Homer, Alaska - News - Turn off that tap 10/15/08

Story last updated at 7:18 PM on Wednesday, October 15, 2008

Turn off that tap

More increases in water, sewer rates proposed for 2009

By Aaron Selbig
Staff Writer

Although increases in the water and sewer rates for city of Homer customers prompted a flood of complaints earlier this year, further rate hikes have been proposed for next year.

In the city's fiscal year 2009 preliminary budget, the finance department has proposed a 15 percent increase "in the aggregate," meaning that the rate of increase will go up in relation to a customer's water usage.

Under the proposal, a residential water user who uses 2,000 gallons in a month, for instance, will experience a rate increase of 3.33 percent for water and 3.13 percent for sewer. A residential customer who uses 5,000 gallons would see a 9.52 percent increase for water and a 7.55 percent increase for sewer.

It's the large commercial customers, however, who will bear the biggest brunt of the proposed rate hikes.

A commercial water user who uses 5,000 gallons in a month would see a 12.9 percent increase for water and 14.46 percent for sewer, for example, and one who uses 100,000 gallons would pay 19.31 percent more for water and 35.37 percent more for sewer.

The reason for the proposed increases, according to City Manager Walt Wrede, is that the city's water and sewer fund is set up as an enterprise fund, meaning revenues must, by law, meet expenditures.

The costs of operating the water and sewer systems, said Wrede in a report to the council, have increased dramatically over the last year, due primarily to skyrocketing electricity and fuel costs.

"So, even though our revenues are on target, we are still faced with a significant budget gap this year," said Wrede.

Wrede added that, in his opinion, " there may be some fundamental problems associated with running water and sewer services as an enterprise fund. It may need some type of subsidy and I think there are valid arguments for doing so."

That notion was supported by local business owner Rich Fetterhoff, who testified at Monday's council meeting in favor of an ordinance that would have appropriated $500,000 from general fund reserves "for the purpose of reducing water and sewer bills on a temporary basis."

"The action last spring to increase water rates was devastating to a lot of businesses," said Fetterhoff. "The system you're running the water and sewer system on is not working. It needs to be subsidized. We've got to get the basic functions of the city working and right at the top of the list is the water and sewer system."

The ordinance, proposed by Mayor James Hornaday, failed 4-2 with only council members Dennis Novak and Matt Shadle voting in favor.

Council member Beth Wythe voted against the ordinance, saying that many Homer-area residents use well and septic systems.

"Approximately less than half of our community has the opportunity to have water and sewer. You're asking them to pay for a system they don't benefit from," she said.

Steve Morphis, owner of the Harborview Boardwalk on the Homer Spit, said his water and sewer bill has more than doubled since the council approved a new rate structure earlier this year. His bill for the period between June 6 and July 11 of this year was $748 for 29,600 gallons of water used, compared to $327 for the same time period in 2007 for roughly the same amount of water. If the council adopts the proposed rate increases for FY 2009, Morphis would pay $789.

For residential water users, the proposed rate increase is a bit more modest.

Janet Bowen lives in a home with her husband and two teenage daughters, and is a city water and sewer customer. Her last bill, covering the period between Aug. 13 and Sept. 18, was $113.31 for 5,800 gallons of water used. Under the formula used in the proposed increase, she would have paid an additional $13.45.

"That just seems excessive," said Bowen of the proposed increase.

The main problem with the city's water rate structure, said Morphis, is that it's fundamentally unfair to business owners.

"I don't know how much more I can make my tenants pay," said Morphis. "It gets to a point where if you're not making any money, you have to go out of business. Building in Homer has slowed or stopped so this is another nail in the coffin. I'd move in a heartbeat if I could."

Morphis said the monthly $80.63 customer service fee he pays in the winter, when his business is shut down and his water is turned off, is excessive. Also, he added, the city ought to give more notice to customers when they are considering raising the rates.

The proposed increases in water and sewer rates are, at this point, just a proposal. Public hearings on the entire proposed FY 2009 budget are scheduled for Nov. 10 and 24 at 7 p.m. in the council chambers at City Hall.

Aaron Selbig can be reached at aaron.selbig@homernews.com.

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