The Troy City Council discussed a possible 5 percent increase to the city sewer rate — and why they may be required to make the increase — at their Wednesday working meeting.
Troy Mayor Dallas Carr told the council that an auditor looking at the city’s finances recommended the increase.
During budget discussions last fall, City Clerk/Treasurer Tracy Rebo told the council that the sewer fund was barely in compliance.
Rebo reminded the council of this situation in November when they were discussing whether to take out a loan to purchase a backhoe, or to instead use money that would otherwise go into an investment account.
Rebo told the council that the money — which came from a CD that had matured — included money designated to the sewer fund. Using a portion of it to purchase the backhoe could have potentially put the sewer fund out of compliance.
The council also discussed the commercial and residential sewer rates. Rebo said that there are 66 paying a commercial rate and 461 paying a residential rate.
Rebo also presented the council a cash report from July 2017 to show where the fund was before the last 5 percent rate increase.
“We were at $42,000,” she said. “We were barely in compliance with the audit — we were under.”
The previous increase helped, but during the recent audit, Rebo was told that the city would likely be written up again if there was not an additional 5 percent increase, she said.
“Does (the auditor) give us any idea what is enough, or is it based on the loan?” Carr asked.
Rebo said that several things factor into how much the city is required to have on-hand in the sewer fund.
“It has to cover your bonds and your reserve and your repayments. All of your depreciation, your capitalizations — all of that stuff,” she said. “Even though some of that isn’t money, it’s just paperwork, but it still has to cover it.”
Rebo noted that the city is still in a much better position than it was in the past.
“Honestly, (the current balance) is awesome compared to six, seven years ago, when we were negative $34,000 in our operating cash,” she said.
Around that time, a representative from USDA Rural Development — the agency through which the city has the loans that paid for the sewer system — came to the council and told them that if the city didn’t raise the rate, Rural Development would take over the sewer system and double the rates in order to bring the fund back into compliance.
“So, that’s when they decided to raise it $2,” Rebo said.
When the sewer was first put in, the rate was $32.47, Rebo said. The current rate is $38.08
In the around 20 years that the city has had a sewer system, the rate has increased less that $6 a month for residential customers.
Rebo told the council that the city has made an effort to keep other prices — such as sewer permits — low. They have also improved how costs charged to the fund are calculated — such as work hours — in order to not take any more out of the fund than is absolutely necessary.
“There’s not much else we can do — we can’t do anything else,” she said.
After some discussion of scheduling, the council decided to set a public hearing on the sewer rate increase for Wednesday, May 15 at 6:30 p.m.