Monday, February 28, 2000
1950s-era sewer rates increasing
End near for 'best bargain in N.Ky.'
BY KRISTINA GOETZ
The Cincinnati Enquirer
FORT WRIGHT — It will soon cost Northern Kentuckians more money to flush their toilets.
Board members of Sanitation District No. 1 are expected to announce at their March meeting the first increase in sewer rates for residents in Boone, Kenton and Campbell counties since 1979.
District officials say there are two reasons for the increase:
• In order to meet federal water-quality standards, the sanitation district must repair its aging sewer system.
• To keep up with Northern Kentucky's rapid growth, the district must build two new treatment plants — one in Boone and another in Campbell County.
Both efforts will take additional funds.
“For the average person it's just a bump in the road,” said Jeff Eger, general manager of the district. “We're starting so low our current rates are almost insignificant.”
Money from rate-payers made up more than 85 percent of the district's total revenue last year. The other 15 percent came from tap-in fees, industry fines and contractual services.
Money from rate-payers will help pay for most of the new capital projects.
“When we built the Dry Creek plant, 75 percent of the money came from federal funding,” Mr. Eger said. “Today, there are zero federal funds available.”
In the next five years, the district estimates that it will spend more than $246.5 million on capital projects and improvements. That includes construction of the Boone County plant and design work for the Campbell plant, as well as improvements to sewers, pump stations and storm water systems.
The district will likely spend half its $48 million in reserves, borrow and increase rates to pay for the improvements.
“You don't raise your rates 150 percent and pay as you go,” Mr. Eger said. “Rate-payers wouldn't be able to do it.”
There also must be enough money in reserve for the district to borrow a significant amount of money.
“And we have over $360 million of assets that we own,” Mr. Eger said. “The Dry Creek plant, that's worth $120 million. If there's anything that goes wrong, it's a major cost to fix.”
Residents in Belleview Bottoms, where the new Boone County plant is to be located, aren't convinced that the rate increase won't affect them. Although the county and the sanitation district have vowed development will not come with the new plant, some residents don't believe it. They also say they think sewer services will be extended to them without their consent.
“I'm disturbed that I haven't had a voice,” said Alice Ryle, a Burlington resident. “I'm disturbed that we have already made arrangements in this area to deal with our sewage, and I'm convinced I'll have to pay double for something I don't want in the first place.”
How much the rate increase will be has not been determined.
“I believe where the board will end up, it will still be below the national average,” Mr. Eger said. The national average is about $17.79 per month.
The average rate-payer in Northern Kentucky now pays about $11.90 a month. In comparison, Cincinnati service fees increased by 9.5 percent this year or about $2 per month. Cincinnati residents pay on average $24 a month.
The increase was the first in Cincinnati since 1996, but officials say they expect to raise rates by 7 percent in 2001.
“For years we've probably been the best bargain in Northern Kentucky,” Mr. Eger said.
The sanitation district has been working with Barton & Associates Inc., a consulting firm in Jacksonville, Fla., to determine the best way to make the rate increase more palatable over a five-year period.
“We're looking at various scenarios to see how they can skin the cat, if you will,” said Mike Burton of the consulting firm.
Consultants met with a group of residents to discuss possibilities.
“I think a rate increase is inevitable,” said Bob Flaherty of Crescent Springs, a focus group member. “It's going to happen.
“We tried to come up with a way it would be best accepted.”
The firm is expected to present three or four alternatives to board members in March. At least one will include spreading the increase out over time.
“We're going to have to work that through because the timing of the capital projects can affect somewhat how much of a smoothing we can put on the rates,” Mr. Barton said. “We're trying to smooth them out as much as possible.”
In order to balance the price rate-payers have to pay for infrastructure in new growth areas, the sanitation district raised the tap-in fee in August.
“What people pay on their quarterly bill is really for (operation and maintenance) of the collection and treatment of that waste,” Mr. Eger said.
A tap-in fee is what homeowners pay when they build a house or what business owners pay when they build a business.
The connection fee has represented 10 percent of the district's total revenue for the the past two years. The increase has generated $1.15 million from 831 tap-ins since August.
The district projects an average of 1,700 new residential customers a year, which would bring in about $2.21 million more annually.
“It's just to get some equality there,” Mr. Eger said.
Home builders say they'll keep a close eye on the increase.
“Any time we have a raise in a government fee or a fee like this, it comes upfront, and it definitely goes to the consumer,” said David Noll, president of the Northern Kentucky Home Builders Association.
“We just hope we can keep it under control.”
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