C. Galie's 1998 budget plan due out Nov. 1.
City Administrator Anthony J. Restaino said under the proposed rates, which must be approved by the City Council, the minimum water bill for less than 20,000 cubic feet of water per quarter would increase $1.36 per quarter and the average bill by $2.72 per quarter.
The water increase would raise the minimum bill by about 10 cents per 100 cubic feet of water from $1.16 to $1.26. The quarterly bill for such users would increase from $15.08 per quarter to $16.44 for water only and from $38.58 to $39.94, for the combined water and sewer bill but without the sewer increase. The effect of the 9 percent sewer increase has not been calculated yet, according to Restaino.
The average water user would see his quarterly bill rise from $30.27 to $32.99 for water only and from $88.59 to $91.31 for the combined bill without the sewer increase. Rates for higher usage and for water consumed for residential or industrial purposes outside the city also would increase by 9 percent.
Restaino said the water rate hike is part of a six-year plan calling for percentage increases of 9, 8, 8, 8, 5 and 5, through 2003 to cover the debt service on the new drinking water treatment plant. Currently the debt service is being paid for with interest earned through investment of the first payments Occidental Chemical Corp. made to the city. Occidental agreed to pay $64.5 million toward the new $70 million plant over 20 years. The city is obligated to pay the debt service on the bonds borrowed to fund construction. Occidental made its first payment in 1995.
In 1998, the city will have to pay $4.2 million toward the debt service. Restaino said as of Dec. 31, there only will be $5.3 million left in the debt service account. And, without a rate increase, by the year 2000 the debt service account would be out of money. The proposed rate increases would raise about $500,000 in additional revenues each year.
"If we only increase 9 percent for the 1998 budget and 8 percent in 1999, 2000 and 2001 by the year 2002 the debt service account would be in a negative situation so we added 5 percent in 2002 and 2003. That should stabilize the account," Restaino said.
"If we don't raise the rates, that fund would be exhausted by 1999. We'd be in default of a bond payment," the administrator said.
The last water increase was approved in 1996 and raised the rate 15 percent for the water portion of the bill.
No long range rate plan has been established for the Sewer Department yet, but Restaino said he would like one.
The sewer fund balance is on the verge of being depleted due to two main reasons, he said. In 1995, expenses exceeded revenues by $4 million. Plus, the revenues generated by heavy industrial users is decreasing, in part because there are fewer industries and in part because the industries that remain are pretreating wastes on their own sites before they are sent to the city's sewer system.
Restaino said the city is trying to reverse the trend by marketing the plant to take in new waste streams in order to make up for the revenue losses. He said the city is marketing the plant to septic tank cleaners and industries here and in Canada that have to dispose of liquid wastes.
This year there was no increase in the minimum quarterly residential sewer charge of $23.50 for 1,300 cubic feet. But, the rate for additional usage over the minimum increased by 8 percent, or 15 cents, from $2.01 to $2.16 per 100 cubic feet. Officials said most residents don't exceed minimum usage. Sewer rates for industrial users are based on the amount and type of waste they discharge.