Clarification on rate hikes
It’s probably the city council meeting that every Newport city councilor has been dreading for months. A meeting when Public Works Director Tim Gross gives the council a reality check on the “State of the Pipes” in Newport. And the news wasn’t good. In fact, it was down right awful.
As readers of News Lincoln County know well, the city of Toledo is faced with having to replace everything from river intake to sewer mains. Roll that picture west down Highway 20 to Newport, and repeat the observation. Pipes in Newport, put into the ground in the 1950′s, are decayed and worn out like those in Toledo. Gross says to ensure reliable water and sewer service and a workable storm drain system, Newport needs to replace nearly 200 miles of pipes that hook to water and sewer treatment plants, which themselves, are still in good shape. However, the sewer plant will be needing some expensive upgrading in the near future. There are also another 100 miles of storm drain pipes that have to be replaced.
But the issue is what will happen to sewer and water rates for Newport residents and businesses over the next five to ten years to begin “paying forward” the bill for new water and wastewater treatment plants and sewer pipes and the pump systems that go with them. The council asked Gross what he thinks he’ll need for a revenue stream to do it. His response was “It depends on how fast you want to replace the pipes and whether we get a major system failure that throws the plan off schedule. I’m looking for rate hikes for water and sewer, and that’s not counting storm water. The system we have now is well beyond it’s life expectancy and it’s failing.”
Rather than agree to any specific rate hike, the council asked Gross to sharpen his pencil and develop a plan on how much money he’ll need to be raising annually to stay up with replacement costs.
Gross said that many communities in Oregon are facing the same dilemma. A big infrastructure push following World War II and into the early 1950′s was the last major infrastructure work during the last century. Now, more than a decade into a new century, all those pipes, plants and pumps are failing. All those decades of neglect are coming home to roost. And it’s going to cost a lot of money just to rehabilitate Newport’s sewer and water service.
A visibly uncomfortable city council suggested raising rates 5% a year but Gross told them, “I need five percent a year just for the rising cost of operations and part of the system maintenance cost. At five percent you won’t be putting any money into replacing a system that continues to decay in the ground.”
Gross said that the dilemma is common across the country. People have not been told they have to eventually replace their entire system, even though the obligation was always there. Nothing lasts forever. Gross said he will be spending the next two weeks coming up with a plan to raise $1.5 million a year in water pipe and pump replacements, and another $1.5 million in sewer pipes and pumps. The council suggested borrowing money up front to soften the initial blow of the rate hikes. But Gross reminded the council that the rate must produce a revenue stream that “pays forward” the cost of pipe and pump replacement.
Gross says whatever the new rate hike schedule the council agrees to, whether it’s 20% for year one, 15% for year two, 10% for year three, and so on, it must raise about $3 million a year for system component replacements. An additional 5% per year rate increase is needed just to cover the costs of operation and maintenance inflation.
So, we’ll see what Mr. Gross comes up with during the first council meeting in May.Share on Facebook