City eyes water surcharge hike
The City Council approved on first reading an ordinance that would raise the water surcharge to $35 Nov. 1 to cover payments on $13.5 million in revenue bonds issued last month to pay for a new water treatment plant.
The current plan called for an escalating surcharge, starting at $10 per meter in January, rising to $20 per meter in May, and topping off at $30 per meter in August. The surcharge on approximately 1,696 meters on approximately 1,875 dwellings in Olney will generate enough revenue to cover the most costly years of the 30-year repayment – about $764,000, the Council said.
“You can always amend an ordinance but we’ve got to make sure we can service that debt,” Mayor Rue Rogers said.
The initial surcharge included about $2.75 per meter to purchase new pipes and valves for the city’s antiquated water delivery system. But a challenge to the plan to sell general obligation bonds in January by voters slowed the process, and rising interest rates tacked on an additional $2 million in interest by the time the Council executed an alternate plan to sell revenue bonds.
“There is no money in that for valves and pipes. We lost all that,” Mayor Pro Tem Tom Parker said.
The Council asked Interim City Administrator Arpegea Pagsuberon to do a final count of water meters before the second and final reading of the ordinance. Although the Council intended the surchargeto stay indefinitely, Councilmember Harrison Wellman pointed out that increased water meters could allow the Council to lower the surcharge in the coming years.
“Hopefully, it’s structured in a way that can fluctuate with the meters,” Wellman said.
Wellman pointed out that the Federal Reserve raised interest rates by a half percent shortly after the Olney revenue bond measure was sold. Market watchers are expecting another half-percent rise later this year, he said.