LONGMEADOW — Town Manager Lyn Simmons, Finance Director Ian Coddington and DPW Business Manager Lisa Okscin presented their recommended rates for water, sewer and stormwater, as well as a proposed change in fee structure, at the June 2 Select Board meeting.
The proposal was informed by a recent study of the town’s water and sewer utility needs by consultant Tighe & Bond.
Simmons said the recommendations were made with the goal of funding water and sewer operations, building the respective enterprise fund balances to $1 million over the next few years and funding capital expenses, all while limiting the impact to rate payers.
Coddington said the sewer account balance was $662,952, while the Water Enterprise Fund contained almost twice the policy minimum, at $980,333. Both are above the policy minimum of $500,000, but neither meets the $1 million goal laid out by the Tighe & Bond study.
The study also recommended the town adopt tiered water and sewer rates, with the customers who use the most water paying more per unit, which is measured in increments of 100 cubic feet. Simmons said that a single water rate means the lower water users are subsidizing the rates for the higher users.
By increasing the fixed meter rate, the town could lower the overall portion of the bill that would change from quarter to quarter. Coddington said fixed rates are easier to control. “With a fixed rate, a resident knows what they’re going to get going in,” he said.
Fixed meter costs depend on the size of a user’s water line. Coddington said 86% of users have 5/8-inch or ½-inch water lines. He presented figures based on fixed meter increases of 200% and 300%. With a single water rate, if the town increased users’ fixed rates by 200%, the water rate would be $6.34 per unit, and the quarterly bill for most users would be about $58 more. If the meter cost went up by 300%, the water rate would be $6.07 per unit and the average water bill would increase by $87. Coddington said the average user “would not see a substantial change on a year-to-year basis.”
A tiered water rate would alter the math. Most customers use 25 units or less per quarter. A 200% fixed meter increase would mean those who use 25 units or less per quarter would have a water rate of $5.70 per unit. People who use between 26 and 55 units would pay $6.56 per unit and the heaviest water users, with more than 55 units per quarter, would pay $7.58 per unit. If the fixed meter rates were increased by 300%, the water rates would be $5.48 for the people who use the least water and $7.23 for those who use the most.
Like the water rate structure, an increase of 200%, about $25.71, to the fixed cost on a sewer bill would result in a water rate of $4.96 per unit for the average user. A 300% increase of $34.28 would result in most users paying $4.55 per unit. The sewer rates were calculated with the 55-unit cap on the bills for the April through June and July through September quarters.
Stormwater is calculated as a single fixed rate. The proposed increase to the stormwater rate was $9.71 per year, to $116.84.
With the approach laid out by Coddington, the fixed rate would pay for operations and the water rate would pay for capital expenses, which is the opposite of how expenses have been handled in the past. This way, Simmons said the higher water users would be the ones paying for capital improvements, as they are responsible for a larger share of the system’s wear and tear.
DPW Director Sean Van Deusen talked about capital expenses needed for the town’s water and sewer systems. He said the water, which is supplied by the Springfield Water and Sewer Commission, needs to have some form of redundancy in case of emergency, such as a water main break or drought conditions, which can leave the town without enough water to fight fires.
Redundancy could be accomplished with either an interconnection with Enfield’s water system, or by installing a second water tank.
Analysis of a possible second tank is complete, as is a feasibility study on an interconnection. Design work is the next step for either project. Van Deusen said the Select Board could pursue one or both projects.
Engineering work on a waterline replacement for Western Drive is finished and is ready to go out to bid. Van Deusen explained that paving on the street has been on hold for a few years so the water and sewer line work could be completed. He said water and sewer projects often have timelines of three to four years from feasibility studies to design work, bidding and construction. Then new water and sewer lines must “settle” before paving can begin.
There are also culverts in need of attention and repair work required at Raspberry Brook.
“We’re not trying to fix everything. We’re really just trying to stick to the stuff that makes the most sense,” Van Deusen said.
At a previous Select Board meeting, board member Dan Zwirko asked about water and sewer rate discounts for seniors, veterans or other populations. Simmons suggested the town can implement a 30% discount for the blind, elderly and veterans. There is already a discount in place for stormwater costs for those individuals. Simmons explained that they are the same categories of people who receive property tax exemptions, and the list of 129 homes is already sent from the assessor’s office to the DPW for the stormwater discount. Okscin said if the discount is applied to those people, the rates for the remaining users would increase.
Select Board member Mark Gold said the recommended proposals were “the tail wagging the dog.” He said the town should decide how much is needed in revenue and what portion should be raised from the meter rate, rather than beginning by raising the meter rate by 200% or 300%. The enterprise funds should be used to pay any debt owed to the Springfield Water and Sewer Commission if it has been a wet year and water usage — and therefore revenue — is down.
Coddington said the same process was used to calculate the rates he presented — based on the operating budget and debt service — as has been used in past years. The difference is the format, he said. When considering the recommended capital projects and generating more in retained earnings, he said the fixed meter cost increases limited the impact on users. Otherwise, users would see “large, double-digit increases in the variable rates,” Coddington said. If the Select Board preferred, he said he can alter the proposal, so the fixed costs cover the capital expenses and retained earnings increases.
Most of the Select Board members expressed hesitation in adopting tiered water and sewer rates. Gold said tiered rates would cause a “spiral” in which the highest water users use less, causing the town to raise rates to bring in the same amount of revenue.
Select Board Chair Vineeth Hemavathi recalled representatives from Tighe & Bond stating that user behavior does not usually change based on rates. Select Board member Andrew Lam disagreed.
Lam noted that the bill for a high water user who waters their lawn in the summer would double, from about $1,600 to roughly $3,200 annually, while low residential water users would see an increase of about $149 per year. He likened it to the reason Longmeadow adopts a single tax rate, because a split rate would substantially impact relatively few people, while not providing much benefit to others. Select Board member Josh Levine also spoke against tiered rates.
Zwirko said the board uses the same methods every year and gets similar results. He said the board should rely on Tighe & Bond as experts and on Van Deusen and Okscin, who handle water bills and infrastructure regularly.
Zwirko said the town has been keeping water rates low with retained earnings, resulting in a “mountain” of capital projects. He said raising rates may not be popular, but was the “right thing” for the town.
Lam pushed back on that, saying the board members understood the need to raise rates. He also said that, whether the bulk of the bill was in fixed costs or variable rates, the same amount of money would be raised.
The board asked Coddington and Okscin to come back with options for a single water rate, as well as figures including discounted rates for eligible individuals.
