Tyer Releases Rate Plan to Pay For $74M Wastewater Project
PITTSFIELD, Mass. — Mayor Linda Tyer is introducing a plan to raise sewer rates over the next seven years to pay for the $74 million wastewater treatment project.
The sewer rate increase will be particularly front-loaded with a 50 percent hike at the start of 2019, should the City Council approve the plan. That would raise the current rate to $362.34 per year -- an increase of $114.65 per year for a household with two toilets -- effective Jan. 1, 2019.
There is no proposed increase in fiscal 2020, a 15 percent increase in FY21, no increase in FY22, 12 percent in FY23, and then calls for no increases in FY24 and FY25.
By the end, the total bill for a household with two toilets -- which makes up the majority of the unmetered households -- the bill will go from $247.69 annually to $466.69 annually.
The meter rate will see the same percentage increase, going from $1.91 per 100-cubic feet to $3.69 per 100-cubic feet.
"My administration inherited this EPA-required wastewater treatment plant upgrade. It came without a plan for how to get it done or how to pay for it. When we came into office, we were headed down this path of potential violations of the EPA's requirements for us to do this upgrade and the potential for fines," Tyer said.
She later added, "we have built this plan and we are going to work this plan."
The city is well underway in getting construction going on the wastewater treatment plant, with the bids for general contractors expected to be opened next Wednesday. The city is under an administrative order by the U.S. Environmental Protection Agency to lower the levels of phosphorous and aluminum in the water coming out of the plant.
The consultants, Kleinfelder, crafted a design to do that as well as introduce a nitrogen optimization process as well -- a process the consultants say will likely have to be addressed in the future.
The issue dates back to 2008 when the EPA renewed the National Pollutant Discharge Elimination System permit and set the levels higher. The city fought the new levels in court but ultimately lost. In 2012, the city put $1 million toward the design and, in 2015, the EPA signed an order requiring the plant to be under construction by August 2018.
Most of the first half of this year the City Council spent many hours and late evenings hotly debating the project, particularly because of the cost it will have on residents.
"There has been what I would describe as misguided speculation, inaccuracies, fear tactics, all expressed in public spaces about the impact this essential upgrade to the city's wastewater treatment plant will have on ratepayers," Tyer said.
Money in that initial design allocation was eyed for a rate study, which Tyer said was done by Russell Consulting out of Newburyport.
"This is the big money. This is what everybody is so anxious about. How could we possibly be spending $74 million on an upgrade and not have our rates go up 8,000 times or 800 times or whatever scare tactic you want to use," Tyer said.
The consultants charted out where the city needs to go with the rates to cover operations, maintenance and upgrades over the next seven years, and presented a multitude of options.
Director of Finance Matthew Kerwood said the choice was made to front-load the rate increase more heavily to help build reserves in the wastewater enterprise account. He said the debt payments don't start until the construction is completed in 2021 so the rate structure is partly saving up to pay for the work.
"Part of the strategy is to building up some of those reserves and be prepared for when that actually does happen," Kerwood said.
The city has secured a $50 million loan through the state's Clean Water Trust Fund. That will carry a low-interest rate of 2 percent. In conversations with the state, Kerwood said the rest is also expected to come from a 2019 allocation from the same fund, with the same terms.
Commissioner of Public Services David Turocy added that there are additional ways some of that loan could be reduced to zero percent, but not all of it.
"It is federal money that is given to the state for these purposes. Every state runs it differently, some states do put out zero-interest loans and at one point Massachusetts did. But they changed the philosophy and now put it out at 2 percent and the idea behind that is the interest that is paid expands the pool of money available," Kerwood said.
The rate plan coincides with construction on the plant that is mandated to start by Jan. 15, 2019, following an extension of the order the EPA gave after the City Council begrudgingly approved the project. It is set to be completed by 2021 and the city is required to be in full compliance with its permit in 2022.
"We will have done the right thing. We will have upgraded our wastewater treatment plant to protect our environment but also have this infrastructure that will serve many generations for years to come," Tyer said.
Tyer said she recognized the effect that the increased rates will have on the citizens and highlighted her administration's move to an electrical aggregation program, lowering the property tax rate, and reaching an agreement with city employees to save the budget from substantial health insurance increases.
"We are always on the lookout for how we can save our citizens money," Tyer said.
Waterwater is only one part of the bill, however. The water rates are also going up in anticipation with projects, albeit at a somewhat smaller scale, for that system.
A water bill rate hike of 20 percent will be effective Jan. 1, 2019 -- raising the annual bill from $278.22 to $333.80 per year, or $55.58 per year. Future increases to the water bill aren't quite known because the project and timelines aren't fully developed.
"We know more on the sewer side. On the water side, we know what we don't know in that some of the capital projects on the water side are in outer years and depending on how we go, we may or may not do those projects, do them differently, or maybe not as large scale. There is still some work on the water side as to what we actually do for capital projects," Kerwood said.
The water and sewer charges are on the same quarterly bill. Residents can expect an increase in the price they pay each quarter to rise by $42.56 for both water and sewer. The percentage changes remain across the board for those with more or less than two toilets.
Tags: drinking water, sewer rates, treatment plant, wastewater,
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