Several residents filled the El Dorado City Commission room Monday evening to voice their concerns on a proposed water rate increase.
The commission has been considering an increase that would raise all rates 4 percent, and in addition, get rid of tier 3, which would impact larger users such as the hospital, refinery and rural water districts. Those larger users would see a 10 percent increase by moving to tier 2.
Kurt Bookout, public utilities director, said it has been eight years since their last increase and they have experienced an increase in the cost of water production, as well as investing heavily in maintenance and repair.
One other reason they were proposing getting rid of tier 3 was the state encourages cities to have a flat or conservation (inclining) water rate, not a declining rate which El Dorado currently has, although it is not required at this point.
Looking at the history of El Dorado water, Bookout said in 2010 they dropped tier 1 in the migration toward a flat rate structure.
Revising their recommendation, Bookout said staff’s recommendation was to drop tier 3 and not have the 4 percent increase to help large customers. This would equate to an about 10 percent increase for large water customers and no increase to residential customers within the city.
What this increase would mean to a rural water district customer is if they are paying $6 per 1,000 gallons and used 5,000 gallons that is $30. With the increase it would be an extra $3 a month.
Large outside users, including rural water districts, would go from $2.59 to $2.89 per 1,000 gallons, roughly. That would generate $135,000 a year in revenue.
“If we had stayed with the recommendation of going with a single tier and 4 percent, that would have been $226,000,” Bookout said. “That doesn’t mean we can’t do small incremental increases in the future. Sometimes that is more palatable.”
Commissioner David Chapin said that brings him to his thoughts that he wouldn’t mind seeing this spread out over the next couple of years.
“It is going to impact some of our rural area people that do use a little more than the 5,000,” he said. “They have livestock and everything else.
“I would like to move in that direction or at least think about it. Rural El Dorado, I still consider them part of the community. They do come in and shop. We do look after them and they look after us.”
Commissioner Chase Locke said he had some of the same concerns.
“I guess eventually it’s probably going to happen, but I don’t know if it would be to our benefit to try to stretch that out or go ahead and try to get it done,” he said.
Page 2 of 6 - Bookout said if they were going to a single tier, this would be the least amount of increase they could do.
Chapin said he was just saying not to do it all in one year. He said he is familiar with the prices of things going up constantly and how it adds up.
“A 10 percent increase is going to make an impact,” he said. “I think we can get to the same means down the road by spreading it out a bit. That way they would be able to absorb it.”
Commissioner Nick Badwey asked Bookout what that would do to his budget for infrastructure if they did not approve the full increase.
“This rate increase is only predicated on need,” Bookout said. “In the last eight years, all of our operating costs have gone up on top of investing heavily in infrastructure and repairs. We are only asking for an increase because the water fund needs it to keep operating. The 4 percent on top of tier 3 was about a 15 percent rate increase and we dropped that back to 10.”
Commissioner Bill Young asked if they move forward with the recommendation how long it would be before there was another increase as they stand today.
Herb Llewellyn, city manager, said the main drivers for them are fuel and power.
“I understand, but if we move forward with the proposal when is the time you ask for another rate increase?” asked Young.
Bookout said it would be four to five years, adding in that time if they added another revenue stream, he didn’t think they would need that.
“To me that is key,” Badwey added. “We need to replenish our water fund because we need to keep our infrastructure up and going.”
“While I don’t disagree,” Young said, “it is easier to stomach in increments. My fear is just raising rates every year moving forward.”
Chapin again pointed out they were dealing with more than just the residents of El Dorado.
“We’re dealing with the livelihood of other people,” he said. “The only way to make less of an impact is to do 5 percent over two years.”
Bookout also pointed out El Dorado still has some of the cheapest water around, and not only were customers not affected by the drought, but they didn’t have to pay conservation rates.
Mayor Mike Fagg voiced his concerns on the lake debt and the fact they were not addressing the big piece of the debt.
Page 3 of 6 - “We need that big customer then we will pay it every year like the other two pieces,” Llewellyn said.
Fagg also was concerned there was $65,000 for the new stadium, as well as funding for the international city manager retirement fund (ICMA) in the water budget.
Young said that doesn’t take away from the fact they haven’t had an increase in eight years and he didn’t want it tied back to the ICMA or stadium.
Llewellyn said one other thing they are looking at is how to start selling raw water and giving customers another option for non-potable water at a reduced rate.
“I agree with Dave and we’ve all said it, this is far from an ideal situation,” Young commented. “It would be great if we could continue doing business as usual, but that’s not the reality. The cost of doing business has gone up, the cost of making water has gone up.”
Llewellyn also mentioned water is the only bill in a person’s life they can come and talk about and possibly impact.
Following the commissioners’ discussion, several rural water customers voiced their concerns.
Davy Harkins, chair of Rural Water District No. 6, spoke first.
“I really would like the commission to be aware of what the tier was put in there in the first place for,” he said. “The tier was put in there for the rural water districts to have a little financing to maintain their infrastructure. When you take that away it makes the cost of the water in the rural areas considerably more expensive. It puts a lot of pressure on rural water districts on if to pass a bunch on or not maintain infrastructure like they should.
“I would like the commission to consider before they drop the tier what it was really put in there for. We don’t mind rate increases. The difference from in town and rural areas, if it gets too disproportionate, builds animositys between rural areas and the city and I don’t think we can afford to have that.”
He asked them not to drop the tier, but rather to just increase the percentage a little bit.
Steve Morgan, a board member on Rural Water District No. 1, also spoke.
