North Tahoe PUD adopts fee, rate increases
August 15, 2007
Residents within the North Tahoe Public Utility District boundaries may soon face a significant increase in monthly costs for water and sewer service starting in December.
The district’s board of directors on Tuesday voted unanimously to adopt the finance committee’s recommendation for rate and fee adjustments.
The directors said the rate hike is needed to pay for $2 million in annual water and sewer improvements in the district’s current five-year plan. A 6 percent sewer rate increase is scheduled for January, with a 4.5 percent water rate hike following a year later.
Before the new rates go into effect, the district must notify property owners of the adopted monthly fee increases and explain the reasoning behind the action. A public hearing to discuss the rate increases will be scheduled in October. The rate adjustments would not become effective until the public process is completed in December.
Faced with an aging water and sewer system, the district’s board and staff have reviewed the finance and rate structure for more than a year to assess the district’s ability to finance necessary improvement projects.
The board has approved a five-year plan that outlines various projects, including updating the sewer collection system, force main and pump stations, replacing water lines, installing additional water tanks and improving water treatment plants.
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“We’ve funded the projects that we’ve had so far, and now we’re looking [to fund] projects in the future,” said board President Lane Lewis at Tuesday’s board meeting.
Current rate and fee structures do not have the capacity to fund the projects in the five-year plan authorized by the board.
“This is to try to create a rate structure to fund subsequent five-year plans,” said board Director John Bergmann during Tuesday’s discussion.
State and federal mandates, such as the new air-quality standards, require other system improvements that would require additional funds.
Sewer rates have not been adjusted since 1991 and water rates were last reviewed in 1999. Rates have since become outdated compared to inflation and current construction and operating costs, according to the district.
Considering the district’s long-standing policy to “pay as you go,” the board is now looking to adjust fee and rate structures to accommodate existing needs.
“We feel that pipe in the ground is a constant that we should do every single year,” Lewis said. “That has to be incorporated into our rate structure.”
The board has set a target goal to replace $800,000 worth of water pipe line every year for the next five years, as well as $1.2 million each year in sewer system improvements.
“We’re going to evaluate annually where the areas of the district are that make the most sense and economic sense to move forward,” said General Manager Steve Rogers.
The board has also recently approved a $4.8 million water tank. The cost will be spread out over several years, and they will consider debt financing ” taking a turn from their “pay as you go” policy.
“It’s about time. The water lines do need to be replaced; they’ve needed it for years,” said Jerry Wotel, a Tahoe Vista resident. “They should have been fixing the grid all along.”
Wotel said he was concerned about the board’s accountability, questioning how much water pipeline will be replaced once the rates are raised.
“I’d like to know what good it’s doing, how much of a line replacement is being accomplished with this money,” Wotel said. “The longer you put things off, the costs keep climbing.”
At Tuesday’s meeting, Jeff Lanini said that the district would deliver the worth of what they will charge. If the projects merit completion, then the rate adjustments are warranted, he said.
Director Sue Daniels said at the workshop that she questioned whether the board’s past action has led them astray, leaving them with an overload of work today. Or if the district has made accurate decisions in the past, but is now attempting to do too many projects.
The board adopted a series of adjustments to water and sewer monthly rates and connection fees at Tuesday’s meeting. They also adopted a new water capacity fee for development or redevelopment exceeding beyond a single family residential unit.
Two new components will likely be added to both monthly sewer and water rates. The first being a system replacement fee to fund district improvement projects.
The second being a state- and federal-mandated program fee to fund projects needed to comply with government regulations.
An increase in user fee rates was also adopted ” except a 4.5 percent increase in water rates would not be adopted until January 2009, whereas a 6 percent sewer rate increase would be adopted this coming December.
Immediate escalation to the base water service fee was not proposed due to the implementation of the $20 water system replacement fee and the adjustment to a tiered charge, which kicks in if a user surpasses the allowed 6,000 gallons of water with the base fee.
Existing sewer and water connection fees were adjusted to $2,900 and $5,500, respectively. A connection fee is charged to hook up to the utility system.
A new water capacity fee component was also adopted to support specific projects needed to meet the demands of development or redevelopment beyond the standard single-family residential unit. The proposed fee is $8,394 per additional residential unit.