Purcellville Council Eyes 27-Percent Water Rate Increase

The majority of Purcellville residential water and sewer users could see sharp utility rate increases next year or steadily rising rates each year over the next decade, but commercial users are in for a big break, under a proposal being considered by the Town Council.

For a fourth time in the past month, the council on Wednesday night met to discuss ways of bolstering the town’s $3.2 million water fund and $4.1 million sewer fund, which have shrunk by 39 percent and 16 percent, respectively, in the past fiscal year. In part, those declines are a product of an imbalanced water system, which sees73 percent of the town’s annual water output going toward single-family residential users, who pay 86 percent less, or $8.32 less per 1,000 gallons of use, for water service than the $17.99 it costs the town to provide it.

According to an analysis by Stantec, the town’s utility rate consultant, the town’s water and sewer fund revenue requirements will hover around $4.5 million in each fiscal year from 2020 to 2022 to begin to achieve structural balance. Currently, the water fund is generating $2.3 million in user fee revenue and the sewer fund is generating $3.1 million. While both funds’ revenue requirements will drop to about $3.25 million in Fiscal Year 2023, the water fund revenue requirement won’t go back up to $4.5 million until the end of the decade but the sewer fund’s requirement will go up to about $5.25 million in Fiscal Year 2023 and will rise to about $5.75 million by 2029.

With the town responsible for nearly $31 million of sewer debt and $21 million worth of water projects, and needing to close a $1.9 million funding gap in the water fund and a $1.3 million funding gap in the sewer fund,Stantec suggested three plans of action to help the town regain structural balance of its utility funds—increase water rates by 27 percent and sewer rates by 36 percent in the next fiscal year followed with 4-percent annualwater and sewer rate increases for the remainder of the decade; increase water rates by 15 percent and sewer rates by 20 percent in each of the next two fiscal years, followed by 4-percent annual water and sewer rate increases for the remainder of the decade; or increase water rates by 7.5 percent and sewer rates by 9.25 percent in each fiscal year for a decade.

Stantec recommended the town go with the second option but also told council members the third option also was sensible. But the town staff is recommending that the council embrace the first approach—to increase water and sewer rates all at once.

One Large Hike

That recommendation—to raise water rates one-time by 27 percent and sewer rates one-time by 36 percent, and follow with 4-percent increases to both through 2029—would see water rates for the town’s 1,527 average single-family users, or those who use 8,000 gallons of water every two months and currently pay up to $8.89 per 1,000 gallons in the existing second tier, increase to up to $13.81 per 1,000 gallons in the new 8,000-14,000-gallon bracket

That would mean those users’ bi-monthly utility bills next year would go up by 5.3 percent, or by $11.60, to $229.17.

Meanwhile, single-family users consuming 0-7,000 gallons of water would pay up to $9.20 per 1,000 gallons,single-family users consuming 15,000-20,000 gallons would pay up to $18.41 per 1,000 gallons and single-family users consuming more than 20,000 gallons would pay up to $23.01 per 1,000 gallons.

As for existing non-residential water customers that use upwards of 600,000 gallons of water in a billing cycle, their rates would drop significantly—from up to $57.26 per 1,000 gallons in the existing 17th rate tier to a $9.47 fixed rate for all of their usage.

That means the town’s 28 average non-single-family users with 1.5-inch meters would pay $616 less on their bi-monthly bills, the 26 average non-single-family users with 2-inch meters would pay $12,367 less and the two average non-single-family users with 3-inch meters would pay $10,076 less.

Meanwhile, all sewer users’ rates would go up by 36 percent in Fiscal Year 2021 and 4 percent thereafter through 2029.

An option to boost the utility funds with 40-year loans from the USDA could reduce the one-time water rate increases to 20 percent and the sewer rate increases to 33 percent.

Fixed-Rate Increases

Under Stantec’s proposed 7.5-percent fixed water rate and 9.25-percent sewer rate increases through the next decade, water rates for average single-family users would increase to up to $13.39 per 1,000 gallons in the new 8,000-14,000-gallon bracket.

That would mean those users’ bi-monthly utility bills next year would go up by 0.8 percent, or by $1.75, to $219.32.

Other single-family users would pay $7.65 per 1,000 gallons in the proposed 0-7,000-gallon bracket, $17.22 per 1,000 gallons in the 15,000-20,000-gallon bracket and $21.04 per 1,000 gallons in the over-20,000-gallon bracket.

Non-single-family water users, such as businesses and governmental institutions like schools, would begin paying for their usage based on two factors—their meter size and their consumption.

