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Shorewood faces sewer rate increases to cover improvements

Options range from $89 to $158 annually starting in June

Jan. 23, 2013

Shorewood - Shorewood residents can expect an increase in sanitary sewer rates for usage beginning next month.

The Village Board on Tuesday discussed different options for increasing sewer rates, including the option for one large increase in 2013, or smaller increases in 2013, with subsequent rate increases in either 2014 or 2015.

Trustee Michael Maher, chair of the Budget and Finance Committee, explained that the increase is necessary to help cover the cost of sewer improvements to Basins 1 and 6, which the board approved last March.

"When we considered that in March, we were presented information on what the sewer rates would have to be by making those improvements in Basin 1 and 6," Maher said.

"Improvements already have been made, we've issued bonds. This is the point where we now adjust the sewer rates to cover those costs for those improvements," he added.

According to a memo from Finance Director Stephanie Walker, without a rate increase, the utility likely would be facing a deficit cash position by the end of 2013.

In order for the sanitary sewer utility to issue revenue bonds for future projects, Walker explained in her memo, the rates must be set so that cash operating income is 125 percent of the debt service for the prior year.

Three options

The three main options proposed by Walker include a single increase of 46 percent in 2013, the combination of a 26 percent increase in 2013 and 12 percent increase in 2014, and the combination of a 33 percent increase in 2013 and likely a subsequent increase of about 9 percent in 2015.

For all options, the 2013 rate increases are proposed to be effective with consumption beginning Feb. 15. The first bills reflecting the increased rate would go out to residents in June.

The options differ in how soon they would enable the utility to reach its required minimum cash balance and revenue coverage. With one large increase this year, both would be achieved in 2013. With the second option, revenue coverage would be satisfied in 2013 and the minimum cash balance in 2014. The last option would ensure that both are met in 2014.

Increases proposed for 2013 and 2014 are to fund the $6.2 million of debt issued between 2011 and 2012 for improvements that have already been completed, Walker's memo states. Rate increases shown beyond that would be to fund future capital projects, which have not yet been authorized.

More increases possible

Further rate increases in 2016 may be necessary for each option, should the village decide to borrow additional funds to complete future sanitary sewer projects called for in the village's Comprehensive Facility Plan. If those projects are not completed, no other significant sewer rate increases would be planned.

Trustees indicated that one large increase in 2013 may be less palatable to taxpayers. However, they asked that staff return to them with a recommendation.

Village Manager Chris Swartz said he would request that Walker narrow down the options to one recommendation to be considered for action by the board at its next meeting.

Notifications of whatever increase is approved will be sent to residents with the sanitary sewer bills that are being mailed out in February, Swartz said, and information also will be published in an article in the village magazine.

AT A GLANCE

The main sanitary sewer rate increases the Village Board is considering are as follows:

Option A: Rate increase of 46 percent in 2013.

For the average user, this would amount to a quarterly bill increase of $39.49, and an annual increase of $157.95.

Option B: Rate increase of 33 percent in 2013, likely followed by an increase of 9 percent in 2015.

For the average user, this would amount to a quarterly increase of $28.33, or annual increase of $113.31, in 2013, and an additional quarterly increase of $10.28, or annual increase of $41.10, in 2015.

Option C: Rate increase of 26 percent in 2013, followed by 12 percent in 2014.

For the average user, this would amount to a quarterly increase of $22.32, or annual increase of $89.27, in 2013, and an additional quarterly increase of $12.98, or annual increase of $51.92, in 2014.

NEXT STEP

WHAT:Shorewood Village Board to consider adopting an ordinance to increase sanitary sewer rates

WHEN: 7:30 p.m. Feb. 4

WHERE: Village Hall, 3930 N. Murray Ave.

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