The Houston Board of Aldermen was handed a breakdown of proposed water rate increases to be spread over industrial, residential and commercial customers by Mayor Stacey Parker at the city’s regular first-Tuesday meeting March 4.
Parker said, as the city sought funding to purchase new electronic water meters and fix the Washington Street well, it was brought to his attention that current revenue from water bills would not finance sustained improvements to the city’s water system.
“We have not increased water rates or taxes in a long, long time and expenses have gone up tremendously,” said Parker. “With what we want to do with our fire loop and at the industrial park and other improvements in the city – it would ultimately drain all our reserves.”
Revenue from industrial, commercial and residential water bills is a major revenue stream for the city along with property and sales taxes.
Mike Knox, an accountant with Watkins, Ward and Stafford, who audits the city’s finances, said unless the city cut costs or raised rates the city would see expense and income lines converge at some point in the future.
“Quite frankly you need to make money with your water system,” said Knox “You have to have the capital available to buy equipment, repair your system and match grants that ultimately improve your water system.”
Knox said the question to raise rates was brought to light when bankers looked at the city’s long-term finances in their decision to loan money to Houston to purchase electronic meters and repair the Washington Street pumping station that is currently down.
After looking at current rates and future needs, Alderman at Large Barry Springer said the city needed to raise rates to create $240,000 in new revenue, cut expenses by a similar amount or do a combination of both.
“It looks like they want us to be solvent before they loan us the money,” said Springer. “This is information we need to know before we make this decision to raise rates.”
It was pointed out Houston’s water and sewer rates are lower than towns in the region of similar size.
Place 2 Alderman Shenia Jones said she was hesitant to vote on a rate increase until she could see how it would affect residential customers.
“I would like to see us hold a town hall meeting to get some direction from the community,” said Jones. “What we are talking about doing is big and will affect everyone who uses water, especially those on fixed income.”
The discussion also touched on plans to expand the city’s fire loop to industrial clients and get a water main to the industrial park in northwest Houston. The current industrial park is served by a six-inch water line and the city has repeatedly had water pressure problems at the Chickasaw County Regional Correctional Facility.
“We do need to think about the industrial side because that will be an issue in the future,” said Parker. “Part of the reason we have not been able to get a Toyota supplier to land here is we don’t have a lot to offer an industrial client.”
Parker estimated it would cost the city between $500,000 to a $1 million for planned improvements to that part of Houston’s system.
Houston currently has 1,780 water customers. Census figures saw Houston’s population drop from 4,079 in 2000 to 3,623 in 2010 and to 3,562 in 2012. The city has also seen a drop in the number of retail businesses and recent sales tax revenues.
The city met with the U.S. Department of Agriculture in December as part of a public hearing to explain the purchase of electronic water meters to replace the city’s aging mechanical meters and make reading residential water bills more efficient and improve accuracy.
The more accurate meters are expected to boost revenue by 10 percent.
The meter upgrade has an estimated price tag of $400,000. The cost to repair and improve the city’s Washington Street well could be $80,000 to $100,000.
Under the federal proposal the city is seeking a 45/55 matching grant with the city to pay 55-percent and the USDA paying 45-percent.
“The cycle for our finance package and grant for the meters means we need to make a decision this month if we want to do this, this grant cycle,” said Parker. “I want you to take these new rates home and look at them and we will probably have another meeting this month.”
The board took no action on change water and sewer rates at the March 4 meeting.