Berlin Sewer Rates Discussed

BERLIN – Berlin wastewater customers should pay less than $3 a month more to fund the improvements to the Berlin wastewater treatment plant, and the special connection fee should be much less than predicted a year ago after the award of substantial grants and low-interest loans to the project.

The $15.7 million project will be funded by $8 million in grants, $6 million in loans, with the remainder, about $2 million, from Berlin’s coffers.

That leaves $365,000 to roll over for the spray irrigation land and facility, projected to cost another $8.7 million. Unused contingency funding, included in the project budget against unanticipated costs, could also be rolled over to purchase spray irrigation land.

Russ Tatman and Mark Prouty of URS Engineering went before the Berlin Mayor and Council Tuesday night to present the financial picture of the improvements and expansion.

“It’s good to be back because the picture is much brighter this time [than when] we were here a year ago,” Tatman said. “The present projection is you have to raise your rates 6.5 percent.”

Tatman offered the option of raising rates in January, at a lesser percentage, or raising rates in July, at 6.5 percent.

The town also has to consider an additional rate increase to handle the new spray land and facility.

Raising the rates earlier, which URS recommends, saves ratepayers about 1 percent.

“You and the BUC [Berlin Utilities Commission] need to think about this,” said Tatman.

With the funding in place, URS was able to make the calculations necessary to determine EDU charges.

Special connection charges, according to Tatman, came in substantially less than the projections made a year ago, when URS estimated that the town would have to charge between $14,929 and $19,029 per EDU. With the grants in place, that cost has been dramatically reduced to $12,261. The grandfathered charge remains $8,338 per EDU.

If the town can garner another substantial grant for the spray irrigation facility, Tatman said, the special connection charge would fall to $10,118, with the grandfathered charge reduced to $6,195.

“Historically, Berlin has been good at setting a rate and letting it stand for several years without adjusting for inflation,” Tatman said.

Tatman explained that rates were calculated with certain dates in mind: the purchase of new spray land in January 2010, the start-up of the expanded and improved plant and lagoon in July 2010, and the start-up at the new spray facility in December 2012, as required by the state.

The new rates are also predicated on 20 new wastewater connections in 2009-2010, with 30 more new connections each fiscal year to follow.

“The good news is if there’s more than 30 you’ll be given more cash,” Tatman said.

Building 30 new units of housing a year will extend the life of the wastewater expansion for decades.

“We’ll be alright for 50 years,” said Berlin Mayor Gee Williams.

The improvements to the treatment plant and the addition of spray irrigation land to handle additional effluent should remove any need to keep upgrading treatment levels.

Removing concerns over sewer capacity will allow the town to concentrate on the quality of future developments, Williams said.

Spray irrigation preparation will continue with the new spray land Berlin intends to purchase in Newark. With the site testing complete, the town will move on to aerial surveys over the winter, which will gather information necessary for the design of the new spray facility.

The source of funding for the land purchase and the construction of the spray facility caused some confusion at the meeting.

“It was my understanding we had that money in our special connection fees,” said Councilwoman Paula Lynch. “I’ve asked this question a lot of times.”

The special connection fees have not historically been set aside in a separate fund to be held against future system improvements, as they are meant.

“Our special connection fees have always been going into an operating budget and they shouldn’t,” said Lynch.

“I think we spent it,” said Council member Troy Purnell.

A special fund designation was created for special connection fees last spring, said Carson.

“Where are we going to come up with the money to pay for the land we’re buying?” Lynch asked.

The plan is to borrow the money from the Berlin General Fund, then to pay that back, with interest, from loans or grants, Tatman said.

“That has never been said before. It’s been said we have the money,” said Lynch. Now it seems like the money has been spent twice, she said.

The town does need a reserve so the work can be done without interim financing, Tatman said.

“If this isn’t the opportunity or time to use the reserve when is?” asked Williams.

The reserves are nearly $2 million higher than they were a year ago, Williams said. The reserve fund is roughly $2.6 million. About $2 million will be paid out on the wastewater treatment plant project, leaving $589,000 unspent.

Erik Quisgard, chair of the BUC, asked where the money would come from to pay for the expansion if less than 30 new houses are built in a year.

“The ratepayers would have to do it. The rates would have to be adjusted,” said Williams.