MOUNTAIN VIEW — Mtn. View Mayor Charry McCann and city council members Calvin Perry, Ed Martin and Judi Colter held an open work session July 2 ahead of a public hearing regarding a program to improve the city’s wastewater system, which was held Tuesday this week at the Community Center. Alderman David Bauer was absent from the work session.
The hearing offered city residents an opportunity to hear about and weigh in on a loan for the wastewater system, plus a grant, to help bring the project to fruition. Watch upcoming issues of the Quill to learn more about the results of that hearing, held in advance of the city’s regular monthly council meeting.
The bulk of the July 2 work session was taken up with a review of city financial information and it was opened with a presentation by Horner & Shifrin engineering firm representative Ken Cates.
He, McCann and Operations Manager Eddie Owens had been working on the project for several months to get it completed under the assumption it had to go out to bid by early July, but now have time to address some of the issues and discuss what to do.
Cates provided figures and made suggestions for meeting the requirements for the city to qualify for $3.5 million in Missouri Department of Natural Resources (DNR) grants and a loan of a little over $3 million to make improvements to the city's water and sewer infrastructure.
To get the loan, as when a person applies for a bank loan, the city will have to prove it can repay it. After reviewing information, including Mtn. View water rates, it appears the rates have been in need of an increase for several years, and that increase will have to be a reality for the project to move forward.
A 20-year replacement fund is required by DNR, but Cates suggested to council members that it be thought of as an operating fund, or those funds put away annually to keep the water and sewer system functional, including equipment replacement.
A rates projection was provided for the next five, 10 and 20 years, taking into account keeping up with potential inflation and a yearly rates review will be required by DNR if the loan and grants are accepted. The city already participates in a yearly audit, and those results will also be required by DNR, Cates said.
Cates suggested writing into ordinance that the consumer price index (CPI), a gauge of what consumers typically pay for goods and services and the fluctuations in those prices and a tool to calculate how inflation is affecting those prices, be used to calculate future rate increases.
He emphasized the plan is a living document and can be adjusted, for example, in case another employee needs to be added later or equipment needs to be purchased.
In 2021 there was $337,150 in revenue and operating expenses were higher than that, so rates needed to be raised, Cates observed. That was also the case the next year and the next, 2023, was "not quite as bad," but it was nevertheless an indication rates had been too low anyway. There is a reserve of about $57,000 in the replacement, or operation, fund.
The first year of the loan repayment, if rates remained exactly the same and based on a 5% inflation rate, the city's water department budget would be drained from running on too thin a margin between revenue and what's needed to be socked away for a rainy day for replacement equipment and other expenses.
The current charge is $10 per first 1,000 gallons; $6 each additional 1,000 gallons (volume charge). It was suggested the volume charge be reduced to $5.41 per 1,000 gallons, but the minimum charge will be more than tripled to $32.17.
Using the example of the average Mtn. View water customer, Cates said there is about 4,164 gallons average use per month, and with the increase that would be $49.29 that month. Using a 5,000 gallon standard that would bring the monthly bill to $53.81 a month compared to about $34, the rate now.
"So that's a substantial increase, yes it is," Cates commented. In five years, with predicted inflation rates applied, would bring the bill to an estimated $63.63 for 5,000 gallons.
"The reason for that is because your loan has kicked in and your loan payments have kicked in then,” he explained. “Remember that thing about CPI and all that? That's all happening. too. So your rates are up to $63.63 in five years. And that's what it takes to pay this loan off and to get your system funded."
Alderman Perry commented he'd checked the rates in other towns like Summersville, Cabool and Houston and wondered why Houston was able to charge less, having had done a similar high-dollar project a year or two ago . He also expressed doubt that Mtn. View residents would be able to absorb those costs.
Cates explained again that the city is going to have to play catch up to meet the loan requirements.
Perry replied that he understood how the numbers worked, conceding rates should have gone up years ago in Mtn. View.
Cates also reminded council members DNR has already sent the city a letter regarding needed improvement to wastewater flows, and it is better to commit to the loan requirements now, when an additional $3.5 million in grants is available.
