City starts paperwork on higher water, sewer rates

Plan considers freeze for elderly, disabled

By Scott Aust, Journal staff | Tuesday, October 28, 2008

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Utility rate increases are on the way.

During a special meeting Monday, the Rapid City Council directed staff to begin drafting ordinances to implement a five-year plan for water and sewer rate increases. 

Much of the increase, about 9 percent per year, is designed to pay financing debt on a $135 million project to build two water treatment plants and upgrade the water distribution system.

To reduce the cost burden on those who live on fixed incomes, the council is considering a plan modeled after the state's property-tax related "Freeze on Assessments" program.

If approved, the city's program would freeze water and sewer rates for customers who meet age, income or disability criteria, such as having an income of less than $22,573 for a single-person household, or less than $28,217 for a multi-person household; being age 65 or older or disabled; and rent or lease a property or own a home with a market value of less than $154,950

On Monday, the council chose to finance the projects over a longer period to somewhat lessen the "sticker shock" of the rate increases. The new rates will be based on using revenue bonds with a 30-year pay back.

The city also is pursuing grants and other federal funds to help pay for the project. Some council members also have eyed using all of the next five-year round of the city's 2012 fund sales tax revenues. 

However, that projected infusion of $50 million would not lower rates significantly in the short term. According to the city's rate study consultant, the typical residential monthly bill in 2011 would be about 85 cents lower, with more savings in later years.  

It will probably be late November before the ordinances are prepared. When ready, the documents will require approval twice by the council at separate meetings before going into effect.

The project will bring Jackson Springs water gallery back online and replace the existing water treatment plant, which was built in the 1960s. Capable of producing 8 million gallons per day, Jackson Springs is a water source that's too large for the city to ignore.

Jackson Springs, which bubbles to the surface near the Cleghorn Springs fish hatchery, provided about half the city's water supply before it was shut down by the federal Environmental Protection Association in 2006 due to potential of surface water mixing with ground water.

Even without those projects, rates were expected to rise to cover the cost of inflation and ongoing maintenance of aging infrastructure, according to the city.

Contact Scott Aust at 394-8415, or scott.aust@rapidcityjournal.com