Dan Lanning of Willdan Financial Services presented the results of his study on water and wastewater rates to the Winslow City Council last week. In his presentation, Lanning explained a 10-year plan for raising rates for Winslow utility customers. Currently, the costs to the customer for water and wastewater are comparable to other communities in the area but will increase.
“The last comprehensive rate study and long term financial forecast was completed in 2016,” Lanning said. The purpose of the study was to develop a water and wastewater cost of service plan to cover operating and capital costs and debt service.
“In the future, you are going to need at least a five to six percent increase in your rates in order to keep up with costs as well as to get maintenance projects, upgrade projects and expansions,” Lanning said. The study did point out that monthly water usage per residential meter has decreased since 2013 by 1,300 gallons, but is projected to increase by 0.2 percent by 2028.
The City of Winslow water and wastewater funds are in sound financial condition, according to Willdan’s study. Lanning said, “Your rates have been covering costs and there is a solid reserve fund balance. The city is also managing its debt coverage well.” However, as Lanning pointed out, factors such as inflation, a new debt from WIFA (Water Infrastructure Financial Authority) and population growth will lead to rate increases.
The WIFA debt is a result of a loan awarded to the city in the amount of $5.1 million for improvements and upgrades on sewer lines and manholes, among other infrastructure projects. According to City Manager Steve Pauken, “About three years ago, we initiated Phase One of the wastewater system rebuild which basically was some site improvements. That project cost about $1.1 million paid through available revenues.”
He explained that Phase Two was replacing machinery and equipment at the wastewater treatment plant; paid for through a bond initiative. “Phase Three includes rehabilitation and rerouting of a major sewer line.” The WIFA loan was acquired to help pay for Phase Three. Pauken added, “We requested financing from WIFA in the amount of $5.1 million and they have agreed to forgive $510,000 that we won’t have to pay back.”
Lanning said, “To avoid drawdown of water and wastewater funds, we recommend a five percent increase in wastewater rates in fiscal years 2019 through 2022 and a two percent increase in fiscal year 2023.” Increases are recommended for water services as well with five percent increases in 2019 and 2020 and two percent in each of the fiscal years 2021 through 2023.
Lanning concluded, “Higher than expected capital improvement project costs and unanticipated debt issues may require a need for future rate adjustments.” Water and wastewater customers in Winslow should expect a reflection of the initial five percent increase on their bills beginning in September of this year.
