Archive for Thursday, December 14, 2006

Utility rate increases coming

December 14, 2006

The De Soto City Council gave approved last Thursday to increases in sewer and water fees.

The sewer fee increase was anticipated and was among a package of information City Administrator Pat Guilfoyle gave the council on the city's financial status. Among the items in the package was a five-year financial forecast.

The fee increases will raise the monthly sewer rate 6.2 percent and the water rate 3 percent starting Jan. 1, 2007.

The sewer fee increase was built into the 2007 budget the council approved last summer.

The water rate increase was the first since in two years, Guilfoyle said. The city administrator said it was needed because of increasing costs associated with operating an aging water distribution system and plant at the Sunflower Army Ammunition Plant.

Guilfoyle said during the earlier rate increase discussions that sewer rate increase was needed to pay for the $9 million wastewater plant now nearing completion in the West Bottoms. Two rate increase for the same purposed scheduled for the past 18 months were never enacted, he said.

The good news, Guilfoyle wrote in a report to the council, was that planned sewer increases of the same size in 2008 and 2009 might not be needed.

The utility funds were further explored in the five-year financial forecast Guilfoyle shared with the council.

In presenting city's first ever forecast, Guilfoyle said it was meant to give the council an understanding of the long-term implications of budget decisions. As such, it showed what trends the council could expect should current policies and circumstances remain static and was not meant to be an exact prediction of the city's financial situation in 2011.

"The purpose is to give you a general direction," Guilfoyle said. "The trend is five years down the road taxes go up. You're developing that awareness now, so you can identify what those early warning signals are."

Furthermore, revenue projections in the forecast were conservative and new development, a change in state or federal policies affecting the city, inflation or other circumstances could dramatically change real circumstances, Guilfoyle said.

With those caveats, the forecast does show pressure to increase the city's mill levy near the end of the decade with debt service requiring an additional $70,000 a year and annual general fund allocations growing in that period by about $1 million.

Driving the debt service obligation was the new pool and sewer plant. The latter was to be paid off primarily through system development fees charged to new construction and sewer rate increases such as those presented at the meeting. However, Guilfoyle said the failure to follow through with the first two of those planed rate increases and the failure of housing to match projections account for the forecast. Positive development news could change that picture, he said.

Guilfoyle said he would soon provide the council with a proposal to restructure the debt portfolio, which should provide a brighter debt service forecast.

At Guilfoyle's suggestion, the city started taking competitive bids for investing the $2.5 million electrical utility fund. That would provide the city with at least another $80,000 in 2007 to use for property tax relief, the city administrator said.

On the positive side in the forecast, the city's capital accounts funded by such sources as the excise tax, system development fees, and Community Development Block Grant are projected to provide the city with $2.86 million that could be used for new projects.

The council could look for spending cuts to avoid the mill levy pressure the forecast projects, Mayor Dave Anderson said. But he and Councilman Ted Morse vocally supported growth was adding more revenue to city coffers.

"We need to diligently do what we can to bring revenue in," Anderson said. "I don't think anyone wants to cutback on what we are doing."

Anderson signed an agreement at the meeting that will spur more development on the west side. In the agreement, Joann Thompson agreed to provide the city right of way for the extension of Primrose Drive and a timetable for obtaining a final plat on her Cherokee Woods subdivision. In return, the city agrees to create benefit districts to finance street and underground utility improvements in Cherokee Woods. Assessment against lots in the subdivision will pay off the debt.

The completion of Primrose Drive was also a condition of Nate Harding getting a final plat for his Brook West subdivision to the north of Timber Lakes, which would be included in a benefit district for the Primrose Drive extension. With the signing of the agreement, council and city staff agreed to support Harding's application before the De Soto Planning Commission.

However, planning commissioners could still have reservations about the timeline and surety the street will be completed

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