Those with 1.5-inch meters would pay $21.04 per 1,000 gallons for all use exceeding 135,000 gallons, those with 2-inch meters would pay that same amount for use exceeding 241,000 gallons and those with 3-inch meters would pay that price for use exceeding 526,000 gallons.

In all, average non-single-family residential users with 1.5-inch meters would spend $475 less on their bi-monthly bills, average non-single-family users with 2-inch meters would pay $7,498 less and average non-single-family users with 3-inch meters would pay $8,094 less.

Vice Mayor Tip Stinnette said the 7.5-percent fixed-rate structure is “about as revenue neutral as you can make the design” and that it would stabilize rates, balance customer impacts while still generating more revenue, enhance transparency and promote water conservation. But he still asked if it would be beneficial to work on making it even more revenue neutral.

Stantec Principal David Hyder said his company’s proposed fixed-rate structure accomplishes those objectives well. “It’s about as close as we can get,” he said.

Two Moderate Jumps

Stantec’s primary recommendation is for the town to implement 15-percent water rate and 20-percent sewer rate increases in the next two fiscal years, followed by subsequent 4-percent hikes in both through the end of the decade.

Under that proposal, average single-family users would pay up to $12.47 per 1,000 gallons in the new 8,000-14,000-gallon bracket.

That would mean those users’ bi-monthly utility bills next year would go up by 1.9 percent, or by $4.10, to $221.67.

Other single-family users would pay $8.32 per 1,000 gallons in the new 0-7,000-gallon bracket, $16.63 in the new 15,000-20,000-gallon bracket and $20.79 in the over-20,000-gallon bracket.

Non-single-family water users with 1.5-inch meters would pay $20.79 per 1,000 gallons for all use exceeding 135,000 gallons, those with 2-inch meters would pay that same amount for use exceeding 241,000 gallons and those with 3-inch meters would pay that price for use exceeding 526,000 gallons.

In all, average non-single-family users with 1.5-inch meters would spend $495 less on their bi-monthly bills, average non-single-family users with 2-inch meters would pay $8,021 less and average non-single-family users with 3-inch meters would pay $8,296 less.

Universal Fixed Rates

Alternatively, Stantec also proposed a universal fixed-rate model in which the town’s 2,777 water users with 5/8-inch meters would pay a fixed rate of $13.33 under the one-time and two-year increase models, or $14.75 under the steady 10-year increase model. Those 1-inch meter users would also pay a $15.23 fixed rate for sewer service.

Under that same system, the 44 water users with 1-inch meters would pay $53.62 under the one-time and two-year increase models, or $59.80 under the steady 10-year increased model. Those users would pay a $61.25 fixed rate for sewer service.

The 28 water users with 1.5-inch meters would pay $89.75 under the one-time and two-year increase models, or $99.27 under the steady 10-year increased model. Those users would pay a $102.52 fixed rate for sewer service.

And the 26 water users with 2-inch meters would pay $160.62 under the one-time and two-year increase models, or $177.66 under the steady 10-year increased model. Those users would pay a $183.47 fixed rate for sewer service.

Time to Decide

To better understand the task at hand, Stinnette said Purcellville staff should meet with the Town of Hamilton to understand its utility rate model and compare operational costs.

Town Manager David Mekarski said that the town staff has already met with Hamilton’s utility staff and that he has personally met with Hamilton Mayor David Simpson, who has been “very gracious.”

“I’d like to understand the Hamilton model a little bit better.”Stinnette said. “I do think it would be useful for us to understand the pluses and minuses as it’s applied to our municipality.”

When Mayor Kwasi Fraser mentioned the idea of bringing in an outside company to manage the town’s utility system, like Middleburg and Hamilton did withInboden Environmental Services, Hyder cautioned the council and noted that before the town engages in those types of discussions, the town should understand how much it needs to raise utility rates throughout at least the next decade.

In the short term, Stantec is expected to present the Town Council with a comprehensive analysis on utility refinancing and rate restructuring options by early January. Stinnette said the town needs to discuss the matter more and finalize it soon.

“Don’t make this hard … go easy—Don’t make this into a huge science project. Just find out what the parameters are and give us your best guess on the parameters,” he told Mekarski. “We have got to start making some decisions.”

pszabo@loudounnow.com

3 thoughts on “Purcellville Council Eyes 27-Percent Water Rate Increase

  • 2019-11-22 at 6:41 pm
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    Wow!! I understand why the town says it needs to make the increases. But wow!!

  • 2019-11-23 at 11:21 am
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    So as it turns out Fraser math is the mythical numbers. Only took 3 terms for people to catch up to that..Luckily, he only had the majority of council with him for the last 2 terms..

  • 2019-11-25 at 8:36 pm
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    This is NOT news. This issue has been discussed at TC meetings for over a year.

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