Consultant: City needs water, sewer hike
Aug. 13—Unless it alters its rate structure, the City of Greenville will have insufficient revenue to cover its water and sewer expenses beginning in fiscal 2023 and on through fiscal 2027.
That was among the chief takeaways from a water and sewer rates study performed by NewGen Strategies & Solutions. Company representative Chris Ekrut presented the findings during a meeting of the Greenville City Council on Tuesday.
"If you want to invest in your business, if you want to ensure the financial integrity of your business, some type of rate action is needed going forward," said Ekrut.
Revenues from water and sewer collections must match or exceed expenses, Ekrut told the council, and the city will have to make some tough decisions.
In a comparison with 23 other North Texas cities, Greenville was at the bottom in terms of combined water and wastewater rates, according to the study. The comparison is based on residential water use of 5,000 gallons through a 3/4-inch line. Greenville customers pay a combined $62.93 for water and sewer, which is the lowest amount among the cities surveyed. Residents of Farmersville paid the highest rate at $134.12.
Greenville is planning to make almost $174 million in capital improvements to its water and wastewater systems through fiscal 2027. The study shows the city having insufficient revenue to service its debt. Under the current rate structure, it also will have insufficient funds to maintain an appropriate fund balance.
NewGen presented two rate structure scenarios that put the city's water and sewer fund in the black. Scenario 1 places the city in a positive position during the next fiscal year and achieves a 20% reserve fund by fiscal 2027. Scenario 2 takes a more aggressive position on rates, boosting revenues quickly in fiscal 2023 and also achieving a 20% fund reserve in fiscal 2023.
"Under both scenarios, you're in a better financial position long-term and you're able to fund that capital (improvement plan)," said Ekrut.
Under Scenario 1, Greenville residential customers would pay $75.25 based on 5,000 gallons, up from today's $62.93. The rates proposed in Scenario 1 are the same ones recommended in the city's proposed budget for next fiscal year. Under Scenario 2, the amount rises to $87.09. That would place Greenville roughly in the middle of the pack among the 23 cities surveyed.
Greenville employs a three-tiered system in regard to its rates. The more water a customer uses, the more the unit rate goes up. NewGen proposes the city install a fourth tier and try to "send a stronger conservation signal, charging even more for even higher levels of use," said Ekrut. "... We want to make sure we are encouraging conservation and being good stewards of that (water) resource."
NewGen also encourages an industrial customer rate classification.
Under the rate scenarios proposed by NewGen, the initial implementation would be Oct. 1.
