From The Longmont Times-Call (John Fryar):
Longmont’s city staff is recommending raising the city’s sewer rate charges by 3 percent next year, followed by 2 percent increases in both 2019 and 2020.
The City Council is to discuss the possible rate hikes during a Tuesday night study-session review of Longmont’s wastewater utility and that utility’s financial projections and needs.
The Department of Public Works and Natural Resources staff said in a memo to the council that the proposed rate hikes “will allow the utility to maintain its target debt service coverage and appropriately fund operational costs” of Longmont’s sewage collection and treatment system.
“The wastewater utility continues to experience cost increases that affect the utility’s financial outlook,” the staff wrote in that memo. “While staffing levels have been significantly decreased in the utility since 2000, resulting in annual cost reductions in excess of $2 million each year, operating costs have still increased by an average of 2.8 percent each year between 2006 and 2016.”
Major drivers of those costs included regulatory requirements that necessitated large capital expenses at Longmont’s wastewater treatment plant, the staff said, as well as flood-recovery and repair costs for the sewage collection system, the city staff said.
The staff also cited a need for “deployment of new metering technologies,” as well as climbing construction costs after the 2008 recession and what it said was an “aging wastewater infrastructure reaching the end of its life cycle.”
In order to pay for capital improvements to the city’s wastewater treatment plant and infrastructure, Longmont sold a total of $52 million in sewer bonds issued in 2010, 2013 and 2015.
Debt repayments from the wastewater utility’s budget fund have increased by $3.1 million a year because of those bond sales, the staff said, and the bond requirements include being able to maintain enough budget money to cover at least 110 percent of that debt.
As part of its adoption of Longmont’s 2017 budget, the City Council approved an average 3 percent increase in customers’ sewer fees that took effect this year…
Staff reductions, achieved after Longmont completed a 2000 water-wastewater strategic plan, “helped stabilize rates and provided more money for capital needs while service levels were maintained or improved,” the staff wrote.
However, “while staff has continued to maintain service levels, major cost drivers in the form of regulatory requirements, natural disasters, new technologies, increasing construction costs and aging infrastructure have impacted the utility.”
The City Council cannot make official rate-increase decisions during a study session but can direct the city staff whether to proceed with preparing a rate hike for formal council votes later this summer or fall.