After first downplaying forecasted water and sewer rate increases, Starkville leaders performed an about-face Tuesday on City Hall’s previous stance and said future hikes are more than likely needed as Public Works tends to a growing list of capital improvement projects.
SPW Director Doug Devlin first predicted the increases in October, but City Hall representatives said the discussions on rate hikes were premature before Starkville’s Fiscal Year 2013-2014 audit arrives in early 2015.
Tuesday, both Ward 5 Alderman Scott Maynard and Mayor Parker Wiseman said the city is nearing its first water and sewer rate increase in about seven years.
Neither Maynard, nor the mayor say when an increase could come, but Wiseman said such a hike “in the near future is a real possibility.”
“As budget chair, I want to advise the board that, at some point, you’re going to have to take a serious look at upcoming cash flows to water and sewer based on the amount of revenue we’re bringing in to make sure we can meet the needs and obligations we have as a city for repairing our aging infrastructure,” Maynard told his peers. “It’s something we’re going to have to address somewhere down the line.”
The pair made their comments as aldermen unanimously approved Starkville’s participation in a $400,000-maximum Mississippi Capital Improvements Revolving Loan Program (CAP loan) disbursement that will fund a major sewage pipe replacement project near the city’s southern industrial park.
Portions of the cast iron line are experiencing numerous age-related problems, and the planned infrastructure improvement would also expand its size, thereby facilitating future industrial demand.
CAP loans may be made for a maximum of 20 years and are not to exceed $1 million per project. The Mississippi Development Authority’s website lists the annual interest rate for such loans at 3 percent for taxable activities and 2 percent for non-tax exempt projects.
Although the project and its associated debt service are not expected to directly impact consumer prices, future projects and their associated payment plans, Devlin told the board last month, could force Starkville to raise rates for the first time in about seven years.
Other immediate sewer projects are also expected as a recent inspection of 15 miles worth of pipe found about 20 defective segments that need to be fixed immediately, Devlin told the board. Public Works will take the highest priority areas — the ones with the most problems — and tend to them first. He did not identify how much the fixes would cost.
Besides traditional infrastructure improvements, both SWP and Starkville Electric Department pledged earlier this year to pay a combined $3 million for automated metering services across a four-year period. Workers are expected to replace the city’s combined 24,000 electric and water meters with usage-measuring devices in 2016 after aldermen approved an implementation plan that was said not to increase either utilities’ rates.
Devlin previously told The Dispatch his organization will use its cash reserves to finance its portion, while SED General Manager Terry Kemp said SED will utilize its own capital improvements stream.
After the four-year period, the city’s contract with German manufacturer Elster will continue at least a decade.
Devlin previously estimated his department will save about 33 cents per meter after cutting meter-reading services, which are already outsourced.
In other business, the board:
■ entered into a $303,538-maximum contract with Columbus-based Brislin Inc. for construction of wastewater and storm drainage associated with the Mill at MSU development;
■ approved a sign height variance for the upcoming Panda Express location near Walmart;
■ and reappointed Bill Poe to the Oktibbeha County Heritage Museum committee.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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