About 14,000 customers in O'Fallon's city-owned water and sewer district could see a rollback in rates totaling almost 41 percent if the City Council follows the recommendations of a consultant.
Laura Lashley of Development Dynamics, said the district's current water and sewer fund balances are excessive by almost $4.5 million. Much of that could be used to reduce rates to levels equal or close to those charged in 2005. Last year the former board of aldermen approved a 40 percent hike in those rates.
Lashley had been directed to examine the rates after another consultant, Donahue and Associates, said it discovered considerable over budgeting and poor management and capital planning for the system, which serves residents on the north side of town. Lashley's report mimicked what Greg Smothers, assistant city administrator, told the council at its last meeting.
Smothers had been asked by Robert Lowery Jr., city administrator, to undertake an extensive review of the system after a shake-up in the city's community development office in which two employees were fired and two others resigned in April. Under Lashley's proposal, customers would pay the same rate they paid in 2005: $2.50 per 1,000 gallons for water service, a reduction from the $3 rate they currently pay. Sewer customers would pay $1.75 per 1,000 gallons, a 31-cent increase from the 2005 rate. The rate is $2.05 now. Service charges would also decrease slightly for both services.
Lashley said the new plan maintains about $7.4 million in fund balances to appropriately provide for emergencies. The plan proposes no changes in the $5,000 total fees for sewer and water tap-ons. Last year, the prior board approved a 100 percent increase in those fees.
Council President Peter Cantwell and fellow councilman Pierce Conley both questioned whether Lashley should have considered lowering the tap-on fees when she calculated the proposed rates. Last year, Cantwell opposed the fee increase, arguing it unfairly punished builders and that the cost would be passed on to new home buyers.
Lashley said she kept the tap-on rates the same to manage the system's debt service and that a decrease in tap-on fees would result in somewhat higher rates for customers. She agreed to recalculate the rates using reduced tap-on fees to show the council other options.
Mayor Donna Morrow said fiddling with tap-on fees would penalize current residents. Last year Morrow supported the increase in tap-on fees and led a charge to de-annex property out of the city. Under a former administration led by Mayor Paul Renaud, many of those property owners were promised free sewer and water tap-ons if they annexed into the city. Morrow said the consultant's statement that the tap-on fees were necessary to fund the debt-service indicated the board had made a wise decision to raise those fees.
On Thursday, the council supported Lowery's decision to hire R.W. Beck of Seattle for $25,000 to run an appraisal of the system and guide staff through a possible sale of it to a private entity. Any sale would have to be approved by voters via referendum.
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