An average residential water and sewer customer in Elizabeth City would see their monthly bill rise by either $1.50 or $3.15, depending on usage, under a new rate increase proposal presented to City Council this week.
Councilors discussed raising residential water rates 4.06% and sewer rates by 2.35%, a move that would generate roughly $380,000 in new revenue for the city’s water and sewer fund. That money could then be used to finance needed fixes to the water and sewer systems, mainly the city’s sewer lines.
City Council also agreed to have city staff to come up with a possible different rate hike plan for commercial users. Third Ward Councilor Kem Spence, council’s mayor pro tem, suggested the different plan was needed because “businesses should not be paying less than residents.”
Under the plan proposed by City Manager Montre Freeman, a residential customer using 1,000 gallons of water would see their combined water and sewer bill go up by $1.47 a month. A residential customer using 5,000 gallons of water a month would see an increase of $3.15 a month.
Freeman said the residential rate hikes, combined with possible different rate hikes for commercial users, will keep the city “on track” to adhere to a 2020 water and sewer study that recommended the city raise rates over 10 years to pay for mostly sewer improvements.
The now more-than-two-year-old study by Raftelis recommended City Council increase sewer rates by 50% in 2020-21, followed by 3-percent increases in each of the next eight years before ending with a 9-percent increase in 2028-29. The study said the city needed to spend $37 million over 10 years on improvements.
The former City Council that paid for the Raftelis study cut the recommended 50% sewer rate increase for 2020-21 to 25% but then added a 28% increase in 2021-22. The city did not raise sewer or water rates in the current fiscal year that ends June 30, however.
“This will put us on track” to meeting the goals of the Raftelis study, Freeman said.
But First Ward Councilor Johnson Biggs questioned whether the extra revenue from the proposed rate hikes would be enough to finance the improvements highlighted by the study. Biggs, a banker who chairs council’s Finance Committee, did some rough calculations and said the city would only be able to get financing of $2.75 million on a 10-year loan based on the extra $380,000 the rate hikes would generate.
“The $2.75 million is not going to take you very far in the utility world,” Biggs said.
Councilors also agreed to have Freeman look into the cost of updating the Raftelis study, a recommendation made by head of the state’s Local Government Commission.
In an email to City Council and Mayor Kirk Rivers dated three days before Monday’s meeting, state Deputy Treasurer Sharon Edmundson again recommended that the study be updated. The city has been on the LGC’s Unit Assistance List since 2020 due to internal financial control issues, including having two late audits.
Back in December, Edmundson directed the city to conduct a water and sewer study and implement its findings. At the time, Edmundson was not aware of the 2020 Raftelis study. After learning of the study, she recommended in a Dec. 13 email to Freeman and Rivers that the study be updated.
But in her Jan. 20 email, Edmundson noted the city “has declined to follow through on this recommendation.”
Rivers said Monday he sometimes has “heartburn” with studies.
“When you do the study and they come back and say raise the rates 10% and we have already drawn the line in the sand and said we are not going above 3%, I’m just using that,” Rivers said. “When you do the study, you are paying whatever the study fee may be but if you are not prepared to raise it 10% you just paid for the study. What is council prepared to go up to?”
Councilor Joe Peel said the city needs new figures on how much improvements will cost since construction costs have risen sharply the last several years. Peel, who is also chairman of the board for the Northeast Academy for Aerospace and Advanced Technologies, said an estimate for a planned project at the school has more than doubled since it was first proposed.
“The original estimate was a little more than $8 million,” Peel said. “We got an estimate back for $19 million. That (Raftelis) study done two years ago is out of date construction-wise. It would be good to know where we are.”
Edmundson was also critical of a plan proposed by Freeman at council’s Jan. 9 meeting that called for an across-the-board $3.15 a monthly residential rate hike.
Freeman did not provide how much revenue that rate would generate at the meeting and later said in an email to The Daily Advance that he would share that information with the newspaper after he provided it to City Council.
In her Jan. 20 email, Edmundson said a fixed-rate increase puts the rate burden on all customers rather than on those that are using the most water and capacity in the system.
“What is the basis for this amount of increase?” Edmundson asked city officials. “How much revenue will it produce? Please provide us with information to back up the calculation of this rate increase.”
City Finance Director Alicia Steward told City Council Monday that revenues in the water and sewer fund are running ahead of what was budgeted in the current fiscal year.
The city budgeted $5.4 million in water revenue but Steward said based on the first six months of the fiscal year, the city will collect almost $5.8 million in revenue.
The city also budgeted $4.5 million in sewer revenue but Steward projects it will increase to just over $4.8 million.
