After several months of discussion regarding a potential increase in water and sewer rates in Elmore City, City Council members heard fresh insight on the matter during a regular meeting of the Elmore City Public Works Authority March 7.
Randy Clark with the Oklahoma Rural Water Association presented council members with the results of a recent rate analysis conducted by ORWA of Elmore City’s water and sewer rates.
Town officials requested the free analysis from ORWA earlier this year, after putting the brakes on a proposed rate hike that was initially set to be implemented in December. The increase was intended to bring Elmore City’s municipal rates into compliance with town ordinances that currently require an annual rate increase at a rate equal to the percentage of the municipal cost index (MCI). The increase initially proposed in December was expected to be steeper than prescribed by the ordinance, in order to catch up after failing to implement the increase in previous years.
During the March 7 presentation, Clark first addressed the town’s operating ratio, which indicates the ability to pay debt back. That ratio should be at 1.25 or higher, according to Clark. Elmore City’s ratio is currently at 1.86.
“You’re very strong on that,” Clark said.
Clark then showed the council the town’s affordability index, which is an indicator of the ability for average water customers to pay the water and sewer rates. An index of 1.0 or less is considered affordable. Elmore City’s AI currently sits at 2.29.
“Your affordability index is high. Part of the reason for that is that your median household income is a little low for this area. We just don’t have high income with our community and that makes a difference,” Clark said.
Before discussing specific rate proposals, Clark made several recommendations for the council to consider moving forward, including the recommendation to have ORWA conduct a rate analysis on an annual basis to better assess the town’s utility needs. ORWA does not charge for rate analysis.
Clark also recommended the town separate water and sewer costs so those rates can be calculated independently of each other.
“At this point and time, you’re not separating costs out, so we do the best we can at getting the rates set for both of them.”
He also recommended the council form a planning committee that will report both short term and longterm infrastructure needs to the council each year as part of their annual budget planning.
“We want you to have an annual planning session of where we need to be in our infrastructure for the water and wastewater. If we’re not planning annually then we need to be doing that, so we know how to make our budget,” Clark said. “We need to look at short-term goals and long-term goals, and that helps us develop a budget, which helps me know how to go in the right direction on setting proposed rates for you to look at.”
Clark said the report shows the town’s water loss rate is high, at nearly 60% last year. That number is calculated by subtracting the amount of water sold from the amount of water produced. Clark recommended the council conduct a water loss audit and allow ORWA to send their leak detection team in to try to identify and reduce water loss.
“Water loss could be through your meters. It could be through your non-metered buildings you may have in town – maybe a park, city building, community center. We want to make sure everything is metered that belongs to the people of this community. Even your city buildings should be metered,” Clark said. “Even if it doesn’t get a charge, it needs to be metered for the concern of water loss and knowing where water is going.”
Clark said while the town currently shows it is generating an average monthly net income, after expenses, of $15,836.92 through water billing, Elmore City is not adequately financing depreciation and capital improvement structure to provide for future infrastructure needs.
To remedy that, ORWA is suggesting an overall 9% increase in rates, but also a reorganization of how the rates are applied, both on customer billing and to city expenses.
The analysis proposes raising the base rate for water from $21.81 to $40.45. That fixed base charge is what is typically assessed by utilities to cover the cost of maintaining existing infrastructure and repaying loans and bonds used to build that infrastructure.
“We want to see your customer base rate, if they don’t use any water at all, cover two-thirds of your fixed cost,” Clark said.
The variable cost charged per 1,000 gallons of usage would also be restructured from the current range, which according to the report is $17.48 for the first 1,000 gallons and goes down from there at 1,000-gallon intervals. The report suggests moving to an ascending scale charge, which is the recommended method for assessing variable rates, of $7-$10 depending on usage. Those variable charges are typically designed to reflect the cost of providing water, including chemical treatment and energy to move and deliver water to customers.
An ascending rate keeps costs lower for those customers who use minimal water and place minimal demand on the system, while charging more for those customers who place larger demands on the system. It also helps promote water conservation.
The result would be an overall increase of about $10 for 5,000 gallons of residential water usage, from $71.96 to $81.45.
The suggested rate structure would allow the city to fund annual depreciation at a just over $11,000 per month, providing for infrastructure needs for the future of the system.
“This is giving you $136,000 extra for annual usage for taking care of your infrastructure,” Clark said. “Now, what we’re trying to get you to do is get out of the mentality of the loan business. If we’re setting aside what the auditor actually says we should do, in 10 years you’ve put back $1.3 million.”
The proposed rates would increase the town’s operating ratio from 1.89 to 1.91 but would also raise the affordability index from 2.29 to 2.6.
Clark said the numbers in the rate analysis report are based on information and figures provided by town officials “This is based on facts. This is based on information,” Clark said. “Again, annually look at your rate structure. You may need to change your ordinance from an MCI to actual whatever we need to be at that time. It may not be near as high as the MCI says it should be. We may be able to do a smaller rate adjustment, so it’s not as difficult for all those who are using water and wastewater services here in town.”
The agenda item was for presentation of the rate analysis and the council took no action on water rates during the meeting.
Under the City Council agenda for the same regular meeting date, council members tabled a request to decide whether the Elmore City Chamber of Commerce can pursue fundraising for a splash pad to be placed on municipal property. The city would ultimately be responsible for maintenance of the splash pad.
Council members also heard from Joni Oller with the Chamber of Commerce regarding a proposal to build a Footloose Pavilion on the corner of Highways 29 and 74. Oller advised the council that the Chamber has been working with Paramount, which owns the copyright to the original Footloose material, and is trying to ensure they have the proper permissions to use any images or other copyrighted material as they construct the pavilion. She said the Chamber is in need of an attorney to assist with those copyright issues and asked if it might be possible to enter into a partnership agreement to allow the Chamber to employ the town’s attorney to represent the Chamber only on the copyright matters.
Council members voted to table the item until next month’s meeting to allow the town attorney time to review the agreement.
The council approved a $500 sponsorship for the 2023 Footloose Festival, as well as an item to allow the Elmore City Chamber of Commerce to hang Footloose Festival banners on the north side of the community center.
The council approved the purchase of a woodchipper in the amount of $20,539.69. The cost of the woodchipper is being completely funded by a DEQ grant.
Council members approved allowing code enforcement officer Jason Hayes to apply for a $1,000 Community Improvement Grant from the Oklahoma Code Enforcement Association. The reimbursement grant will be used to purchase a covered dog kennel to be used for cardboard recycling and to purchase recycling bins for plastic bottles. Hayes said any remaining funds will be used to purchase identifying lettering for the city’s code enforcement vehicle.
Police Chief Jason Thornton requested the council table an agenda item to revise a city ordinance regarding who is allowed to carry concealed weapons without a permit. Thornton said the ordinance needed to be updated or revised to mirror state statutes, and he’d like additional time to consult with the town attorney about the proper wording before bringing the item back to the council at April’s meeting.
Council members did vote to approve adding offenses to the town’s fines, cost and bond schedule. Thornton said the offenses, many of which are code enforcement violations, are already outlined in city ordinances but are not currently on the schedule of listed offenses, preventing officers from issuing citations and fines for those violations.