Closing of Sara Lee plant blamed for likely slight increase in monthly water and sewer bill for Paris residents

Posted on Jun 4, 2012 in Behind the Scenes by Charles Richards

By CHARLES RICHARDS

www.eParisExtra.com

The Paris City Council received a proposal Thursday night that the residential and commercial monthly water rate remain the same for the next fiscal year but that the monthly sewer charge be increased by 6.3 percent – making the combined monthly bill about 3.5 percent higher.

Assuming a monthly usage of 5,000 gallons, the average household would see its combined monthly water and sewer bill go up by $1.76 a month, from $50.81 to $52.57.  The average business would see an increase in its monthly water and sewer bill of $2, from $57.18 to $59.18.

The city’s loss of wastewater revenue from Sara Lee’s shutting down last November is the primary culprit for the need to raise sewer rates, said Chris Ekrut of McKinney, an analyst for J. Stowe & Company, which does an annual ”cost of service” study for the City of Paris.

Also, he said, “the city had some capital expenditures for lift station equipment and pumps.”

On the water side, Ekrut said, Lamar County Water Supply District’s usage of water from the city’s distribution system “increased significantly” last year, causing its rate to go up. As a result, the City of Paris is estimating $1,416,000 in revenues just from the sale of water to LCWSD in the next fiscal year.

Consequently, Ekrut said, “we are not recommending an increase to your water rates.”

Under the terms of the city’s contracts with its largest retail water customers, the city is required to get a annual cost-of-service study on water and sewer. The council will be asked to take action on the rate increase for residential and commercial customers at a subsequent meeting, finance director Gene Anderson said.

For the city’s retail water customers, such as Campbell Soup, Lamar County Water Supply District and the city’s power companies, the proposed rates will take place automatically by contract, Anderson said. The council will have to pass an ordinance to put higher residential and commercial water and sewer rates in place.

“This is not for action tonight,” Anderson said. “After you’ve had some time to kind of digest this, we’ll bring it back at a later council meeting for your consideration on whether you want to adopt the findings of the study.”

Part of the water and sewer rate analysis, Ekrut said, is the City of Paris’ ”rate maintenance” policy that was informally in effect for years and then formalized in January 2010.

“This requires the city council set water and wastewater rates to achieve a number of goals. This includes net utility revenues – which is basically your revenues less your O&M (operation and maintenance) expenses. That’s your net utility revenues,” Ekrut said.

“They must be 1.1 times the principal and interest payment of all outstanding water and wastewater debt. In addition, the city has an interest and sinking fund, which is established to pay the next principal and interest payment; there’s a reserve fund that must be established which is equal to the average annual principal and interest payment. There’s also a contingency fund of $500,000.”

Anderson was asked the ramifications of the council disregarding the consultant’s recommendation and leaving residential and commercial water and sewer rates as they are for the coming year.

Of major significance, Anderson said, the City of Paris is in the process of making the final payments on three significant bond issues.

So there’s some fairly strong possibility that in the upcoming budget discussions for the 2012-2013 fiscal year, the city may be able to issue additional debt “to fund some things that we’re going to do,” the finance director said.

“When the rating agencies come in and do a financial evaluation, if we fail to maintain the financial integrity of our system, that could affect our bond raiting, and we could conceivably end up paying hundreds of thousands of dollars more in interest.”

 ”In other words, this is something that would be required to be done,” Mayor AJ Hashmi said.

“Yes,” Anderson replied.

Here is a comparison with other cities of the City of Paris’ residential water and sewer rates — both current and proposed — with the prices charged by cities of similar size:

WATER AND WASTEWATER MONTHLY BILL COMPARISONS

RESIDENTIAL CUSTOMERS

ASSUMING 5,000 GALLONS MONTHLY USAGE

 

		MONTHLY			MONTHLY			TOTAL
CITY	POPULATION	WATER		CITY	SEWER		CITY	MONTHLY
		CHARGE			CHARGE			CHARGE
Bonham	10,661	$34.16		Terrell	$39.41		Terrell	$69.80
Gainesville	16,569	$32.73		Paris (proposed)	$34.20		Gainesville	$66.15
Terrell	19,599	$30.39		Gainesville	$33.42		Bonham	$60.48
Corsicana	26,463	$29.60		Paris (current)	$32.19		Commerce	$59.80
Commerce	9,750	$28.40		Commerce	$31.40		Corsicana	$59.35
Denison	24,127	$27.70		Corsicana	$29.75		Paris (proposed)	$57.58
Marshall	24,089	$23.45		Marshall	$28.02		Paris (current)	$55.57
Paris (current)	26,539	$23.38		Kilgore	$26.80		Denison	$53.50
Sulphur Springs	15,738	$23.03		Bonham	$26.32		Marshall	$51.47
Kilgore	12,975	$21.60		Denison	$25.80		Kilgore	$48.40
Greenville	27,200	$21.28		Greenville	$23.43		Sulphur Springs	$45.00
Mount Pleasant	16,564	$19.70		Sulphur Springs	$21.97		Greenville	$44.71
Texarkana	37,103	$17.18		Texarkana	$21.83		Texarkana	$39.01
				Mount Pleasant	$15.75		Mount Pleasant	$35.45

 

 

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