City looking at water, sewer rate increases

Havre public works director Dave Peterson is recommending that the Havre City Council increase city water and sewer rates to help fund needed repairs to the city's infrastructure.

The city's Water and Sewer Committee will meet April 27 at 7 p.m. at City Hall to decide whether to recommend a rate increase. The council will then hold a public hearing May 3 at 7 p.m. at City Hall to allow people to comment on a rate increase.

The city has to commit to rate increases to make it eligible for a state grant to help it replace water lines under U.S. Highway 2.

Regardless of the grant, Peterson said, the city needs to raise rates to pay for other improvements unrelated to Highway 2, including water line improvements, lift stations, and upgrades at the wastewater treatment plant.

"The rates have to increase no matter what. That's just the cost of doing business," he said Monday.

Rates would probably go up in December, but that will be up to the council, he said.

The city would have to commit to raise water and sewer rates by a total of $4.27 per user per month to make the city eligible to receive as much as $500,000 from a Treasure State Endowment Project grant. The city can become eligible for the competitive grants, awarded by the state Legislature every two years, only if the price of city water meets a target rate established by the state Department of Commerce based on the median household income in the community.

The City Council would have to commit to the rate increases before the May 7 application deadline to be eligible, said Annmarie Robinson, deputy director of Bear Paw Development Corp.

Much of the grant's match requirement can be covered by work scheduled to be done by the Montana Department of Transportation on the First Street Project that will uncover the water mains being replaced, she said today.

The First Street Project will rebuild about 2 miles of U.S. Highway 2 where it passes through Havre as First Street.

Robinson said it only makes sense for the city to apply for the grant if the cost of all the needed water projects in the city are enough to justify a $4.27 rate increase. She said she thinks there are probably enough improvements needed to justify that increase.

If not, the city may take out a loan for the project instead. Earlier this month Peterson said a water rate increase of 89 cents would qualify the city to receive a loan for the water line replacement from a state revolving loan fund.

Monday night Peterson said there are improvements that need to be made outside of First Street as well, he said, and a rate increase - even if lower than $4.27 - will be needed to help pay for those.

"We still need to be able to raise the rates to pay for the infrastructure," he said after the meeting. Needed improvements include work on pumps and motors at the wastewater treatment plant, and replacing some sewer and water lines.

Peterson said he would like to see the council implement an incremental water rate increase - 1 or 2 percent a year - instead of 20 percent at once as the city has done in the past. That kind of an increase, he said, is "not fair to the public."

The average monthly water bill is about $50, he said. A 2 percent rate increase is equivalent to $1 a month, he said, whereas a 20 percent increase is equivalent to $10 a month.

Earlier this month a consulting firm recommended the city replace the water main under a section of U.S. Highway 2 when the section is torn up in 2006.

At that time Peterson recommended the city replace the main sewer line under the section of highway and the service lines connecting the main line to buildings.

The total cost of the projects is estimated at $1.2 million, he said.