Apr 4, 2013 - By Katie Roenigk, Staff WriterThe Riverton City Council voted Tuesday to raise utility rates for residents, approving a 4 percent hike in water fees and a 2 percent increase to sewer and sanitation rates.
Public services director Bill Urbigkit said the move amounts to a $2.30 addition to the average family's monthly utility bill.
The city is required to raise utility rates each year based on the national consumer price index, which was set at 1.6 percent this year, according to Urbigkit, who recommended rounding up to a 2 percent increase to sewer and sanitation fees.
He said the water fund has more capital demands, however, and would benefit from more revenue.
"We're in the middle of a project that is designed to build water supply and transmission of water for our community for the next 20 years, but that takes money," Urbigkit said, referring to the Riverton Water Supply Project in west Riverton. "It's a $9.2 million project currently, (and) the city has to come up with a 33 percent share of that. That's taxing our resources."
In addition, he said, the city water system's main booster station on Main Street near Fifth Street West is "limping along with a bandage and a crutch."
"It has to be rebuilt, bottom line," Urbigkit said. "So we recommended for water fund rates to be increased by 4 percent."
Two council members wanted to increase the fees for water and sewer services by 5 percent and 3 percent, respectively, but after discussion the majority of the council voted for a smaller hike. Urbigkit said the steeper increase would have added about $3 per month to local utility bills.
Councilmen Jonathan Faubion and Richard Gard said the more substantial hike would help retire some of the city's debts in the water and sewer funds.
"I think the city currently carries a significant amount of debt," Faubion said Tuesday.
Urbigkit pointed out that council goals indicate an interest in retiring debt service funds. He outlined some of the city's higher-interest loans that could be paid off through more increases to
"Particularly the water and sewer funds have debt service," Urbigkit said. "So we had suggested, if you wanted to try to retire those debts earlier, that an additional 1 percent in the water fund and 1 percent in the sewer fund could be increased in the rates. That would generate some money we could then designate to go for earlier retirement of debt, selectively choosing those debts that have higher interest rates."
One loan in the water fund carries an interest rate of 4.9 percent, and Urbigkit said that is the first debt he would like to pay off. The highest interest rate in the sewer fund is set at 2.5 percent.
"Obviously paying off the loans at 0 percent interest (comes) last," Urbigkit said. "And there's no debt service to sanitation."
Gard pointed out that money generated in the water, sewer and sanitation funds has to stay within those funds. He added that the city would save money by paying off the loans that otherwise would continue to gain interest.
"(This increase) would generate around $40,000," Gard said. "That could reduce those debts substantially and quickly to put us on good financial basis."
Urbigkit estimated the extra 1 percent in revenue in the water fund would have generated an additional $20,000 per year for the city. Riverton currently pays about $17,000 per year toward a $350,000 debt in the water fund, he said, so the increase would have doubled the city's annual payments.
"So instead of 20 years, you'd pay it off in 10," he said. "It does pay off. ... You'd save quite a bit of that interest money."
In the sewer fund, Urbigkit said the increase proposed by Faubion and Gard would have generated about $16,000 per year.
"We'd start applying that to a 2.5 percent (interest loan), a 20 year loan," Urbigkit said. "We would probably pay off that note in half the time."
Mayor Ron Warpness asked city clerk Courtney Bohlender whether she thinks Riverton carries excessive debt.
"I don't believe it is excessive debt," Bohlender replied. "I believe it could get into the uncomfortable zone quickly if we don't keep an eye on it. But I don't believe it's excessive at this point. ... We're already not incurring more debt, and we'll watch those funds closely."
Warpness said he has spoken with many residents who say they will stop watering their lawns if utility rates go up.
"I think given the economy of our nation and whatnot, this is a bad time for us to be taking or looking at those kinds of actions," he said. "In a person's family life, being debt free I think is a wonderful thing. ... In municipal life I'm not sure it's a reality."
Gard and Faubion voted for the larger increase, while Warpness and council members Eric Heiser, Mary Ellen Christensen and Lars Baker voted against it. Warpness also voted against the smaller hike, while the rest of the council approved the increase. Councilman Todd Smith was not present at the meeting.
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