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Posted December 10, 2012 | Leave a comment
Strasburg wastewater treatment plant: Upgrades could lead to rate hike
By Alex Bridges
Higher sewer bills for Strasburg residents could be on the horizon after it was discovered that upgrades to the wastewater treatment plant are higher than previously expected.
Strasburg town staff members are continuing their efforts to shave the cost estimate from the lowest bidding firm of nearly $37 million to the earlier target of $24 million. But Town Council directed staff members to put their energies elsewhere, such as seeking help in finding ways to reduce the cost.
Regardless of the final price for the project, customers still face paying more for sewer service. How much more they must pay depends on how close the town can get to the earlier estimate.
A bill for using a minimum of 4,000 gallons would need to increase from $41.60 this fiscal period to $55.55 per month by 2017 under the $37 million estimate, according to information from Town Manager Judson Rex. Council received the information at a finance and personnel committee meeting in November.
Strasburg staff members recently reported to Town Council the efforts being made to reduce the current construction cost estimate of $31 million. Staff showed the cost could come down by several thousand dollars while funding sources may increase grant awards.
Information provided to the council shows sewer rates rising by $13.95 in the next five fiscal periods through 2017. Officials originally had calculated the rate would need to increase by $7.99 over the five periods in order to pay off loans if the project cost $24.48 million.
Town Council members at recent meetings expressed concern that Strasburg could not afford to build the project for more than $20 million in constructions costs.
The town projected sewer rates for 4,000 gallons at $41.60 and $44.10 in fiscal years 2013 and 2014 respectively. The levies for the first two cycles would not change if the town moved forward on the $37 million project.
Customers would start feeling the pinch in 2015 as rates would increase to $47.63, then $51.44 in fiscal 2016.
Council moved forward with advertising the project for bids based on the engineer's estimated construction cost of $20 million. Town officials used the total estimated cost of $24.47 million to determine the sewer rates needed to pay off the loans.
Under the earlier figure the town planned to raise the sewer rates by 6 percent in the fiscal years 2013, 2014 and 2015, then by 3 percent the last two periods, for a total increase of 24 percent.
Town officials projected spending $776,003 each year to pay off the loans.
When the lowest bidder put the total project cost at $36.96 million, officials recalculated the annual loan payment at $1.27 million -- an increase of nearly 64 percent.
However, the lowest bidding firm put the cost of the project at $36.96 million, $31.4 million of which would go toward construction.
Under the higher cost estimate, officials calculated that sewer rates would increase by 6 percent in fiscal 2013 and 2014. However, the levies would need to increase by 8 percent in the subsequent three fiscal periods, for a total increase of 36 percent.
At least one Town Council member broached the idea that Strasburg not move forward with an upgrade and wait to see what happens.
The town may have little choice.
"While Strasburg is not currently under a consent order to upgrade the facility, we have experienced sewage inflow that exceeded 95 percent of capacity for three consecutive months on four separate occasions," Rex stated in an email Monday. "Therefore, we need to either reduce the flow or expand the facility to accommodate existing and future flows."
The town also needs to upgrade the facility to meet regulations under the Chesapeake Bay Act, according to Rex. Strasburg pays approximately $65,000 each year to buy nutrient credits to offset the town's nitrogen and phosphorous discharges, Rex explained.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org
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