- Last Updated on Wednesday, 23 April 2014 00:00
- Published on Wednesday, 23 April 2014 00:00
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In Colonial Beach, the town’s sewer fund is currently losing money. The town council has been warned since 2012, but so far, the council has not taken action to rectify the problem. The 2012 council went so far as to raise water rates, but lower connection fees, resulting in user fees being used to subsidize the connection fees.
The cost to the town of installing a water connection is currently $41.00 more than the current fee charged to its customers.
Concurrently, sewer connections leave a positive balance, which is being used to fund the operation of the sewer department, when sewer usage should cover those operating costs.
Town staff is recommending that council increase the sewer user rate by $25.00 per quarter, while maintaining the current sewer connection fee for the next fiscal year and also recommends leaving the current water usage rate the same, but proposes an increase in the water connection fees by $1000.00 per connection.
Utility (water and sewer) funds are accounted for separately from the general fund budget since utilities should stand on their own and cannot be combined with the general fund.
Currently, the annual user fees for water is $289.00 and sewer is $550.80, which works out to quarterly billed payments of $210 per month.
The fees were thrown off balance by Council’s actions in the summer of 2012, when the sitting council heard a report on 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 a regular meeting during that time.
Cole pointed out to council, “The town is covering their operating expenses from current year revenues; after loan payments, a bit short.”
One of Cole’s recommendations supported a $10 per month rate increase, as well as looking at another increase a few years down the road.
The council did raise water fees by passing Resolution 629, setting a $10 per month, or $30 per quarter increase in utility fees, which took affect on September 1, 2012. Residents outside the corporate limits of town saw and increase of $15 per month.
With that increase, the Town was able to gain approximately $240,000 in revenues for public works each year, and the increase helped fund the water and sewer infrastructural project recently completed on the numbered streets in town.
However, in contrast to raising water usage fees, the council also amended Ordinance 628, which lowered water tap (connection) fees from $4,500 to $2,250 and lowered sewer tap fees from $7,500 to $3,750.
The council’s hope was to jumpstart new construction by reducing the burden of high tap fees, and they also caved to pressure from Mike Dzaman and Jon Natelson, Builders of Monroe Point Development, who had been trying for years to convince the Colonial Beach Town Council that raising water and sewer connection fees (tap fees) would have a negative financial impact on the town. The developers argued that construction and hookups had dropped drastically since the tap fees had risen three years earlier, in 2009. Their theory was that increased construction would generate more revenue in real estate taxes, as well as water and sewer usage fees.
Lead Auditor, Billy Robinson of Brown Edwards, cautioned the town council during the December 2013 annual presentation that the sewer fund was losing money and suggested a rate increase. Any excess from connection fees should go to fund capital improvement projects and equipment replacement for the water and sewer system.
Council has received a copy of the Town staff’s recommendations but have not discussed the matter in a public meeting.