July 3, 2016

Preview:  Town Hall Meeting on Water and Sewer Rates - July 11, 7:00 p.m.

Bellaire, we have a problem.

For at least the past 22 years, our water and sewer rates have not been adjusted to keep up with the rising costs of providing the service, and of maintaining the infrastructure that delivers it.  Rather than having incrementally increased rates over that time period, we're now faced with the prospect of having to catch up all at once.  We've reached the point that we couldn't continue kicking the can down the road even if we wanted to; we've simply run out of road.

The primary driver of the proposed rate increase is that we urgently need to replace critical utilities infrastructure all over town.  It's a problem we can no longer ignore.  More than 40% of our water lines throughout the City are more than 70 years old, and the brittle cast iron is failing.  Ruptured water lines are becoming an all-too-familiar sight.

Obviously we have no choice but to immediately repair water lines as they break, but such a piecemeal approach is unsustainable and successive failures only add to the cost and are wasteful, messy and hugely inconvenient to the affected residents.  What we need is a plan to systematically replace failing water lines, which staff is developing with the City Council's full support as a stated priority.

We're planning an $11 million bond referendum for the November 2016 ballot, to fund water line replacements throughout 2017, 2018 and 2019.  To support that indebtedness will require an increase in water and wastewater utility rates.  The City's financial management policies recognize that it would be inappropriate to subsidize utility improvements (Enterprise Fund) with property taxes (General Fund).  Utility rates have to be sufficient to cover utility costs.

Working with a water rate consultant designated by the Public Utility Commission of Texas, we've developed a proposed rate structure guided by these objectives, to:  cover the cost of service, support the capital plan, incentivize water conservation, provide for operational contingencies and react to surface water rate changes.

Unfortunately, we'll need an approximate 25% overall rate increase to meet those stated objectives.  Looking at it another way, perhaps this best illustrates just how artificially low our rates have been kept for all these years.  For typical households, the proposed rates are very much in line with those charged by other communities in the region.

With the benefit of hindsight I'm sure all can appreciate that incremental rate increases over the past 22 years would have made much more sense, and been much more tolerable in paying our monthly bills.  Rates were adjusted just once during that time period, in 2006, but not by enough to catch up or to stay caught up.  (Interestingly, the rate structure recommended in 2006 was similar to what is being proposed now, though the City opted for a lesser increase at that time.)  But this is the situation we find ourselves in, and we're now faced with ripping off a huge Band-Aid rather than having kept up with costs gradually.  No one is happy about it, but it would be woefully irresponsible of us to ignore the problem.

Please join us for a town hall meeting on July 11 at 7:00 p.m.  We'll provide a detailed presentation on the issue and receive public input, which will guide us in further developing and refining the FY 2017 budget to be deliberated in the coming months.