Tue09162014

Last updateThu, 19 Nov 2015 8pm

   20140901MetroCastweb

Public hearing to lower tap and raise usage fees

Colonial Beach Town Council will hold a public hearing  to raise water usage fees (Res. 629) and lower tap (hook up) fees (Res. 628).

If resolution 629 passes residents will see a $10 a month increase or $30 in their quarterly utility bills beginning September 1, 2012.

Residents outside the corporate limits will see a $15 a month increase. 

The town stands to gain approximately $240,000 in revenues for public works each year with the increase, which it needs for two major water and sewer infrastructural capital improvement projects. 

The first project is a mandated upgrade planned on the numbered streets which has been estimated at approximately four million dollars. 

The funding for that upgrade is being provided by Rural Development, a division of USDA. An additional two million dollar loan is expected, to complete this portion of the upgrade by the end of fiscal year 2013.

In order to receive funding from other sources the town must show that the utility fund can not only sustain itself on fees collected but can show an increase in revenue that will pay for loans awarded. 

In a recent report of the town’s utility system budget, Ted Cole, Senior Vice President, Public Finance, Davenport & Company LLC laid out a financial picture of the town’s water and sewer department for council members at the regular meeting in June. 

Cole pointed out to council that a couple of things are going on. “The town is covering their operating expenses from current year revenues, after loan payments, a bit short.”

Cole also pointed out that the town has been billing the utility fund $100,000 each year to cover administrative costs for billing and other services. 

Cole outlined several recommendations for keeping the town’s utility system on track for regular maintenance and upgrades needed. 

One of Cole’s recommendations supports the ten dollar a month rate increase as well as looking at another increase a few years down the road. 

In order to receive loans and grants for water and sewer infrastructure upgrades the town must take certain actions to keep a good credit rating, just as individuals do. 

Some of Cole’s other recommendations include, ensuring that the utility fund can shows $1.15 in revenue (income) for every $1.00 of debt service (money borrowed). 

Cole also recommends building a reserve account and showing a balance between debt and cash. Debt in this sense refers to money owed by the town and cash refers to surplus after operating costs and debt are paid. 

In contrast to raising water usage fees the council also intends to hold a public hearing to amend Ordinance 628 which would lower the water tap fees from $4,500 to $2,250 as well as lower sewer tap fees from $7,500 to $3,750. 

Together water and sewer tap fees will go from $12,000 to $6000 for customers inside the corporate limits. 

The council is hoping to help jump start new construction by reducing the burden of high tap fees. 

Since new construction and hook ups have dropped drastically since the tap fees rose 3 years ago in 2009 the theory is that increased construction will generate more revenue in real estate taxes as well as water and sewer usage fees.

If passed the reduction in tap fees will be a huge success for Mike Dzaman and Jon Natelson, builders of Monroe Point Development, who have been trying for years to convince Colonial Beach Town Council that raising water and sewer connection fees (tap fees) would have a negative financial impact on the town.

 

Linda Farneth

 

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