The Norman Transcript

July 11, 2013

City crunches sewer numbers

By Joy Hampton
The Norman Transcript

NORMAN — Norman needs to raise about $2.8 million annually to make $63 million in upgrades to the city’s south wastewater treatment plant. City leaders anticipate asking voters to approve a rate increase in November to pay for those capital improvements.

“The last rate increase we had was in 2001, and we’ve spent about $80 million in investments in our system since then,” Mayor Cindy Rosenthal said. “We have to put a rate proposal before our voters.”

A public forum is planned for August to get input on the rate hike.

Utilities Director Ken Komiske said all of the options currently under discussion would result in a rate increase of about $7 a month for average-use customers.

The current focus is on the existing south wastewater treatment plant because Department of Environmental Quality requirements are driving some of the upgrades. Norman is under a consent order by DEQ and could face thousands of dollars in fines if regulations are not met soon.

Aging equipment also will be replaced and capacity expanded as part of the project.

Currently, Norman’s sewer rates are lower than 15 comparable cities.

“We do run a lean shop, and our rates are extremely low compared to our sister cities,” Komiske said.

However, low rates mean aging equipment has not been replaced, he said.

Of the $63 million needed for the project, only $38 million will need to be raised through the rate increase. Wastewater excise tax funds will pay $25,641,000 — about 40 percent — of the project.

The $2.8 million annual increase estimate is based on a 4 percent loan paid over 20 years. Some of the bond money should be available at low interest through the Oklahoma Water Resources Board’s State Revolving Fund.

This is a very large project, however, and the city may not be able to finance the total bond through the OWRB because available funding is limited, Komiske said. That could mean higher loan rates for privately financed bonds.

City council members met Wednesday for preliminary discussions regarding potential rate increase formulas.

Ward 4 Council member Greg Jungman favored leaving the base rate the same and increasing the fee charged per 1,000 gallons of water used. By putting most of the increase onto the usage rate charge, customers will be incentivised to conserve water, he said.

Others agreed, but some also favor changing the formula for establishing the rate.

Because wastewater is not metered, sewer rates are based on water usage. In the case of residential rates, that is estimated by averaging the winter months’ usage and basing the charge on 80 percent of that use. In the case of commercial use, the rate is determined by averaging 100 percent of yearround usage.

Some council members favor increasing the charge per 1,000 gallons used and basing the residential rate on 100 percent, rather than 80 percent of water usage.

While at first blush, that formula appears to give commercial customers a break, in reality, commercial customers already will pay more because of the city’s capital improvement fee. Residential customers pay a flat 50 cent Capital Improvement Charge each month. Commercial customers pay 60 percent of their total sewer bills as a CIC. That means when the usage rate goes up, so will the commercial CIC charge.

Discussions are far from over.

Based on input from the council on Wednesday, city staff will come back with a number of options.

Joy Hampton