City council members agreed to increase wastewater and water utility rates during a meeting on Dec. 6.
The rate increases were built into the 2011 budget that was approved in August 2010, and the new rates take effect on Jan. 1, 2011.
The 5 percent water rate increase will cost the owner of the average home in Gardner $27 per year. The 8 percent increase in wastewater rates will add about $46 annually to the average Gardner homeowner’s bill.
Stewart Fairburn, city administrator, told council members the driving force for rate increases is to cover debt service in both funds. Typically, development fees paid by developers as they hook into the city’s water and wastewater system are used to pay debt in the funds.
However, Fairburn said operating funds are being used to manage the debt.
“The rate increases are helping to cover debt service,” Fairburn told council members.
He warned that without the rate increases, future councils would need to make more dramatic rate increases.
“The issues we have when we delay increases is we have more expensive and more often rate increases,” he said.
In out years, city officials project increasing wastewater fees another 8 percent in 2012; 8 percent in 2013 and 4 percent in 2014.
City officials don’t anticipate using increases to fund large capital improvement projects, Fairburn said.
Even with rate increases, Fairburn said city officials will have their hands full in both wastewater and water funds if development doesn’t pick up.
“Long term the lack of growth and the attendant development fees cause serious concerns,” he wrote in a memo to council members. “…With no significant income from development fees, the operating budgets for both utilities must make up the difference.”
In other business, council members:
• approved an addendum to the listing contract for the city-owned building at 112 S. Elm Street in Gardner. The building was previously leased to the Multi-Service Center, however it has been vacant and used for city storage since the service center moved to the west side of town last year. The addendum will allow the city to rent the building rather than selling it.
Fairburn told council members that few potential buyers have shown interest in the property.
“I’d like to see some cash flow from that,” he said. “To loosen that up and have sale as an option, but also look at leasing.”
• approved an ordinance that disallows parking of commercial vehicles on residential streets. Loading and unloading will be allowed. Officers will issue warnings only for the first month.
• approved a resolution authorizing the city to create an escrow account for prepayment of city bonds related to the fire house on 183rd Street. Johnson County Fire District No.1 will take over payment of the bonds.
• heard a presentation on municipal bonds.