Wednesday, Oct. 5, 2011 | 7:38 p.m.
Henderson’s water and sewer rates are going up again and will continue to rise for the next four years, under a plan approved by the City Council on Tuesday.
The increase in fees will raise about $3.2 million each year for the next four years to help the city’s utility services department plug a budget gap and continue paying down debt on bonds. It will be the third increase in water rates in the last two years.
The average homeowner will pay about $25 more annually under the plan, with similar increases in subsequent years.
The council passed the rate hike by a 4-1 vote, with Councilwoman Kathleen Vermillion in opposition.
If the city hadn’t passed the measure, it risked another downgrade in its credit rating, which would make borrowing money for capital projects more expensive. The city had its credit rating downgraded by Moody’s Investors Service in June.
The slowdown of development in Henderson during the recession is largely to blame for the budget shortfall, said Barney Rabold, acting director of utility services.
The city funds its utility services through monthly usage charges for customers and through hook-up fees charged to developers to connect to the system.
The revenue the city receives from the hook-up fees has dropped 80 percent over the last four years and isn’t expected to rebound soon, Rabold said. Becasue of that, the utilities department needs to change its financial model to remain viable, he said.
The department has eliminated 15 positions and cut $14 million from its budgets over the last three years. But the decline revenue has been too steep for the cost-cutting measures and previous rate hikes to keep up with, Rabold said.
The new plan will address the city’s problems for at least the next four years, because most of the needed large infrastructure investments have already been made, he said. Now, the utility department will shift its dollars to paying off debt and maintaining the system.
“We have an aging infrastructure...We have to maintain a plan to repair and renew those facilities to ensure the reliability of our service,” Rabold said. “I don’t see us needing significant growth investment in the future. What I do see is a problem paying for the debt that’s already been incurred.”
Mayor Andy Hafen said he was reluctant to vote for the fee increase, but it was the “prudent” thing to do for the city’s financial health. He encouraged the Utilities Department to study other cities to find a sustainable model.
“We relied very heavily on our connection fees. That was a mistake,” Hafen said. “In the future, I think for us to be sustainable, we need to take a very hard look at those fees. We cannot use the system development fees as a panacea...If we don’t make a change, we’re going to be here again and again and again.”