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With the city's Water Department struggling financially, the Tonawanda City Council approved a measure Tuesday to increase water rates for residents by 5 percent over nine months.

The rate increase comes on the heels of last week's adoption of a $13.4 million budget for 2001, raising the tax rate by 2.82 percent.

The fate of the city's water supply has been in flux for several months, with city officials researching the possibility of outside companies providing the service.

According to City Treasurer Joseph Hogenkamp, the department, faced with deteriorating water lines and meters, is about $184,000 in the hole. Losses are increasing steadily.

Councilman Jack Gallagher said the losses are forcing city officials to increase water rates to break even.

"We don't have any option," he said. "This (increase) will maintain the department a little bit until we can look at the major problems."

Depending on how much water a resident uses during a three-month period, rates will increase to $2.86 per 1,000 gallons for less than 300,000 gallons used. Residents using more than 1 million gallons over a quarterly period will see their rate become $1.83 per 1,000 gallons used.

Mayor Alice A. Roth told Council members that proposals from agencies such as the Erie County Water Authority and American Water will be accepted until the end of September.

The Council hopes to make a final decision regarding the department's future by the end of the year.

The Council also approved a contract with URS Corp. to perform an environmental study on the deteriorated property at 153 Fillmore Ave. The study, intended to search for potential asbestos and other dangerous elements, is funded by a $75,000 brownfields grant from the county.

The property, currently owned by the defunct 1788 Corp., will be either condemned or foreclosed for delinquent tax payments before any work is done on it, according to Deputy City Attorney David Jay. Hogenkamp said the ultimate goal is to get the property back on the tax rolls.

"We want to see what the investigation tells us," Roth said of the study. "If there are no surprises, we will proceed."

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