FORT WAYNE – The Fort Wayne City Council on Tuesday overwhelmingly approved a 40 percent water rate increase over the next three years but could not decide how much money the utility should be paying to the city each year.
The council voted 7-2 in support of a rate increase that will generate an additional $12 million in revenue after it is fully implemented. Councilmen Tom Smith, R-1st, Tom Didier, R-3rd, Geoff Paddock, D-5th, Glynn Hines, D-6th, John Crawford, R-at large, Marty Bender, R-at large and John Shoaff, D-at large, supported the increase. Councilmen Russ Jehl, R-2nd, and Mitch Harper, R-4th, opposed it.
The discussion over the rates was brief, as council members needed only a few minutes to vote in favor of the increase after debating the issue over the last two weeks.
The increase, subject to state approval, would raise rates the most in 2013 followed by smaller increases in 2014 and 2015. The city initially proposed a two-year hike, but residents and council members asked to stretch it over more time to reduce the burden on customers.
Residential users of 5,000 gallons a month would see their monthly water bills rise from $17.25 to $21.10 in 2013, $22.95 in 2014 and $24.10 in 2015.
Jehl said many residents questioned the need for such a large increase in the first year, which was the basis for his opposition.
Kumar Menon, City Utilities director, said it was front-loaded to help the city best secure long-term financing for the previous acquisition of the northern Aqua Indiana utility.
Much of the discussion Tuesday focused on a companion bill drafted by Harper to limit the amount of money City Utilities has to pay to the city in a form of taxes.
The amount the entire utility, including water, sewer and stormwater, has paid has increased from $3.4 million in 2007 to $6.8 million last year. It is expected to grow to $7 million this year.
The payments have increased as the utilitys assets improved, thanks to a $240 million federally mandated sewer project and other investments.
Harper said the bill was an attempt to limit the amount of utility revenue that goes to finance regular city operations, such as parks or public safety. Instead, that utility revenue would be used to improve the utilitys infrastructure.
He said while he considered killing the payments altogether, he decided a freeze on them would balance the needs of the city for that revenue.
City Controller Pat Roller said any changes to this payment program need to be investigated, as the city is already hurting for revenue because of state property tax caps.
We need to make sure we understand the impact of this change, she said.
The water utility is expected to pay $2.3 million of its $33.8 million in total revenue to the city this year as its tax payment. The council voted to delay Harpers proposal in an effort to get more information. Harper said he couldnt support the rate increase without support for a cap on the payments.
The city is expected to file its case to the state Feb. 29 and hopes to begin charging the new rates in early 2013.