MSD rates to rise, but not as much as last year

Louisville's sewer rates will rise another 5.5 percent starting Aug. 1 to pay for an ongoing $850 million project to stop billions of gallons of local sewage from overflowing into area creeks and the Ohio River.

The Metropolitan Sewer District board voted Tuesday to raise the agency's rates an amount that is slightly less than last year's 5.8 percent increase of 5.8 percent and a full percentage lower than what had become common in recent years.

"We continue to not have enough revenue to cover our spending requirements," Chad Collier, MSD's finance director, told the board.

Because people are using less water as their homes become more efficient, the impact of recent rate increases carries less significance, MSD officials said. In fact, the typical household uses just 5,000 gallons of water a month now, compared with 6,000 gallons a month a several years ago.

That means less revenue for MSD, Collier said.

Unless board members decide to make a change following a 60-day public comment period, their action means typical residential customers can expect their MSD bills, which include wastewater charges and drainage fees, to increase about $29 for the year starting Aug. 1 to a total of about $535.

A final vote is scheduled for July 28.

Board Chairman James Craig said MSD has had "outstanding fiscal performance the last two years" and that the next fiscal year's budget "continues our mission of providing exceptional wastewater, drainage and flood protection services while maintaining rates that are below the national average."

The National Association of Clean Water Agencies, of which MSD is a member, says the U.S. average residential wastewater bill is about $37.37 per month, and MSD's typical wastewater bill will be a $36.90 a month, including the proposed rate increase.

"Our rates have been increasing slower than the rest of the nation," Collier said.

But he said repeated rate increases are necessary to help pay for the $850 million federal court agreement intended to halt the continuing flow of sewage into creeks and rivers caused by storm overflows. That agreement was signed in 2005 and amended in 2009.

The board on Tuesday also approved its 2015 budget, including $117.8 million for capital projects and $115.9 million for operating expenses, up from up from $108.7 million and $115.3 million, respectively, in the current fiscal year budget.

To maintain cash flow and pay for consent degree construction projects, MSD plans to borrow another $80 million. But that is $20 million less than it borrowed last year.

Collier said the agency has tried to take a balanced approach between raising rates and borrowing money, to prevent dramatic spikes in rate increases. But MSD still carries a long-term debt of $1.8 billion, he said.

"Our debt service will be with us for a long time — another 30 year," he said.

The budget allows for 655 fulltime positions, down from the authorized 668 positions approved in last year's budget. The current staffing level is 605, said Steve Tedder, MSD spokesman.

The budget also allocates $1 million to continue working toward more shared functions with the Louisville Water Co., under Mayor Greg Fischer's "One Water" concept.

"The mayor is glad they kept the rate increase less than last year," said Chris Poynter, Fischer's spokesman.

"Rate increases are unfortunately a necessary reality, due to the federal consent decree that MSD must comply with," Fischer said in a written statement. But he said it's good that local waterways are getting cleaner because of the agreement.

The mayor hires the agency's two top executives and appoints its board members.

Greater Louisville Inc. spokeswoman Susan Overton said GLI and its members "appreciate all of the hard work MSD employees do."

She said that members of GLI, the metro area chamber of commerce, "do not like to see their business or home sewer rate increase. However, they understand the need for continuing our progress as a community to come into compliance with the Clean Water Act provisions under the ... consent decree."

She also said GLI appreciates that MSD has worked to reduce the size of the rate increases in the last couple of years.

MSD is now in the tenth year of its 19-year overflow abatement program and it continues to drive the agency's spending priorities.

In the coming fiscal year, MSD plans to spend $67 million on consent decree projects, including the elimination of the often-overflowing Jeffersontown Wastewater Treatment plant and five smaller, less efficient treatment plants in the Prospect area.

The capital budget also envisions completing a 17-million gallon Logan Street Basin in Smoketown, which would capture storm water and raw sewage that overflows from Louisville's combined sewer system during rain.

And it includes construction on a new Bells Lane Wet Weather Treatment Facility in western Louisville that's designed to reduce spills from MSD's largest combined sewer overflow location from 61 times per year to a target of eight times a year.

MSD also plans to spend $6.7 million on drainage improvements and upgrades to the community's flood protection system.

Low income, senior citizen discounts on MSD rates are available to customers that qualify, Collier said. Some 8,500 households participate, saving a combined $720,000, he said.

For anyone hoping that MSD rate increases may some day vanish, MSD Executive Director Greg Heitzman cautioned that MSD needs to look beyond its consent-decree obligations and plan for other major and necessary capital upgrades, including additional work on the community's aging flood-pumping stations.

MSD Chief Engineer Steve Emly said Louisville still has 40 miles of brick sewers that are more than a century old, such as the one that collapsed under Broadway recently.

"We'd love to rehab those old sewers, but it will have to wait," he said.

Reach reporter James Bruggers at (502) 582-4645 or on Twitter @jbruggers.

WHAT'S NEXT

MSD will present its budget and rate proposal for information and discussion to a Metro Council budget committee at 6 p.m. Thursday, in the Metro Council Chambers on the third floor of 601 W. Jefferson St.

Major capital projects:

• Jeffersontown Wastewater Treatment Plant elimination.

• Elimination of five wastewater treatment plants in Prospect.

• Bells Lane Wet Weather Treatment Facility construction.

• Drainage improvements and upgrades to flood-protection system.

WHAT YOU CAN DO

TO COMMENT:

Write to MSD, Customer Service, 700 W. Liberty St, Louisville, KY 40203, or call customer service at (502) 587-0603.

A final vote on the new rates is scheduled for July 28. People may air their concerns to the board at that meeting or at the board's June 23 meeting.

Senior discount:

Residential customers over 65 years old can receive a 30 percent discount if their household gross income is $35,000 or less annually.