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Ellis will hike water rates 10 percent

9/21/2012

By RANDY GONZALES

By RANDY GONZALES

rgonzales@dailynews.net

ELLIS -- In order to avoid a statutory violation, water rates are going up.

In Monday night's Ellis City Council meeting, a 10-percent increase in water rates effective with the Nov. 1 billing was approved by the council by a split vote. Council members voting in favor of a motion to increase rates 10 percent were Brian Raub, Lyle Johnston and John Walz. Opposing the motion were council members Jolene Niernberger, John Leiker and Martin LaBarge. Mayor David McDaniel broke the tie by voting in favor of the motion.

In principle, the council also authorized the city attorney to draft a series of water rate ordinances that could come into effect in the future to address inflationary increases.

A comprehensive study by Ranson Financial LLC last year analyzed the city's water and sewer funds. Ranson recommended and auditors concurred sewer and water rates needed to be increased.

Late in 2011, the sewer utility almost went in the red. General fund money had to be tapped to keep the utility in the black. The council took the consultant's recommendation and passed a rate increase for sewer to ensure users of the system paid for the costs.

After the 2011 city audit, the report indicated water rates needed to be raised or the water utility would be in statutory violation.

The city clerk's office analyzed the current financial situation of the water utility, and the current rate structure forecast showed it would be in the red by 2013.

"The (cash) figures are dwindling and dwindling and dwindling," McDaniel said. "The reserves are dwindling. If we don't do something, we're going to be in the red."

The consultants' recommended 30-percent increase would result in a positive ending balance in the utility each year until 2024. However, the council opted to phase in the increase, reaching the 30-percent level through time, McDaniel said Wednesday.

"We came up with 10 percent three different times to do this, over a period of years," he said. "That should get us where we need to be."

McDaniel said council members were concerned about too big of an increase all at once, and decided to instead phase it in.

"The council discussed at length about slamming 30 percent at the people all at once," McDaniel said. "That is not an acceptable solution at this time."

According to the city clerk's office, the initial 10-percent increase will result in a typical homeowner's bill to show a base rate increase of $3.21 and increase 32 cents per thousand gallons.

If a customer used 5,000 gallons, before the rate increase, it would cost $48.38 -- after the increase, that customer's water bill would be $53.22.