Indian Hills officials are considering water and sewer rate increases to fund the state-mandated arsenic treatment program, as well as a depreciation allowance for maintenance of water and sewer capital improvements.
"This is something you are required to do," said Kim Borgzinner, engineer with Farr West, the consulting firm that prepared a rate study for the Indian Hills district. "The state doesn't set a limit on how much you must fund depreciation, but they emphasize you should fund 100 percent.
"It's cheaper to pay for projects now, rather than borrow in 20 years. It will save you in the long run," Borgzinner said.
Five options are being considered, each set to fund depreciation at a different rate. The Indian Hills Board of Trustees is considering option 4, which would accrue a total of $112,500 annually.
If approved, this proposal would raise sewer rates for the average consumer from $23.54 to $33.65 per month. Figuring an average consumption of 15,000 gallons per month, water bills would increase from $35.64 to $47.85.
The board set a special meeting for the end of July to consider the issues at 6 p.m. July 30, at the district board room, 3394 James Lee Park Road.
The average Indian Hills customer pays a base rate of $6.39 plus $1.95 per thousand gallons of water monthly. A flat rate of $23.54 per month per dwelling unit is charged for sewer service, according to Indian Hills General Manager Dennis Longhofer.
In past years, connections fees were used to subsidize operating and maintenance costs, thus keeping water and sewer rates artificially low. Those connection fees are supposed to be set aside for capital improvements, he said.
"We tried to set aside money for depreciation this budget year, but we weren't able to save much and our (utility) rates are so low we can't qualify for grants," Longhofer said.
Borgzinner said Indian Hills has a board of trustees who are showing an interest in maintaining the financial integrity of the district.
"To be eligible for financial assistance, the district has to show they are interested in properly maintaining themselves by setting aside money for future projects so they can provide matching funds (for grants)," she said. "Rate increases are always difficult, but it's in the best interest of the community to start setting aside those funds and the board is becoming aware of those (financial) requirements.
Funding 100 percent depreciation would be ideal, but it may not be politically feasible to implement such a large rate increase in one year, consultants Farr West said.
"It may be better for the district to set a goal to fully fund depreciation over a 5- to 10-year period," Farr said. "This would require the district to review rates annually and implement more frequent rate increases."
