Two representatives from Draper Aden Associates (DAA) met with town council last Tuesday to discuss increases in wastewater rates for customers in Warsaw.
On March 19, Sheryl Stephens proposed three options that would allow the town to overcome a deficit of $70,000 in the wastewater fund and achieve a budgeted amount of $760,000 in a balanced manner.
Town Manager John Slusser attributed the deficit to a loss of water volume due to Warsaw Health Care’s closure last year and the decline of inmates at the Northern Neck Regional Jail.
Based on the figures in Stephens’ presentation, the health care clinic brought in $18,000 to $20,000 of annual revenue for the town’s sewer fund before it closed in March of 2012. The average amount accounted for 4 percent of the total volume billed per year.
In addition, the average daily population of prisoners at the jail had slipped from 458 in 2008 to 371 in 2011. Jail officials were unable to provide a figure for 2012 in the presentation.
Stephens, who noted that the jail’s ability to maintain its inmate population is closely tied to the town’s operation of its sewer fund, said the facility accounted for 29 percent of the wastewater revenue that was billed by the town from March to December of last year.
With the jail using 31 percent of the billed amount, Stephens said the difference in percentage was off by 2 points…an amount she did not consider to be “out of whack.”
Therefore, Stephens determined that the town was treating the jail fairly based on its share of the use.
As of now, the presentation documented that the town generates 33 percent of its revenue from residents, 31 percent from commercial users and 36 percent from government customers including the jail.
However, Stephens said that residential customers use 37 percent of the wastewater gallons billed by the town.
“That is one place where we should probably equalize that out a little bit so the revenue contributed by the residential group is closer to the amount of wastewater being used,” Stephens told council.
According to the presentation, the average residential use of wastewater is 4,000 gallons per month at a rate of $34.25, which was lower than the amount charged by Bowling Green, Colonial Beach and Tappahannock.
Meanwhile, Stephens said that commercial users, although they were billed 31 percent of the total revenue by the town, only used 26 percent of the total volume.
“They’re paying a little bit more than their share,” she said. “That might be a place where we try not to increase rates so much.”
The presentation showed that the town’s commercial customers used an average of 8,000 to 9,000 gallons per month at rates of $110 to $120 respectively.
Both monthly rates were nearly twice as high as the listed amounts for the same three towns.
Of the three options proposed by DAA for generating revenue increases, the first option projected $740,000 from user fees.
The projection included a base rate increase by $8.91 for residential users, which meant that residents would be paying $44.53 per month in comparison to $34.25.
While Stephens said the higher residential rates for Option 1 were
reasonable,” she noted that the rates for commercial and government users, which increased by a base rate of $8.05, were the highest compared to neighboring localities.
Option 2 projected $700,000 in user fees while utilizing $40,000 from the town’s general fund.
According to the second option, rates for residents would increase by $7.76, commercial and government rates would each rise by $5.75 and charges would be proportional to use.
However, Stephens said there would still be a “little bit of inequity” between the revenue billed to government and commercial users, as well as the total volume of wastewater that they actually used.
The final option also projected $700,000 in user fees and an incorporation of $40,000 from the general fund.
However, unlike Option 2, the proposal featured a 0 percent increase in revenue charged to commercial users while increasing residential rates by $5.75.
The presentation shared that the third proposal would keep government users proportionate to use and adjust commercial rates as needed to balance revenue for consumption.
All three options included $20,000 in availability fees.
“With Option 3 we can get to balancing the revenue and the volume use between the customer groups,” said Stephens, who said that the listed rates for residential users, while higher, were not what DAA considered to be “too outrageous.”
Town Councilman William Washington praised Draper Aden for “crunching the numbers to provide for an Option 3” while calling the $40,000 subsidy a “necessary evil at this point in time.”
In reviewing the listed options, Slusser said the residential base could sustain a rate increase, but implored that council minimize the impact to commercial users.
“If it gets too high, then it becomes more difficult to try and attract business.”
In discussing the $40,000 subsidy, Mayor Mark Milstead suggested isolating the amount from the years that needed less than $40,000 to reach $760,000.
“We need to put some perimeters on it if we do it,” said Milstead. “Otherwise, we’re not doing the future any favors.”