Board to Vote on Possible Water and Sewer Rate Hike

The is planning to vote at its last meeting of 2011 on how much of a water and sewer rate increase will be implemented to help bring the fund back into the black.

At the board meeting Monday, Public Works Director Dave Heyden said the situation is dire.

“If we don’t act by Jan. 1, the actual fund will be at zero or in the negative by April 30, 2012,” Heyden said. “I am asking for a raise of some amount due to depreciation and the cost of capital improvements.”

Several different scenarios were presented to provide for a "step" increase so residents don’t see huge spikes all at once on their bills.

Among the proposals from village administration is an initial increase of 40 percent, which would represent a 24 percent increase on the total bill, because the increase would apply only to the village water and sewer portion of the bill.

For example, if a resident’s current bill is $50, it would increase to $62 by Jan. 1, according to Finance Director Al Zochowski.

A second increase of 15 percent then could be implemented on Sept. 1, and would represent an additional 10 percent increase in dollar amount to the bill.

A final increase of 11 percent on May 1, 2013, would be the last step increase for one possible scenario, and reflect an 8.5 percent increase.

Three other scenarios, according to Zochowski, would include an initial 35, 30 or 25 percent hike put in place by Jan. 1, which would directly correlate to the amount of increases implemented Sept. 1.

A final increase in 2013 would be the same under all scenarios, Zochowski said.

The village hired Trilogy Consulting to take a close look at existing water and sewer rates. In a recent presentation, consultants said there would need to be a total 69 percent increase to the village portion of water and sewer bills.

“Trilogy is trying to (help us) provide positive fund balances in the next two years, and then debt service would go down significantly; we currently pay $1 million in debt service each year,” Zochowski said.

“We are looking at slower raises that would be more palatable than an initial high raise at once,” said Mayor Suzanne Branding.

Heyden presented alternate increase possibilities during the Monday night board meeting.  

They include a 10 percent increase on Jan. 1, which would be an additional $1 per 1,000 gallons used by a household. Another proposal from Heyden was a 20 percent increase, which would be a $2 hike per month on residents' bills.

The proposals could bring $222,000 or $444,000, respectively, into the ailing water and sewer fund.

But those increases also would be just a start.

Heyden said an additional increase could be implemented on May 1, but he added that the amount could be determined after the first of the year when the fund is more closely examined to determine its viability.

"It is recommended that the fund have $1.5 million in reserves," Heyden said.

At the Dec. 3 committee of the whole meeting, trustees agreed they no longer want to utilize a portion of the non-home rule sales tax funds for the water and sewer fund.

That practice has come under scrutiny by a number of trustees in recent months, who have stated non-home rule sales tax funds should not be used to "charge back" to the fund for administrative costs.

“It seemed the consensus of the board was to not use NHRST funds, which would result in an initial 42 percent increase,” Heyden said.

Residents, however, would not see a 42 percent increase in their bills. For example, an increase of 40 percent to a resident bill actually would round out to be 26 percent more in terms of the dollar amount, or $2.60 per 1,000 gallons used.

The rate increase applied to the village portion of the bill representing water and sewer operational maintenance, would not apply to the Lake County treatment charge portion which is $4 per 1,000 gallons of use.

The water debt service retirement charge of 78 cents, along with 68 cents for sewer debt service retirement, also would not be included with the proposed increases. 

Both also are based on a per-1,000-gallon usage. If residents use 2,000 gallons, those numbers are multiplied by two.

The board did vote on Monday to allow Village Attorney Carlos Arevelo to prepare an ordinance for a final decision on the rate increase amounts to be decided at the Dec. 19 meeting.  

The increase, whatever the board decides it will be, won’t be seen until bills are sent out in early February. The village plans to mail residents a notification of the exact amount of the rate increase along with water and sewer bills mailed out by the end of the year.