Moroni City Council approves funding for $3.5M project

MORONI—The Moroni City Council put funding in place for its $3.5 million water project last week by approving a $2.48 million bond, instituting a $3,244 impact fee on new water connections and raising water rates an average of $11.50 per household.

The votes on all three measures at a meeting Thursday March 25 were unanimous. No one showed up at a public hearing prior to the votes.

Mayor Paul Bailey said the informal input he had received from citizens was that the project was needed and to go ahead.

Last year, the Utah Division of Drinking Water (DDW) awarded $3,535,000 for the Moroni project. The funding package included a $1,050,000 grant that doesn’t have to be paid back and a $2,485,000 loan, repayable over 30 years at 1 percent interest.

Sometimes, cities embarking on a big project bond for a little more than the amount loaned by government entities. But the bond the council approved is for the identical amount as the state loan—$2,485,000.

Gary Keddington, CPA and city financial consultant told the council the payment on the $2.48 million bond would be $96,700 per year for 30 years. In addition, he said, the state requires the city to put 10 percent of the amount, or $9,670, in a reserve fund every year for the first 10 years. Those figures come to a little over $106,000 per year.

But Keddington said Moroni had an ace in the hole because in 2019, the city bonded for $110,000 to make some emergency repairs to water pipes.

The city has been paying $30,000 per year on that obligation. The payments on the big water bond don’t start until 2022. By then, Keddington said, the $110,000 bond will be paid off, and the city can redirect the $30,000 to the new bond. That reduces the amount the city needs to come up with over the life of the bond to roughly $70,000 per year.

To bring in that much new revenue, the city had to raise water rates. Keddington said his goal in developing a new rate schedule was not just to bring in more money but to make water rates fairer.

Most towns charge a little more per gallon to households with higher consumption. In Moroni, “people on the lower end of usage are actually paying more per gallon that the bigger users,” he said.

Keddington said he entered every water bill in the city into a calculation system “and played with it until we came up with $70,000.”

The new schedule doesn’t go into effect until July 1, 2022.

Under the plan, a resident using 1,000 gallons or less, such as a widow or widower living alone will get a $2 per month increase.

The bill for a family using 10,000 gallons, typically a family of three or four, will go from $55.50 to $82.25 per month. That’s a $26.75 increase.

A household or business consuming 20,000 gallons, one of the higher usage levels in the city, now pays $111 per month. That customer’s bill will go to $165.25, a $54.25 increase.

But Mayor Bailey said the average increase, taking into account all bills in the city,  is $11.50 per month.

Another big change was imposing the first-ever impact fee in Moroni. Some cities in Sanpete County have impact fees not just for water, but for power systems and parks.

Moroni now has a water impact fee only of $3,244. That’s what any new user will have to pay up front to get culinary water. 

State law permits cities to charge impact fees to new development to cover the cost of expanding utility systems and other facilities to serve the growth.

Keddington said when the city receives one of the $3,244 impact fees, it can put the money directly on the $2.48 million bond.

Under a state formula,impact fees could be used to cover 80 percent of the bond payment. Keddington said it’s doubtful Moroni would ever have enough new construction in one year to generate 80 percent of the $96,700 bond payment.

“But anything we do bring in would help,” he said, and could enable the city to pay off the bond faster.