New water system for Schell City comes up with higher costs

Nevada Daily Mail

After a decade of searching for a solution to Schell City's water problems as they dealt with an aging water system in need of an overhaul, city leaders found a solution, albeit expensive, in a contract with Consolidated Public Water Supply District No. 1, to provide water for the town.

However, despite a U.S. Department of Agriculture Rural Development grant of more than $365,000, the city also had to take out a 30-year, $288,000 loan to pay for the new water tower and the project. Residents of Schell City now face the difficult task of paying off that loan as their water rates are increasing, with those using the most water seeing the bigger percentage increase.

Even so, according to figures presented at the meeting, for those with the most usage, the higher rates aren't enough to offset the city's cost to tap into the new system.

Thursday night the Schell City Council held a special meeting to enact an ordinance to set those new rates.

The ordinance sets the water rates at $25 for up to 1,000 gallons per month as the base rate and $14 for each 1,000 gallons per month after that.

An example given in the ordinance shows that a customer using 2,850 gallons would owe $25 for the base of 1,000 gallons and $14 for the remaining 1.85 thousand, for a total cost of $50.90.

The ordinance also sets the following fees:

* Deposits: $100 for property owners and $125 for renters.

* Reconnect fees: $50 per occurrence after the water has been shut off due to non-payment.

* Late payment fees: 10 percent of account balance afrer the 20th of each month.

The ordinance states that water bills are due on or before the third of the month, with bills considered late and subject to the 10 percent fee after the 20th, noting that service will be shut off for non-payment on the third of the following month.

Just over a week earlier, on Dec. 9, the city and Rural Development representatives celebrated the completion of the water project that allowed the city to shut off the old water supply. That celebration was short-lived and did not extend to the public meeting Thursday when the city council passed the ordinance setting the rate hike.

"It was this rate or higher," city clerk Erin Lee explained. "That is the only option the council had."

By law, the city must submit a balanced budget where revenue equals or outweighs expenditures. With a projected $33,000 going toward purchasing water in 2015 as well as another $3,000 for maintenance and repairs to leaking pipes in the city and $12,000 for debt service to the water bond, Schell City had to raise the rates to counteract those expenditures.

With the increase in rates, the city projects a small surplus of about $858 after about $82,000 in expenditures by the end of 2015.

"We don't want to be the town that didn't pay their bill," council member Broc Koshko said.

That bill from CPWSD No. 1 is $5.50 per 1,000 gallons, with the city planning to purchase 6 million gallons in 2015 for the 130 service connections in the city, 127 residential and three commercial. During the year, Koshko said they hope to continue to make repairs to old lines and broken water meters that will reduce water loss and bring down the amount of water purchased from the water district and potentially reduce the water rates in future years.

"That rate was not set for fun," city clerk Erin Lee said.

Lee also said the goal is not to make money off residents. In a letter sent to residents dated Dec. 4 telling them about the rate increase, Lee also gave information on how to conserve water, since the city begins to lose money once a customer uses more than 3,000 gallons of water per month.

Residents attending the meeting protested against the rate increase, but also expressed their opinion that the city should have given citizens more warning, instead of letting them know in recent weeks the increase would be in effect for the next water bill.

Council members said they too are still learning about how the new water system affects the city and its bills, especially since some of the members are new to the council and are trying to catch up on decisions made months or even years ago.

Lee said it is like moving to a new city and new job, without any information about the city's bills, or what the income from the job will be and trying to create a budget.

The new water system went into operation about three months ago, and since then the city has absorbed the cost of purchasing that water, delaying the rate increase until after studies were done on what the increase should be and until after the start of the new year.

Council members said they, too, will have to find a way to pay the higher water bills, but together the Schell City residents will work to pay off the city's debt while also trying to improve the city's water system and reducing the number of gallons used or lost, to reach a level of greater financial stability.

Council members noted it is only then that the city would be able to consider lowering the rates, as the city pays off the $288,000 loan.

"We're trying to pay the bill we owe," Koshko said.