City water bills would increase up to 10 percent in 2018, with additional rate increases each year after that through 2022, according to a proposal that's expected to be approved at Monday night's Rapid City Council meeting.
The rate increases, which were considered at Tuesday's Public Works Committee meeting, would see the water bills of single-family residences rise between 9 and 10 percent in 2018 compared with 2017. From 2019 through 2022, the rates would increase about 8.5 percent each year.
For example, a household that uses between zero and 10 “units” — defined by the city as 100 cubic feet of water, or 748 gallons — would see an increase from $3.11 per unit in 2017 to $3.42 in 2018. For residences using between 11 and 25 units, the rise would be from $3.32 in 2017 to $3.65 in 2018. Water reclamation rates would rise annually by similar percentages through 2022.
City Operations Management Engineer Dan Coon said the majority of single-family residences use no more than 25 units per month in the summer and average about seven units per month in the winter. Water for irrigating lawns accounts for most of the difference between seasons.
Coon explained that the increase in 2018 was higher than the increases over the next four years because the city hoped to use the extra revenue to bolster its water utility reserve fund.
“We’ve just gotten to the point where we’ve depleted our reserves to uncomfortable levels,” Coons said in a Journal interview after the Public Works Committee meeting.
Since April, a committee composed of council members, city department heads, water division superintendents and HDR consultants have studied the operation, maintenance and capital improvement costs of the water utility services. Resulting from the study, the first of its kind since 2008, rates were then determined in an effort to cover the costs of providing water services and to gradually strengthen the city’s reserve fund, which has been slowly draining over the past few years to pay for infrastructure improvements.
If passed, the new rate structure would go into effect on Jan. 1. Rates have not been altered since 2013, when the five-year rate structure resulting from the 2008 rate study concluded.
Shawn Koorn, associate vice president of HDR Engineering, Inc., the consulting firm hired by the city to assist with the new rate structure process, said the new rates were “tailored specifically” for Rapid City.
“It’s looking at the specific costs to provide this service to each of the city’s customers,” Koorn said in a Journal interview. “It’s the actual cost of providing water and water reclamation services.”
Aside from the rate increases, the city council will also consider a policy Monday night for determining future water and water reclamation utility rates. A “comprehensive rate study” will be conducted every five years and if the city fails to meet this obligation, it will use the municipal price index, an inflationary index, to adjust rates to account for the increase in cost of providing such services. The policy also stipulates benchmarks for the utility’s various reserve funds.
During Mayor Steve Allender’s 2018 budget presentation in August, he said the city would be doing a review of its rates and fees for services provided by the city. Public Works Director Dale Tech said he did not expect any other rate/fee changes within his department in the near future but could not speak on any such changes to fee structures for other departments, including the City Attorney’s Office, Finance, Community Planning & Development and Community Resources.
The rate increases, which are included in a city ordinance, will be discussed at the council's Oct. 16 meeting. Per council rules, the ordinance must come before the council and be approved by a simple majority two times before it is formally approved. As a result, the earliest a final decision can be made would be at the council's Nov. 6 meeting.