CENTERBURG — A review of past Centerburg sewer rate increases, consultant recommendations, and the appropriate amount for future increases were the topics Centerburg Village Council members discussed at Monday night’s meeting.
At the Sept. 3 meeting, council members gave a first reading to legislation increasing sewer rates by 4%, 3%, and 3% for years 2025-27.
However, council members had questions about the wastewater treatment plant loan and the village’s money market account.
Village Administrator Teri Wise reviewed that and other information from the 2018 and 2023 Centerburg sewer rate studies on Monday.
Wise said she came up with the recommendation based on three-year projections.
She noted Fredericktown projects rate increases for 10 years ahead. Gambier projects for two years.
“I don’t think 4-3-3 is enough, but we have to start somewhere because we’ve been a couple of years without an increase,” Wise said.
2018 sewer study
The village took out a $9.4 million, 0-interest loan around 2016. The annual debt payment is about $477,000.
The village will pay off the loan in 2036 or 2037.
The 2018 study recommended that the village track projects in a separate fund to clearly show revenue and expenses.
“This is something that we have started doing, tracking expenses versus revenues and making sure we’re getting all of the costs into one place so we can look at it,” Wise said.
The study also projected expenses would exceed income for years 2018-21 coupled with a negative fund balance in 2021.
However, the fund had reserves (money reserved for unexpected economic conditions, decreased use, or seasonal fluctuations) of 79%.
Reasonable reserves range from 25% to 40% of revenue. The village was to use some of its reserves to make up the revenue shortfall.
“In this 2018 study, one of the things they pointed out to you was there is currently no capital improvement list for the village and no capital improvement projects to be added to the rate study,” Wise told council members on Monday.
“That means there are no projects to replace equipment or do major repairs at the wastewater treatment plant.”
2023 Centerburg sewer rate study
Village council raised rates in 2020 and 2021.
In February 2023, Kleinfelder consultant Jack Jones told council that actual revenues were higher and expenses lower for years 2018-21.
Additionally, the village transferred $447,250 from its closed-out water fund to the sewer fund.
For 2023, the starting balance was $1.1 million, with reserves at 108%.
Jones said at the time that while the village was in an “enviable position” with its sewer fund, the Kleinfelder study recommended a 3% increase for the years 2024-26 to keep pace with growth and expenses.
Even with the 3% increases, the study projected expenses would outnumber revenue, and the $1.1 million January 2023 balance would decrease to $708,000 by 2026.
In April 2023, Wise and village council members agreed not to raise Centerburg sewer rates. However, Wise cautioned at the time that the village should not wait too long to raise rates to avoid a 20% or more increase down the road.
“Their recommendation was a 34% rate increase, which we all know we can’t do,” Wise said on Monday. “We have to eat this in bites. That’s why the suggestion is a 4%, a 3%, and a 3%, and come back to the committee and look at it again.
“That would at least try and help us hold our own,” she added.
Other options
The sewer fund should cover all sewer expenses. Wise told the council members they could opt to take some expenses, such as wages, out of the general fund.
“But I believe that you’re not getting the true picture of it [if you do that],” she said.
“We are getting a clearer picture today than we’ve had in the last four or five years as to where the expenses have been charged versus where they should have been going,” Mayor Greg Sands said.
“We probably should have had increases the last three years, too, just to kind of keep pace, but we didn’t.”
Councilman Greg Myers voiced concern about the $259,740 wages appropriated to the sewer fund.
“Close to half of the personal services allocated from the sewer plan match the personal services for the street and everything else,” he said.
Wise noted that previously, the village paid only half of the wastewater operator’s wages through the sewer fund. Now, all of the operator’s wages are attributed to the sewer.
Additionally, the village added two workers who wanted to obtain their wastewater licenses, which requires them to spend time in the plant. The sewer fund now covers those hours.
“One of the issues that Kleinfelder identified was we would be short because personnel costs were spread over three different funds, and now they’re down to two,” Wise said.
Money market account
Mayor Sands said the village opened the money market account around 2019 or 2000. When the village closed the water fund in 2022, it transferred the $447,250 balance into the MMA.
The remaining money in the account comes from various other funds. At council’s Sept. 5 meeting, Fiscal Officer Mike Ullom reported a $3 million balance.
Wise said having such an account is not unusual for a municipality. A general recommendation is to have six months operating costs in reserve.
“But it’s supposed to benefit the people,” Myers said.
“But you leave it in that account until you need it to use it,” Councilman Dave Beck said.
“Kleinfelder said in both of the reports the amount of reserves we had was normal,” Wise said.
She noted the plant has not incurred a lot of maintenance costs, but things are starting to age.
“So as far as the expenses, we know that that money, according to Mike, is in the MMA account,” she said. “It’s my job to tell you when and what we need it for, and then to get it moved into an account we can use.”
Councilman Daniel Hardwick said council should use the MMA money for capital improvements.
“We can maybe set ourselves up to reduce some of our expenses by producing sludge, and in turn, trim that money market account money down to a reasonable amount — not violating any of the six-month-expenses principles,” he said. “But while we have it, use it so that we can set ourselves up for later.”
Participation helps Centerburg sewer rates
The village initially thought everyone in Centerburg would hook into the sewer system and share the cost. However, according to Sands, 81 village households have private septic systems and are disconnected.
He said the real issue is to get other people onto the system, whether through developing Schlabach houses or annexing a development.
“It was anticipated that the entire community would be on the sewer plant and that has never happened,” he said.
“What we did anticipate is getting the subdivisions to come in like Table Rock, but we’re not getting any cooperation from the health department and places like that,” Councilman Beck said.
The rate increase ordinance will be up for a second reading at council’s October meeting.
