Mississippi State University Assistant Extension Professor Jason Barrett talks to city officials during a Friday afternoon work session about potential water and sewer rate changes. The city is considering rate increases to help pay for infrastructure improvements to its water and sewage system. Photo by: Alex Holloway/Dispatch Staff
June 30, 2018 9:56:16 PM
Starkville's water and sewage rates will likely increase as the city undertakes a massive infrastructure replacement project.
On Friday, city leaders continued discussions of what those changes might look like at an afternoon work session in City Hall.
The city is looking to replace aging water infrastructure. While the entire program will likely see work stretching across many sections of the city, officials are focusing on three areas with the highest volume of repair calls -- Pleasant Acres, Green Oaks and Rolling Hills -- to get started.
In order to pay for the work, Starkville is almost certainly going to have to raise water and sewer rates. On Friday, Jason Barrett, an assistant professor with Mississippi State University's Extension Center for Government and Community Development, talked officials through what some changes in rates might generate.
Starkville's Utilities Department currently charges a base rate of $4 for service, then $2.26 for every 1,000 gallons used.
Starkville's water and sewage rates are relatively low, compared to cities of similar sizes. Barrett compared Starkville's base rate to Ridgeland, Vicksburg, Pearl and Brandon. Only Ridgeland's base rate is lower, and Starkville's rate of $4 is more than 40 percent lower than the average rate of $7.04 among that group. Starkville's sewage rate was similarly below average.
"If we look across the state and make the assumption that other systems of similar size and classification are seeing and doing and having to field the same things we field, they have adjusted rates to the appropriate level," Barrett said. "I wouldn't want to be the highest, but I definitely wouldn't want to be the lowest. And I think what y'all will see is you're some of the lowest."
Barrett said small changes in the water rates can lead to large shifts in revenue. Raising the base rate by $1 would generate about $124,000. Raising the variable rate -- the amount charged for every 1,000 gallons -- by 25 cents, would generate another roughly $273,000.
Aldermen will discuss possible rate changes at Tuesday's board meeting, through a decision at that meeting is unlikely.
The amount the city adjusts water and sewer rates could also depend on if officials want to protect low-use customers. For example, Mayor Lynn Spruill suggested maintaining current prices for the first 1,000 gallons so as to not put an extra burden on residents who may be living on a fixed income.
Should the city take that route, it would need to raise the variable rate 99 cents to $3.25 to generate an additional $1.4 million.
No money currently for investment
Pulling from audits for the last few fiscal years, Barrett said the utilities budget has been at a break-even level, with about $6.1 million in revenue and slight deficits evened out by capital grants or contributions. That doesn't leave room to reinvest in infrastructure improvements, he said.
"I think it's clear from historical audits, you need another million dollars or another million-and-a-half of revenue, per year," he said. "I think you've got room to move and still be in an acceptable range. ... If you go just across the county line in Columbus, they're charging ($5.25 or $5.50) for 1,000 over there with the same rate structure."
Spruill told The Dispatch the rate changes are a necessary discussion as the city continues to prepare for its infrastructure rehabilitation project.
She added that, whatever increases aldermen adopt, she'd like to do it all at once, instead of breaking it across a few years as suggested during the discussion.
"I think people would get tired of hearing us do that every year," Spruill said. "I think you go ahead an generate what you need for this initial request and requirement and then it's set for a period of time and there's some stability for that. But it's going to up to the board."
Starkville Utilities Department Director Terry Kemp presented initial estimated costs for the areas. Pleasant Acres, where the city is hoping to begin work as soon as this fall, would cost an estimated $600,000. That estimate, according to Kemp's presentation, includes 7,000 feet of eight-inch water main lines and 9,800 feet of eight-inch gravity main sewer lines.
Green Oaks is the largest project, and Kemp said it may be split into four phases. The estimated cost for work in the neighborhood is $2.4 million. That includes 38,500 feet of eight-inch water mains and 37,900 feet of eight-inch gravity sewer lines.
Rolling Hills falls between Pleasant Acres and Green Oaks, with an estimated cost of $900,000. The estimate includes 13,000 feet of eight-inch water lines and 13,500 feet of eight-inch gravity main sewer lines.
All estimates also include driveway repairs, manholes, service point relocations and other facets of the work.
Those three areas may take years to complete, and Kemp said they're likely just the first of a major undertaking that could take up to a decade to finish.
He said Starkville began installing and expanding infrastructure in the 1960s. At that time, he said, the typical lifespan for utilities infrastructure was 50 to 75 years. Kemp conservatively estimates at least half the city's infrastructure is nearing the end of its life.
"Realizing where our infrastructure is now, we're in that last 10 years, maybe," Kemp said. "There may be a push to see how fast we can get to some of that before it just fails -- we really don't want that to happen."
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