Ephraim City issues water

bonds and is considering

options for raising rates

 

By James Tilson

Staff writer

Apr. 12, 2018

 

EPHRAIM—The Ephraim City Council heard arguments last week for the need to raise revenue to pay for the city’s water infrastructure.

Brant Hanson, Ephraim City manager, and Bryant Kimball, director of community development, told the council on the city needed to enact parity water revenue bonds and raise water rates to pay for past infrastructure projects and the new culinary water well.

During the April 3  meeting, Hanson pointed out the revenue bonds would pay for the new infrastructure Ephraim has installed, and will be installing, over the last seven years and in the near future.

Ephraim has built a new 1.5-million-gallon water tank, has purchased new water rights, has replaced four blocks of water pipes underneath the roads comprising the “college loop,” has begun the culinary water tunnel and is now working to begin drilling a new culinary water well, with the attendant water rights.

Hanson said Ephraim’s spending on water infrastructure is “approaching $10 million,” but the city has not raised water rates since 2010: “All of this together puts us in a difficult situation.”

Hanson also reminded the council Ephraim has experienced significant population growth over the last 10 years. However, the city has not added any new employees during that time:  “We’ve tightened our belts.”

In response, the city, both to address past infrastructure spending and to address conditions within the new grants and loans associated with the new well project, proposes to enact parity water revenue bonds and to raise city water rates.

The parity water revenue bond would help to pay for the loans on which the new water well will be built.

The water rate raise would help pay for the debt service on the infrastructure already built.

Kimball explained the city staff had reviewed the current water rates, their relation to other rates from other local communities and the amount of revenue needed to service the city’s debt. After the review, Kimball said the city’s staff came up with two different alternatives.

First would be to charge a higher base rate.

This method would have the advantage of generating revenue quickly, but it would also impact certain groups more than others.

The other alternative would be to charge a higher rate to high water users.

Such an increase would be fairer to users, but when users reduce their usage to save money, it would reduce the revenue coming to the city.

Hanson explained, “We’re trying to keep businesses in business and to not decimate grandfather’s and grandmother’s budgets.”

The city staff recommended the city adopt a water-rate raise that balanced a base-rate raise, with a lower increase to all of the tiers to reduce the impact to any particular group.

The base rate would be raised to $24 for the first 7,000 gallons, with tier-rate increases after that.

The average water bill after the proposed rate increase would go from $40 to $57, or somewhere in the middle of other local municipalities’ water rates.

Kimball noted Utah’s Permanent Community Impact Fund Board (CIB) had requested their rates be raised to about $72 on average per user, but the city staff members were prepared to argue the city’s recommended rate would serve Ephraim better than the higher rate.

The council did not take any action on the proposed water-rate raise but took it under review.

The council did approve a resolution authorizing the issuance of parity water revenue bonds, pending a public hearing to be held on May 2 to allow for public input.