Every year, the

Charlottesville City Council

sets the rates for gas, water and sewer services provided by the City’s Department of Utilities.  The rates are calculated based on a study put together by outside consultants. The study for FY2009 was put together by Draper-Aden and Associates, and the City’s rates are calculates after the

Rivanna Water and Sewer Authority

sets their wholesale rates to the City and the Albemarle County Service Authority.  In May, the RWSA approved rate increases for the City of 2.7% for water and 10.4% for wastewater.


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Hence, the City is proposing raising rates accordingly. The City has two separate schedules for water rates. From May through September, the rate would increase from $45.57 to $48.17 per 1,000 cubic feet. From October through April, the rate would increase from $35.05 to $37.06 per 1,000 cubic feet. The City is proposing sewer rates be raised from $35.20 to $38.57.





Source: City of Charlottesville

To put that into perspective, City Finance Director Bernard Wray said the average residential customer would see their rates go up by 5%, or $1.72 per month, based on usage of 5,800 gallons per month. In comparison, Wray said Albemarle County residents on public water will see their rates go up an average of 12.9%.

The average retail customer, who uses about 7,500 gallons a month, would see their bills rise an average of 5.1%, or $2.26 a month.

Wray said the water rate increases are due to three reasons. First, the City is selling less water because of efforts to conserve water, which means the City has to charge more to break even. Second, the City is spending more money on operations. The third reason is the rate increase made by the RWSA.

The average City resident will see wastewater rates increase by 8.3%, and Wray said this was due to the RWSA increases as well as increased operating costs. That translates to average bill increase of $2.57 a month for the average residential customer, and a $3.37 increase for the average retail customer.

The City is also proposing drastically increasing the fees required for new connections to the water and sewer system.  Wray said the City has traditionally charged low fees for new homes and businesses.

“Existing customers actually benefit from this change because the capital cost has shifted to new development,” Wray said. Currently, connecting a new home to both water and sewer lines would cost $1600, or $800 each. That will rise to about $6,000 under the new scheme, which Wray said is more in line with other communities. Not increasing these feeds would put more of the burden on ratepayers.

The sewer charge without these fees in next year’s rates would go up 18%,” Wray said. “By imposing these rates it will go up 9%.”

These connection fees would also be levied on a tiered basis. The larger the connection required, the higher the fee. That would mean a developer requesting connections for an equivalent of 50 residential units (such as a large retail store) would need to pay over $280,000. Currently that developer would pay $1,600, same as a residential customer.

The discussion on rates came during the first reading of an ordinance to place the changes into City Code, which meant a public hearing was required. Most speakers during the public hearing took the chance to speak out against the reaffirmation of the Community Water Supply Plan that Council had decided earlier in the meeting.  Many objected to paying higher water rates to support the plan. Dede Smith said the RWSA has already been charging higher rates since 2002 in order to pay for extra capacity.

“It ends up basically being a tax on water above and beyond what they need to actually deliver water,” Smith said. Former City Councilor Kevin Lynch put the figure at about $30 million in cash, and said the RWSA was misleading the public by using that money  to make it seem that the $142 million 50-year community water supply plan won’t affect ratepayers.

“Gary O’Connell and other members of the [RWSA] Board have been in meetings where they’ve discussed…  how much does the rate have to go up every year to pay for this,” Lynch said. “Five percent a year for thirteen years… The reason for that is that once you spend that $30 million that you have bankrolled, it’s gone. You may be able to get a dam, but then you’ve got a pipeline that has to be built.”

Charlottesville architect and builder Bob Pineo raised the concern that the new connection fees would be a shock to the development community.

“The incremental change from something to ten-fold is going to have some really deep repercussions in the housing industry because it’s going to be that much harder to build a house and to sell it in a depressed market,” Pineo said.

Keith Rosenfeld, also of Citizens for a Sustainable Water Plan, said he had a conversation with RWSA Executive Director Tom Frederick about the amount of leakage in the urban water system.

“Our local system leaks 15 to 17 percent of the water going through it, whereas most cities are 10% and below,” Rosenfeld said. “That’s kind of interesting when you look at what our water needs are and the baseline we’ve established for today.

After the public hearing, Councilor

David Brown

remarked that in the five years he’s been voting on water rates, he’s never received as much public input as he has this year.

Councilor

Satyendra Huja

wanted more information on the connection fees, and asked if the higher fees would jeopardize Council’s efforts to provide more affordable housing in the City. Councilor

Julian Taliaferro

said the increases are a big jump and he was concerned. Wray had an explanation.

“The way we looked at it is that our current ratepayers are paying for something maybe they shouldn’t be paying for,” Wray said. “Maybe the new developers should be paying for utilizing the system that our ratepayers have been paying for many years.”

Taliaferro agreed with that philosophy, but said he would prefer to see a gradual introduction of the higher connection fees.  Huja also said the fees should be raised, but said the magnitude was too sudden.  He suggested cutting the connection fees in half for now.

Wray said his staff had looked into how other jurisdictions in Virginia had handled waiver programs for affordable housing projects, and said he would come back with a list of recommendations before the next reading of the utility rate ordinance.

Councilor

David Brown

said more needed to be done to encourage low-income houses to fit their homes with low-flow toilets and other water saving measures. Councilor Holly Edwards called for a work session to discuss “the high cost of living poor” at which utility rates would be a topic.

Mayor

Dave Norris

asked City Public Works Director Judy Mueller to explain what proportion of the RWSA’s water and sewer upgrades City residents can expect to pay in comparison to County residents. She said she will work with the Albemarle County Service Authority to differentiate between capital projects for maintenance and those for new capacity.

“Then we will take those sections that are adding new capacity and will come to [Council] with a recommendation of how much of the new capacity the City system, including U.Va, will want for the future and how much of that capacity the ACSA wants for its growth,” Mueller said. “It’s an attempt to say if you’re already in the system you’ll be paying for the maintenance part of it but you’ll only pay for the part of growth the City feels it needs.”

The second reading of the utility rate ordinance will be held at Council’s next regular meeting on June 16, 2008.


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