Carson City Supervisors discuss funding critical projects with water rate increase

The Carson City Board of Supervisors held a discussion regarding a wastewater and water rate increase in order to fund critical projects such as the Quill Treatment Plant, which had provided 50 percent of the water for the city as a whole and now is not being fully utilized due to needing upgrades and rehabilitation.

Carson City hired Farr West to perform a study regarding water and wastewater rates, who returned with their results and are recommending a standard 3 percent increase for all water rates.

According to the presentation to the Board of Supervisors Thursday morning, in 2012 the FCS Group was hired to perform a Cost of Service Rate Study regarding the wastewater and water rates for Carson City, and established rates that were effective from 2014 through 2018. Farr West took this study into consideration as a part of their review.

The cost of service for each customer “class” (single family residential, multifamily residential, commercial and large commercial) was phased in over the period. The FCS recommended a 15 percent yearly increase for wastewater rate and a 6.5 percent yearly increase for water rate, but due to the recession, the Board voted against the FCS recommended connection charges and remained at the existing connection fee schedules.

The last rate increase was effective July 1, 2017.

In 2015, the city adopted a water and wastewater connection fee ordinance that established a phased in connection fee increase between 2016 and 2021 with the last increase effective July 1, 2020.

The indexing of the connection fees will begin July 1, 2021. Connection fees would increase yearly based on the Engineering News-Record Construction Cost Index with a cap of 3 percent.

Farr West has concluded that an “across-the-board” rate change in which each customer class would experience the same percentage rate change is the most efficient, as opposed to each class facing a different percentage change.

The FCS Model suggests a fluctuation model increase between 1.31 percent and 4.28 percent each year; Farr West recommends instead a 3 percent yearly increase to make the process simpler and more straightforward, beginning July 1, 2020.

These increases will be able to fund multiple Water Capital Improvement Plan (CIP) projects between 2020 and 2025, according to the presentation, including the Water Line Replacement and Rehabilitation Program. Some pipes under the ground are as old as 100 years old and these, along with any between 100 and 50 years old, will need to be dug up and replaced.

In addition, the Quill Treatment Plant Rehabilitation project needs to be completed and is scheduled to begin in 2024. The Quill plant is the original source of water for Carson City, and is a project that is “near and dear” to the city’s heart, according to one of the project presenters Eddy Quaglieri.

Having diversified ground and surface water systems is important economically and for the health of the city as a whole, said Quaglieri. Some water sources have uranium or arsenic in them, and they need to be blended with other water sources in order to be drinkable.

“We’re talking about what once provided 50 percent of the city’s water and now is providing barely any in the last 20 years,” said Supervisor Stacey Giomi. “I think it’s critical to get this source back.”

Mayor Bob Crowell asked what would happen if the increase did not happen.

“We’d keep limping along but eventually we’ll need to find sources for build up demand,” answered Quaglieri. “This is one we’re going to have to do, like it or not.”

According to the presentation, without the three percent increase by 2022, annual expenditures will overtake revenue with the existing rates, causing a significant deficit by 2025.

This will benefit the city being able to treat water it is not able to treat currently, reducing debt in the long term by taking care of the plant now at lower interest rates.

Some drawbacks to moving it sooner include larger rate increases are needed to fund the CIP projects for 2021, 22 and 23 opposed to the FCS plan.

Supervisor Lori Bagwell said she believes the city is being wise to complete the Quill Water Treatment Plant Project now, so the city won't lose its water rights because we aren't able to use that water currently.

The Board of Supervisors was asked to consider providing $10,000 of funding toward the Utility Rate Payer Assistance Program (URAP).

Mayoral Candidate Nathaniel Killgore spoke on the record during public comment and said that he came to the meeting to implore the Board to not raise the rates, but after listening to the experts and the discussions held, he now understands the need for the Quill Treatment Facility and he agrees with the 3 percent increased rate.

"Our diminished use of Quill and westside water has troubled me for years," said Giomi. "The state recently tried to purchase it out from under us (since its been underutilized by the city). I think it's critical we move that Quill treatment plant up sooner. I'd like to see that done in a way that keeps the rate close to as 3 percent as possible. I don't think anyone up here take rate increases for granted."

"I believe the Quill plant is a must because in our current economic cycle it will come to an end and by 2024 we won't be able to afford to do the project and it will get pushed out for decades," said Supervisor Brad Bonkowski. "We can get as close to free money as possible in today's market by bonding for it. I think we can make it work."

"As far as the URAP funding, I'm positive $10,000 is sufficient from each fund for the need," said Bagwell. "We can also have a donation line added into our utility bills. We can always reassess later."

Thursday was a presentation and discussion only, and voting on the rate increase will be held at a later meeting.