By PAULENE POPARAD

Chesterton sanitary-sewer customers won’t see a 14-percent rate increase Jan. 1 as recommended by the Utility Board and a financial consultant.

It now appears more likely a 7-percent rate hike will be imposed in 2009 with another 7-percent increase taking effect in 2010.

Town Council members Emerson DeLaney, David Cincoski and James Ton voted no Monday on a motion by Sharon Darnell to impose a 14-percent hike in one phase. Cincoski seconded the motion for discussion. Darnell was the only one in support; member Jeff Trout was absent.

Darnell said the town has two choices: raise rates 14 percent now to rebuild cash reserves, cover operating increases and undertake needed projects, or pay later with interest through a bond issue if another catastrophic sewer failure occurs like the recent, unexpected $500,000 in repairs to a major Porter Avenue ductile iron force main.

“We have 100-year-old infrastructure we have to take care of,” said Darnell, adding that with housing starts down the last 12 to 18 months the town is collecting less in sewer tap-on fees as a source of revenue.

But Cincoski and Ton said 14 percent is too steep a jump at this time, especially on the heels of a 34-percent sewer increase which took effect in 2007. Rates were increased in 2005 and 2006 as well.

DeLaney noted the Utility Board passed over or chose smaller rate hikes than recommended by a consultant in previous years even though the utility’s wanted to make improvements to the sewer system for some time. The current project list totals about $3.5 million and $1.4 million for additional work is being sought in federal funds.

By majority consensus town attorney Charles Lukmann was asked to revise the proposed rate ordinance to reflect a 7-percent increase in each of the next two years for consideration at the Aug. 25 council meeting.

The council vote came as a surprise to Utility Board president Larry Brandt, who had laid out the board’s reasons for a 14-percent rate hike during Monday’s public hearing. “I thought they’d approve it,” he commented after the meeting. Now, he said, the Utility Board will have to look again at its budget anticipating less income.

In June the Utility Board voted 3-2 with Brandt, Andy Michel and Scot McCord recommending a single 14-percent hike and members John Schnadenberg and Jim Raffin preferring a two-phase implementation.

Last night during a public hearing, citizen Paul Tharp said if there has to be an increase, he urged the council to take the latter approach. He said town residents will face increases in their trash-collection and leaf pick-up fees next year unless the town absorbs those higher fuel costs. “Something’s got to give somewhere (or there will) leave a bruise in a lot of pockets.”

Donald Karp said senior citizens should get a discount on their sewer bills, not see an increase because the utility has a wish list. “Senior citizens have a list --- a survival list.” He added, “We’ve got to start looking at people with low income; there’s plenty out here. Senior citizens have taken a beating all the way.”

The case in favor

While Tharp and Karp were the only speakers against the rate hike, Brandt and consultant John Julien of Umbaugh & Associates were the only ones to speak in favor.

Brandt emphasized, “Reluctantly, believe me this Utility Board is extremely reluctant, in increasing rates.” However, he said the costs of operating the sewer system and treatment plant have increased dramatically over the last three years while necessary projects no longer can be deferred and financial reserves are being depleted.

Responding to a question from the audience by Greg Leckenby of the Indian Boundary Conservancy District, which Chesterton serves, Brandt said four utility employees have been added over the last three years.

Julien said 14 percent was recommended after a rate study based on expected operational costs, the need for capital reinvestment and for debt service. The result would be an approximate increase from $66 to $75 on a typical bi-monthly residential sewer bill or $4.50 per month.

DeLaney later said viewed as $1.10 a week, “That’s a cup of coffee.” Citing the previous sewer increases in addition to the one now proposed, Ton replied, “Look back three, four years ago what we were paying. It’s a lot more than a cup of coffee. It’s a lot more than that.”

Cincoski said there are a lot of ratepayers who will not get an increase in their own pay and the rate hike would affect them drastically. “We are at a time, and the department heads know this, that we have to do more with less.” While $4.50 a month may not sound like a lot, “Every little bit adds up.” Unless revised numbers show a need, Cincoski said he couldn’t support a single 14 percent rate hike.

Fees to fund upgrades

DeLaney asked Julien if the utility eliminated all nine critical projects it wants to do over the next two years, could a rate increase be avoided? Julien said no because a good portion of the new money is needed for increased operating expenses; if only a 7-percent rate increase is allowed each year, it doesn’t mean half the projects could be done in each.

DeLaney said while the treatment plant has been upgraded and the infrastructure for recent subdivisions is new, “What’s in between is falling apart.” Those projects need to be done, he said, “but at what cost to the taxpayers of this town?”

Brandt said if $85,000 isn’t spent soon to reinforce the sewer line from Morningside subdivision and north of Interstate 94, it easily could turn into another catastrophic failure. “If that goes, it’ll be a lot more than Porter Avenue.” Other projects deemed critical include upgrading three-phase power to five lift stations, upgrading others, installing real-time live monitoring of lift stations and purchasing portable generators for them.

Darnell said sewer rates would have to be raised to pay for a bond issue if a major sewer failure, considered a threat to public safety and health, occurs. And if it’s the Morningside line that goes, town officials estimated one-quarter of Chesterton and a large portion of the town of Porter, whose sewage goes to Chesterton’s treatment plant, would be impacted.

Darnell asked if Chesterton would suffer a penalty if it cannot serve Porter. “You’ve got to provide a service to get paid,” said Lukmann. Porter is considering a sewer rate increase of its own, in part because of Chesterton’s planned rate hike.

After the vote, Lukmann was asked to meet with Julien to amend the pending rate ordinance to reflect twin 7-percent rate increases.

Posted 8/12/2008