The Select Board approved the water rate hike Monday on a 5-to-1 vote after deliberating for several weeks on how best to proceed. The board also approved an 11-percent hike in the sewer rate. The board reviewed three possible increase amounts from the current $298 yearly flat fee. The lowest increase was 16 percent over three years, which was proposed and recommended by Town Manager Stuart A. Hurd.
The 16-percent increase will result in a $400 yearly fee in the final year of the three-year plan. The board had asked for background information on even higher rates. An 18-percent yearly increase over three years would have resulted in a $491 fee, and a 20-percent increase would have led to a $516 fee in the final year. The water rate increase will be used to cover depreciation costs in the water system.
The system, a hard asset, loses value every year and the town should add cash to the fund balance to keep it level — and have money on hand to replace a fully depreciated system. Not doing so causes the system to show an annual loss. The town is in a large hole because the practice of budgeting for depreciation has never been followed. Depreciation of the sewer system has already been covered by the town.
The increased revenue in the sewer system will be put toward a reserve fund.Both increases will take effect July 1.
Select Board Vice Chairman Matthew Maroney, the only board member to vote against the measure, said he wanted a higher increase to begin upgrading the water system. “I still think that we’re not getting ourselves where we need to be with system upkeep,” Maroney said. “I’m still a firm believer that we need to put more money into this.”
Maroney declined to make a motion to set a higher rate increase, however, noting the support among board members for the 16-percent increase. “It probably doesn’t make any sense,” he said.
Board member John Zink called the board’s decision to increase rates “courageous,” but said he, too, thinks more money is needed. “After speaking to our constituents and hearing the arguments on both, I think this is happy medium,” Zink said.
Terry Morse, the town’s water resources superintendent, said about 60 percent, or 35 to 40 miles, of the town’s water mains need to be replaced. At a cost of $1 million per mile, the project is massive, he said. “We could be looking at a lot of money by the time it’s said and done,” Morse said. “It’s certainly not going to happen in my time here.”
Morse said the Select Board will have to determine how to fund the necessary system improvements. “It totally is going to be up to the board. There’s so much that goes into it with the economy,” he said. “That’s going to be the tough part. How much do you lay on the town? How much do you lay down on the ratepayers?”
“Some people see those kind of upgrades for the community as a whole. If you make strategic upgrades and improve it for schools and businesses then people are more likely to come here,” he said. “In that respect, it benefits the entire community.”
Rutland is considering a 120-year plan to replace much of its water system. Morse said the city is considering a bond of tens of millions of dollars.
“Everybody laughs, and I don’t know the specifics, but before I laugh I’m going to take a harder look at it,” Morse said. “I’m not sure it’s an absolute mad thing.”
The Bennington water system, first constructed by Henry W. Putnam, dates back to the late 1800s. Putnam turned the system over to the town as a gift in 1912, but with stipulations. Users, in perpetuity, would pay just one-half of the 1912 water rate after the handover was completed, and a separate fund for repairs would be established from the annual fees.
Town officials said the low rates meant the system operated at a deficit for decades. The town finally went to court in the early 1980s to eliminate the restrictions. The court ruled that the town could set more reasonable rates and sell off land no longer used, which was used to build up cash reserves.
The water system is currently under a temporary operating permit issued by the state. The temporary permit was issued by the state Agency of Natural Resources because issuance would not “unreasonably contribute to a public health risk.”
The system is in violation of the Federal Safe Drinking Water act and state requirements, however, according to Morse. Two disinfection by-products, trihalomethane, or TTHM, and haloacetic acid, exceed allowable amounts at times, Morse said. The chemicals are the result of bacteria in the cast-iron pipes interacting with chlorine used to treat the bacteria, he said.
“We’re not meeting the current levels throughout the year. For nine or ten months we are, but during the warmer months, with high humidity, we’re not,” he said. “It’s been highlighted and we’ve been identified as one of those [water systems] that needs to work on this problem and come up with a solution.”
The maximum allowable amounts of TTHM and haloacetic acids are 60 and 80 parts per billion, respectively. Various tests in 2010 produced detected amounts of TTHM ranging from 18 to 69 ppb, and haloacetic acid ranging from 19 to 110 ppb.
The standards are set to get even tougher to meet in 2013, according to Morse. The two chemicals, “over many years,” can lead to increased risk of cancer or other health problems, according to the town’s annual water report.
The state is also requiring the town to address water pressure issues, particularly in fire-fighting events. The state has requested a short- and long-range capital improvement plan to address the issues. Such a report was submitted to the state in April, according to town records.
Continued violations of federal or state water system standards could eventually lead to a revocation of the operating permit, Morse said. “Do I really think that’s going to happen? Probably not, because there is such a huge amount going on in Vermont,” Morse said. “They’d have riots in Montpelier if somebody said that.”
“At some point they could say, ‘If you don’t take care of these things we’re going to make you do this.’ I don’t know what ‘this’ would be at this point,” Morse said.
Contact Neal P. Goswami at email@example.com.