City considers rate changes for water and sewer improvements


Jason Barrett, of the Mississippi State University Extension Service, discusses potential
changes to the city’s water and sewer rate structure, and how it could mean additional
revenue for the city. (Photo by Ryan Phillips, SDN)

By: 
RYAN PHILLIPS
SDN EDITOR

Starkville Utilities customers could soon see a slight fluctuation in their water and sewer rates as the Board of Aldermen considers changes to the rate structure to pay for improvements to the city’s aging infrastructure.

During Friday’s work session, Mayor Lynn Spruill and three aldermen heard from both Starkville Utilities General Manager Terry Kemp, who discussed target areas and Jason Barnett of the Mississippi State University Extension Service, who broke down potential changes to rates.

Ward 1 Alderman Ben Carver, Ward 3 Alderman David Little, Vice Mayor and Ward 6 Alderman Roy A’. Perkins and Ward 7 Aldermen Henry Vaughn did not attend Friday’s work session.

The issue of changes to the city’s water and sewer rates will be taken up at Tuesday’s regular Board of Aldermen meeting.

TARGET AREAS

Three of the oldest neighborhoods in Starkville will be the first beneficiaries of water and sewer improvements, with Pleasant Acres slated to be the starting point. This project would carry a roughly
$600,000 price tag, according to city estimates.

“We’re finishing gathering engineering data about Pleasant Acres, but our estimates is $600,000,” Kemp said. “It will effect about 100 homes.”

Kemp said Pleasant Acres represents the preliminary target area and he hopes to have more firm numbers in the next 30 days. He also hopes to begin work on Pleasant Acres this fall.

He did, however, say funding and the availability of the contractor would play roles in moving forward on the improvements.

Plans for each individual neighborhood call for the installation a new 8-inch water main in the neighborhood and running services from it, along with upgrading and replacing existing sewer mains.

Kemp said Green Oaks, which is about four times larger than Pleasant Acres, would likely be done in four phases and come at a cost of $2.4 million.

Rolling Hills would follow the completion of Green Oaks improvements and cost the city approximately $900,000.

When asked about the thought process in terms of which neighborhoods to begin work in first, Kemp cited call volume and frequency of infrastructure issues.

Ward 2 Alderman Sandra Sistrunk asked if the process in replacing aging infrastructure could be expedited, as opposed to a decades-long project.

“We have to deal with the funding piece, then have to see how we can manage,” Kemp said. “These are three places to start, but if we do that much infrastructure, it’s going to be a long, long
term commitment.”

Another issue mentioned when discussing a complete overhaul of the city’s water and sewer infrastructure were fire hydrants.

Kemp said his crews would have to look at recapping all of them in places where improvements are being made, to which Spruill urged that there should be a conversation had with Fire Chief Charles Yarbrough before making changes to hydrants.

Apart from the larger swaths of the city in dire need of improvements, Kemp said there were also smaller, more isolated pockets of infrastructure he would like to address.

This includes Scales Street, where Kemp cited problems with leaks in the water line.

After discussing the list of areas the city hopes to address, talk circled back around to funding.

“Looking at the working capital we have on hand, and even including that $1 million sewer grant, we might make it through Pleasant Acres on existing funds,” Sistrunk said. “But we’re not going to get any further than that.”

FUNDING IDEAS

Barrett presented data to the board that addressed the city’s consumption, current rates and how the city stacks up to comparable municipalities.

One proposed change is adjusting the city’s variable rates, or the charge per 1,000 gallons used after the base rate of $4 paid by customers for using city water. As it stands, the city’s variable rate
is locked in at $2.26 for most customers within the city limits. This put the city at a considerably lower rate compared to cities like Ridgeland ($3.70) and Pearl ($4.39).

Barrett’s hypothetical findings showed if the city raised its variable water rates by less than a quarter to $2.50, Starkville could net roughly $600,000 in revenue that could be used toward infrastructure projects.

