By Tom Morphet
A committee of the Haines Borough Assembly will recommend a 20 percent
hike in water and sewer rates starting Jan. 1 to cover costs and begin to pay depreciation
on the utilities’ aging infrastructure.
Rates have been propped up by dwindling reserves in recent years, but
unless they increase this year, the municipality will default on terms of debt payments,
borough staff told members of the assembly’s government services committee last week.
Committee member Deborah Vogt described the increase as a moderate one
that would pay a small portion of depreciation. On sewer and water systems, the borough
has never paid depreciation – money budgeted as reserves to pay for infrastructure
replacement – instead relying on state and federal grants and municipal bonds to pay
for major improvements.
The proposed increases would pay 12 percent of depreciation on the
water system and 30 percent of depreciation on the sewer utility for the next 18 months.
The committee deliberated on how much depreciation to pay. Consultants
hired by the borough to review the utilities recommend paying 100 percent, but committee
members clearly weren’t ready to increase rates that much. Not saving for
depreciation amounts to taxing future utility users for current use, said borough
financial officer Jila Stuart.
Vogt said it was "reckless" to completely ignore
depreciation. "It’s a dilemma for the borough. Obviously we don’t want to
raise rates on people who are already stretched thin, but we can’t let the system go
belly up, either."
Alaska’s Congressional influence is waning and the state is not
delivering much to Haines despite the rising price of oil, Vogt said. "In the past we
haven’t paid for capital projects entirely on our own, but that money may not be
there in the future… How trusting are we that things are going to go our way?"
Also, using boroughwide funds for utilities is sensitive because many
residents aren’t utility customers, she said.
At current funding, water and sewer maintenance work isn’t getting
done, said borough utility manager Scott Bradford. All sewers aren’t jetted, all fire
hydrants aren’t flushed and valves aren’t exercised. In addition, about 45
percent of businesses aren’t metered. Installing meters costs $350 or more, Bradford
said. (Residential use is unmetered.)
Bradford pointed to difficulties getting state funding for a sewer pump
project near Tlingit Park where raw sewage sometimes surfaces in a ditch. "Even with
a health risk" the borough can’t get state funding, he said.
Resident and rental property owner Annette Smith attended the committee
meeting, saying talk of increased rates was "very scary" to her. Resident
Tresham Gregg, also in attendance, called for a local campaign to secure legislative
funding.
Vogt said the borough should consider charging a "vacation
rate" for seasonal residents that would cover depreciation and fixed costs of the
systems, as is done elsewhere. "The truth of the matter is people who have two homes
are able to pay these rates."
Assembly member Vick called the proposed increase necessary but
unfortunate. Committee member Doug Olerud was absent.
Residential water and sewer customers pay $65.10 per month; commercial
customers pay $61.28 plus extra when they exceed 5,000 gallons in water or sewer per
month.
For residential water and sewer, Haines rates rank 13th of 22
communities statewide the borough recently surveyed. Combined rates in Skagway are $30.10,
compared to $100.79 in Homer. Crystal Cathedrals of Haines, a private utility servicing
the west end of town, tops the list at $117.25. The proposed increase would push Haines to
number seven.
Financial officer Stuart said differences in rates may be due to
whether or how much different municipalities pay for depreciation.
The borough’s last rate increase came in 2001. The borough is
paying a consulting company $20,000 to evaluate the water and sewer system, with a rate
analysis, as baseline information toward evaluating purchase of Crystal Cathedrals.
Residents now served by the private utility have requested borough service.
