December 11, 2013 - Nothing's been decided yet and the numbers are still being crunched, but based on preliminary figures presented last week, Oxford Village's water and sewer rates may need to be increased by approximately 80 percent and 40 percent, respectively.
But that's if the village decided to do all $4.89 million of the proposed capital improvements to the water, sanitary sewer and storm sewer systems over a 15-year span.
Options are being explored to reduce the potential rate increases such as spreading out the improvements over a 20-year period and doing 70, 75 or 80 percent of the proposed projects as opposed to all of them.
"We know (a rate increase) needs to happen," said Councilman Bryan Cloutier. "We just need to figure out what it's going to be and what's going to be palatable and what's reasonable."
The committee examining the village's water and sewer rates will discuss these options at its next meeting on Friday, Jan. 3 at 8:15 a.m. in the municipality's Community Room, located at 22 W. Burdick St.
Committee members include councilmen Cloutier and Elgin Nichols, village Manager Joe Young, village attorney Bob Davis, village engineer Rob Lavoie, Department of Public Works Superintendent Don Brantley and Oxford Township Clerk Curtis Wright.
On Friday, Dec. 6, the committee reviewed and discussed the figures concerning how much additional revenue would be needed on an annual basis to fund capital improvements and administrative costs.
Officials are looking into possibly raising the water and sewer rates in order to pay debts, cover increased operating costs and finance future system enhancements.
Based on the figures presented Dec. 6, it would take a 60 percent water rate hike and 20 percent sewer rate hike just to fund all the proposed capital improvements, plus an increase in the village's administrative charges.
"That's not going to be acceptable – 60 percent," Young said.
It should be noted those percentages don't include the additional 20 percent increase that would need to be applied to both the water and sewer rates in order to help pay for debts associated with each system, according to Young.
The water system has $433,500 in annual debt payments, while the sewer system will have a total of $108,000 in annual debt payments, according to Young.
Village water customers currently pay a base, fixed rate of $18.10 per month, which covers up to 2,000 gallons whether they use it or not. They then pay $3.41 for each 1,000 gallons above the initial 2,000.
With regard to sewer rates, village customers pay a monthly base rate of $22.85, which includes up to 8,333 gallons. They then pay 51 cents for every 1,000 gallons above 8,333.
Village engineer Rob Lavoie presented the committee with a laundry list of potential capital improvements including $3.6 million in water system projects, $945,000 in sanitary sewer work and $332,500 in storm sewer improvements. He described this as "a reasonable approach" to capital improvements needed in the village.
"We didn't overkill it," Lavoie said. "There's certain things, from a routine maintenance standpoint, that are going to be worked into the numbers already in the regular rates. We really tried to look at things that were above and beyond the routine stuff."
For example, most of the water projects involve upgrading existing mains in terms of capacity and installing new ones.
"When you've got 4-inch and 6-inch (water) mains on many of these residential streets, you don't have adequate fire flow. You need to have better fire flow," Lavoie said.
In order to fund all these capital improvement projects over a 15-year period, Lavoie estimated the village would need an average of $404,143 annually or a total of $6.06 million. That's after factoring in an annual inflation rate of 3 percent.
That works out to approximately $300,000 annually for water system improvements and about $100,000 per year for sewer projects.
The combined annual amount needed for water and sewer capital improvements would begin at $325,833 next year and top out at $492,852 in 2028, according to the schedule Lavoie provided.
"There's flexibility in there if the village is of the opinion that this is too much money in 15 years. Maybe you spread it out to 20 years," Lavoie said. "Or if you've got more money and you want to get cracking, you do it in 10 years. But we felt 15 years was an appropriate time frame."
Because not all these improvements are critical, Wright suggested the village "prioritize what you need."
"Obviously, you're not going to do everything at once," Cloutier said. "But you don't want to wait for an emergency situation to happen, either, and not have the funds to (handle) it."
Young presented figures showing how much additional water and sewer revenue would be needed to cover administrative costs if the village were to base its charges on the fact that the state allows a maximum 15 percent administrative charge when it comes to street funds.
Right now, the village is charging the water and sewer funds approximately $97,000 each in administrative costs, which includes office staff time, postage, insurance, their portion of the annual audit and other things.
But Young indicated that doesn't cover things such as facility costs, which includes building maintenance, heat, electrical, etc., and administrative costs associated with the increased sewer debt and potential capital improvement projects.
Using a 15 percent administrative charge as a basis, he suggested the sewer fund would need to pay approximately $21,000 more annually in administrative costs, while the water fund would need to pay approximately $64,000 more annually.
It was suggested that Young provide an exact breakdown of the administrative costs in order to justify the need for an increase in this area to both council and the public.
As to the question of whether the potential water and sewer rate increases should be implemented as large, onetime adjustments or multiple, smaller increases over a period of years, some committee members, like Nichols, preferred the latter approach.
"I think the economy is starting to change, but some people are still in dire straits and I think it gives them time (to adjust their finances)," he said.
Davis pointed out "the only downside" to spreading the rate increases over time is residents wondering every year what's driving the annual double-digit hikes.
The attorney said the village would have to be sure to explain to residents up-front that the increases are going to be phased in over time.
"They need to understand that and I think the memories will be short," Davis said.
"I think we'll have to keep reminding them then," Nichols said. "Regardless of what happens, there's going to be people that are not going to be happy with increases."
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.