Greenwood proposal advances
Officials: Water, sewer rate hikes needed to keep up with expenses
GREENWOOD — The city took the next step in establishing higher rates for water and sewer services for the first time in over a decade.
The City Council voted 6-0 to approve the second readings of two ordinances adopting increases for city water and sewer rates that would be phased in over two years at its meeting Tuesday.
The council has to approve three readings of the ordinances before taking effect under state law. It approved the first reading Nov. 6.
If implemented, someone living in Greenwood using 4,000 gallons of water in a month would go from paying $33.25 this year to paying $40.50 in the first quarter of 2024 and $48.90 in the first quarter of 2025. A person in the city paying $18.75 for 4,000 gallons for sewer in a month this year would similarly have to pay $40.80 for the same amount in 2024 and $48.40 in 2025. The rate increases would also apply to people living outside the city.
The ordinances also provide for annual water and sewer rate adjustments consistent with changes in the consumer price index for all users beginning Jan. 1, 2026, and continuing every year afterward. Despite this, the City Council may vote to reduce or forego the adjustments in any upcoming year before they take effect at the start of every calendar year.
The City Council amended the ordinances Tuesday to specify this would be done in accordance with the national consumer price index.
WHY THE NEW RATES?
The city held a public hearing on the increases before the City Council meeting. This gave residents an opportunity to find out more about what the proposal entails, how it was determined and why city officials say it’s necessary. They could also ask questions and voice their concerns on the topic.
Theresa Burtchett, chairwoman of the Greenwood Water and Wastewater Commission, has said the city last voted to raise the rates in 2012.
Tom Marsh, city finance director, said Greenwood’s revenue for water and sewer services combined have grown modestly since 2011, going from more than $2.75 million to slightly less than $3.25 million in 2022. However, its water and sewer operating expenses grew more rapidly during the same period of time, from between $2 million and $2.25 million in 2011 to more than $3.25 million in 2022.
Marsh noted factors such as supply chain issues and inflation caused the city’s combined water and sewer expenses to increase significantly after 2020. He also claimed expenses grew even more quickly in 2023, although he didn’t provide specific numbers.
While the Water and Wastewater Commission discussed implementing a rate increase and was in the process of doing a rate study in 2019, it postponed the idea in 2020 due to the covid-19 pandemic, according to Marsh. Greenwood hired the Van Buren-based Hawkins-Weir Engineers to do the study to generate the rates being proposed in collaboration with the city.
Meg Kelch, project engineer with Hawkins-Weir, said the city’s water and sewer systems both have had to deal with aging infrastructure and equipment, increased operations and maintenance costs, and inflation, among other things. More specific factors include James Fork Regional Water District increasing the average rates for water it sells to the city by 82% from 2021 to 2023 and costs for chemicals for wastewater treatment going up by more than 300% over a two-year period.
Kelch said Greenwood also had to do a rate study due to Arkansas Act 605 of 2021.
The act — with some exceptions — put more responsibilities on retail water providers in managing and operating their water systems, according to the Arkansas Department of Agriculture website. It requires providers to prepare a rate study using a state-approved entity every five years or before any major development project. The provider then has to implement the rates determined from the study within one year of the study being completed or two years if the provider’s rates would increase by at least 50%.
Kelch said Act 605 is meant to ensure water systems are paying all their infrastructure needs and budgeting appropriately. This includes setting aside reserve accounts so they have enough money to do projects they need to do.
“Part of the rate study includes contributions for those reserve accounts that allow Greenwood to be in compliance with those Act 605 requirements,” Kelch said.
Some of the money from the proposed rate increases would go to water and sewer projects outlined in five-year capital improvement plans, according to Kelch. Water and sewer expenses are paid for by water and sewer rates, as well as city sales and use tax money.
Kelch said Nov. 6 the increased rates can both be broken down into a one-time monthly fixed charge covering the first 1,000 gallons used and a volume charge for every 1,000 gallons beyond that. There are two classes of customer: those who live in Greenwood and those who live outside the city. People outside the city have to pay a 25% surcharge for water and sewer service, which is the case under Greenwood’s current structure.
Kelch said an annual rate increase for water and sewer service after the two phasedin increases would help the city keep up with inflation. However, the city Water and Wastewater Commission will do an annual review to determine if an increase is necessary.
The City Council also discussed having another public hearing before the third reading of the ordinances. A date hadn’t been set as of Tuesday.