Social Circle ponders rate increase
Residents' water, sewer bills may rise

SOCIAL CIRCLE - Residents may soon see an increase in their water and sewer bills as the city looks for ways to generate funds to pay debt service on capital improvements to the water and sewer systems.

City Manager Doug White asked the City Council for guidance at a work session Tuesday evening as he and other city personnel begin planning for the town's budget for the 2009-10 fiscal year, which begins in July.

White said the general fund appears to be in good shape, but he had some concerns about the town's capacity recovery fund, which is used to meet debt service on low-interest loans from the Georgia Environmental Facilities Authority (GEFA). White said the fund currently contains between $900,000 and $1 million; however, since the town spends about $300,000 a year on debt service, the fund will be depleted in about three years if more revenue isn't generated.

In the past year, the city transferred money from the gas fund in order to avoid a rate increase for water and sewer, White said. City Council members agreed Tuesday to consider a plan that would phase in water and sewer rate increases over the next two to three years. The city will also look at modifying its rate schedules.

White said revenue in the capacity recovery fund is currently generated by fees paid by those who develop property in the city and connect to the water and sewer systems. The fees are similar to impact fees, he said. Since building has slowed substantially in the past year, less revenue has been flowing into the capacity recovery fund. In fact, White said the fund has received $1,400 in fees in the current fiscal year, while $500,000 was generated in the prior fiscal year.

John Hewitt of Hewitt Utility Economic Services, who consults with the city on utility issues, told the mayor and council that debt service on the town's GEFA loans will increase substantially in 2009 since two projects were recently completed. One project involved constructing a water tanks and lines and the other was sewer plant improvements. Those two projects totaled $11.8 million.

"That alone drives the need for a rate increase. That alone," Hewitt said.

According to GEFA, Social Circle will pay about $450,000 in debt service for the fiscal year ending June 30. In the next two years, debt service payments will remain in the $450,000 range. The town has six outstanding GEFA loans dating back to the early 1990s. The total debt service on these loans through 2028 is $5.4 million, according to GEFA.

In addition to increases in debt service, White said the city has seen water sales decrease over the past year due to watering restrictions related to the ongoing drought.

Hewitt said that the average monthly water bill would need to increase by $11 and the average sewer bill would increase by about $12 in order for the capacity recovery fund to be restored in one year. He suggested the council consider phasing in rate increases over the next two to three years and re-evaluating the town's rate structure.

"We need to do something rate-wise, and we need to do it pretty quickly," Hewitt said.

White said he will prepare two plans for the council's consideration - one showing rate increases phased in over two years and one phasing in rate increases over three years.

Alice Queen can be reached at alice.queen@rockdalecitizen.com.