WOONSOCKET — The much-bemoaned financial burden of upgrading the wastewater treatment plant will begin hitting home in the form of steep hikes in sewer fees as soon as the next bills go out in May.
The average homeower’s bill of $69.23 per quarter will rise by some 12 percent, effective immediately, followed by a series of increases in each of the next four calendar years of 11, 11, 5 and 5 percent, respectively, under an ordinance adopted Monday by the City Council.
Those increases would lift the average homeowner’s annual bill to about $420 by 2016, sending wastewater fees from the third-lowest to about the seventh-highest among 18 sewer districts statewide. And that’s pretty much the good news. The bad news is that the revenues generated by those increases will probably fall well short of the amount of money needed to cover the projected $35 million price tag the state-mandated upgrades are expected to cost, so the ordinance is really the first snapshot of a moving target that will likely translate into even higher fees.
“This is all a best guess at this point,” said Public Works Director Sheila McGauvran. “We won’t even know how much the project will cost until we go out to bid in June, so this is all going to have to be revisited.”
But McGauvran said that without a binding schedule of rate hikes in effect, the city would not be able to repay $30 million in low-interest loans authorized by the state Clean Water Finance Agency to commence the project. The interest on the loans from the CWFA, a go-to resource for communities seeking to modernize public utilities, will be around 2 percent, officials say.
The upgrades are needed to comply with a mandate from the state Department of Environmental Management to reduce the levels of nitrogen and phosphorous discharged into the Blackstone River from the Regional Wastewater Treatment Plant on Cumberland Hill Road. DEM initially ordered the city to reach more stringent discharge limits for the agricultural and industrial pollutants in 2008, but the city, citing financial constraints, has been offered a series of deadline extensions.
The latest came just a few weeks ago, when DEM Director Janet Coit gave the city until January 2015 to complete construction, an additional 10 months. Officials say the relief could shave millions off the cost of the behind-schedule project because it no longer has to be bid at a fast-track premium.
Coit granted the extension after city officials repeatedly complained that state and federal regulators want them to embark on two major public works projects at virtually the same time, with a combined price tag in the vicinity of $80 million. In addition to the regional wastewater plant, regulators have also ordered the city to replace the Manville Road water treatment plant by March 2013, a project that carries an estimated price tag of $55 million.
The City Council adopted the new schedule of rate hikes Monday on a 5-1 vote, in one of two measures related to the water plant project. In another, the council, on a 6-1 vote, granted Mayor Leo T. Fontaine permission to strike new intermunicipal agreements that would heap new financial burdens on neighboring communities that also use the wastewater plant, North Smithfield, Blackstone and Bellingham.
After a lengthy debate, the council approved a measure authorizing the mayor to seek a combined sum of roughly 11.25 percent of the capital costs of the wastewater project from the three communities, prorated according to the amount of sewage they send to the plant.
That would be 7 percent for North Smithfield, 1.5 percent for Blackstone and 2.75 percent for Bellingham, all of it amortized over 20 years.
Councilors instructed the mayor to recoup the funds not in the form of rate hikes, but as “host fees” which could be deposited into the general fund, or used in any fashion the city sees fit, according to Fontaine. The idea, he said, was to spread the benefit around to everyone in the city who pays taxes, even if they don’t pay sewer fees.
“There are a lot of sewer users in the city who don’t pay any taxes,” said Fontaine. “We thought the benefit should be spread out among anybody that does pay taxes.”
The City Council didn’t just pick the 11.25 percent figure out of thin air. The original intermunicipal agreements inked by the city some 30 years ago calculated that a fair split for the cost of using the 16 million gallon-per-day plant was 68.75 percent for the city, and the balance, or 31.25 percent, for the other three communities combined. Sometime in the 1990s, said Fontaine, that deal was amended by former Public Works Director Michael Annarummo, so that the current split is 80 and 20 percent, respectively.
Under the deal approved by the City Council, the split would revert back to the original agreements, but the windfall must be paid to the city in the form of a host fee instead of garnered through rate hikes.
Fontaine said that if the communities reject that offer, the city could exercise its power to serve them with a termination notice. That means the neighboring users could assert the status quo for another three years, but after that they’d be forced to renegotiate or find some other way of treating their municipal biosolid wastes legally. Without plants of their own, that would leave them with few options.