After much deliberation during Pell City City Council meetings, budget work sessions, and a public hearing a resolution was passed on Monday to increase the water and sewer rates. Rates would go into effect in January 2018.  

Rate increases would raise the minimum usage rate from $23.46 a month to $25.30 per month beginning in 2018. For those using more than 5,000 gallons per month, such as the average family home, the rate would increase from $35.48 per month to $38.48 per month in 2018.  

Each subsequent year, the rate would increase by three percent (it is currently set at two percent per year.) By 2022, the minimum usage rate would be $28.48 per month. Senior and low-volume commercial rates will remain in effect. 

According to utility data, an excess of 80 percent of those on the Pell City water system consume more than 2500 gallons per month.  

There was a consensus among City Council members that this decision was not something that they took lightly and understand that it is a difficult and unpopular decision to make. After considering the alternative cumulative debt and other options, the City Council approved the Resolution to increase rates as the most effective way to reduce the current debt of the utility fund.  

“This is not anything that we want to do,” Councilman Jay Jenkins said. “This is something we have to do. We want to cause the least possible problems for everyone, because some people this may impact greatly month to month.” 

The Pell City utility fund has been operating at an income loss over the course of several years, despite continual subsidies from the general fund, ranging from $600,000 to $1 million per year. By 2022, the total income loss is projected to be over $6.3 million at the previous rates. 

The operating loss is the result of several capital projects done to improve the water and sewer utilities. Between 2002-2017, over $40 million was spent for rehabilitation projects, water line replacements, and expansions. Many projects were a result of federal mandates that required the city to act to correct issues that may have been delayed.  

There are several needed maintenance projects scheduled for the next 5-10 years that will also need funding. While the city will continue to subsidize the utility fund from the general fund for the next several years, Pell City City Manager stated, “The proposed increase puts us on a ten-year path to utilities being self-sustaining, which is a huge improvement over what it is now.” 

The City Council also approved the creation of a Capital Improvements Fund, which stipulates that three percent of net sales taxes gathered by the City, as well as Tobacco Tax funds, will be directed to a Capital Improvements Fund.  

According to the ordinance, the Capital Improvement Fund would be used to purchase items such as equipment, vehicles, machinery, and used for construction of public buildings, sewers, waterworks, sidewalks, bridges, and any other improvements, repairs, renovations, or repairs to public facilities.  

“Earmarking funds for these purposes allows us to give our best attempt to establish a dedicated fund for improvements,” Pell City City Attorney John Rea said.  

The fund will begin during the 2017-2018 Fiscal Year and continue each subsequent year. The amount estimated to be directed to the Capital Improvements Fund each year from sales tax is $240,000 and $190,000 from Tobacco Tax proceeds.  

“While these funds will not cover the totality of the capital needs of the City, they will provide a substantial base from which to fund capital projects such as paving, infrastructure improvements, capital vehicle purchases, etc,” Muenger stated.