Officials blame themselves for sewer rate hikes
Fredonia Village Board members last week were upfront about their failures to prevent an unavoidable 10% sewer rate hike next year to balance the utility’s budget, and a possible 70% increase over the next three years to fund treatment plant upgrades.
“Shame on this board and previous boards for not raising rates to get our finances equal,” Trustee Tiffany Bartz said. “We can’t keep getting into these situations. We’ve been band-aiding things for 40 years and now we are hit with a $6 million cost.”
The Village Board on Thursday received a report by Strand Engineering recommending about $6.2 million in repairs and upgrades to the wastewater treatment plant.
The two most urgent projects — which involve the demolition of the biotower and its replacement with modern systems — would cost an estimated $1.9 million.
“The biotower is out of date and not efficient — on top of that it is falling apart. It is a safety hazard,” Village Administrator Christophe Jenkins said.
According to a financial impact study by Ehlers Inc. that was also presented to the board, sewer rates must be raised by at least 10% to simply balance the utility’s budget and be raised 70% over the next three years to fund a conservative estimate of $4.5 million in improvements.
If the village takes out a 20-year state Clean Water Fund loan to finance the projects, it would be eligible for 10% loan forgiveness, however, it would need to prove to the state it could fund the loan and operations at 110% of its expenses, according to the study.
Village President Dan Gehrke said the village still “needs to figure a few things out.”
“First, we need to get our hands around what is 100% needed,” he said. “There are some things in there that are fluff. But there are some things that literally are falling apart.
“This is something that since I’ve been on the board we’ve been dealing with.”
Public Works Director Eric Paulus said that some projects could wait, like the construction of a new garage and the renovation of the offices.
But others, like the construction of a new chemical phosphorous removal building and the addition of a third primary clarifier, can’t be put off very long, he said.
“I don’t like the numbers either. It’s a huge hit,” Paulus said. “But we had a clarifier go down. It was a $100,000 fix and they are band-aided now.”
The board will discuss the improvements further at the Village Board meeting at 7 p.m. on Thursday, Jan. 23.
“We are still sitting here not knowing what to do,” Gehrke said.
The last time the Village Board raised sewer rates was six years ago by 12%.
Many board members said they should have been progressively raising rates by single-digit percentages over the last few years to prepare for these upgrades since they knew work at the plant would be necessary.
“I guess, on that aspect, shame on us,” Gehrke said.
Trustee Don Dohrwardt said each year the board would receive engineering comments talking about the need for upgrades, which the board ignored to prevent increasing the burden on residents.
So, Dohrwardt said, it is not all negative.
“We did enjoy very decent water rates for many years because we weren’t where we were supposed to be,” he said. “That doesn’t help us now, but it wasn’t a big, huge mistake.”
Trustee Kurt Meyle Sr. said raising rates by the estimated 70% would be “stringent” in the face of the recent approvals of Northern Ozaukee School District and paramedic referendums.
“Inflation is through the roof. And now we are asking residents to pay 20% more for each of the next three years?” he said. “Yeah, we dropped the ball but should we make them pay?
“People are feeling financial pain and to inflict more pain on them isn’t our job. Let’s be reasonable, 20% is not reasonable.”
He proposed raising the rates incrementally over several years, although Lisa Trebatoski, a representative from Ehler’s, said the revenue-based CWF loan would not allow that.
“Try to explain that to the average resident,” Meyle said. “I don’t understand it, honestly.”
Dohrwardt said the sewer utility needs to function like a business tied to the village, and cost increases are simply a part of doing business.
“It is not like we are making so much of a profit and people can say why don’t you cut prices,” he said. “Our cost of doing business is what we figure rates at. Right now we are in a hole.”
Strand representative Phil Bzdusek said the board members shouldn’t be too hard on themselves, as the steep cost of the projects is the result of recent inflation and the pandemic.
“You couldn’t have known to do this in 2021 — that you’d be killed now,” he said. He estimated the improvements would have cost half the current price tag if completed in 2017.
Gehrke said that regardless of the past, repairs are urgently needed at the plant now.
“Nobody wants to raise rates just to raise rates but we also need to do what’s best for the village in the future,” he said. “The easiest thing is not always the best thing. It’s going to hurt.”
Bartz said the most important thing is that the village starts doing regular audits of its utilities to prevent future sudden rate hikes.
“This is kicking our butts each time it comes to the table,” she said. “Regardless of what we do, a clear plan is better than what we are doing now.”
Jenkins pointed out that the utility has a healthy $600,000 in reserves and that other communities have faced even steeper rate increases in recent years.
“It is not all doom and gloom,” he said. “We are kind of doing OK.”
The potential loss of Guy and O’Neill if the company closes at the end of the month without a buyer would make a significant dent in revenues although it would also decrease usage, so Jenkins said the closure’s impact on the utility is uncertain.
The planned construction in spring of the Southern Industrial Park and its businesses would also not make a serious impact on the budget, he said.
Gehrke, who is leaving the board in April, said the treatment plant has been failing since he took office in 2019 and it is time to finish it.
“Things have been done in the past but this is our opportunity to set things right,” he said. “I don’t want to leave this chair with this being a problem for the next board.”
If the board goes through with the 70% rate hike, the average quarterly bill of $153 this year would reach $257 in 2027.
Strand estimated the improvements would take 18 months to complete.
The treatment plant was built in 1981.
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