Huntertown is in good shape with water rates, but current sewage rates are far short of the $1.1 million needed to operate the town’s sewage system each year, meaning a rate increase is needed, town officials learned Monday.
The town is in the red about $286,000 a year after paying sewage system operating costs, said Stephen Carter of H.J. Umbaugh and Associates. Carter provided information from a study of utilities rates the council ordered in May, noting the study is still in draft form.
Although Carter gave several possible scenarios for raising sewage rates, none included the possibility of building a new wastewater treatment plant.
Huntertown officials are working to end a contract with Fort Wayne City Utilities for sewer service and want to build their own $11.2 million wastewater treatment plant. But the Indiana Department of Environmental Management preliminarily rejected their plan.
Regardless of whether or not the town sticks with City Utilities or builds its own plant, rates need to go up, Carter said.
Fort Wayne increased the rate Huntertown pays for sewer service from a bulk rate to a retail rate, and as of July 1 charges Huntertown $2.31 for every 748 gallons that is treated, Carter said. In 2009, Huntertown was paying $1.59 for every 740 gallons sent to Fort Wayne for treatment.
Huntertown residents now pay a flat rate of $21.25 a month. One option provided to the council takes users to a metered system where residents are charged for wastewater usage based on water consumption.
Low-end users who use the minimum of 2,000 gallons of water or less would pay about $18.10 a month for sewage; a family using 5,000 gallons would pay $21.25; and those using 10,000 gallons a month would pay $53.30 a month, Carter said.
Another option involved building an equalization basin – allowing Huntertown to add new connections to the system and increase its wastewater treatment capacity. Such an effort would cost the town about $4 million to build and would increase the flat monthly rate to $37.25, Carter said.
Regardless of where you go in the future, the equalization basin will be a component, Carter said.
The report also showed a need to include a provision that would allow the town to raise residential rates whenever Fort Wayne increased their rates without having to go through the public hearing and regulatory process repeatedly.
This sewer rate increase is important and something we have to do soon to cover the shortfalls, said Council President Jim Fortman.
Fortman asked Carter if the study would still be applicable if the town gets approval to build a new wastewater treatment plant six months from now.
Carter said the town would need a new rates study, as it would be a different project.
In projected future costs, the report lists $120,000 a year for engineering and legal consulting fees for the first year – the amount the town has been paying annually since they began investigating the possibility of building their own wastewater and drinking water facilities.
But that amount is expected to decrease after the first year to $50,000 a year once the projects are underway, Carter said.
When it comes to the water rates, which adjusted several years ago in anticipation of several large projects, they are now in excess of requirements, Carter said.
Huntertown is constructing a new $1.8 million drinking water filtration plant on Carroll Road near Lima Road, which is part of a larger $4.5 million drinking water project.
Typical residential water customers now pay a base rate of $14.95 plus $3.34 for each 1,000 gallons of water used, so a family using 10,000 gallons of water a month would pay $48.35.
There is still $2.6 million in cash to finance the remainder of the project, but the council will have to decide what amount to borrow so they don’t exhaust cash reserves, Carter said.
The council appointed four members to further evaluate the water and sewer options. They will meet with Carter and town engineers and supervisors and report back at the next meeting on Oct. 15.
The council hopes to make a decision and act on it within 30 days, Fortman said.