City considers raising sewer bills

City officials indicated Saturday that they expect to move forward quickly on consideration of sewer rate adjustments and hope to capture soon-to-expire stimulus dollars to help the city pay for state-mandated sewer system upgrades.

Sedalia City Council members, city administrators and contracted engineering and finance representatives met Saturday morning at Best Western State Fair Inn to discuss the city’s long-term strategy to pay the $25 million to $30 million cost of a Department of Natural Resources consent order to address inflow and infiltration issues in Sedalia’s sewer system.

The city must comply with the order by 2016 or it risks accruing $2,500-a-day fines.
Public Works Director Bill Beck said that during preliminary meetings with DNR after the consent order was received, city officials were told bluntly: “Sedalia has had a free ride for too long.”

Beck and others stressed the need for the city to look at increases in sewer fees.
During its Sept. 7 meeting, the council is expected to consider moving forward with a study to determine increases.

Beck said the study will take about 45 days to complete, and if the request is approved, likely would take effect in January.

Sedalia saw its most recent fee increase in 2004, and the low fees now charged have proved to be an impediment to some forms of stateinancing, Beck said.

Carl Ramey, a city financial adviser with Stifel Nicolaus & Co., a St. Louis brokerage and investment banking firm, laid out three potential funding mechanisms for the city to pay for the upgrades: Pay-as-you-go with money coming directly from the city’s fund; seek state or federal grants to cover part or all of the cost; or long-term financing.

Ramey went on to say that the long-term financing option could be funded either through a voter-approved ballot question, or by the city issuing certificates of participation.

Ward 3 Councilman Wiley Walter seemed to sum up the opinion of the group by pointing out past difficulties with gaining passage of local bond issues.

“We cannot afford to take it to the voters time and time again,” Walter said. “We are going to have to bite the bullet on this.”

Ramey said the city could potentially issue Build America bonds — an expanded municipal bond created by the American Recovery and Reinvestment Act — that offer a 35 percent subsidy on interest costs.

Accessing the bonds, which must be sold before the program expires at the end of the year, would mean lower long-term costs for the city.

In June, the city finished an inflow and infiltration reduction plan, which outlined sanitary sewer line replacement projects, the creation of new retention areas and increased inspections needed to bring the city into compliance with the DNR’s order.

The report forecast an additional $3.1 million in spending from the city’s water pollution control fund next year. It also proposed a total of $27 million in expenditures for system improvements by 2016, as well as a $600,000 increase in annual operation costs to maintain the system once it is brought into compliance.

Capital Cost Expenditures for Sedalia sewer upgrades

Year One Projects
• Inspections: $439,000
• North basin: $780,000
• Central basin: $1,130,000
• Southeast basin : $777,000

Year Two Projects
• Inspections: $236,000
• North basin: $3,350,000
• Central basin: $1,300,000
• Southeast basin: $7,350,000

Year Three Projects
• Inspections: $244,800
• North basin: $3,000,000
• Central basin: $2,000,000
• Southeast basin: $750,000

Year Four Projects
• Inspections: $241,000
• Central basin: $1,750,000
• Southeast basin: $1,900,000

Year Five Projects
• Inspections: $241,400
• Southeast basin: $1,000,000

Total: $26,489,300