Residents here will see their water rates increase for the first time since 2008, avoiding a worst-case scenario water fund deficit of about $98,750 at the end of next year and possible cuts to the department.
All but Councilman Ethan Reynolds were in favor of the increase that city officials say will initially help pay for leak detection and fixes on the city’s water mains, as well as increased maintenance of water infrastructure.
Residents will pay $6.78 per 1,000 gallons beginning in April through March 2014 and $7.28 from April 2014 to March 2015. The rate is currently $5.78.
Council approved the measure after a more than 45-minute discussion between council and staff — and a brief debate between Reynolds and Councilman Bill McIntire — over whether residents’ wallets or the city’s infrastructure would experience a greater loss as a result.
Reynolds said he felt an increase would harm the 33 percent who are on fixed incomes and the 15.5 percent of its population considered below poverty level. And he said a suggested plan of contracting out leak detection services, then possibly buying the same equipment, would be a waste of money.
“It kinda seems silly to pay for somebody to do it and then buy the same thing off of them later,” Reynolds said.
But City Service Director Howard Kitko and Finance Director Richard Sexton argued that the cost of doing nothing would be even higher.
The water department has hemorrhaged money the last several years through leaks, declining revenues and increases in the cost of doing business, they said.
“Over the last three years, we have been averaging a decrease in our revenues in our water fund of approximately $10,000 to $11,000 annually, or 1 to 1¼ percent annually, the last three years,” Sexton said. “At the same time, we’ve seen our expenses increase on average $30,000 per year. So, we’re actually losing about $40,000 a year.”
“We pump about 204 million (gallons) and bill for about 129 million (gallons each year),” Kitko said.
About 30 percent of water loss is to leaks and another 19 percent is through water services that aren’t metered, he said.
The cost to produce 1,000 gallons of water is $3.78.
Kitko said lessening revenues and increased costs have led the water department to do only about 50 percent of the proper upkeep to its aging wells, 7-year-old water treatment plant and its nearly 80-year-old water lines.
At the end of last year, council approved a $30,000 transfer to the water department fund from the city’s contingency fund to keep the water department out of the red, Sexton reminded council.
After leaks are found and fixed, the department would then be able to focus extra revenues on upkeep and maintenance of city wells and the water treatment plant, according to Kitko.
He said regular cleaning of a well costs about $18,000 to $20,000 every 5 years, according to the Ohio EPA, and that if one well goes down, the cost to drill a new one would cost between $140,000 to $180,000.
He was also concerned about the health of two wells, one that’s been high in iron and another that’s had a decrease in production.
Councilman Mike Lowrey asked what would happen if the city waited to pass a rate increase until after Tecumseh’s levy goes to voters.
“If my well breaks down, I don’t know what we’re going to do then,” Kitko responded.
More revenue would also allow for installation of automated meters that would be able to read remotely and help customers keep track of their water usage on an hourly basis, Kitko said. That would help customers pinpoint reasons for heavy water usage and detect leaks earlier rather than on the current 30-day cycle.
Those meters would also decrease the department’s man hours spent to read them by hand. It currently takes the three employees a week to read customers meters, he said.