Middlebury mulls water, sewer rate hikes

MIDDLEBURY — Faced with the prospect of having to raise municipal water and sewer fees due to declining use of those services, Middlebury selectmen are toying with such options as adjusting fees to woo more commercial users and marketing town water service to neighboring towns as a way to boost revenues.
The town of Middlebury currently charges a rate of $2.85 per 1,000 gallons of water used, and $5.94 per 1,000 gallons of municipal sewer use. Those rates, based on fiscal year 2010 use projections, would yield $833,489 for water department operations and $1,017,376 for wastewater treatment services.
Trouble is, according to Middlebury Business Manager Joe Colangelo, the projected revenues in both the water and sewer accounts won’t meet expenses under the rates. Colangelo said water department expenses in fiscal year 2010 are expected to be $1,002,468 — about $170,000 more than anticipated revenues with the current $2.85 rate. And sewer department income is expected to be around $63,000 short of expenses ($1,080,576) at the current $5.94 minimum rate.
Colangelo explained that residents and businesses are simply not using as much water as they used to. And in the meantime, the water and sewer budgets — influenced heavily by such fixed costs as salaries, wages and capital improvements — are gradually climbing.
“I’ve looked at the last two years of (water and sewer) usage, and what I’ve found is that during the past four quarters, we’ve had 10 million fewer gallons billed in both water and sewer than in the previous four quarters,” Colangelo said. “That is obviously the reason our revenues are not keeping pace with what they are estimated to be for the current fiscal year and what we need to have to meet out expenses.”
Officials said they can trace a large chunk of the reduced use to three local companies that have either gone out of business or changed operations. Among them are Standard Register (which left the Route 7 building that is now home to Connor Homes) and Monahan Filaments on Case Street (formerly Specialty Filaments), which are using less water than their predecessors, officials said. Then there is the Exchange Street cheese plant operated by Agri-Mark/Cabot, a one-time major municipal water user that drilled a well to reduce its expenses.
The bottom line, according to Colangelo, is that the town will need to either trim its water and sewer operations or raise its rates. Specifically, the town would have to raise its water rate from $2.85 per 1,000 gallons to $3.42 (a 20 percent hike); and raise its current sewer rate of $5.94 per $1,000 gallons to $6.30 (a 6 percent increase). Those rate hikes, according to Colangelo, would add $27.36 and $17.28, respectively, to the average water and sewer bills of a four-person family (based on 48,000 gallons of water used in the household).
It should be noted that Middlebury’s water and sewer funds have cushion to absorb some financial hardship. The water fund is currently $153,000 in the black, while the sewer account has a fund balance of $800,000, according to Colangelo.
Selectmen remain concerned, however, about expenses outpacing revenues and the prospect of raising water and sewer bills in a tight economy and at a time when Middlebury wants to attract more businesses. Selectman Don Keeler noted that remaining large users of municipal water — like Otter Creek Brewing — would face some tough decisions if they were presented with a water rate hike.
The town has formed a committee to look at its machinery and equipment tax — along with its water and sewer rates — to see how it could become more hospitable to firms looking to settle or expand in the area.
“We have the possibility of offering an ‘incentive rate’ to a new industry, perhaps, to help entice one in,” Selectboard Chairman John Tenny said at Tuesday’s selectboard meeting. “Remember, if you are going to increase your production and your efficiency to deliver the water, you are going to reduce your unit costs. You can justify that as something that would be a way to stimulate the industrial growth that you’d want to see without adding cost to the existing rate-paying base, potentially.”
Tenny also suggested the town could explore marketing its water to adjacent communities.
“There has been a reluctance to expand our system into some neighboring communities in the past, but we might want to be reconsidering that position,” Tenny said. “I know there was a position several years ago about drawing the line hard at not going forward into Weybridge, even though Weybridge would be receptive of it. It might be in our interest to allow that expansion to happen.”
Selectmen asked Colangelo and other town staff to calculate the town’s water delivery capacity and work with local economic development groups to determine potential demand for the resource.
Officials vowed to also carefully consider cutting water and sewer system expenses.
“If you keep on reducing the efficiency of your plant by reducing the product going out, you’re going to have a very hard time trimming expenses very far,” Tenny said.
Selectmen said they will revisit the water and sewer rate issue later this summer.

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