Rate hikes to pay for water projects
The Hot Springs Board of Directors heard a presentation Monday night on four capital-improvement projects that increases to the minimum monthly water charge would finance.
The board postponed a vote on the rate increase at last week’s business meeting amid concern the public hadn’t been told why the rate hike was necessary, with District 6 Director Randy Fale motioning to remove ordinances that would have increased 2018 minimum monthly charges for water by $3, or 60 percent, and wastewater by $1.44, or 7 percent.
Only one member of the public attended Monday’s presentation at City Hall despite the city publicizing it in a news release issued Friday. The city’s public information department said the more than one hour presentation wasn’t recorded, but a summary of it is available
on the city’s website: http:// www.cityhs.net.
The presentation mostly recapped what the board had heard earlier this year, including the updated draft of the 2012 water supply study Crist Engineers Inc., the city’s water system consultant, presented in July and the rate analysis Willdan/Economists. com, the city’s utility rate consultant, presented last month.
More detail was provided on the estimated $2 million project to replace the master center control gear, or switchgear, at the Ouachita Plant that treats the city’s raw water supply on upper Lake Hamilton. Deputy City Manager Bill Burrough told the board the plant’s switchgear is 17 years old and difficult to maintain.
It’s also exposed to the elements, making it vulnerable to a weather-induced failure that could imperil the function of pumps that push treated water through 24-inch and
30-inch transmission lines. “We can (treat) water, but we can’t get it to the city without this particular switchgear that operates those high-surface pumps,” Burrough told the board. “It’s one of the most important pieces of equipment we have, and it’s becoming obsolete.”
Burrough said the switchgear may be the most urgent of the four projects. A malfunction would limit the city to water held in its 11 storage tanks until a replacement pump could be brought on line.
“We might be able to get a pump in from another state, bust a hole in the clear well and stick a hose in it and start running water through one of those pipes into town,” he told the board, explaining that new switchgear would be sheltered and have a service life of 20 to
30 years. “And it wouldn’t be within 24 hours, and we don’t have 24 hours of storage. We’re going to run out of water.”
The 3 million-gallon elevated storage tank included in the capital improvement list would give the city almost 10 million gallons of usable storage to tap in the event of a service interruption, providing about 16 hours of service during an average day of production at the city’s two treatment plants last year.
The Arkansas Department of Health’s 2016 sanitary survey of the water system showed 15.12 million gallons a day of production was needed to meet last year’s average daily demand, making the city’s current 6.8 million gallons of usable storage able to satisfy almost 11 hours of average demand and fewer than nine hours of last year’s maximum day demand of 20.11 million gallons.
The Planning Commission approved a conditional-use permit earlier this month to locate the tank behind Lowe’s Home Improvement Warehouse.
The more than $5 million tank, $2 million switchgear and
$10.4 million of improvements to the three dams forming lakes Sanderson, Dillon and Bethel in the city’s proposed Northwoods Urban Forest Park would be paid for from the $20 million bond issue the city expects to offer next year.
Burrough told the board the improvements will reduce the downstream hazard posed by potential dam failures, which could damage property on Bull Bayou, Cedar Glades, Wildcat and Blacksnake roads. A study the city commissioned in 2015 determined a failure was unlikely.
Burrough told the board the project is not part of the potential Northwoods development. The lakes were formerly used for water supply but are no longer in service.
“The project is not associated with the planned Northwoods Urban Forest Park, should one even come to pass,” Burrough said. “Whether anything happens on that land in the future, dam upgrades and improvements must be taken to mitigate any risk of dam failures.”
Burrough said decommissioning the dams would come at a considerable expense and undo a geographical feature unique to the area.
“There’s probably nowhere else in Arkansas, or maybe in North America, that has those particular type lakes up there,” Burrough said in response to the board asking why the lakes are necessary. “That’s a value-based question versus an economic question.”
Burrough said $5 million of the proceeds from next year’s
$20 million bond issue would go toward the $95 million project associated with the 23 million-gallon average day allocation the city secured from Lake Ouachita earlier this year.
The $90 million of debt the city plans to offer through three $30 million bond issues in 2020, 2021 and 2022 would finance the rest of the project, which includes an intake at Lake Ouachita, a 20-mile long raw waterline to a 15 million-gallon a day treatment plant in the Amity Road area and transmission and distribution lines to convey treated water.
The water supply study presented in July projected that the addition of the Lake Ouachita allocation will secure the city’s water needs through 2037.
Rate increases proposed to service the debt incurred from all four projects would be staggered over a four-year period, with a $3 increase in the monthly base rate taking effect next year, $2 increases in 2019 and 2020 and a $1 increase in
2021. The proposed rate structure would increase the current
$4.99 monthly minimum charge
160 percent by 2021.
The base rate, or minimum charge, is assessed on the first
1,000 gallons of use. Volumetric charges assessed on usage exceeding 1,000 gallons would continue to go up 3 percent a year, an increase the city said pays for rising operation and maintenance costs.
“At some point in time, someone is going to look back and thank this board for making the decision to rectify these problems,” Burrough said. “It’s only going to take one of the things I just mentioned to happen, and we’re all going to wonder why we didn’t.”