FOREST CITY - The city's sewer fund is already in a hole that's going to get deeper if the city doesn't raise sewer rates, an engineer said at the Nov. 16 Forest City Council meeting.
Although the water fund is faring better, those rates also need to increase, said Bill Angerman of WHKS, an engineering firm from Mason City. The firm reviewed the city's water and sewer rates to determine if the city could adequately fund any future capital improvement projects.
"You need an average annual 7 percent increase in the water rates and you need an average 11 percent increase in the sewer rates to fund your capital improvement (projects)," Angerman said.
Residential, commercial and industrial users would all pay more if those rates are increased but the city needs to determine how much more each classification pays, Angerman said.
Angerman had three options for each rate increase for the council to consider.
The city can apply the 7 percent water rate increase more on volume use which would increase the rates of heavy water users such as Winnebago Industries more than a typical user. Or it could apply the 7 percent across the board between base and volume use. A third option is called base rate heavy where the base rate increases and the volume rate only increases by inflation.
The same options apply to the 11 percent sewer rate increase. One difference with sewer is Winnebago Industries has its own wastewater treatment system and does not pay sewer rates.
Mayor Rick Skjeie said each of the options presented by Angerman would increase the typical user's monthly water rate by $1 and monthly sewer rate by $2.
The city's base water rate is $9.65 a month for the first 2,000 gallons and $2.71 per month for every 1,000 gallons. The base sewer rate is $2.50 a month and $5.60 a month for every 1,000 gallons.
If the city does not increase its sewer or water rates it risks depleting its sewer and water funds, Angerman said.
"With sewer you are spending more than you are taking in in revenue," Angerman said. At this pace, "The sewer fund goes to zero in four years," Angerman said.
"These are some big numbers we are talking about," Angerman said.
A small to medium sized project for something such as a repair in the wastewater plant can cost about $1.2 million, Angerman said.
The city will also likely need upgrades at the water plant which are not inexpensive, Angerman said.
"Without rate increases and if you take on any capital improvement projects, your water fund runs to zero (in several years)," Agnerman said.
If Forest City increases water and sewer rates, it's not alone.
Angerman said during the past eight years Iowa cities with populations of 5,000 and over have an average water rate increase of 9 percent and an average sewer rate increase of 9.4 percent.
"A lot of it is, (with water rates) there are no grant dollars available, Angerman said. In the 1950s through early 1990 many upgrades and new water plants were paid through federal and state grants, Agnerman said.
Forest City's water and sewer rate increases are significantly lower than 9 and 9.4 percent.
"You've had a 4 percent (water rate) increase over the same period, Angerman aid.
The city's sewer rate increase is 1.9 percent.
"That's a double edged-sword, Angerman said of the 1.9 percent.
It's a low rate but on the other hand, the city must consider if it should have been increasing those rates more each year, Angerman said.
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