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Pittsfield Councilors Split on Water/Sewer Rate Increase
By Andy McKeever, iBerkshires Staff
03:58AM / Wednesday, December 05, 2018
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David Russell from Russell Consulting presents the plan to the City Council of the Whole on Tuesday.


The City  Council votes 6-5 in favor of the new rates on Tuesday.
PITTSFIELD, Mass. — The City Council is split on setting water and sewer rates for the next 18 months. 
 
In a 6-5 vote Tuesday night, the council's Committee of the whole approved Mayor Linda Tyer's plan to raise water rates by 20 percent and sewer rates by 50 percent starting on Jan. 1.
 
However, the final decision has to be made next Tuesday and the council has requested more information before casting that vote. 
 
David Russell from Russell Consulting presented an executive summary of a water and sewer rate study he recently conducted in determining where rates need to go over the next seven years. The biggest drivers of the rates is a $74 million wastewater treatment plant upgrade set to break ground in January and future capital projects for various water system upgrades. 
 
Director of Finance Matthew Kerwood said Russell provided a model, or a baseline, for the city to check against. But for now, the council needs to vote for the next 18 months and future increases can be assessed later if factors change.
 
"It is sound planning that we can then use as a benchmark. When we need to do, we can pivot, but we have a sound foundation," Kerwood said.
 
The plan for sewer calls for increases of 50 percent as of Jan. 1, no increase in fiscal 2020, a 15 percent increase in FY21, no increase in FY22, 12 percent in FY23, and then calls for no increases in FY24 and FY25. By the end of seven years, the bill for a household with two toilets will go from $247.69 to $466.69 annually. Metered rates will follow the same percentage increases. By the end, rates will be 93.2 percent higher than currently. 
 
For water rates, the plan is for a 20 percent increase starting on Jan. 1, no increase in fiscal 2020, no increase in 2021, 5 percent in 2022, 10 percent in 2023, 10 percent in 2024, and 20 percent in 2025. The annual bill for a home with two toilets will increase to $508.92 at the end of seven years. Metered rates will follow the same path. By the end of seven years, the bills will be 83 percent higher than currently. 
 
"We forecast all of the cost associated with running the utilities and make projections of the revenues you are recovered with the existing rates," Russell said.
 
That first increase is what is before the City Council now.
 
Commissioner of Public Services David Turocy said the immediate increase is to curb deficit spending in both accounts, though more drastically in the water enterprise fund. Turocy said the last increase for both was two and a half years ago but it wasn't enough. 
 
Turocy took over the job just weeks before the fiscal 2018 budget and didn't change the rates then. He later identified a need to raise rates to keep with increasing costs.
 
But, with the capital projects coming, he felt it prudent to hire Russell, at a cost of $10,000 from the capital dollars set aside for the engineering of the sewer project, to do a long-term rate study. He put off requesting a rate increase for July 1 of this year to finish that study, and in turn the accounts are now trending to run a deficit.
 
"I wish I could have looked at it earlier but I couldn't and when I got to FY19, I wanted the long-range forecast," Turocy said.
 
Russell estimated that in the current year there is deficit spending of $175,000. The long-term plan rights that to build reserves, covers expected annual increased costs in maintenance and operations, and then add in the millions of dollars being put toward improvements during the next seven years.
 
Russell said even so, at the end of the seven years the city residents will still be paying significantly less for sewer and water than the state average.
 
"You are starting at a low level," he said. "Even though the increases are not small, you have been experiencing very low rates for a number of years."
 
And Russell believes those rates were kept low because the city hadn't kept up with repairs to the facilities.
 
"People tend to put off improvements. They try to repair, repair, and repair, and eventually it catches up with them," he said.
 
As for the City Council's current role in voting on rates for January, some of the councilors felt the information was woefully lacking.
 
While Russell had produced some 60 pages worth of analysis of the city's rate structure, only a PowerPoint presentation was made outlining what plan the administration opted to put forward. Capital projects that were considered regarding the water plant were left out, which particularly irked Ward 4 Councilor Christopher Connell.
 
"I want to know the break down of what's in the water to make sure it is closer to the $5 million and not the $66 million," Connell said.
 
Kerwood had previously been reserved about discussing the long-term water structure because those projects hadn't been set in stone yet — unlike the sewer project which was approved. Nonetheless, the plan projects some $81 million worth of capital spending for the water system — including projects currently being paid for, currently underway, and future — to raise revenues needed.
 
Connell objected that he doesn't want to immediately raise rates dramatically if the funding isn't going to be needed.
 
"I'm not going to vote on this tonight because I need to see that completely broken down by year and in correspondence for these rates," he said.
 
Councilor at Large Melissa Mazzeo also took umbrage with the lack of information presented. She would like to have had all of the numbers outlined and options to choose from. 
 
"We are talking about a really huge increase and we don't know really for what projects or if they have to get done," she said.
 
The question of what went into the seven-year plan created a difference of opinion among the council. President Peter Marchetti said the future capital projects don't weigh much on the council's current vote on the immediate rates. He said future councils will be weighing each increase presented in the plan. 
 
"We are being shown a seven-year plan of how we are going to get there, the roadmap, the plan, but we are being asked to vote on one-year rates," Marchetti said.
 
Mazzeo, however, said, "you have to talk about the seven years to decide what you want to charge for the first year."
 
The city hadn't brought in this type of long-range forecasting of the water and sewer rates in the past. But even Russell said his work is not set in stone.
 
"It is a roadmap. It is a plan. But it is undoubtedly going to change over time, circumstances change, estimates change frequently," Russell said. "Anyone who does this type of work will readily admit that after one, two, three years, it becomes variable."
 
Mazzeo also objected to the timing of the administration, feeling like she is being rushed into a decision. 
 
"This is not up-front information. This is information to support what you are asking for," Mazzeo told Kerwood. "I'm so sick and tired of being told, here you go, hurry up and make your decision."
 
Kerwood said the administration has put forward a plan it feels is the best and the councilors have every ability to develop their own plan. Ward 3 Councilor Nicholas Caccamo may just do that.
 
He asked Russell for projections of what would happen if the council instead opted for the sewer rate increase to be broken into a 30 percent immediately and 20 percent on July 1, but Russell didn't have those numbers available. 
 
"I'm not prepared to offer an alternate plan. I have to do some economic forecasting myself," Caccamo said.
 
Meanwhile, Councilor at Large Pete White said he appreciates the mayor's proposal. He said it was "prudent" to have an outside professional dig into the rate and help set the course of action.
 
"We've been so much lower than everyone else that we need to start having increases to keep up a 35-year-old system," White said. "I see this as a prudent plan to put in place now and I don't see it as overreaching."
 
The rates for both passed the subcommittee level by a 6-5 vote with Marchetti, Ward 1 Councilor Helen Moon, White, Vice President John Krol, Caccamo, and Councilor at Large Earl Persip in favor. Connell, Ward 5 Councilor Donna Todd Rivers, Ward 7 Councilor Anthony Simonelli, Mazzeo, and Ward 2 Councilor Kevin Morandi voted against.
 
On Monday, resident Craig Gaetani will be making a presentation to a subcommittee on ways to potentially save money on the capital projects. He urged the council to hold off on setting the rates until after his presentation.
 
However, given that design, engineering, piloting technology, and all of the bids for contract work have been done, it is unlikely the city will backtrack from the current plan just a month or so before construction begins.
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