Customers of the Tuckaseigee Water and Sewer Authority will see their rates increase if the 2017-18 budget is adopted as proposed Monday, June 26.
Base charge rates will rise by 3 percent, with charges for consumption and system improvement increasing by 4 percent. For the average residential water and sewer customer — using a combined 5,428 gallons per month — that will translate to an additional $2.24 per month, an overall 3.47 percent increase from the average 2016-17 bill.
The rate increase is part of an ongoing effort to adjust the budget so that operating revenues are sufficient to cover payments on TWSA’s long-term debt. For several years, the organization has had to transfer money from its reserves to cover those payments, but that’s not a sustainable model. The problem emerged after the recession, when TWSA held rates steady in recognition of the hardship the economic downturn had caused customers. However, in 2013-14 the TWSA board resolved to bring rates in line with operating and debt service costs within five years.
“The proposed rate increase of 4 percent doesn’t cover the debt service in full, but does continue to reduce the level of transfers from reserves,” TWSA’s Executive Director Dan Harbaugh wrote in his budget message. “To continue to make headway in this area, a combination of growth in customer base and a series of future rate increases will be necessary.”
If those future rate increases don’t happen, Harbaugh wrote, TWSA’s reserves will be depleted over time, limiting its ability to sustain the system and jeopardizing the organization’s financial health.
Customers with unmetered hookups could see significant increases, too, as the proposed budget would correct a discrepancy in how those fees are calculated compared to fees for metered hookups.
“Compared to the people that were on the metered rates, the people that were on these tiers were not paying their fair share,” Harbaugh explained to the board during a June 13 work session.
Commercial customers with unmetered hookups are divided into tiers based on what volume they’re likely to use in a given month. But all 10 tiers were paying the same monthly system improvement charge of $4.28 per unit. The proposed budget would increase the system improvement charge based on the customer’s tier. After a 4 percent increase, the new system improvement charge would be $4.45, so Tier 1 customers would pay $4.45 per month, Tier 2 customers would pay $8.90 per month, Tier 3 customers would pay $13.35 per month, and so forth. These customers also pay a monthly service charge, which would also increase by 4 percent.
“It will be a shift for the customers, and we’ll have to have an education process,” Harbaugh said. “It’s not punitive. They just have been getting a bargain in the past instead of paying their fair share.”
While many fees in the proposed budget will see a change from 2016-17 levels, impact fees — arguably the most controversial fee TWSA charges — will neither increase or decrease. But that could change, because the board intends to spend the next year examining the impact fee issue and hopefully arriving at some solution to implement during next year’s budget process.
“The consensus is this is such a big issue that we cannot come back to you with a recommendation for any changes to this budget cycle,” Harbaugh told the board in summary of two work sessions they had held on the issue this month.
Impact fees are upfront payments required of new TWSA customers, intended to offset expansion of the system. The fees, which can be in the tens of thousands of dollars depending on what size hookup is requested, allow TWSA to keep rates for existing customers relatively low.
However, impact fees have been decried as an impediment to economic development, especially for restaurants, which use a substantial amount of water. For a new business, critics say, the fees are insurmountable barriers to setting up shop in Jackson County, making it more attractive to go next door to Swain, Macon or Haywood County. What’s more, the fees are tied to location, so if a business wants to move to a new building after already paying its impact fee at the original location, it could find itself facing yet another large payment.
But eliminating the impact fee, if that’s the direction the board wants to go, wouldn’t be easy. The lost revenue would have to come from somewhere, and businesses that have already forked over large impact fee payments likely wouldn’t take kindly to paying increased rates so that future customers could get a better deal.
“There are no changes to impact fees,” Harbaugh said. “But also we have not resolved the discussion about impact fees for the future.”