Fraser keeps water service fee structure
March 29, 2016
A financial consulting firm has recommended that the Town of Fraser keep its current water fee structure.
Ehler's Inc. conducted a study on the town's water fees to determine what rate structure would best suit the town's goals of promoting attainable housing, providing affordable water to year round residents and maintaining a consistent source of income.
Paul Wisor with Ehler's, speaking at the Fraser Board of Trustees' March 16 meeting, said his firm had examined at two possible alternatives to the town's current structure, which comprises of a quarterly base fee of $153 and an additional $1.50 per every 1,000 gallons used.
Because 92 percent of revenue from the current structure comes from the base fee, it's more stable for the town and predictable for residents, Wisor said.
“The clear message here is that we need to keep the revenue stream coming in that we have now, but we’re trying to encourage affordable housing, so we just set a fee structure that meets those two goals.” - Trustee Andy Miller
The first alternative, an inclining structure, would charge users more as their use increases.
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Starting with a $117 base fee, users would pay $4.90 per 1,000 gallons for the first 3,000 gallons, $5.90 up to 9,000 gallons, and $6.90 above 9,000 gallons.
The 30 percent of users in Fraser that use 3,000 gallons or less could see a 16 percent reduction in their bill, while the town's highest user would see an 18 percent increase.
Ehler's also considered a declining rate structure with a $131 base fee, a $5.25 fee per 1,000 gallons up to 3,000, $4.25 from 3,000 to 9,000 gallons, and $3.25 from 9,000 gallons up.
Under the declining structure, low-end users still paid less than the current structure by about 6.8 percent. Medium and high-end users came out better than they would under the inclining fee structure, though they still paid more than they do under the current fee structure
Wisor said that, after examining the two alternatives, Ehler's felt the town's current fee structure makes water more affordable for year round residents and provides the town with a stable revenue source, which it needs to make financial decisions about future capital improvements.
Consultant examines reducing water tap fees
Ehler's also examined Fraser's water plant investment fee, also known as a water tap fee, and the impact that reducing that fee might have on spurring development.
The board previously discussed a graduated investment fee structure.
Assuming a 50 percent reduction in Fraser's $7,700 water plant investment fees the town would need to increase water fees drastically – as much as 17 percent in 2017, and 5 percent annually thereafter – to meet the town water plant investment fund's capital needs, Wisor said.
To lessen those rate increases, Wisor said the town could pursue a number of strategies including reducing capital costs going forward, collecting more investment fees and promoting higher growth to increase plant investment fee revenue.
"The needs that you have are significantly larger than the revenue you're going to generate unless you're going to have a tremendous amount of growth," Wisor said.
Ehler's and Fraser could use the 50 percent figure to devise a graduated plant investment fee structure.
Trustee Jane Mather said that the town should consider reducing sewer service fees, which she felt were too high, to help offset any increase in water fees.
"We've got less costs in the sewer fund, so we really don't need to keep collecting all that money from our users in the sewer fund," Mather said.
Fee structure could take many forms
Fraser developer Clark Lipscomb said he had run a model of a straight-line graduated plant investment, which would charge so much per square foot of construction, and found that it minimally reduced the town's revenues.
Trustee Andy Miller said he felt the town should stick with a revenue neutral tap fee structure.
"The clear message here is that we need to keep the revenue stream coming in that we have now, but we're trying to encourage affordable housing," Miller said. "So we just set a fee structure that meets those two goals."
Town Manager Jeff Durbin said he felt the town had adequate room to design a graduated plant investment fee without getting hung up on making it revenue neutral.
Mather said that, because Fraser is primarily collecting tap fees from smaller homes, the fee structure can't be revenue neutral.
Durbin said town staff would look at the possibility of a graduated water plant investment fee, "probably a per square foot type of situation," while leaving the current water service fee structure in place. Staff will also examine reducing sewer service fees.
Hank Shell can be reached at 970-557-6010.