The Excelsior Springs City Council voted unanimously to pass the proposed rise in utility rates during their Monday, Aug. 5 meeting. The increases will take effect on Sept. 1.
Excelsior Springs resident Andrew Kowalski said he became interested early on in how the proposed rate increase would impact the community. He decided to use his science degree and love of finance to perform his own research on the matter.
He said the council inherited a significant challenge in City’s water and sewer infrastructure.
“It seems they’re trying to be more responsible than previous administrations by beginning to budget for past, present and future expenses,” he said. “However, the city council’s vote tonight to raise our combined water, sewer, and trash rates by approximately 17% pushes our rates to over 50% higher than a random sampling of 21 communities within a 40-mile radius. Rate increases alone are not a financially sustainable solution for our citizens.”
In the June 17 City Council meeting, Public Works Director Chad Birdsong said comparing communities can often be like comparing apples to oranges. He said one must also compare items including the age of the community’s infrastructure, needed improvements and population. Even in the case of a similar population, the numbers of customers must also be compared. He said he did not believe Kearney and Smithville have performed the federally mandated improvements and they will most likely need to raise rates in the future.
Jim Eldridge, the city administrator of Kearney, said in 2017, the city completed a rate study that recommended 20% annual sewer rate increases to occur for five years.
“Our Board was resistant to fully implement these recommendations, and we started with the first step (which combined with the water rate increase, was a combined 30% increase), implemented in Jan 2018,” Eldridge said.
Kearney did recently impose a 5% water and 5% sewer increase. Eldridge said the city will defer some infrastructure improvements and needed maintenance to conform to projected revenues.
Molly McGovern, Excelsior Springs city manager, said the increases come from operating at a loss which includes the bonding costs to pay for federally mandated infrastructure improvements in additions to preparing for ongoing maintenance future.
“Utility infrastructure is expensive and represents a current investment of $63 million in Excelsior Springs; long-term debt will be needed to finance capital improvements periodically, but we also must invest in rehabilitation of our existing infrastructure each and every year. This system is over 80 years old,” she said.
Also in the June 17 City Council meeting, Birdsong said in 2010, the city took out over $30 million in bonds to pay for infrastructure improvements to the sewer and water systems. He said this included federally mandated improvements to the water and wastewater plants.
As part of the requirements to receive the bond, Birdsong said the city underwent a rate study with a third-party agency.
Although the rate study predicted an increase in water usage, the City saw a 5% decline in water usage.
Also, some industries installed water-only meters, to measure their water consumption without being additionally charged for a gallon of sewer.
Because the City determined the rates based on the third-party rate study, they did not make enough money to make the debt payments and provide for future infrastructure improvements, McGovern said, and the City’s water and sewer departments lost money each year since 2011.
Kowalski said the numbers make it hard to argue the City delivers the water, sewer and trash services as economically as possible. Raising rates alone, he said, does nothing to address the costs of the services. A rate increase also does not address the past and current prioritization of non-necessities over needs in our capital improvements budget or overall city budget, he said.
“It’s hard to understand the apparent reluctance of some city leaders to propose, or even to consider, any options other than raising rates,” he said. “Some city leaders have said the capital improvements fund isn’t intended to be used for water and sewer infrastructure. However, in each of the past five years, city leaders proposed and approved budgets including capital improvements funds for sewer projects.”
Kowalski said the budgets simply do not include as many funds for the City’s infrastructure, as they have for what he said he described as non-necessities like the golf course.
McGovern said the City decided to invest in the golf course because of its potential to make money in the future. In addition to this, the City created a tax increment financing fund for the new subdivision and the new clubhouse. The TIF will take a portion of the property taxes from the sale of lots and homes, once built, to repay the money invested by the City. McGovern said the TIF will also use a portion of sales tax generated in the clubhouse in the same manner.
Kowalski said going forward, the City must solve challenges in a way that minimizes impacts to the residents.
“We owe it to our neighbors to seek better solutions that make our water and sewer systems fiscally sustainable without making water totally unaffordable for those who need it most,” he said. “Let’s challenge our city leaders to refocus future efforts on considering and proposing viable solutions, instead of attempting to dismiss them. It might not be the easiest path, but it’s the right one.”
McGovern said the City’s goals remain the same.
“I do not wish to sacrifice health over cost,” she said. “While this decision has been difficult to make, we remain committed to continue to deliver a qualify service at the lowest cost.”