I’d like to start this post by saying everything I’m writing is my opinion as an individual New Haven City Councilperson and resident. It’s not necessarily the opinions of the rest of the Council, the Mayor or anyone else at the City of New Haven.
An ordinance was introduced at Council on January 10th which would raise the water portion of your water/sewer/storm water bill by 30% this year followed by a 20% increase next year. The decision to raise rates was based on the repeated increases of wholesale water from Fort Wayne and increasing operating costs. We purchase our water from Fort Wayne as well as paying them to treat our sewage. The last time New Haven raised water rates was in 2011. In 2013, Fort Wayne raised the rates 19.62%, in 2014 another 5.87%, in 2015 another 5.7% and in December of 2016 we received a 36.2% increase. Overall, the combined increases since August of 2011 raised our wholesale water prices over 80%.
A study conducted by Financial Solutions Group, Inc. in December recommended a 50% increase to cover increases and keep our water utility sustainable. The City felt 50% was too large of an increase at one time and broke the recommended increase into two chunks. 30% to take effect April 1st, and another 20% the first of part 2018. Steve McMichael (City Council 5th District) proposed an amendment to the ordinance to keep the 30% increase, but to eliminate the 20% scheduled for next year until we can do further research. The amendment was passed 4-3. We felt that planning an increase a year out wasn’t necessary when we meet twice a month. We’re also hoping to figure out some ways to be more efficient and hopefully not need the second increase.
To pass an ordinance, it has to go through three “readings”. If an ordinance has a direct financial impact on residents, it has to have a public hearing. The first reading of the Water Ordinance was on January 10th. It passed 7-0 with the amendment to limit the increase to this year. The second reading will be on January 24th, the Public Hearing will be on February 14th, and the third reading on February 28th. The general public is always welcome at City Council meetings (2nd and 4th Tuesdays at 7:00) and I encourage you to attend often.
From my view, we really don’t have any choice but to pass this 30% increase. But even a 30% won’t solve all our problems. It won’t fully cover the increases in our costs, but will help us come closer to breaking even. We’ll still need to figure out how to operate more efficiently, or we’ll face another increase next year.
Last year, the City of New Haven spent $759,552.55 for our water from Fort Wayne. When you figure the 36.2% increase (effective now), that’s an increase of $274,950.00 over last year (figuring the same amount of water used). We currently have 5,657 water customers. If you take that increase and divide it among all the users, the most recent increase alone increases our costs $4.05 per customer – per month. Of course larger users will cost more, smaller users less. But $4.05 is the average cost increase. That doesn’t include any of the prior increases, or increases in labor, materials and infrastructure improvements.
A typical bill at our house (2,600 gallons) runs $15.51 for water, $1.09 sales tax, $56.14 for sewer, and $5.35 for storm water. That’s a total of $78.09. When I figure a 30% increase on water, it will increase our bill $4.65. There isn’t a whole lot left in that increase to cover previous water increases or increased operating expenses over the last 5 years.
I’ve been fielding a lot of questions from residents the past couple weeks, here are some of the legitimate questions and my opinions.
When will the water/sewer increases end?
That’s a very good question and unfortunately, there isn’t much good news. Water/sewer costs in general are going to continue to increase. In addition to the increases in wholesale water and sewer rates from Fort Wayne, the Indiana Department of Energy Management (IDEM) requires us to meet standards for waste treatment and eliminating discharges into the rivers. I don’t think water rates will increase greatly over the next few years, but sewage rates are going to be a problem. Fort Wayne is just starting their sewer separation project and we’ve heard estimates from $500 million to a billion dollars that they’ll need to satisfy IDEM requirements. That cost is going to eventually fall on their users. In addition to Fort Wayne’s increases, IDEM has required us to submit a plan to eliminate our overflows. Even with the sewer separation that we’ve already completed, the least expensive plan the engineers have come up with is over $10 million dollars. If you’ll read my previous post about Inflow and Infiltration, it describes the situation and what we can and must do. It’s not just New Haven seeing higher rates. Our rates are actually low compared to Huntertown and Hoagland. Fort Wayne has lower rates because of their scale. It’s easier to spread operating costs over the large number of customers they have compared to the smaller communities.
What else can we do?
Conservation is one answer. Since your sewer bill is based on the amount of water your household uses, the less water you use – the lower your sewer bill will be. High efficiency washing machines, low flow rate toilets, not letting water run, etc.
We’re going to take a hard look for efficiencies that the City can do to reduce costs. We’re proud of our people and the work they do, but we have to figure out how to make cuts. Everything is on the table.
What if we sold the water utility?
That’s a possibility. There are third party utilities and even Fort Wayne might be interested in purchasing the utility. There are good and bad things about selling the utility. The good would hopefully be lowering bills for our residents (again based on scale). The bad would be potentially losing control of future development in the city as well as the guaranteed quality of service to our residents. If we went down that path, we’d have to make sure the agreement protected New Haven as much as possible. Again, everything is on the table to look at.
What determines our water bill?
The water portion of your utility bill is determined by the cost of wholesale water from Fort Wayne, debt service on the bonds we have for previous water infrastructure improvements (currently $6,325,000), as well as labor, materials, and operating costs. New Haven has many older neighborhoods with failing infrastructure. We are committed to providing our residents with clean water and sewage no matter which neighborhood you live in. Those repairs and building out for future development are very expensive. The raw cost of water from Fort Wayne is less than 1/2 of your final bill. That’s why we don’t have to pass along an 89% increase which is what we’ve received since 2012.
Why haven’t we done small increases each year?
That’s a good question and I guess the best answer is nobody likes to raise rates – any time. It wasn’t until this year’s increases that the raise became critical. There has been less and less money available for improvements over the past few years, but we’ve gotten by. That’s not possible in the immediate future without at least the 30% increase.
I know this was long winded, but I hope I’ve answered some questions. Please feel free to respond with any other questions or comments. We’re doing our best to keep New Haven a great place to live, work and play. Unfortunately, sometimes that comes at a cost.