Starkville will increase water and sewer rates and adjust its rate structure to help fund more planned infrastructure upgrades, a long-term project that started two years ago.
Nelson McGough, a research technician at the Mississippi Water Resources Research Institute within Mississippi State University, presented the board of aldermen with four rate structure options at its Friday work session. The board will consider the options and choose one at a future meeting, though not on Tuesday.
“One of the things we committed to two years ago was moving (the rates) so we could begin the infrastructure improvements and maintain them, so this board and the next board and onward seeks to take care of the infrastructure that’s going to keep on aging,” Mayor Lynn Spruill said.
The city’s initial rate increase in September 2018 began raising the money required to replace aging water and sewage pipes in Pleasant Acres, Green Oaks and Rolling Hills, the neighborhoods Starkville Utilities general manager Terry Kemp said generated the highest volume of calls for repair work in 2018.
The $1 million Pleasant Acres project is recently finished, several months later than originally planned, and the city is starting the $2.4 million Rolling Hills project.
The current rate structure brings in more than $6 million per year, even with the drop in usage after several MSU students left town during the COVID-19 pandemic, McGough said. Each of the four new structure options he presented would bring in more than $7.5 million per year. Two of them would keep the base rate at $8 — $4 each for water and sewer — and the other two would increase the base rate to $9 and $10 respectively.
The current variable rate — or the amount charged for every 1,000 gallons of both water and sewage use — is $3.25. The new structure options include a higher variable rate, ranging from $3.75 to $4.25.
The increases in customers’ water and sewer bills would vary based on how much water they use, except for one option, which would increase the base rate to $10 and the variable rate to $4.10. This option is “the most equitable,” McGough said, because it would create a 25 percent increase in all customers’ bills.
Ward 5 Alderman Hamp Beatty said the city should consider the fact that not all MSU students might return to the area next month as the pandemic continues, and the potential rate structures might have to be adjusted accordingly in order to still bring in the targeted revenue. McGough agreed but said he “would estimate that it wouldn’t change that much.”
Additionally, although businesses everywhere have taken a hit and some have closed due to the pandemic, “brands that are ideal for Starkville are showing an interest” in the city now that more real estate is available, said Jennifer Gregory, downtown strategies president at the retail development firm Retail Strategies.
The firm is based out of Birmingham, Alabama and has overseen Starkville’s retail recruitment since February 2016, and its contract includes providing regular updates to the mayor and aldermen.
“Starkville is an attractive market, and we feel really good about being able to backfill existing vacancies on the commercial corridors,” said Gregory, who is also a former CEO of the Greater Starkville Development Partnership.
Retail Strategies has been advertising vacant spaces such as the former Payless ShoeSource and the soon-to-close JCPenney, both located at Starkville Crossing on Highway 12, and the former Mugshots location on Main Street. Starkville’s weakness in real estate is high land prices, but Gregory said the market is currently “a tenant’s market” regardless.
Tenants consider parking availability, traffic, neighboring businesses and visibility from the main thoroughfares when choosing a location, and drive-thru lanes and outdoor dining have become increasingly important to potential tenants due to the pandemic, she said.
Some nationwide businesses — such as GameStop, AT&T and Tuesday Morning — have closed some stores but have chosen to keep their Starkville locations, Gregory said. Other businesses have signed new leases in Starkville, though Retail Strategies cannot announce which ones, she said.
“I know that you guys are worried about sales tax revenue, and rightly so, especially looking at additional closures, but we feel like Starkville is in a perfect spot to attract tenants that you want,” Gregory said.
Tess Vrbin was previously a reporter for The Dispatch.
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