Costs are going up again for water and sewer services in Platte City, as officials prepare to deal with projected increases in capital costs in the coming years.The Platte City Board of Aldermen approved the hikes during its regular session Tuesday, July 28 at Platte City City Hall. The move falls in line with a recent strategy to up rates in smaller increments rather than dumping one large increase on citizens at once. An analysis of both systems showed that funding will have a long-term shortfall, projected to come into play during the next decade-plus.
Water will increase 5.6 percent per thousand gallons used (about $0.25) on Aug. 1, an increase of about $1.50 for the average customer. Wastewater charges will go up 3.6 percent (about $0.30) or about $1.25 for the average customer. Those numbers are based on the use of 5,000 gallons of water per month.
Platte City city administrator DJ Gehrt said water and wastewater increases are projected at the same rate during coming years due to the eventual need of funds for infrastructure.
According to Gehrt, Platte City’s water system operated at a deficit each of the past two years, although that is projected to decrease by nearly $4,000 for the 2014-15 fiscal year. Even with cuts in expenditures, more was needed to eliminate the deficit and look ahead toward capital costs, including vehicle and equipment replacement.
Part of the increase also goes toward rising rates from the City of Kansas City for supply of the water.
The wastewater fund is under larger stress, according to Gehrt. Large capital improvement needs are projected in the more immediate future. This current increase in rates is designed to eliminate operating deficit, fund supplemental requests for the public works department and address immediate vehicle and equipment replacement. It does not impact longer term needs, according to a staff report.
Major needs for the department include the expansion of the wastewater treatment plant by 2021 to remain in compliance with more strict codes and the replacement of the final 40,000 feet of clay sewer line in the city, which will cost an estimated $1.25 to $1.5 million.
In addition to the planned rate increases, Gehrt suggested taking a look at the basic water rate in the near future in an effort to reduce future rate volatility.
To do so, the city would look at the standard charge to try and collect a more equitable amount before the charge of per-gallon usage. Currently, the city charges just more than $6 for the first 1,000 gallons before the incremental usage charges. That only allows the city to collect about 8 percent of its fixed costs, mostly debt service, to operate the water system. According to Gehrt, a general standard would be to collect about 30 percent through the base rate.
An increase to the base rate could help provide a better fixed source of income and potentially lower the usage rate.
“That’s a reason why you have to look at this and say, ‘What affect does this have on your rate payers?” Gehrt said. “You try to be as equitable as possible and you try to be understanding to people’s situations.
“Every city is unique.”
Gehrt acknowledged that a more detailed study would need to take place, and the city will address that during the coming year. He said this is simply one option to try and reduce the constant need for water usage rate increases in the coming years.