By Michael S. Hoey
CORRESPONDENT
The Delavan Common Council intended to send a message to the Walworth County Metropolitan Sewerage District by not approving its rate increases but realized the move would drain the city water utility’s fund balance.
Every member of the council opposed WalCoMet’s rate hike set to go into effect Jan. 1 but ultimately approved the increase to avoid having to use the reserve fund balance of the water utility to make up the difference.
Aldermen decided the city must pass the cost on to users because the bill must be paid. If users of the sewer system do not pay the increase, the water utility would have to and the taxpayers would end up footing the bill anyway.
Aldermen Gary Stebnitz and Jeff Johnson initially voted in favor of the rate increases – Stebnitz to begin a discussion about them, and Johnson, because he said there was not much choice.
“The cow has left the barn,” he said about WalCoMet’s decision to raise rates that must be paid by someone.
“By not approving it we are simply putting the tax payers in a stressful situation, and we are putting the water utility behind the eight ball,” he said.
Ultimately, aldermen agreed that not approving the increases would do more harm than good, and the council unanimously approved the rate increases.
Rate hike
While the city’s portion of the water and sewer bill will remain unchanged for 2013, WalCoMet’s rates will increase from 11.2 percent to 14.3 percent depending on volume of use, according to the city. Stebnitz, who serves on the city’s Water and Sewer Commission, said most residences in the city will see increases of 13.8 to 14 percent.
WalCoMet Commission President Dean Logterman and Commissioner Ron Henriott, the former mayor, disputed the city’s numbers.
“It is a misnomer,” Logterman said. “Those are strictly city-generated numbers.”
He said the commission works very hard to keep rate increases as low as possible, usually less than 5 percent. He said a double-digit increase is not attributable to WalCoMet.
“I don’t know where their numbers are coming from,” Logterman said.
Logterman said the increase may be coming from the city’s end for city-related costs. WalCoMet sends the city the invoice and how the city passes the charges on to the users is up to the city, Logterman said.
City Administrator Denise Pieroni said the city relied on information provided by its auditors from Baker Tilly.
“The auditors did the calculations, and we then adjusted the rates to cover what WalCoMet charges,” Pieroni said. “We did not change the city rates, period.”
Pieroni said the city had to catch up a little this year to cover WalCoMet charges from last year, but the city did not increase its rates.
City Utility Director Barb Stebnitz also said the city has not increased its sewer-related rates.
“The increase is for WalCoMet revenues to be designed to recapture the amount needed to pay for the WalCoMet billings,” she said. “In short, the monthly bills sent to us by WalCoMet are paid by the revenues generated by the amount received in the WalCoMet portion from our customer billings.”
Stebnitz said the city utility quarterly bills are separated into three components – water, city sewer charges and WalCoMet charges. The revenues from the WalCoMet portion of the billings pay for the WalCoMet bills to the city.
Stebnitz said she has invited representatives from WalCoMet to sit down with city representatives and the auditors from Baker Tilly this week to answer any questions about the city’s position.
Alderman Bruce DeWitt opposed the increase and encouraged residents to contact the two commissioners who represent the city on the WalCoMet commission –Henriott and Harold Shortenhaus, even though the rates have been set and cannot be changed. Henriott opposed the rate increases when the issue was considered but Shortenhaus voted in support of them.
Henriott said he voted against the budget that was passed Oct. 9 but not because he opposed the rate increases. He said the budget contained some other items he did not like, but he knew rates would have to be increase.
Henriott said he and Shortenhaus live in the city but do not represent the city like individual aldermen represent specific districts.
“We represent all the entities,” he said.
Increase opposed
“They shouldn’t raise the rates, especially in this economy,” DeWitt said.
DeWitt said the size of the increase is “ridiculous.”
“They pass a resolution and act like it is no big deal,” DeWitt said. “It is a big deal.”
Stebnitz agreed the WalCoMet commission does not seem to care what municipalities think.
Logterman said the commission is as straightforward as it can be and treats every municipality equally. Mayor Mel Nieuwenhuis also opposed the rate increases and said the council could make a very public statement by voting not to raise the rates charged to residents on their water bills. He said because the bills come from the city, most people will blame the city when they see the increases.
City Attorney Steve Koch said the city’s hands are tied by another government entity it has no control over. The increases must be paid either by water and sewer users or the water utility itself. The city has no say in setting WalCoMet’s rates.
The WalCoMet commission meets at 1:30 p.m. the second Tuesday of each month but will not meet again until after the new rates take effect. Residents are billed quarterly so will not see the increases until their May water and sewer bill.
Stenbitz said the city’s water and sewer commission tried to work with WalCoMet and provided some ideas about how to keep the increases down but the suggestions “fell on deaf ears.” Pieroni proposed spreading out the increases over a number of years by drawing from WalCoMet’s reserve fund.
Pieroni said the increases are a result of a major expansion done at the WalCoMet facility at 975 West Walworth Ave. a few years ago, before the economy fell. Pieroni said WalCoMet expected continued development and new user fees that never materialized to help cover the cost of the expansion. She said WalCoMet has made efforts to restructure debt in recent years and does other things to reduce costs.
“They are starting to hear the concerns,” Pieroni said. “There has been a change in how they are approaching things, but they have significant costs to cover.”
Commission responds
Logterman said WalCoMet has shown relatively stable rate increases in charges to the city over the past several years. The rate is expected to decline from $4.35 per 1,000 gallons treated in 2012 to $3.74 per 1,000 gallons in 2013. Logterman said those numbers are projections but had no explanation for how the city came up with 11 to 14 percent rate increases based on those numbers.
Logterman said rates have increased in individual categories but those increases cannot be added up to come up with the size of increase the city is claiming.
“Those numbers are used to factor data,” Logterman said. “You can’t just add them up – there are variances.”
Logterman said the important number is the amount WalCoMet invoices per 1,000 gallons and that number is projected to go down for 2013.
Logterman said avoiding rate increases altogether is difficult because of the lack of growth in the economy. He said WalCoMet expanded significantly based on projected future growth and connection fees that did not happen. Costs are going up as is the debt service because of the plant expansion.
Lower inflow of water to be treated because of two dry summers in a row has also meant less-than-expected revenue. In addition, the state has ordered WalCoMet to reduce phosphorous levels in the treated water that leaves the plant.
Logterman said the rates for 2013 were set at the commission’s Oct. 9 meeting. They could be changed, but he said he doesn’t see why they should be.
Logterman said the only legitimate solution is to raise rates. The only other option is to borrow.
“No government body wants to borrow more,” Henriott said.
Logterman said it is wrong to say the commission does not care what municipalities think.
“All the commission members are members of the communities,” he said. “We all pay the same bills because we all live in the district.”
“We are paying the same rates,” Henriott said. “Everyone is trying to be responsible.”
“As a rule we have been fairly conservative,” Logterman said.
As for spreading the increases over a number of years by using some reserve money, Logterman said WalCoMet’s reserve fund is running out, and the commission did not feel it was necessary to tap what was left. He said the commission has refinanced some debt in an effort to keep rate increases down.
Henriott said last year the city shifted the “fire protection” fee onto the water bill, a charge that had previously been part of property taxes, and listed it right above the WalCoMet charges potentially leading some users to believe the charge was a WalCoMet charge.
“We need to meet with them,” Henriott said. “We need to be sure both sides are comparing apples to apples.”
