- The Enterprise
- The Recorder
All Chesapeake Beach users of water and sewer will soon start paying for exactly how much they use after the Chesapeake Beach Town Council approved a universal, flat utility rate structure for fiscal year 2014 on Thursday night.
The flat rate structure charges sewer users $11.28 per thousand gallons of sewer used and $4.28 per thousand gallons of water used quarterly.
In a 4-1 vote, the flat rate structure was approved. Council members Valerie Beaudin, Jeff Krahling, Eric Reinhardt and Pat Mahoney voted in favor of adopting the structure, council member Bob Carpenter voted against it and council member Stewart Cumbo abstained from voting, citing that he was still unsure as to which rate structure he believed was best for the town.
The structure was included in the $5.3 million fiscal ’14 utility fund, which the council approved Thursday night.
Mayor Bruce Wahl said he is “very happy” to have a rate structure that will bring in enough revenue to cover the cost of operating expenses.
“While I don’t necessarily agree with what the four council members did, the fact that we have enough money to operate the system is very important,” he said during a phone interview Friday.
During the meeting, Wahl said “it’s clear [that] the sentiment is” to adopt the flat rate structure; “so be it.” Wahl’s main concern was making sure the rate structure met revenue targets “because we haven’t been there for several years,” he said.
“I think there’s going to be a lot of sticker shock when the first bill comes out … in September,” he added before the flat rate structure was adopted.
The original ordinance being considered for adoption was a utility rate structure that included a minimum bill for both water and sewer use with a separate charge for every 1,000 gallons used for all users.
Included in that rate structure was a charge of $7 for every 1,000 gallons of sewer used. The minimum bill for sewer use based on meter size included in the structure was $70 for those with a 5/8-inch meter; $96.25 for those with a 1-inch meter; $131.25 for those with a 1.5-inch meter; $166.25 for those with a 2-inch meter; $236.25 for those with a 3-inch meter; and $306.25 for those with a 4-inch meter.
All water users would have been charged $2.50 for every 1,000 gallons of water used. The minimum bill for water use based on meter size included in the structure was $30 for those with a 5/8-inch meter; $41.25 for those with a 1-inch meter; $56.25 for those with a 1.5-inch meter; $71.25 for those with a 2-inch meter; $101.25 for those with a 3-inch meter; and $131.25 for those with a 4-inch meter.
The minimum base rate for both water and sewer usage was calculated on the recovery of cost, which is the debt service and reserve funds for the utility fund, Wahl said.
During a public hearing held before the regularly scheduled meeting, town resident Randy Getman said the rate structure that included a minimum bill made him feel like the small-volume, residential users would be subsidizing the large-volume, commercial users. He gave an example that if a residential user uses 10,000 gallons of both water and sewer, their minimum bill is going to be $100 quarterly. If a large-volume user uses 800,000 gallons, their minimum bill for both water and sewer will only be $400.
“I don’t see the fairness and equality of this,” Getman said.
Wahl said all users would have paid the same rate for water and sewer use, and the minimum base rate was designed by equally dividing amongst all users the cost of the debt service and reserve fund.
“I cannot and will not support the mayor’s proposal, which includes a $400 annual membership fee plus” water and sewer rate charges, Mahoney said. “… This plan of the mayor’s has the majority of our citizenry very unhappy.”
Krahling made a motion to amend that original structure to the flat rate of $11.10 for sewer use and $3.51 for water use. Krahling said having a flat rate would allow anyone who wishes to “cut your water bills down” to do so by conserving water.
Several residents expressed their support of the flat rate structure during the public hearing.
“What you have come up with and what you have been out here supporting … in my opinion is brilliantly simple and brilliantly fair,” resident Joe Johnson said to Beaudin, Mahoney and Reinhardt.
Resident Charlotte Allison said town residents have been “paying a lot less” for their utilities than people in other municipalities “for a long time,” and she said the most important thing in adopting a new structure is for everyone to feel like they’re equal, which she said the flat rate structure does.
Cumbo said at previous work sessions a flat rate structure has been introduced with “wrong” numbers.
When the flat rate structure was introduced in May by council member Beaudin, it was presented as charging all users $9.65 per 1,000 gallons for both water and sewer usage. The numbers in the amendment made Thursday night differed from the original proposal, he said.
“I think that’s very unfair to present that type of plan to the town if the numbers aren’t accurate,” Cumbo said.
Council members Carpenter and Cumbo asked how the flat rates were calculated.
Beaudin said to get the cost for the sewer rate, she added the sewer expenditures, sewer debt, water expenditures, water debt and personnel costs, which were all included in the utility fund budget, and then divided that by what the town bills in usage. Using those numbers, she calculated a sewer use rate of $11.10 and a water use rate of $3.51 per 1,000 gallons.
“These base rates, as they are, would not cover all the costs to operate the system,” said town treasurer Leslie Porter. “The net capital costs are not being accounted for,” which Porter said is almost $250,000.
Wahl said if the structure was adopted with those numbers, it would create a shortfall of $22,293 in sewer revenues and $119,067 in water revenues.
With the addition of the net capital costs into the calculation, Porter said the sewer rate would be $11.28 and the water rate would be $4.28 per thousand gallons. Krahling then amended his amendment to include the proper numbers. It passed in a 4-2 vote, with Carpenter and Cumbo opposed.
“Again, tonight, we’ve been given erroneous numbers, and even when my colleague was explaining where the numbers came from, she left out $240,000,” Carpenter said. “… To operate a campaign with erroneous numbers is embarrassing, and it shouldn’t be allowed to stand.”
Carpenter said while he was happy “my colleagues moved their numbers to factual numbers,” the flat rate structure would not allow costs for debt service and reserve funds to be covered if the plant somehow “go[es] offline.”
“It’s not good government, it doesn’t make fiscal sense and the campaign that’s been waged, it’s not fair to our citizens,” he said.
Carpenter made an amendment to include a $25 per quarter administrative fee to cover the cost of people not using water or sewer but still being connected to the system and having a meter. He said there are about 160 customers not currently using any water or sewer. He said the administrative fee also would “address” the $15 bay restoration fee, which would still need to be billed to a “zero user” still connected to the system.
“We need to take that into account,” he said of the zero users. “If we’re looking for a fair system, it’s certainly not fair to the [2,000-plus] users to be subsidizing that 160 users for the cost associated with collecting the [bay restoration fee].”
The amendment failed, with Beaudin, Krahling, Reinhardt and Mahoney opposed. Carpenter then made an amendment to include a reconnection fee for users who do not use water or sewer for one year. He did not specify how much the reconnection fee would be. That amendment “die[d] for lack of a second,” Wahl said.
In other news, the council:
• Unanimously approved a $7.2 million wastewater treatment plant fund for fiscal ’14;
• Tabled an ordinance prohibiting farm animals within the town; and
• Introduced a new zoning map, which will be discussed during a public hearing at 7:45 p.m. before the next council meeting July 18.