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Mayor seeks to hold line on sewer rates
(by Sue Reid - September 09, 2010)
Mayor seeks to hold line on sewer rates
By SUE REID
Solon Mayor Susan A. Drucker said last week the city will do its due diligence in cutting costs wherever possible at the sewage-treatment plant. Her comments related to discussion on the issue of raising sewer rates based on revenue for the plant not keeping up with expenditures.
"It's a serious situation that's before us because of the expenditures exceeding the revenues at the plant," Mrs. Drucker said. "However, I cannot in good faith go to residents and businesses of Solon and raise rates without the city completing its due diligence in cutting costs where it can."
Treatment plant Director Paul Solanics said the facility has seen a loss for the last two years. "We've been more or less in the red for the last two years," he said. "Not completely in the red, but we've seen our expenditures outweigh the revenues."
Mrs. Drucker said she believes the burden should not only be placed on others, but the city has the responsibility to provide the best service possible at the lowest possible rate.
"I have to do my part on behalf of the city, and I'm not going to just dump the cost on the residents and businesses," Mrs. Drucker said. "We're doing our homework right now, as we have been the past several months, on this issue. I'm not going to have residents and businesses pay and the city continue business as usual. That's not right."
Public Works Director James S. Stanek told the public works committee last week that the mayor wants to look at all opportunities to try to cut expenditures at the plant.
"We will sit down and look at every facet of the operation and see if there's an opportunity to do things more cost-effectively," Mr. Stanek said. "Not that we haven't done that before, but it will be a more serious look. The mayor has been very adamant that we owe that to the public."
The last time the city set a rate schedule was in 2006. It called for an increase of 6 percent annually for that four-year period. This year is the final year of a four-year, 6 percent sewer increase that was passed.
Mr. Solanics presented to the committee an expenditure and revenue chart. It showed that the plant would be $1 million down in 2011 just by holding the line and not doing any capital improvements.
"If we did some capital improvements, we would be $1.232 million in the hole," Mr. Solanics said. The reason is that revenue has been declining due to a reduction in water usage, he said.
He told the committee that one "major company in town" is thinking about pre-treatment. If that happens, Solon's plant can lose an estimated $500,000 annually in revenue, he said.
"Companies are out there trying to find ways to cut their utility costs," Mr. Solanics said. "That's why they are looking into pre-treatment.
"It's almost a Catch-22," Mr. Solanics said. "They are trying to reduce their sewer rates and surcharge rates, and, when they do that, it affects us because we are not getting the income to cover our costs." That also affects the community as a whole, he said.
Mr. Solanics said the plant receives $800,000 annually in surcharges. The company he referred to looking into pre-treatment "is absolutely the majority of that surcharge," he said.
In general, the major portion of revenue for the plant comes from sewer usage rates that the city charges and the surcharge rates, which are rates that we have charged industry for waste water above what we consider normal strength.
"Those two are our main sources of income," Mr. Solanics said. We see roughly $4.5 million in sewer usage charges and about $800,000 in surcharge rates." The cost to operate the plant is about $6 million annually.
Mr. Solanics said there are two funds that involve the treatment plant. A repair and replacement fund is composed of tap-in fees from re-classified development or new buildings and that has gone down significantly due to the fact that the city is close to build-out. That fund has been used specifically for major upgrades or improvements at the plant.
"The fact is the fund no longer has a revenue stream to support further capital improvements," he said.
There is also a sewer revenue fund which pays the everyday bills, including debt service.
The city was in the habit of collecting a half million dollars in tap-in fees for the last 20 years, and that's not the case anymore, Mr. Stanek said. The only exception was in 2008, when Parkside Church on Pettibone Road in Bainbridge tapped into Solon's system, tripling the tap-in fee because it is outside the city. "That fee was significant, but was an anomaly," he said.
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