MONROE - The Common Council voted 7-3 at its meeting Monday to increase city water rates by an average of 16.1 percent, which includes public fire protection service.
The rate increase gives the Monroe Water Utility an annual increase in revenue of about $209,000, or a 3.5 percent rate of return on its investments.
Aldermen Thurston Hanson, Paul Hannes and Charles Koch voted against the 16.1 percent increase.
Alderman Mark Coplien made the motion for the 16.1 percent rate increase, as a "happy medium" he was looking for between a rate increase and the utility's revenue increase.
The rate increase puts the utility in a difficult position.
The council postponed until 2011the reconstruction of 8th and 9th streets, which was planned for this summer, in order to include a total replacement of water mains in the project that run from 7th Avenue to 20th Avenue. The council will require the utility to replace all the mains at a cost of about $550,000.
The utility had planned to replace only part of the water mains, at a cost of about $181,000. That cost was included when it applied to the Public Service Commission for a 29 percent rate increase, and an annual revenue increase of $382,246. The Public Service Commission authorized the city Feb. 17 to have a 29 percent rate increase, for a 6.5 percent rate of return.
The rate of return is based on the utility's investment in facilities and equipment.
Monroe Mayor Ron Marsh told council the full rate increase was set to cover current expenses, emergency purposes, future debt, property taxes and current bond debt.
Water Utility Supervisor Mike Kennison said potential problems for the utility include well problems, metering system replacement, and replacing three to four problem mains that have needed repairs every year.
"This increase would allow us to get in there and replace them instead of putting band-aids on it," he said.
Kennison said the utility is required to set aside $140,000 a year for depreciation and replacement costs.
The utility also has $1 million in restricted assets, required to cover bond payments. Marsh said that amount is a reduction from $1.6 million four years ago.
The utility currently pays over $300,000 per year on bonds, which will be finished in 2014.
At that time, the utility would be able to repay the city both principle and interest if the city would take out 10- or 20- year bonds for the utility to use.
The utility could make the city whole in the sixth year, Marsh said. "Mike (Kennison) could literally pay back the money in the sixth and seventh year."
Alderman Charles Koch made a motion earlier in the meeting for a 20.5 percent rate increase and $267,000 annual revenue increase for the utility. That motion was rejected 8-2, with only Koch and Keith Ingwell voting for it.
Hanson said all the rates of return being considered, from 3 to 6.5 percent, were too high, and wanted a 2 percent rate of return, resulting in about 10 percent water rate increase.
"The lower the better, he said. "I'm voting 'no' on all of these."
All future options for helping the utility will depend upon the next council because four seats, aldermen in wards 3, 7 and 9, and the mayor, will be up for election on April 6.
Also, the council members discussed the utility's need for the $200,000 it pays the city annually for property taxes.
Mayor Ron Marsh said the taxes had been relieved in the past, but in 2006 were reinstated to help the city pay for increases in employee health insurance benefits.
Council members agreed that relieving the utility of the taxes for 2010 was not an option, because the budget is already balanced, with the taxes being used as a revenue. The option of tax relief for the utility would have to wait until the next budget cycle.
"I would love to see the city weaned off the $200,000," Coplien said.
The rate increase gives the Monroe Water Utility an annual increase in revenue of about $209,000, or a 3.5 percent rate of return on its investments.
Aldermen Thurston Hanson, Paul Hannes and Charles Koch voted against the 16.1 percent increase.
Alderman Mark Coplien made the motion for the 16.1 percent rate increase, as a "happy medium" he was looking for between a rate increase and the utility's revenue increase.
The rate increase puts the utility in a difficult position.
The council postponed until 2011the reconstruction of 8th and 9th streets, which was planned for this summer, in order to include a total replacement of water mains in the project that run from 7th Avenue to 20th Avenue. The council will require the utility to replace all the mains at a cost of about $550,000.
The utility had planned to replace only part of the water mains, at a cost of about $181,000. That cost was included when it applied to the Public Service Commission for a 29 percent rate increase, and an annual revenue increase of $382,246. The Public Service Commission authorized the city Feb. 17 to have a 29 percent rate increase, for a 6.5 percent rate of return.
The rate of return is based on the utility's investment in facilities and equipment.
Monroe Mayor Ron Marsh told council the full rate increase was set to cover current expenses, emergency purposes, future debt, property taxes and current bond debt.
Water Utility Supervisor Mike Kennison said potential problems for the utility include well problems, metering system replacement, and replacing three to four problem mains that have needed repairs every year.
"This increase would allow us to get in there and replace them instead of putting band-aids on it," he said.
Kennison said the utility is required to set aside $140,000 a year for depreciation and replacement costs.
The utility also has $1 million in restricted assets, required to cover bond payments. Marsh said that amount is a reduction from $1.6 million four years ago.
The utility currently pays over $300,000 per year on bonds, which will be finished in 2014.
At that time, the utility would be able to repay the city both principle and interest if the city would take out 10- or 20- year bonds for the utility to use.
The utility could make the city whole in the sixth year, Marsh said. "Mike (Kennison) could literally pay back the money in the sixth and seventh year."
Alderman Charles Koch made a motion earlier in the meeting for a 20.5 percent rate increase and $267,000 annual revenue increase for the utility. That motion was rejected 8-2, with only Koch and Keith Ingwell voting for it.
Hanson said all the rates of return being considered, from 3 to 6.5 percent, were too high, and wanted a 2 percent rate of return, resulting in about 10 percent water rate increase.
"The lower the better, he said. "I'm voting 'no' on all of these."
All future options for helping the utility will depend upon the next council because four seats, aldermen in wards 3, 7 and 9, and the mayor, will be up for election on April 6.
Also, the council members discussed the utility's need for the $200,000 it pays the city annually for property taxes.
Mayor Ron Marsh said the taxes had been relieved in the past, but in 2006 were reinstated to help the city pay for increases in employee health insurance benefits.
Council members agreed that relieving the utility of the taxes for 2010 was not an option, because the budget is already balanced, with the taxes being used as a revenue. The option of tax relief for the utility would have to wait until the next budget cycle.
"I would love to see the city weaned off the $200,000," Coplien said.