City Council gives final approval to rate increase

By Thomas Wilson
STAR STAFF
twilson@starhq.com

   Elizabethton City Council voted to approve a new water and sewer rate structure that will effectively raise utility rates for the majority of city water customers.
   "I don't think any of us are happy about this," said Mayor Sam LaPorte, "but we'd be even less happy if the state came in and raised rates even more."
   The council voted 4-1 with Pat "Red" Bowers voting no to pass the water rate restructuring rate on second and final approval.
   Council member Diane Morris was absent from the meeting. Mayor Pro Tem Sam Shipley was unable to attend the meeting due to work.
   In a letter to city administrators, the state's water and wastewater finance board directed the city to modify the existing utility rate structure to fund the water and sewer system.
   The city's 2002-2003 water/sewer budget was cut 33 percent, down from $5.3 million to $2.6 million The new budget postponed capital projects or the use of any fund balance at all.
   According to the water/sewer ordinance, the municipal water rate for customers living inside the city limits would increase from the current rate of $5.20 to $6.24 for the first 1,000 gallons of water used, while metered sewer rates for municipal customers would rise from $7.89 to $9.47.
   Regional system customers living outside the city limits would see their water rate rise from $9.70 to $11.64 for the first 1,000 gallons of water used.
   The rate restructuring also includes substantial increases for water tap and sewer tap fees for municipal and regional water customers. The new water rate structure will go into effect on Feb. 1.
   The water and wastewater financing board functions under the Tennessee Department of Environment and Conservation. According to state law, the board was created to maintain the financial integrity of water systems and wastewater facilities of municipalities and utility districts.
   The closure of Alcoa Extrusions cost the city roughly $200,000 in lost water/sewer fees and new accounting regulations requiring cities to fully fund all depreciation costs were two major factors that have compelled the rate increase, according to the city.
   Projects, including a state-mandated $2.2 million water filtration system at the Big Springs Water Plant and the $1.1 million construction sewer line connecting the West Interceptor to the sewage treatment plant, added more costs to the water and sewer budget's bottom line.
   The Siam Utility District's evolution to a self-supporting utility system also resulted in the district purchasing less water from the city. Under the new rate structure, wholesale water rates to utility districts buying water from the city will increase from $400 to $425 for the first 100,000 gallons purchased.
   "In one year, we lost Alcoa; Siam went off line to their own system," said LaPorte. "Until that time, we had good cash flow, but all that was a double whammy on us."
   In other business, the council also approved by 5-0 on second reading a budget amendment of $2,000 to the city's special capital projects fund.
   The council also voted 5-0 to approve the purchase of the Jesse and Carol Arnett property at 615 N. East Street. The purchase was initiated under the Hazard Mitigation Grant funded through the Federal Emergency Management Agency (FEMA) following the county flood in January 1998.
   There were approximately 15 properties scheduled for purchase under the Hazard Mitigation grant by the city.