Columbus City Council members heard a presentation regarding proposed increases for water and sewer rates this week. Council members will take votes on a first reading of an ordinance establishing the new rates, along with accompanying bond ordinances during their meeting on Oct. 1.
Ordinances must be passed on two readings to be fully approved.
The new rates were backed by the Columbus City Utilities (CCU) board during their meeting on Aug. 19 and recommended by an outside firm, Baker Tilly.
The firm’s recommendations were based on a cost-of-service study done for both utilities. The primary driver for the increases are planned capital projects over the next few years to critical CCU infrastructure.
Members will vote on ordinances to issue more than $80 million in bonds in order to finance the projects — Baker Tilly is proposing a bond issuance of $29.9 million for water utility projects and a $50.6 million bond issuance for sewer utility projects.
The proposed new rates would help fund work to CCU’s two water treatment plants, which are running well below their capacity, various water distribution projects and modifications to both of their water tanks.
In terms of sewer collection system projects the proposed rates would help fund, the biggest is a $20 million westside interceptor that would eliminate the need for a lift station on State Road 46 and generally allow for continued growth in the area. There would also be upgrades to some of the city’s lift stations and wastewater treatment plants.
Cost of service rate adjustments will vary based on customer class. Residential users had been subsidizing large users in the past and the new cost-of-service study shifted that so larger users would “pay more of their fair share,” according to Baker Tilly’s Doug Baldessari.
Water rates are subject to Indiana Utility Regulatory Commission (IURC) jurisdiction, whereas sewer rates are not. Although the council may approve water rate increases, the IURC will ultimately approve a certain rate schedule, which takes about a year. Because of this, the water rate increases won’t be effective until 2026, even though the proposed phase one sewer rate increases would get started in January of 2025 if approved by council members.
The IURC will decide whether to accept the proposed water rates as presented, or may adjust them. If they are adjusted, the new water rates would come before city council one final time sometime next year for approval.
Water rates
Water rates are proposed to be increased over two phases, beginning with 18% increase in 2026, followed by another 15% increase in 2027 for a typical residential user, assuming usage of 4,000 gallons per month.
According to a cost driver breakdown presented to council members, debt service and capital improvement plan projects are responsible for 81% of the increase in water revenue requirements and about 19% is due to operating expenses.
Below is an example of an average residential user monthly bill, assuming usage of 4,000 gallons per month:
- Current ($16.45)
- Phase 1 ($19.39)
- Phase 2 ($22.29)
Sewer rates
Sewer rates are to be increased over three phases, beginning with a 5% increase during phase 1 in 2025, a 9% increase during phase 2 in 2026 and another 5% increase in 2027.
A cost driver breakdown indicated that the sewer rate increase is 48% due to debt service, 39% because of operating expenses and 13% for replacements and improvements.
Below is an example of an average residential user monthly bill, assuming usage of 4,000 gallons per month:
- Current ($40.37)
- Phase 1 ($42.57)
- Phase 2 ($46.40)
- Phase 3 (48.73)
The previous water and sewer rate increases were approved in 2021 and lasted over three phases with increases in 2021, 2023 and this year. At the time, the increases were the first in more than 27 years for water customers and 12 years for sewer customers.
Council member Chris Bartels, R-District 1, said that a combined increase in rates of 42% since 2021 has been a topic he’s heard about from constituents. He also noted that a lot of the debt service on the sewer side drops off after 2026, and wondered if deferring the westside interceptor later would be worthwhile.
“We’re talking about the westside interceptor, and it being 40% of our capital project costs, and it being in phase one, yet we used a lot of if and when on the city view project,” Bartels said. “Is there a potential to move that to phase three when those bonds start to decrease, which would then maybe level things through that time period?”
Council members voted last December to annex nearly 700 acres of property owned by Columbus Regional Health. The site stretches east-to-west from Interstate 65 almost to State Road 11/Jonesville Road, and is south of the westside Walmart and north of the Bartholomew County 4-H Fairgrounds.
In addition to an approximately 100-acre future CRH campus on the northeast side of the site, the City View District Plan includes a variety of residential neighborhoods, commercial centers and a research and development campus.
Bartels continued, “When hearing CRH present the city view project last year, they even said 10 years is more of a realistic timeline, and if that’s the main focus of the westside interceptor, and that’s the largest portion of the cost, it just makes sense, with the numbers as well, to shift those and bring forward maybe some of the other (CCU) projects.”
Mayor Mary Ferdon then chimed in to clarify the bit about the 10-year timeline.
“What they’re (CRH) saying is it probably wouldn’t be complete for 10 years, but it doesn’t mean that we won’t start sometime in the next couple of years. Part of that project rests upon having a westside interceptor to make it successful, otherwise they can’t do the project,” the mayor said. “… I think I would just be careful in putting off something that we may need to get started on now in order to attract developers to come in and put in the housing that we need — it’s tied together.”
“I’d like to take care of more of the deferred maintenance first on the things that would be more of a priority before we start looking at projects that are just at the birth,” Bartels said, going on to ask if CRH could help with the cost or if there were redevelopment funds that could help pay for the interceptor.
Council member Tom Dell, D-at-large, said that westside area is growing as it is, and CCU Director Roger Kelso added they have “capacity problems in that area already.”
“There’s more than just the hospital property,” Dell said. “The potential for that development (the City View District) would definitely require it, but we have additional growth in some of those areas that that’s (the interceptor) going to be servicing already.”