“I totally agree with Davy,” he said. “I understand your point about infrastructure, but we have that too. That pipe is 40 to 45 years old. There’s going to come a time you’re talking about major money and personally – I’m sorry, I hate the way this sounds – I don’t trust government. They start telling me 10 percent now and say wait another eight years and have another 10 percent. None of us know the future.”
Page 4 of 6 - He too thought they should maintain the tier, and invited any of the commissioners who wanted to to attend one of their water board meeting and look at their monthly report.
“I would just like you to consider before you pass anything on to do a little more research,” Morgan said. “To me, how can you make a decision if you don’t know what we’re facing and what our concerns are.”
Bruce McCabe, chair of Rural Water District No. 3, also addressed the commission, saying, “I think you guys are being totally unfair with the farm community. We don’t mind a 4 percent raise, but when you jump us the other 10 above and beyond your city folks, I think you’re penalizing the rural communities. When that happens you have hard feelings.”
He also pointed out all they are basically wholesalers.
“Our customers are the ones we are trying to serve as cheaply and efficiently as we can,” McCabe said, “so make your decision accordingly.”
A customer from Rural Water District No. 6, Nancy Sage, also expressed concerns.
“I feel the hike for the rural customers should be the same as what the city customers are going to have to pay,” she said. “We are already paying almost double rates. We refer to it as Butler County rural liquid gold. We don’t have sprinkler systems in our yards. Nobody out in the country has nice green, wonderful, lush lawns. When you have water bills higher than your electricity bill, it’s a little ridiculous.”
She also was concerned when she learned they were helping subsidize the football stadium.
“Consider making a fair raise for everyone instead of gouging the rural people,” she urged.
Attorney Tim Connell also addressed the issue.
“Water districts are great customers,” he said. “They are the biggest and cheap to serve. They fill up their towers at night. They pay their bill every month. They are a good deal for the city of El Dorado.”
He said a few years ago districts were informed they just need to count on an increase every year.
“I don’t think it is so bad to increase every year,” Connell said. “I think what is bad is to have a large water increase without an opportunity to plan for it. It’s easier to plan when you have a little time ahead. It’s great there hasn’t been an increase. The flip side is it is not the best planning if you wait until you need a big increase.”
Page 5 of 6 - Connell said although the city needs $300,000, that doesn’t mean the majority needs to come from outside customers.
Locke said he honestly felt a little undereducated with the concerns they had heard.
“I probably would feel more comfortable if we have a few more conversations,” he said. “Part of our job is having conversations with people all around us. I don’t know what the solution is but I guess I would prefer a little bit more time.”
Llewellyn pointed out the reason they were looking to get rid of the tier was because of being compliant with the state, although they do not have to do that yet.
“This is just a step in going flat in what everyone else is doing,” Bookout said. “I’m sure everyone who purchases water from Wichita would love to have a flat rate instead of an inclining rate. It’s a painful step, but divided over eight years, it’s a little over 1 percent a year increase.
“If you do a rate increase every year you get criticized and if you wait as long as you can you get criticized for that. It’s kind of a no-win situation. The fact is we are going to need the rate increase to keep operating and doing the job we’re doing,” he said. “Our customers are still paying less than everybody around.”
Young asked staff to put together data to keep tiers in place and do increases in the tiers themselves.
Chapin added his biggest concern was rural water people are being charged a higher percentage increase than in-town people.
Bookout said inside city customers also pay toward the mill levy.
“I’m hearing two different things,” Chapin said. “What is residential?”
Bookout said it was not going up. They pay $1.63 per 1,000 gallons.
“Let’s answer the questions I want to ask,” Chapin said. “My question is the end user in the rural area is going to be paying at least 10 percent more. True or not?”
Bookout said that was true.
“Our city people, people we represent, are going to be paying how much on an increase?” Chapin asked.
Bookout told him none, with this latest recommendation.
“I want to understand this water thing a whole lot better than I understand it right now,” Chapin said. “I want to look at these people, in their eye, and know that I did the right thing, rather than staff said for me to do it, so I did it.”
Page 6 of 6 - Bookout said he would be happy to talk with them in a work session.
Locke wanted to explore some tiers and how it would affect them changing the tier system.
Chapin said he was more concerned about the dollars and the percent.
“We showed you who’s paying for this rate increase,” Llewellyn said. “You knew that. The bulk of the expense is, there are two tiers. Today residents in El Dorado are paying $1.63, if big customers are paying $1.48 and you get rid of cheap water, it’s those people paying the difference.”
He said from what he heard, they want to do phased in elimination of the two tiers or to keep the two tiers until the state tells them they have to change.
Before concluding the discussion, Dave McCoy, chair of Rural Water District No. 2, also voiced his thoughts.
“One of the biggest misconceptions is thinking if you raise rates it creates more conservation,” he said. “As rural water users, our rates are already higher. Water out in the country is a necessity, not a luxury. Every month we have delinquent people. The city is not the only one that hasn’t had any raises in eight years. The bottom line is if people are strapping just to get by now and not using any more water than they have to, raising water with eliminating a tier, you are just creating another tax. When it comes down to it, it is going to affect the person who wants to bring their family to town for supper on a weekend or do a remodeling project and needs some lumber. Raising rates and doing away with a tier to promote conservation is just a cop out.”
Young said he did not disagree about the conservation rates for rural users.
“You use water you have to use,” he said. “As we look at the need across the board it is simply because the cost of delivering that water to houses in El Dorado or out in the rural water districts has gone up.”
Before ending the subject, Fagg told the boards he would be happy to come to any of their meetings they want him to, although it would not be every month.
The commission decided to take no action Monday night. They scheduled a work session for 4 p.m. Nov. 26 to discuss it further.