By Richard Gaines
The City Council was asked yesterday to raise sewer rates by 39
percent and water rates by 29 percent, adding about $350 to the
average Gloucester homeowner's water and sewer bill.
Officials who proposed the rates
noted the increase in the sewer fees does not reflect debt service
on the expected $32 million cost of the federally mandated combined
sewer overflow project starting this year.
Those costs will kick in slowly
beginning next year and will begin spiking in two years.
On top of the proposed rate for this
year, future sewer rate hikes — largely attributable to the
combined sewer overflow project — would progressively add 9
percent, 18 percent and 36 percent to the cost of flushing in the
following three years, according to figures presented to the
council's Budget and Finance Committee.
Then, according to the same
projection, the sewer rate would climb only gently at no more than
4.1 percent five years from now.
Over seven years, combined water and
sewer rates were projected to climb by more than 200 percent.
Councilor Bruce Tobey said he
believed the proposed rate of $7.97 per 1,000 gallons of wastewater
would make Gloucester's the most expensive system in the country.
"If we're not number one, I
don't know who is," he said.
"I know it's rate shock,"
said Public Works Director Joseph Parisi, who is charged by charter
to recommend the rates.
Councilor: It won't happen
A 29 percent increase in the cost of
water taken from the city system results in a rate of $7.62 per
1,000 gallons. The state and Massachusetts Water Resources Authority
assume a household uses 90,000 gallons of water a year — and is
charged for the coming and going; this means at a 29 percent hike,
it would cost a homeowner $686 per year for the water bill, up from
The sewer rate would rise to $7.97
per 1,000 gallons of wastewater or climb to $717 for the yearly
bill. Two years ago, the rate was $5.05. It climbed 17 percent to
the current rate of $5.92, or $532 for the yearly bill.
Using that estimate, the average
household that now is charged $1,051 in water and sewer fees would
face charges of $1,400 under the proposed new rates.
"Three hundred fifty bucks in a
whirl," said Councilor Michael McLeod.
Tobey said the MWRA's state and
national survey shows only Seattle as a more expensive system under
"People complain about paying
for city schools," added Ward 1's Jason Grow.
Behind the parallel spikes are
The sewer rate for the first time
gets no relief from a special stabilization fund or free cash. Last
year, $700,000 was taken from these accounts to hold down rates.
Water users will be paying for two big
capital projects — the $4 million upgrade in the Magnolia system
and the $4 million filtration plant built on Quarry Street in Bay
View to bring the Klondike Reservoir back on line to supplement
summer use. Councilors were flabbergasted by the magnitude of the
proposed hikes. The Budget and Finance Committee took the unusual
step of not voting a recommendation to the full council, which will
take up rate setting at next Tuesday's meeting.
Steven Magoon, administrative
assistant to Mayor John Bell, said his boss "is aware of the
rates. He doesn't like them, but doesn't see any way to avoid
"It isn't going to happen,"
said McLeod, but lowering the rate would require another — or
other — funding sources.
The rates for both water and sewer
use must produce revenues equal to the costs of the two systems,
which operate as nonprofit businesses.
Sewer rate hikes were kept more
modest in recent years with transfers from the sewer stabilization
fund, to which the towns of Essex and Rockport had contributed to
compensate Gloucester for joining them to the city system.
Sewer free cash also was used to
moderate rate hikes.
Not as much help this time
Last year, the rate was moderated
with $700,000 from the two nonuser sources, "one-time
money," as City Auditor Joseph Pratt noted.
"We were subsidizing by
design," he said. "Ultimately, you have to face the
No money from those sources was
projected for rate relief next year.
Parisi said only $269,000 remains
from the Essex and Rockport fees, and it might be needed to help
offset the more than $300,000 in emergency costs incurred last week
to have private tank trucks relieve sewer pumping stations along the
east side of the city overloaded by the torrential rains.
There is no certainty that the city
will have sewer or water free cash.
There's an outside chance of some
relief from the Legislature. State Sen. Bruce Tarr, R-Gloucester,
has written a $1 million Gloucester-Essex rider to a rate-relief
bill targeted to MWRA customers, but he said, "it's really a
Magoon told the Budget and Finance
Committee the administration was cautious in not assuming any state
relief. Tarr called that approach wise.
While the CSO project will continue
to propel rates upward, water rates are expected to level off
quickly. The administration's forecast has the water rate climbing
another 14 percent next year but afterward not rising by more than 3
percent a year for seven years.
The impact on the sewer rate from the
loss of contributions from free cash and the stabilization fund is
dramatic. The proposed 39 percent rate increase was requested even
though actual costs of operating the system were projected to
increase by only 12.5 percent, or $585,000.
The rest of the 39 percent increase
traces to the absence of the $700,000 contribution from the sewer
stabilization and free cash accounts — essentially, the nonprofit
enterprise's savings account.
Efforts to reduce the hikes would
entail cutting costs in operating the sewer and water systems or
dedicating revenues from other sources, such as the municipal
Rates must be set by the time the
fiscal 2007 budget is finalized by mid-June but can be adjusted
until October, when spending and revenue estimates are sent to the
state for certification.
Down the road hikes
By administration projections, water
and sewer users who this year on average are paying $1,051 would be
paying $2,208 in seven years — an increase of 210 percent, much of
it due to the combined sewer overflow project.
In three years, by June 2009, this
year's $1,051 for water and sewer usage would balloon to $1,738,
leaving Tobey to muse that "if I'm a sewer user, I'd have until
June 2009 to decide where to move to."
Chief Financial Officer Thomas Moses
said he thought the DPW director's figures were conservative, based
on the assumption that personnel costs will rise by less than 3
percent this year. The cost of health insurance is projected
citywide to jump by 4.4 percent.
Water rates (per 1,000 gallons)
Current Proposed Percent increase
$5.92 - $7.62 - 29%
Sewer rates (per 1,000 gallons)
Current Proposed Percent increase
$5.75 - $7.97 - 39%
Average annual water bill
$533 - $686
Average annual sewer bill
$518 - $717