Bond to pay for repairs continues to affect water rates in Selma

Published 4:53 pm Saturday, July 21, 2012

Running water has become a common staple and expectation in western society, but like most things in life, it comes at cost.

The cost of water service in the area varies depending on where you are, and the number of things that determine that price varies as well.

Lee Goodwin, chairman of the Selma Water Board, said factors such as employee costs, as well as a 2006 bond issue, are factors in determining Selma’s water rate.

Email newsletter signup

“Employee’s salary is the main thing, we’re not taxed by the city, so it’s primarily services and being able to repair equipment,” Goodwin said. “Because of the bond issue, we must make 18 percent profit every year for the 30-year bond. I think that’s how that 2.5 percent annual increase came about was because we wanted to make sure we met that bond requirement.”

There is a 1.67 cent per gallon rate in Selma, Goodwin said, and the city’s basic rate includes 3,000 gallons.

“Now, it’s about $24 [per month] for basic service,” Goodwin said. “Then it goes up as your water use goes up at 1.67 cents per gallon [after the first 3,000 gallons].”

Since the Selma Water Board does not receive annual funds from the city, state or federal governments, it has to find ways to make revenue in order to repay the 2006 bond. One way it does that is by the annual rate increase that happens each year on June 1.

And while many may gripe at the notion of an annual rate increase, it’s not without reason, as Goodwin said it was absolutely necessary to get the city’s water system, which was in a poor condition at the time, up to standards.

“For a long time, Selma had a sign on our water tower ‘Cheapest Drink in Town’ and what they did was they kept the rates low, but they didn’t repair any equipment,” Goodwin said. “So six years ago, we had to do some repairs on our waste treatment, on our water treatment, and the conditions were serious — could have possibly shut down the entire process of treating water or treating waste — and we had to borrow some money to do some things then and the only way we were going to be able to pay the bond was to increase the rates.”

Just as Selma did, the North Dallas Water Authority, which covers the Valley Grande area, saw an increase this year.

Hart Sims, general manager of the North Dallas Water Authority, said a revenue bond is also a factor in determining their rate, which is $15.50 plus tax for the first 2,000 gallons.

“The main thing that determines the water rate is our revenue bond, and they require you to have a net profit of 1.25 percent and that’s basically what we set our rates at so we stay in compliance with the revenue bond,” Sims said. “We did a rate increase this year, and that’s the first increase we had in four years. It’s all based on your revenue bond, how much debt you’ve got.”

Sims said the increase was 4 percent over last year, and other ways the water authority increases revenue is by expanding its customer base, which allows it to increase revenue without charging customers more.

The Dallas County Water Board’s rate for water is $18.89, while the rate for sewer service is $18.89 for the first 2,000 gallons.

“What we generally do is we do a rate study that consists of all of our expenses, including debt, services, loans and things like that,” Hamm said. “What determines that is you’ve got figure in the amount of customers you have, your annual average usage.”

Goodwin said the advantages of the bond, including improving the water and sewage systems, will help both processes become more efficient, which will in turn help customers.

“Now we just borrowed, $3.5, almost $6 million, one from the regular bond, one from the state revolving funds,” Goodwin said. “The state revolving funds, we got $2.7 million with a 50 percent forgiveness. What we’re going to do with that $2.7 is we’re going to change over all of our water meters in town. Hopefully, we’ll be able to increase our revenue because we’ll reduce our water loss, and if things work out, then we’ll be able to reduce some water rates for our customers, but this is something I’ve been working on for almost eight years to get automatic meter readers.”

Sims said the North Dallas Water Authority has a vested interest in making sure the system is efficient and prices are low.

“We try to be extremely efficient,” Sims said. “That’s our main goal because everybody from our board to or employees, we’re all on the same water system and we pay the same price everybody else does, so we want to keep it as low as possible not only for our customers, but for ourselves.”

Goodwin said decisions regarding the rate are always made at public hearings, and that he welcomes the public to the Selma Water Board’s meeting the third Monday every month at 9:30 a.m.

“Previous boards maintained low rates by not fixing equipment,” Goodwin said, “and it got to a point where it had to be done if we wanted a water system. We want to keep our bills current and serve the public the best we can. We’re trying hard.”