By JOHN FLOWERS
MIDDLEBURY — Middlebury selectmen are considering raising municipal water rates for the first time since 2001, in an effort to meet rising operating costs and debt service on water system upgrades.
But some of the community’s largest water users are seeking to turn the tide on talk of a proposed rate hike — which could represent about a 12 percent increase — that they said would only add to the already high costs of doing business in Middlebury.
“Manufacturing is getting harder to harder to do in Middlebury,” Otter Creek Brewing General Manager Gail Daha said at a selectboard meeting on Tuesday of rising expenses in Middlebury. “We’ve seen increases across the board, and there is a tipping point.”
Otter Creek Brewing and Agri-Mark/Cabot are two of the largest consumers of Middlebury municipal water and would be among the hardest hit in the event of a rate increase. But town officials said they must consider a rate hike in light of projections that Middlebury’s water fund will end this fiscal year in the red. Assistant Town Manager Joseph Colangelo is recommending that $40,000 be applied from the water department’s fund balance to wipe away this year’s deficit.
But future deficits appear unavoidable unless selectmen raise current water rates and/or continue to patch annual shortfalls using money from the water department’s fund balance, which now stands at around $400,000. Town officials are advising that selectmen not regularly tap the fund balance, seen as a valuable reserve for emergencies.
Middlebury’s current water rate stands at $2.60 per 1,000 gallons. That rate will need to be bumped to $2.92 per 1,000 gallons — a 12.3 percent hike — in order to avoid water fund deficits in future years, according to Colangelo.
The officials estimate the 32-cent increase per 1,000 gallons would translate into roughly $15 per year for the average household, based on annual consumption of 48,000 gallons.
The impact on larger, industrial users would obviously be much greater, as residential and business consumers have paid the same rate since 2001. Prior to that, Middlebury had offered a three-tiered rate system, through which the largest users saw their rate decline when they exceeded quarterly thresholds of 18,203 gallons and 52,368 gallons.
Several major users have either closed or dramatically altered their water use since the new “flat” rate was instituted in 2001.
Agri-Mark/Cabot drilled a well and launched a very successful whey processing initiative that have resulted in the company using a lot less municipal water. Bernie Boudreau, manager of Agri-Mark/Cabot’s Middlebury plant, said the company’s efforts have shrunk its annual water bill from $252,000 in 2001 to around $140,000 currently.
Otter Creek Brewing has also taken efforts to conserve water and to keep a lid on the amount of outgoing waste it sends to the municipal sewer system.
Those conservation efforts are ironically contributing to Middlebury’s need to look at rate hikes, as they have tightened the spigot on revenues going into the water fund. In addition, Standard Register, which closed in early 2007, used a lot more water than the business that replaced it on Route 7 South, Connor Homes. And Monahan Filaments, the new incarnation of Specialty Filaments on Case Street, is using less water than its predecessor. Combined, the Standard Register and Specialty Filaments changes have reduced this year’s water fund revenues by $87,000, according to Colangelo.
Daha and Boudreau said they are concerned that if more major water users go out of business or dramatically reduce consumption, that will leave more of a burden on remaining users to pick up the slack.
“In Middlebury, you are seeing the base shrinking,” Daha said. “It’s putting more pressure on who’s left.”
Jamie Stewart, executive director of the Addison County Economic Development Corp., said a jump in water rates would present another obstacle to attracting and retaining businesses in Middlebury. He cited the machinery and equipment tax and rising property taxes as other reasons that some prospective firms are taking a pass on Middlebury and instead choosing other parts of the state or New England where costs are lower.
“It’s not the water rate in isolation,” Stewart said. “It’s the cumulative effect.”
Middlebury selectmen have periodically debated the notion of eliminating the town’s tax on machinery and equipment. But selectmen have been hard-pressed to find a different source for the $350,000 in annual revenues the M&E tax generates.
“We recognize the dark cloud (the M&E tax) puts on business development here,” selectboard Chairman John Tenny said. “But we need to find a way to replace that.”
“It’s a delicate balance,” Selectman Dean George said.
Selectmen will spend the coming weeks considering, with input from businesses and residents, potential increases in water and sewer rates.