Outside of the city limits, Barrett did say some customers who have city water services in places like Blue Field were charged $3.39 for every extra 1,000 gallons of water used, which he said could raise a possible need for a citywide uniform rate.

Barrett then discussed possible effects with customers.

“If you raise rates, there will be a small percentage of the customer base that may adjust their consumption down,” he said, addressing concerns that changes in variable rates could impact water usage. “The last study I saw, you would have to get close to $6 per 1,000 gallons to see customers truly adjusting their rates, so you’ve got some room to grow.”

Regardless of the amount changed to the city’s rates, Barrett said his analysis of audits shows the city is in need of increased funding to move forward with water and sewer improvements.

“Your audit already shows you’re not really making any money for capital improvements,” Barrett said. “I think it’s clear from historical audits that you need another million dollars of revenue per year and I think you’ve got room to move that’s still within an acceptable range.”

He then suggested if the board were to institute an increase, to wait until low consumption months to ease customers into the transition.

CITY LEADERS RESPOND

Ward 4 Alderman Jason Walker said following the presentation that he doesn’t think the board will unanimously approve a rate increase and said it is important for city leaders to be cognizant of the impact a rate increase could have on certain people.

“I think what is really clear is that as we have our aging infrastructure, we’re not going to be able to rely on just getting grants to help us do that,” Walker said of the approach to the changes. “The citizens of this community are going to have to help pay for that infrastructure and the most straight forward way to do that is with a rate increase.”

Walker did, however, say the amount of the increase is still open for debate.

“But what is not debatable is there is a need for some kind of increase in the rate structure to offset some of the aging infrastructure costs we have,” Walker said. “I think it was good and gives us a good jumping off spot to figure out how do we find a balance between raising rates and figuring out what we need to accomplish on a yearly basis.”

While absent from the meeting, Ward 1 Aldermen Ben Carver previously expressed his support for a potential rate increase to address the city’s infrastructure issues as they relate to water and sewer.

Vice Mayor and Ward 6 Alderman Roy A’. Perkins was absent from Friday’s work session, but told the Starkville Daily News he had not had the opportunity to hear the presentation with respect to the needed capital improvements needed to repair and meet the city’s infrastructure needs.

“I would like to be presented with his information and data and findings so I can make the best decision,” Perkins said. “It is very urgent we do have the proper infrastructure in place so we can provide the best water and sewer services that we possibly can.”

Perkins continued, saying he would prefer to look at the city’s budget and consider all the evidence before making a decision on how the city should proceed in paying for these immediate improvements.

Sistrunk said the board will have to decide if they want to make wholesale improvements and if they do, then the money will have to come from somewhere.

“Rate increases are just going to be inevitable,” Sistrunk said. “Even if they don’t want to do wholesale improvements to the water and sewer infrastructure, then it’s pretty obvious we’re not on a path that we can sustain for even minor repairs and that sort of thing.”

She then said water and sewer are enterprise funds, meaning only the people who use them are paying for them.

“If our water and sewer are out of commission for a couple of days, we’ll quickly find out that they are very near, if not at the top of city services people value,” she said.

Ward 5 Alderman Patrick Miller said he believes securing funding for the proposed improvements is vital to the city along with maintaining a working capital for Starkville Utilities so it can provide quality service.

“We want to do that at the lowest cost burden to the citizens as possible,” Miller said. “That’s always the end goal, but at the same time, we have to provide an enterprise.”

Spruill said she is sure the city will receive some backlash if a rate increase is instituted, but the needs are dire and immediate for the city’s water and sewer infrastructure.

She did, however, say she believes the board will have the stomach for a rate increase, even if it’s a slight one. After all, Spruill said the last change to the city’s rate structure came roughly a decade ago when she was still chief administrative officer for the city.

“I don’t think it will be a unanimous vote,” Spruill said. “I do think it will pass and I think people on the board who recognize it recognize it as a critical need. (Terry Kemp) was very clear, every day we get calls from neighborhoods for water leaks and sewer leaks, so it’s clear we have reached that point.”

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