Henderson council again raises water and sewer rates

The Henderson City Council, in a 4-1 vote Tuesday night, reluctantly raised water and sewer rates for the third time in three years as it continues to struggle with a prolonged economic downturn.

Barney Rabold, the city's acting director of Utility Services, said failing to raise nearly $13 million over the next four years through four consecutive rate increases would not only cripple the city's ability to maintain $1.5 billion in water and sewer assets, its bond rating probably would be downgraded too, in a fashion similar to what occurred to the nation's bond rating last summer.

In other words, Henderson's residents and business community either can pay a little more now or a lot more in 2016.

Already, Rabold said, the utility is in violation of bond covenants that will make raising capital for future repairs and replacement of infrastructure more costly.

The rate increase means the average water and sewer bill for a family that uses 15,000 gallons of water per month will be $60 starting in January, an increase of $2. The cost would go up an additional $2 each January through 2015.

High-volume residential and commercial users will see an increase between $4 and $5 per month. The current rate for these users is about $111 a month.

The economic downturn has resulted in less water consumption and a decline in the fees developers paid to hook into the system during the prolonged growth boom.

Mayor Andy Hafen said the city must stabilize revenue and rates and not rely on developers. Councilwoman Kathleen Vermillion cast the no vote. She questioned how the utility handled its finances and suggested it seems to spend more than the City Council approves with each rate increase.

Rabold said the previous increases allowed the utility to break even but not make enough to maintain its debt service because of an economy that continues to slide. The utility operates on a $91 million a year budget -- $14 million less than what it had to work with two years ago. Also, 15 positions were eliminated at the same time two major plant expansions went online, Rabold said.

About 35 percent of the budget pays employee salaries, he said, or about half the percentage of other utility providers in cities the size of Henderson.

To put the utility back in the black sooner rather than later, Rabold said a "best practices" guide dictated a rate increase of more than 9 percent, but it was decided to raise the smaller rates over four years because "our citizens are struggling, too."

Contact Doug McMurdo at dmcmurdo@reviewjournal. com or 702-224-5512.