By Mallory Panuska
Times West Virginian
FAIRMONT
September 07, 2008 02:42 am
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Although a more than $1.4 million deficit is weighing heavily on Fairmont’s water fund, city officials are still waiting as long as they can to instate a customer utility rate increase to pay it off.
And the wait will be at least another two weeks, City Manager Jim Snider said last week when this Tuesday’s council meeting agenda was publicized.
Previously, Snider said that he planned to introduce a 50.7 percent rate hike calculated by staff in July at the Sept. 9 meeting. It was removed from the July 22 agenda pending a mediation session held Aug. 28 between city officials and officials from Chapman Technical Group and GE Zenon Environmental.
Chapman is the company that originally manufactured the city’s faulty 5-year-old water plant, and Zenon engineered and designed it. City officials believe that the two companies are responsible for a pair of water emergencies that occurred during the winter of 2007 that spun the city into the significant deficit it is currently facing.
At that time, the membranes in the plant were getting clogged with residue from its Tygart River source because of the absence of a pre-treatment system at the plant. This slowed water production to a point too low to completely meet the high demand of all of its customers, left some customers with little to no pressure and led to boil-water advisories for several days at a time.
After the mediation last month, which officials would not comment on because of the legal issues involved, Snider said staff is postponing the rate increase at least until the following council meeting slated for Sept. 23.
He said that he wants to discuss the mediation with council members and possibly explore other funding options during an executive session Tuesday.
“We are exploring every possibility that we have to see if we can reach some type of settlement. If not, we probably will proceed with a rate increase at some point,” Snider said. “Basically, we are hopeful that we’ll have some type of resolution from the mediation and it will have an impact on the rate increase we are going to have to present. We are looking at other funding possibilities as well.”
But even with this postponement, Snider emphasized the fact that, although it is not what the city wants, a rate increase will likely need to be introduced soon in order to pay the deficit in the water fund and the costs associated with the long-term corrective actions necessary to fully repair the $40 million plant.
According to engineers from STRAND Associates, the corrective-action engineers hired last year to assess the situation at the plant and make recommendations for remedies, the $8.7 million long-term corrective action project needs to start as soon as possible.
But Snider and Mayor Scott Sears said officials will wait as long as they can to begin the project. Sears, who is up for re-election in November, said last week that he is “completely against” the rate increase and wants to see what comes from the mediation and explore additional funding options.
He added that because a rate hike would not fully be realized within the water fund for about six months anyway, it may be premature to introduce it at this time.
“We are looking into any type of grants, any type of money that can be borrowed to help us out in a very short-term situation knowing that six months down the road is really not going to make a big difference,” he said. “Why take the easy road and tax the citizens instead of becoming creative to try and alleviate pain we’re in right now?”
When asked what type of additional funding sources the city may be able to tap to make the payments it needs to, Snider said that officials would “explore every avenue” they have to come up with something.
Snider said staff is also working on holding another mediation session in the near future, but nothing has been officially scheduled. He has said that if officials are not satisfied with the results of the mediation, the city is prepared to go to litigation, which would also cost more money.
When staff figured the amount of the rate increase, Snider said that 37 percent of the total 50.7 percent hike is solely to pay back the deficit in the water fund. The remaining portion of it will pay for the debt service on the slated $8.7 million long-term project and an unexpected jump in the city’s annual payment to the membrane reserve account required by Zenon.
At the percentage it is now, the rate increase will add about $13.28 per month to the average residential customer bill. And if it is eventually passed, this will be the sixth rate hike to go into effect within the city since 1983, with the last five occurring in the last five years.
E-mail Mallory Panuska at mpanuska@timeswv.com.
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