Panel OKs higher sewer rate, lower storm water costs

The cost of flushing a toilet, taking a shower or rinsing a toothbrush could be on the rise again.

After sanitary sewer rates jumped, on average, 27.65 percent this year, the city’s finance committee approved another 19.88 percent increase for 2013.

The rate could change from the $5.82 per unit to $7.43 per unit under the proposed increase. The flat rate of $5.50 per month would remain unchanged under the proposal.

The change comes after a study of the city’s Environmental Services Division conducted by consultant and former director of Western Lake Superior Sanitary District, Kurt Soderberg.

“There is no evidence of out-of-control spending and treating to a higher level than required,” said Superior Finance Director Jean Vito. “I bring that up because that was a big question in councilors and a lot of people’s minds over the last many years when we tried to get rate increases approved.”

Prior to this year, Superior’s sanitary sewer rates remained unchanged at $4.96 between January 2007 and December 2011 with a flat monthly fee of $2.

Vito said, for a number of years, the cost of maintaining the system has come out of the Environmental Services Division’s reserve fund because rate increases haven’t kept up with those costs, resulting in a substantial depletion of reserves.

“An initial investment is needed to save money down the road,” Vito said. “This has to do with some things like automating some of the processes down at the Wastewater Treatment Plant. At the same time, there are some things that need to be caught up on immediately.”

Rate increases are unavoidable, Vito said.

According to documents presented to the finance committee, the rate increase includes 14 cents to adjust the rate for inflation, 87 cents for annual capital projects coming from reserves, 31 cents for flood control program expansion, 11 cents for the Tower Avenue Project, 4 cents for the city’s 25 percent match from FEMA funding stemming from last summer’s flooding and 14 cents to pay to expand capacity at the main treatment plant on the waterfront.

“After we get this catch-up, increases do go down substantially,” Vito said.

Projections before the panel show rate increases in the range of 2 to 3 percent between 2014 and 2016, and a 1 percent increase in 2017.

While Vito said the panel could elect to spread the largest portion of the increase over two years and continue to fund a portion of projects out of the reserve fund, members of the finance committee said it would simply raise the cost of projects down the road.

It would still mean a 13.6 percent increase in 2013 and a 7.8 percent increase in 2014.

“How much is the cost of project going to go up if it isn’t done?” Finance Committee Chairman Tom Bridge asked. “It could end up being a bigger increase next year because it doesn’t get done and the costs go up. It will probably be significant.”

Bridge said raising the rates this much after last year’s increase hurts. Still, it’s one likely to cost more if the city doesn’t act now, he said.

Projects being pushed by regulatory obligations are included in the proposed rate increase, said Steve Roberts, interim administrator of the Environmental Services Division. He said while there are unknown issues, such as a potential requirement for disinfection at the city’s combined sewer treatment plants, they’re not projects that are being recommended at this time because there is no certainty they will be required.

The new rates take into account that consumption rates will drop 4 percent as a result of the rate increase.

Last year, part of the justification for increasing the flat rate from $2 to $5.50 a month was the result of an overall drop in water usage of 10 percent. People who had taken steps to cut their water consumption saw their rates increase more than high volume users as a result.

Still, Bridge said the new rates would likely encourage people to reduce consumption. No fixed fee increases are projected over the next five years.

The finance committee also made changes to the city’s storm water utility charges. The panel eliminated the flat rate and combined it with the variable rate for a cost of $5.90 per month per equivalent run-off unit.

While no change in the cost is expected for single-family homes, people who own duplexes and larger structures evaluated at more than one unit will see a reduction in their costs. Overall, the city anticipates a 3 percent reduction in revenue as a result of the change, but will save money by reducing the cost to customize new billing software.

The committee’s recommendations require council approval before taking effect. The council is expected to take up the issues in November.

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