It has been 12 years since its last rate increase, but if the Georgetown City Council signs off on it Monday, Georgetown Municipal Water & Sewer System (GMWSS) will increase its water rates 28.16 percent next year with gradual increases for the next four years. The proposal includes additional increases in sewer rates of 28.6 percent.
The GMWSS board approved the increases Tuesday, but because the utility is owned by the city, final approval must be given by the city council.
If approved, the new minimum rate will increase from $8.54 to $10.94 for the first 2,000 gallons of water in fiscal year 2020, which begins July 1.
Georgetown Mayor Tom Prather emphasized the rate increase is necessary because of existing infrastructure needs and anticipated needs down the road.
The water board struggled with imposing the rate increase, seeking information from multiple sources, eventually settling on a rate increase proposal that was most gradual in nature, officials said. GMWSS officials said even with this increase its rates are on the lower end of rates offered by other area utility companies.
GMWSS’s rate increase coincides with approval Tuesday by the Kentucky Infrastructure Authority (KIA) for a $3.5-$4 million loan at half percent interest for 30 years to build a sewer line up U.S. 25 to serve mobile home parks at Georgetown Mobile Estates. The KIA will forgive $1 million of the principle if certain criteria are made.
KIA finances complex infrastructure projects for cities and counties in Kentucky. The low interest rate was available because mobile home residents fell within a low-to-moderate income scale.
The sewer system for the mobile home parks is failing with raw sewage flowing into nearby water ways. The mobile home parks have been caught up in legal and financial difficulties and is now managed by a trust after an Atlanta bank foreclosed on the property. Since then members of the trust have met with city officials and a final agreement is “close,” Prather said.
While studying plans for the U.S. 25 sewer project, engineers discovered several necessary improvements to GMWSS’s existing system could be incorporated into the project, as well as creating the ability to expand GMWSS’s footprint within the city. GMWSS could bypass several pumping stations, which are expensive to maintain and are in need of repair, during the same project, officials said.
Although the projects are joint, GMWSS and the City of Georgetown must keep them separate because of the KIA loan and other guidelines. The U.S. 25 project for the Georgetown Mobile Estates will be fully financed by the KIA loan and agreements between the current managers and tenants of the mobile home park and the city, Prather said.
“Absent the principle forgiveness and the low interest loan, this project would not be financially feasible,” Prather said.
The total cost for the sewer project, including Georgetown Mobile Estates and that involving the existing GMWSS system, will be about $13 million. Officials hope to start on the two-year project this year, although a start date has not been set pending approval by the city council.
The increase in the city’s population and a need to repair and expand within its current system has made the rate hike necessary, GMWSS officials said.
“We can’t get around the immediate lift because of the projects we need to do in 2020,” said Chase Azevedo, GMWSS general manager.
GMWSS’s proposed rate increases for a minimum of 2,000 gallons per month:
—In fiscal year 2020, increases from $8.54 to $10.94
—In fiscal year 2021 increases to $11.77
—In fiscal year 2022 increases to $12.63
—In fiscal year 2023 increases to $13.49
—In fiscal year 2024 increases to $14.38
GMWSS’s proposed variable water rate for each additional 1,000 gallons of water:
—In fiscal year 2020, increases from the current $4.80 to $6, an increase of 25.02 percent
—In fiscal year 2021, increases to $6.41
—In fiscal year 2022, increases to $6.85
—In fiscal year 2023, increases to $7.28
—In fiscal year 2024 increases to $7.72
GMWSS’s minimum sewer rates are proposed to increase by 28.6 percent during the next fiscal year:
—In fiscal year 2020, sewer rates are proposed to increase from the current $7.82 for the first 2,000 gallons to $10.06
—In fiscal year 2021, increases to $11.02
— In fiscal year 2022, increases to $11.74
—In fiscal year 2023, increases to $12.42
—In fiscal year 2024, increases to $13.13
GMWSS’s variable sewer rate is proposed to increase 20.04 percent during the next fiscal year:
—In fiscal year 2020, increases from the current $5.58 to $6.70
—In fiscal year, 2021, increases to $7.18
—In fiscal year 2022, increases to $7.54
—In fiscal year 2023, increases to $7.88
— In fiscal year 2024, increases to $8.23
The proposed plan is based on the current GMWSS rate structure approach, with a fixed cost for a 2,000 gallon minimum bill and variable costs for 1,000 gallon increments after the minimum purchase. Like the two plans presented before it, this plan funded all projected expenses and critical projects through 2024.
The revenues used in the plan included all expected revenue for water except interest expense revenue. The revenues for sewer included only service revenue and connection revenue. Lines of credit, revenue bonds and temporary financing were maximized to minimize the rates.
The board unanimously favored the third plan over the two that were proposed before it.
“Nobody likes a rate increase but this may be a more palatable way to manage it,” said board member Glenn Williams.
The rate increases will continue to keep Georgetown at the low end of water and sewer rates compared to other Kentucky cities, GMWSS officials said.
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