15 Sep 2014
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Residents Speak Out On Proposed Water and Sewer Rate Hikes

The aldermen held a public hearing Monday night on the second rate hikes proposed within the past month.

Residents Speak Out On Proposed Water and Sewer Rate Hikes

Several residents chided the city last night about its financial planning and to build reserve funds over the next three years.

The Melrose Board of Aldermen held a public hearing Monday on the proposed rate increases, which are on top of .

A $158,771 deficit in the fiscal 2012 sewer enterprise fund would get backfilled by the increased sewer rate, and both increased rates would bring in revenue that the city would place in savings accounts to mitigate any future deficits or increased assessments from the Massachusetts Water Resources Authority (MWRA).

The new proposal would increase the residential water rate to $5.85, which on top of the previously approved rate increase would result in a 11.43 percent increase over this past year's rate.

The commercial water rate would increase to $7.20, an 11.68 percent increase (again accounting for the already approved increases), and the combined sewer rate would increase to $10.02, a 7.17 percent increase.

After closing the public hearing Monday night, the aldermen sent the proposed rate hikes to the Appropriations Committee, which will meet on Monday, July 23 to debate the proposal, which would then need to go back before the full board for a final vote.

City Officials Make Their Case

Patrick Dello Russo, Melrose city auditor and chief financial officer, and Department of Public Works Director John Scenna made their case for the further increases at the start of the public hearing. Dello Russo said that MWRA assessments account for most of the water and sewer budgets—53 percent of water operating budget and 83 percent of the sewer operating budget.

In the coming years, the city must be "mindful" of increased assessments from the MWRA, Dello Russo said, citing a Melrose Free Press article in which a MWRA spokeswoman said the MWRA kept assessments down during the recession but that steeper increases are on the horizon.

Currently the water reserve fund holds less than 1 percent of the total water budget and there's nothing in the sewer reserve fund, Dello Russo said. By establishing formal reserve funds, approximately 10 percent of each budget, he said the city can mitigate future capital costs, address eemergency expenditures throughout the year and stave off hits to ratepayers in years when the MWRA's final assessments exceed preliminary estimates.

Scenna said that the lower consumption that led to the sewer deficit is a problem facing communities throughout the MWRA region, adding that based off recent figures, it's estimated that Melrose billed approximately $200,000 less in water this past year compared to the year before, and approximately $358,000 less in sewer.

"If we captured half of that we wouldn’t be having this discussion right now," he said. "It’s extremely difficult to absorb this loss without a reserve fund."

Scenna added that although communities are using less water and sewer, MWRA assessments continue to rise, saying that the MWRA's 78 percent debt ratio it reported in 2010 "perhaps ... has a little something to do with that."

Capital improvements to the city's water and sewer systems over the past decade has also lowered the amount of water and sewer use that went unbilled from 20 percent in 2002 to below 10 percent, Scenna said, meeting guidelines set by the MWRA and state Department of Environmental Protection and keeping rates down.

"Unfortunately there are more problems out there—there are still areas of our system that still need attention," he said. "Give the water and sewer business a savings to turn to. It’s a rainy day fund that helps us address emergencies that our operating budgets can’t support. It gives us a place to go. It’s an operational must when you’re running a system of this age and this need."

Why Deficit Not Accounted For Previously?

After Dello Russo and Scenna finished their remarks, several residents raised questions, such as why the deficit, as , wasn't accounted for the already approved rates.

Scenna used an analogy earlier comparing running the water and sewer operations to a household, where savings accounts are used to mitigate possible losses in income or emergency expenditures that arise.

In response, Maryan Hollis questioned why less than a month after approving one set of rate hikes, another proposed rate hike is on the table to address the sewer deficit. 

"I don’t know, as you say in your own household, how you can suddenly within three weeks be reporting on one rate hike and then suddenly you have this deficit that you need to address," Hollis said. "That doesn’t happen overnight."

With regard to lower consumption, Hollis mentioned seeing irrigation systems running on city fields during rainstorms and asked how that type of use factors into the city's water costs.

"We the consumer in Melrose have been asked to conserve—so we have," she said. "This good deed does not go unpunished."

Arnold Koch said that Stoneham, Wakefield and other surrounding communities "all seem to have a very healthy reserve fund," and wondered how those communities were able to build those reserve funds while Melrose's water and sewer reserve funds are neglible. Koch also called the MWRA "the elephant in the room, in some respects," and noted that the MWRA has an advisory board.

"It's supposed to have a designee from each of the cities and towns, but none I could see from Melrose, so we should look into one," he said.

Ted Kenney also raised issues of water and sewer use on city fields and city and school buildings and, in sometimes graphic descriptions, railed against the position that ratepayers—including local businesses—are now in with the further hikes on the table. He suggested that instead of building the reserve funds up over three years, the city should lengthen that out over five years.

"We’re getting hosed here," Kenney said "I’m sorry to put it that way, but we really are. There needs to be more accountability."

Joe Pelrine had several questions for city officials, including how much in water and sewer bils weren't paid before the closing of the fiscal year, how that applies to the budget either last year or this year, and how much the city's borrowing from the MWRA for various projects factors into the increased costs.

While noting that he is "not in favor of this rate increase at all," like Kenney, he asked about extending the period of building up the reserve funds even longer, to seven years, comparing it to an employee asking for a significant raise to build up over three years enough for a child's college tuition.

Tiered Rate System To Favor Conservation?

Aaron Weieneth noted that Melrose currently has uniform, flat water and sewer rates, but that the state recommends the implementation of a tiered rate system, where those who use more water and sewer are charged at higher rates. North Reading has such a system in place.

Implementing a tiered rate structure would prevent people who conserve water feel like they're being penalized when lower consumption requires the city to make up that lost revenue, Weieneth said.

"I don’t think anyone in this room thinks conserving is bad," he said. "This is a way to try and spread out the costs so people using less may not get hit as hard."

Estelle McDonough expressed support for a tiered system while asking whether Melrose is incurring costs for MWRA debt and projects, such as the new water tank being built in Stoneham. She said that increasing fees and taxes are taking their toll, leading her to considering moving to another community.

"It is getting hard," McDonough said. "The taxes have gone up. I have no idea why the trash fee is still $50 a session when other cities and towns are now considering decreasing this. What really is the control? I’m wondering about the control."

Fred Wagner spoke strongly to the aldermen about the need for additional information and data before voting on the increased rate hikes, saying the proposal may be too high or too low but "I don't think you know." He urged the aldermen to examine how other cities and towns are handling water and sewer budgets.

"This committee here should be ashamed of themselves if they pass this without more information and projections in the future," he said.

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