LONGMEADOW — After more than an hour of discussion on June 17, the Longmeadow Select Board elected to hold off on setting the town’s water and sewer rates for fiscal year 2025 until the body could meet with a representative from the Springfield Water and Sewer Commission.
Longmeadow’s water rates are calculated each fiscal year based on the revenue needed to operate the infrastructure and pay the Springfield Water and Sewer Commission, which supplies the town’s water. The issue revolves around a substantial increase in the amount the commission will charge Longmeadow in FY25. At a cost of $1.93 million per month to the town, plus Longmeadow’s operation costs, and an estimated 825,000 units, Longmeadow would need to raise water rates to $4.60 per 100 cubic feet of water used. That represents a 22.34% increase over FY24’s $3.76 per 100 cubic feet. Select Board member Mark Gold later pointed out that 49 cents of the 89-cent-per-unit increase is directly attributable to the commission.
During an initial conversation on the topic at the board’s June 3 meeting, Town Manager Lyn Simmons and Finance Director Ian Coddington were asked to gather additional information.
Simmons told the board that the increases were largely the result of the Springfield Water and Sewer Commission’s capital projects. “They have some really massive capital projects happening. We are appointed a share of that, and that’s [what] the bulk of our increase is attributed to,” Simmons said.
Gold disputed this. He pointed out that the capital outlays detailed by the commission increased from $3.7 million in FY24 to $4.5 million in FY25, while the operation and maintenance costs increased from $14.2 million in FY24 to $18.5 million for the year ahead. While the difference in dollar amounts is substantial, the capital costs have increased by 21% and the operations and maintenance costs have seen a similar, 23% rise. Gold cited a memo stating the commission was using a new accounting system that allocated for operations and maintenance differently than in the past. He said this was the cause of the price increase.
Coddington said he had spoken with a representative of the commission who confirmed that the town will be charged $1.93 million monthly and at the end of the year, it will be reconciled against actual water usage by residents. He said that last year, the town was issued a credit “because we paid more than what was billed.”
Water Enterprise Fund
Another question the board had was about the town’s Water Enterprise Fund and whether it should be used to offset the rate hike. When the number of water units sold is higher than anticipated, the enterprise fund collects the unexpected revenue. When the number of units is under the forecast, some of the money in the enterprise account can be used to offset a rate hike. In some cases, the funding could also be used to pay for capital expenses.
Gold was adamant that the fund was created to offset water rates in years when it runs higher, rather than on capital projects. “We owe it to the people of Longmeadow not to take the rates up [dramatically],” he said. “It’s going to keep going up every year.” He added, “If we raise the rates by 22%, there’s going to be a few of us not here at the next meeting.”
With a goal of $500,000 set by the Select Board, the fund’s balance is $323,550. Surrounding towns have a patchwork of policies for their water enterprise funds. While many have policies that maintain the fund balance between 20% and 50% of the utility’s budget, others have no specific balance required.
Gold brought up the L Project to replace the water and sewer lines under the area around Longmeadow Street before the state re-engineers Route 5. He said the town “made a mistake when we borrowed $11.5 million for a project that’s only costing $5.6 million.” Simmons countered that, clarifying that, while the construction costs were a little more than $6 million, there was also $1.3 million in engineering and design costs. She also pointed out that a vote at the most recent Town Meeting redirected the remainder of the bonded funds to other projects. “This is money that is being put back into the water utility,” she said.
Last quarter
The conversation then turned to the deadline for the board to set the FY25 water rate, which DPW Business Manager Lisa Okscin said was July 20. Gold said he thought it did not have to be set until November because that is when bills for the second quarter of the fiscal year are released.
The first quarter of Longmeadow’s billing year comes out in the summer but reflects the water used from April 1 to June 30, ending before the start of the new fiscal year on July 1. Gold said the board had voted in the past to bill the first quarter of the year at the rate of the fiscal year when the water was consumed. Later, Simmons cited the minutes from July 5, 2022, when the matter was decided. The minutes read, “The group consensus was to bill the new rate at the first billing cycle of the fiscal year.”
The board discussed the idea that residents would have adjusted their use of water in April, May and June if they had known the cost would be raised 22%. Select Board member Josh Levine noted that in the past, Gold had made the argument that people would not change their behavior based on the rate. “At 22%, it will,” Gold said. Levine disagreed.
“I want people to know the rate, but I also want them to know we’ve done our due diligence and are setting the right rate,” Levine said.
Select Board member Andrew Lam asked Coddington and Simmons whether there was a chance the commission might recalculate the cost to the town after meeting with the Select Board.
“At this point, this is what they’re going with. We have no way of knowing if they’ll change or not,” Coddington said. Simmons opined, “I don’t think the numbers from Springfield [are] going to change.”
With that input, Lam signaled that he wanted the board to set the rate with the information available. He said that if the rate were higher than needed, they could use retained earnings in FY26 to lower it. Coddington noted that using retained earnings to ease the water rate could be accomplished with a vote at the fall town meeting, as well. However, he also noted the account had not been used to mitigate the water rate in more than five years.
“It’s going to be a sticker shock no matter what,” Levine commented.
Select Board Chair Vineeth Hemavathi suggested, and the board agreed, to postpone the rate setting until the July 15 meeting, when representatives from the commission could be present to answer lingering questions.
