This article was published on: 02/22/11 12:00 AM

Delay in water rate increase has cost city $90K

By Patrick Cliff / The Bulletin
Published: February 22. 2011 4:00AM PST

A delayed water rate increase in Sisters has cost the city about $90,000 in lost revenues.

When Sisters originally pitched a water rate increase last summer, staff budgeted for the change to take place early in the 2010-11 fiscal year. The rate increase was designed to fund water projects, including new pipes and an upgraded well. But as the city begins preparing its budget for 2011-12, no rate increase has been passed and none appears likely for the next several months.

As city councilors pushed for more information on the study, the city has decided to spend as much as $8,000 more than its original water study budget of $14,000, according to the city. For instance, the city has directed its rate consultant to design another rate structure, according to City Manager Eileen Stein.

“We think we have a problem, and I think council agrees,” Stein said. “The extent of the problem is now the question.”

At the current spending rate and with no rate increase, the city will have $18,000 left in its water reserve by the end of this year. By the end of next year, the fund would be about $8,000 in the red. That could change if the city pulls back on planned water system improvements, including upgrading one of its wells.

Sisters has made up for the lack of revenue by spending reserves and trimming costs this year.

Mayor Lon Kellstrom is hopeful the council will pass an increased rate in the coming months, but he worries about the fund’s reserve now that much has been spent.

Growth in Sisters has slowed, so the city may not need some of the water system upgrades as soon as previously thought, Kellstrom acknowledged. That, though, does not ease the need for the city to increase water rates, he said.

The rate increase, he maintained, is the best way for the city to balance the water fund’s needs over the long term. He wishes the council had passed an increase months ago.

“We’re kind of playing catch-up to keep the water fund in decent shape,” Kellstrom said. “That’s always tough.”

Councilors Sharlene Weed, Wendy Holzman and Pat Thompson did not return calls for comment.

Call for better data

The council had already debated the proposed rate increase for several months by the time Councilor David Asson joined in January, and he soon called for more robust data about the impact of rate increases on city residents.

A retired CPA, Asson is working on a spreadsheet that would show average costs for water customers based on the size of water pipes.

After reviewing his preliminary data, Asson believes the original proposal by city staff may solve the fund’s issues without having too large of an impact on most customers.

Like Kellstrom, Asson is concerned about how the delay in adopting a rate could affect the water fund’s long-term health. If the fund has no reserves, for example, that could limit how Sisters finances more expensive water projects in the future, Asson said. Without robust reserves, lenders would be less likely to loan money to the city for capital projects, he said.

The delay has frustrated Asson, who is just more than a month into his career as an elected official.

“I came out of industry, rather than government, so I’m used to things moving faster,” Asson said. “I’m starting to get a little more patient.”

Patrick Cliff can be reached at 541-633-2161 or at pcliff@bendbulletin.com.

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