Imker wants redo on sewer rate hike
Several citizens Thursday night asked the Peachtree City Council to dissolve its Water and Sewer Authority in light of sewer fee hikes approved last week that will in many cases double the bills
of residential customers.
Mayor Don Haddix said while the city could take over management of the city’s sewer system in lieu of WASA, city taxpayers would still be on the hook for the $34.1 million in bonds that are scheduled to be repaid in full by 2027.
City Councilman Eric Imker noted that the average Peachtree City home pays $705 a year in property taxes for all city services including public safety and more, while WASA’s fee with the Dec 1 rate hike brings that average homeowner’s sewer bill to $540 a year.
“The WASA rate increase was about the equivalent of a 3 mill (property tax) increase,” Imker said. “... I guarantee you, had this begun when Photocircuits left, things would be much different now.”
Imker was referring to the Photocircuits production plant in the industrial park which closed in 2005. The company was one of the system’s largest customers, and sewer officials never were able to replace that revenue loss, sewer officials said.
WASA GM Steven Hogan displayed a chart showing WASA’s revenue peaking in 2004 at $6.9 million a year, but from 1999 to this year, operating expenses increased from $2.28 million to $3.41 million a year, leaving the authority short on funds to pay the annual dept service by $455,000 in 2008 and by $660,000 in 2009.
Instead, WASA officials said they used the system’s reserves to cover the shortfall.
The authority’s reserve funds took a further hit this year when WASA had to withdraw $1.1 million to serve as bond surety when the firm backing the bonds was downgraded from a AAA credit rating to a CCC rating, Hogan explained.
That put WASA’s reserves at about $1 million, and Hogan has recommended the authority not shrink them further.
Imker asked WASA to reconsider its rate increase and instead spread out the affect over the next several years with gradual increases, which he said should have been enacted beginning several years ago when one of the system’s largest customers, Photocircuits, shut its doors, causing a significant revenue loss for the authority.
Beyond appointing WASA members to five-year terms, the city council has no power over WASA as it is an independent authority, other than a restriction that allows Council the ability to deny any extension of the sewer system outside the city limits.
Imker said if WASA doesn’t revisit its new rate structure, he feels strongly that the four WASA members who voted for the increase “need not reapply” for their volunteer, unpaid, positions.
WASA Chairman Williams suggested that if the city decided it was best to dissolve the authority and run the sewer system itself, the WASA board would understand. He again pointed out that the WASA board consists of unpaid volunteers, and he also noted they didn’t enact the rate increase to be spiteful, but instead to be prepared for the future.
Some $27.2 million of WASA’s $34.1 million in outstanding bonds was issued initially to finance the acquisition of the sewer system in 1997 and the total grew in 2002 when $15.34 million was used to expand the Rockaway sewer treatment plant and build WASA’s new headquarters to replace its dilapidated temporary trailers.
The initial bonds to acquire the sewer system were refinanced in 2005 for $24.56 million.
WASA’s annual debt service payment of $3.24 million was cited as one of the top reasons for a need to raise the sewer rates, a move that will cause the majority of city residents’ bills to increase by $20 or more.
WASA Chairman Wade Williams said the authority has put off capital improvements for several years, but needs to re-start that program to prevent sewer pipe failures that could have a drastic affect on city residents.
WASA GM Hogan said that another reason for increasing the sewer rates is a provision in the authority’s bond covenants that it must have a 1.1 to 1 ratio of revenue available each year to “cover” the annual debt service payment. That ratio has dipped to 0.85 and 0.78 the past two years, according to WASA documents.
In addition to having some sewer pipe that is approaching 40 and 50 years old, WASA also maintains 35 pump stations, 24 of which have backup generators so they can work in case of a power outage. The system includes some 117 miles of pipes and over 4,000 manholes in the city and 2 water treatment plants which both discharge most of the city’s treated sewage into Line Creek. A portion of the city’s treated wastewater is discharged into Flat Creek.
WASA is currently treating an average of 3.3 million gallons a day while it is permitted to treat up to 6 million gallons a day.
The fee hike starts December 1, and was approved on a 4-1 vote of the city’s Water and Sewer Authority board last week.
WASA members, all of whom are unpaid volunteers, said the increase was necessary due to a drop in revenue over the past few years due to reduced water usage and also a practical halt to new development in the city and the sewer tap-in fees that come in with it.
The new $26 base fee, which will be paid by all sewer customers both residential and commercial, will solely pay for WASA’s annual debt service payment of $3.24 million. That will keep those funds from being paid for by the fluctuating rate payments, which are assessed based on how much water is used each month by all property owners in the city.
It has been noted that the City Council turned down a plan to extend the city’s sewers into Senoia which would have paid the city $3 million up front and $50,000 a month to provide 500,000 gallons of sewer service a day to Senoia. That revenue could have prevented this rate increase, several WASA officials have noted.
WASA this year also took a big hit on its reserve fund, having to cough up more than $1 million after the surety on its revenue bond had a severe credit rating drop, forcing the authority to self-fund the backing of the bonds. While the authority maintains that funding, it is set aside in a separate account and cannot be touched as a typical reserve fund could, officials have said.
Imker in his statement also criticized WASA for having astronomical sewer tap-in fees, which are charged for each new building that is attached to the city’s sewer system. Imker said lower fees could help spur small business growth in the city.
Imker also criticized WASA for allowing $70,000 in its budget for both merit and cost of living increases for WASA employees. In the past two years, city employees have gone without salary increases, and also social security pensioners have gone without cost of living increases, Imker noted.