Dothan's sewer rates to rise

Dothan Utility customers can forget worrying about the if and when. The only question to be decided is how much sewer rates will increase, and over what period of time.

Two public hearings on wastewater fee increases are set for 9 a.m. Aug. 11 in the city commission chambers and 6 p.m. Aug. 13 at the Dothan Opera House, but Mayor Pat Thomas said public input will not change what must be done.

“I expect it to be less controversial than the sales tax issue,” Thomas said at the conclusion of Tuesday’s city commission meeting.

“We are under a lawsuit from the Attorney General to improve right now,” said Thomas, referring to the city’s four-year quest to close the Beaver Creek Wastewater Plant, and expand the Little Choctawhatchee. Beaver Creek can no longer handle the flow and during rains, there is overflow, creating an environmental hazard.

“The state and federal authorities will demand our facilities meet their specifications. It will cost money. People can vent and say what they want to say, but this system will be paid for.”

The key issue is funding the estimated $45 million project. The city has put together a package of funding plans, including the use of $5 million of Stimulus money and the use of $10 million in State Revolving Loan Funds. The bulk of the project will be paid for with up to a $30 million bond obligation.

“Before we can finalize borrowing any money, we need to show we can repay that,” City Manager Mike West said.

The city’s wastewater treatment operation is another entity that has not paid for itself in some years; the shortfall burden has fallen to the electric department. Sewer fees have not increased since 1990, often because politicians feared they would be ousted from office.

The city, working with consultant C.H. Guernsey & Co., which recently completed a cost of service study, is recommending six increases over four years, with the first coming in September. By the fall of 2013, rates would nearly quadruple, going up $4.50 per 1,000 gallons of wastewater collected and treated.

It’s not quite as bad as it sounds, as Dothan Utilities Manager Billy Mayes and Finance Director Angela Palmer submitted a report showing the average wastewater bill would increase from about $6.30 today (based on 6,000 gallons of use) to about $10.80. When the full suggested increase of $5.55 goes into effect in 2013, the typical user’s bill would be $33.30.

As part of the study, Gurnsey & Co. put together a rate comparison that shows Dothan’s sewer rates are among the lowest in the state.

Dothan’s $6.30 rate on 6,000 gallons would cost Auburn residents $22.32. In Decatur, it would cost $15.64. Montgomery residents pay $39.12 while Phenix City charges $19.32 for the same usage. Enterprise and Ozark charge $11.22 and $19.17, respectively.

To pay for the new treatment plant, consultants have estimated revenue must increase by $9 million in 2010 and $13 million by 2012. It was also suggested a 2.85 percent incremental increase be included, tied to the Consumer Price Index, much like water rates are set up.

“We have to take action,” Mayes told commissioners. “We have been working on this heavy since 2004.”

“Because you have not had any increases,” consultant Jerry Smith said, “it has grown to be greater and greater losses every year. It has to be made up with some other funds. If you don’t have increases in the sewer rates, you are looking at nearly $14 million in losses.

Thomas said the consumer ultimately controls his cost. “This is directly tied to water consumption. Rates are going up, but you can affect your own pocket book by using less water and sewer. We want to have plenty of water for you and family and industry, but the less we use, the better off we all are.”

Commissioner Amos Newsome asked the city to consider spreading the fee increase over eight or 10 years.
“That is certainly an option and we want to have a hearing to hear diverse opinions,” Thomas said. “But we are moving forward and we must show a bonding agent we can repay what we are borrowing. That, more than citizens, will drive what this rate will be.”

Fees would be the same for residential, commercial, industrial, and recreation vehicle park and other customers.

2008 wastewater fees paid by customers: $4.9 million
2008 expenses including debt service: $10.9 million
Net loss: $6 million

History:
1988 rate: 97 cents per 1,000 gallons
1990 rate: $1.05 per 1,000 gallons
2009 rate: $1.05 per 1,000 gallons

Proposed increases:
Sept. 2009: $1.80
March 2010: $2.55
Oct. 2010: $3.30
Oct. 2011: $4.05
Oct. 2012: $4.80
Oct. 1013: 5.55