This story was updated on Thursday, Dec. 5 at 1:18 p.m.
For the last several months, the DeKalb County Board of Commissioners has been considering raising water rates by 6% annually over the next three years. But the DeKalb Public Works and Infrastructure Committee during its Dec. 3 meeting asked the administration to amend that proposal to an increase of 8% annually over the next 10 years.
The committee asked for the amendment after a brief recess. All five commissioners attended the meeting, but the committee members are Robert Patrick, Mereda Davis Johnson and Ted Terry.
Arcadis, the firm running financial projections related to the county’s watershed capital plan, presented an option that would include various increases to the water rates for the county to operate the watershed department and issue bonds for water and sewer improvements.
The initial option presented to the public was to raise rates by 6% in 2025, 2026 and 2027. Rates would spike to a 10% increase in 2028 and 2029 and then level out at 7% from 2030-2034.
To keep the rates flat and avoid those spikes, the PWI committee moved forward with an option to increase those rates by 8% over the next 10 years, on a motion from Terry. To see all the amendments he suggested, click here.
To kick off the discussion Tuesday, county staff and a representative from Arcadis presented the funding and bond options to the commissioners that would fund the watershed capital program, which includes replacing water and sewer lines and improving the Scott Candler Water Treatment Plant.
Robert Ryall, vice president of Arcadis, has worked with watershed and the county to develop a funding plan for the water and sewer capital projects.
“Watershed is looking at the need to invest a tremendous amount of investment into the water and sewer system,” Ryall said. “We have helped to develop a plan about how that investment will be funded.”
Commissioner Robert Patrick, the PWI committee chair, noted that while this would be a big construction project, fixing the system is also a financial project.
“We have to have the necessary capital in order to pull down the loans in order to build out the system, to pay for it over time,” Patrick said.
It was previously estimated that the county would need $4 billion to fix its water and sewer system, but Ryall said it would cost at least $3 billion over the next 10 years. The county would need to issue bonds to fund these improvements.
“The financing plan looks at a lot of things, but there’s a need for debt to fund that and rates to support it,” Ryall said.
He added that the bond resolution has requirements around rates and making sure the county maintains water and sewer rates to pay operating expenses and has a net revenue that’s at least 120% of the annual debt service payment.
“This is a test that must be met every year as long as you have outstanding senior debt,” Ryall said. “This specific test is required for the issuance of future senior bonds.”
This would include funding and bond issuances over the next 10 years, which is the length of the capital program. The parity test would evaluate whether the county has enough revenue to repay the bond.
“The real kicker here is that the master bond resolution states that this forecast may not take into account any rate increases in the future unless such rate increases have been adopted by the governing body,” Ryall said.
He said that with current revenue, the county would not meet the parity test to ensure the county has enough revenue to pay off the bond without future rate increases. Ryall said that the county couldn’t issue bonds to fund the capital program without adopting future rate increases.
On average, residents currently pay about $69 for their water bills. With a 6% annual increase, water customers would see about a $4 increase in their water bill each year from 2025-2027.
The presentation suggested that the county would need about $300 million annually from 2025 to 2034 to address water and sewer capital needs. Ryall said the county would need to issue bonds in 2025, 2026, 2027, 2029, 2031 and 2033 to fund the capital program.
A 6% rate increase in 2025 would allow the county to issue a bond of $200 million.
Ryall said that the capital program is the minimum investment needed to operate the watershed department and make some needed repairs.
Commissioners were interested in exploring a more consistent annual rate to avoid a spike in rates from 2027 to 2028.
“I don’t have a degree in finance, but I wonder why we wouldn’t look at an option, perhaps for 2025, an 8% increase. I would think if we went a little bit higher on the front end, maybe that would end up resulting in a better rating,” Commissioner Michelle Long Spears said.
She had requested other options besides the 6% that had been presented. Ryall said that if the rates increased by 7.5% each year from 2025 to 2034, it would generate the $3 billion needed to fund the capital program.
Patrick said that the suggestion was worth considering.
“I think one of the concerns or priorities is making sure that over the long term we have affordable water rates and no shocks, no spikes to our residents,” Patrick said.
Some commissioners were concerned about the timing between the presentation and when the county commission may vote on the increase. The county commission has two meetings left this year, on Dec. 10 and 17. The PWI committee will hold a special called meeting on Dec. 13. It’s currently unknown when the vote would take place.
The county held a town hall in November where commissioners discussed the 6% increase option.
“What was presented at the town hall was three years, 6%,” Commissioner Steve Bradshaw said. “Now we’re proposing 10 years at 8%. That’s pretty dramatically different. The public should weigh in on that.”
Commissioner Mereda Davis Johnson said that as elected officials, the commissioners must dig further into topics to see what’s in the best interest of DeKalb County.
“We want to make sure that DeKalb citizens have proper infrastructure as well as drinking water. We have heard different experts give their opinions, so I’m comfortable with where we are now,” Davis Johnson said.
Patrick agreed that the rates were different from what was presented at the town hall.
“However, the data that was presented as we get into years 2028, 2029, that’s a 10% spike over and above what was happening before,” Patrick said. “I think the concern would be avoiding those spikes and being consistently affordable for our residents.”
This story was provided by WABE content partner Decaturish.
