In an update on the 2015 water rate study, Athens City Manager Elizabeth Borstad said the increase did what officials intended and has placed the city in a much better position than it was in five years ago.
“The rate review study went into effect in the fiscal year 2016,” she said. “The increases in rates have done basically what they said they would do and now it's the city's turn to develop a capital improvement plan to (use) a lot of the money or revenues that we've gained from the revenues over the past four years.”
In March 2015, NewGen Strategies, a management-consulting firm, reported that the city had been generating far less revenue each year than was needed for the utilities.
Grant Rabon of NewGen said the city utility needed to have enough money on hand to keep it from being put in dire straits by unforeseen events. He said the city also should have enough in the fund to stay operational for 90 to 120 days and that it should set aside money for capital improvements to replace water mains and other major components of the system.
City council members approved a water rate increase in September 2015.
Borstad gave the city council a review of the results of the rate increase at a meeting on Monday.
“What my thoughts were is the utility fund is covering its own costs and should pay for its capital improvements as well,” she said. “Right now, we have some money from the 2017 certificates of obligation designated for utility funds, and I was giving council the option not to use those certificates but actually let the utility fund pay for its own capital improvements.”
Other funding sources can be used for utility projects, Borstad said, such as the Texas Water Development Board.
“One of the good things about the Texas Water Development Board is we qualify for some forgivable funding. If we have a project that's for, say, $1 million, it will actually forgive a part of that principal.”
The water line at Prairieville and Park streets is an example.
“They're going to forgive $250,000 of that principal, so that's a much better funding option than a standard certificate of obligation or a standard revenue bond,” Borstad said.
She told council members on Monday that the 2015 rate study recommended about $600,000 per year in improvements to the system.
“We've done a lot more than that and we've done a lot of projects that weren't on this list,” Borstad said.