The Troy City Council held a sparsely-attended public hearing on the 5 percent sewer rate increase Wednesday at Troy City Hall, and discussed whether future rate increases may be needed in coming years.
The rate changes, which were enumerated in a letter that went out with May utility bills, are expected to take effect July 1, according to an email from Troy City Clerk/Treasurer Tracy Rebo.
The base residential rate will increase from $38.08 to $39.98. The base commercial rate will increase from $43.02 to $45.17.
The rate increase was recommended by the city’s auditor, Nichole Noonan.
On Wednesday, Rebo reiterated points from discussions with Noonan, which Rebo has referred to throughout discussions over the rate increase during past council meetings.
Rebo said that Noonan identified an insufficiency in the funds the city keeps to meet bond requirements.
In 2018, the city raised sewer rates by 5 percent after it was identified that the city’s 2017 net sewer revenues were $28,700 short of what was needed to maintain compliance for the loans that funded the building of the sewer around two decades ago.
“That’s still not enough to bring us into compliance, so we have to do another one,” Rebo said Wednesday.
According to documents Rebo shared, the annual sewer revenue for 2017 that fell short of compliance was $256,100. She projects that the ending balance for this year will be $268,000.
The result would be the sewer revenues falling almost $17,000 short of compliance.
“We’ve still got to get it up even more,” Rebo said. “But Nichole, our auditor, said that if we raise it up one more — another 5 percent — we should be in compliance.”
Troy Mayor Dallas Carr said that if the new 5 percent increase only generates a similar revenue increase to the 2018 increase, the city could still be around $5,000 short of compliance.
Carr questioned whether there would be the need in coming years to do another increase, adding that he felt that increase could be lower, such as 2 percent.
“We’ll see where we are at the end of this fiscal year,” Rebo said.
Rebo said that if sewer revenues are still not in compliance in 2021, they could revisit whether another increase is needed.
The revenues that were discussed are a net amount, and can be affected by costs of maintaining the sewer system.
Rebo said she also presented expenditures from the previous three years so the council could see what it has cost the city to maintain the sewer.
“And this year, we’re actually going to be — I predict — that we’re actually going to be under what we had appropriated,” Rebo said.
Wages and operating costs have been fairly stable, she said. The major difference this year was the $10,000 that came out of sewer revenues to help purchase a backhoe shared among the city’s departments.
Even without the cost of the backhoe, the city’s net revenues would have still been short of compliance for 2018.
In addition, Rebo pointed out that the city should consider having reserves on hand for major costs that may occur with the aging sewer system, such as if the liners were to rip at the lagoon or a blower at the treatment plant failed.
“The blower alone is $5,000. The light bulbs for the UV plant — $2,500 for 12 bulbs,” she said. “So, we have to consider putting money away too, for a reserve.”
However, Rebo said that it is entirely possible an additional increase may not be needed in future years, depending on whether costs for maintaining the sewer remain stable.
“If we can get people to pay their bills and do all that,” Carr said.