LONGMEADOW — The Longmeadow Select Board weighed whether to approve a dramatic hike in water rates when it met on June 3. The rate increases are the largest in years, but Finance Director Ian Coddington warned they will not be the last.
The rates for water and sewer are decided each year using a calculation amount that needs to be raised from rates, otherwise known as the amount of money that needs to be raised by rates to cover operational costs and divided by the expected number of billable units, or 100 cubic feet of water, that will be sold. The town uses an average of the previous five years to determine the upcoming year’s billable units.
For fiscal year 2025, the budget is $3.8 million divided by 825,000 estimated billable units. This puts the water rate at $4.60 per 100 cubic feet of water. This is a 22.34% increase over FY24’s $3.76 per 100 cubic feet.
Coddington provided an example using actual resident bills. A resident who uses 27 billable units for the four quarters running April through March paid $101 this year and would pay $124 in the year ahead. A moderate user, at 114 units, would see their bill rise from $428 to $524. Someone using 243 units would go from paying $988 to $1,209.
The year-over-year water rate increase has been steadily rising from 0.28% in FY22 to 2.51% the next year, and 4.74% in FY24.
Coddington explained that there are three main factors that impact the amount the town must raise through rates. By far, the largest portion of this is the cost of the water, which the town buys from the Springfield Water and Sewer Commission. Salaries for the Water Department within the DPW and the debt service on previous investments are also factors.
While the commission originally sent Longmeadow an estimate of $1.6 million, an updated estimate of $1.9 million was then provided, a difference between an additional $.18 on the water rate and $.53 on the rate. The commission is in the design phase of building a new water treatment plant and the difference between the estimates reflects updated costs for the plant.
According to current projections, the salary increase for FY25 is $61,144. DPW Director Sean Van Deusen has contracted with the consulting firm Tighe & Bond to perform a wage study to determine what competitive wages to offer in the future to attract people to work for the town. There is currently one person working in the water department, with at least two open positions. Van Deusen said the workload is “burning staff out.”
Town Manager Lyn Simmons added that the Massachusetts Department of Environmental Protection has “very, very strict” licensing requirements, which adds to the difficulty of filling positions. The town also pays for the licensure.
The debt service increase — from $629,525 to $952,796 — in large part, reflects bonds sale for the upcoming L Project along Route 5, to replace water mains before the state begins major work on the Longmeadow Street corridor. “These projects were long overdue,” Coddington said, and there are many more projects that will need to be completed in the years ahead. The debt service added $.39 to the water rate. Select Board member Dan Zwirko said the board has known about these projects for years “and we’ve neglected them.”
Select Board member Josh Levine commented that the water rates are still relatively low. Coddington agreed, saying that Longmeadow is lower third of rates among neighboring towns.
Retained earnings
The Water Enterprise has a retained earnings account, which is similar to the general fund’s free cash account. Revenue above what was needed to pay for the number of billable units sold in a year is added to the account.
The balances in both the Water and Sewer Retained Earnings accounts took a hit this year, largely due to capital expenses, including repairs. The Water Retained Earnings account has a balance of $310,328, down from $875,300 at the beginning of the fiscal year. The Sewer Retained Earnings account ended FY24 with $279,731, a far cry from the $972,333 balance it had at the beginning of the fiscal year. There is a target floor of $500,000 in the Retained Earnings account and a ceiling of $1.5 million.
Coddington expected a shortfall of $293,000 at the end of the fiscal year, but as it was a wet start to the season, less water was used in lawn irrigation. With fewer billable units sold, more money was collected in the Retained Earnings account than expected, shrinking the shortfall to $45,000. Coddington opined that such a shortfall on a $3.8 million budget is not particularly concerning.
Moving forward, Coddington said he would recommend a yearly contribution to the Retained Earnings account from other town funding sources, similar to the contributions that are put into the town’s other post-employment benefits account annually. This could be used to offset future dramatic water rate hikes — which Coddington expects in the next five years — or help pay for water capital expenses. He suggested $500,000 per year but said 1% of 2% of the year’s budget was prudent.
Select Board member Mark Gold spoke against using water retained earnings to offset capital projects, saying it is “overcharging residents.” The cost for capital projects is generally bonded for and reflected on water bills as a fixed amount, independent of how many billable units are sold. “Water retained earnings shouldn’t be a piggy bank,” he said.
Coddington countered, “Having an allocation of funds gives us more of a planned position” when unexpected issues arise. “We will reach a point where we can no longer [bond] safely,” without exhausting the department’s capacity for debt.
Nonetheless, Gold insisted using the enterprise fund for capital expenses is “not transparent.”
Simmons suggested pausing the discussion of capital water projects because more information on needed projects will be coming in the fall. The Select Board will set the rate at its next meeting. In the meantime, Gold requested Van Deusen and Coddington seek more information from the commission on the amount it is charging the town.
While not as precipitous, the sewer rate would also increase significantly, from $3.13 per 100 cubic feet to $3.51 per 100 cubic feet, a 12.14% increase. The proposed annual stormwater fee would be $106.32, $14.95 more than in FY24.
Lachiusa honored
At the beginning of the meeting, Select Board Chair Thomas Lachiusa was honored by state Rep. Brian Ashe (D-Longmeadow) with citations from the state Senate and House of Representatives for his nine years of service on the Select Board. He chose not to run for reelection this spring. The town also presented him with a plaque.
Ashe and the members of Select Board spoke about the hard work and commitment that goes into being on the board and thanked him. Lachiusa said that during his time on the board, he was proudest of having “played a part” in getting the town a railroad crossing and having it named for a DPW worker who died in a train accident while plowing snow.
