SHAKER HEIGHTS, Ohio -- The city has announced plans for an incremental sewer rate increase to upgrade aging infrastructure that has become a drain on the General Fund.
The dual-component increase would be phased in over four years, in part through a new fixed fee to customers of $2.50 per month starting next year, going up to $5 in 2021, then $7.50 the next year and $10 monthly in 2023.
This would be coupled with a 50-cent-per-year increase through 2023 on the standard monthly charge per “thousand cubic feet” already appearing on customers’ water bills as “MCF,” which works out to about 7,500 gallons in one unit.
City officials pointed out that there has been no increase to property owners' existing sewer fees (based on the MCF of water usage) since 2001.
The current charge is $10.50 per MCF, which under the proposed plan would go to:
- $11 in 2020
- $11.50 in 2021
- $12 in 2022
- $12.50 in 2023
Mayor David Weiss explained that each 50-cent increase translates into an additional $50,000 per year for the sewer fund. The current MCF rate generates a little over $1 million per year.
By 2024, after the last proposed 50-cent MCF increase in the previous year, the existing sewer fund would be expected to generate about $1.25 million per year.
Meanwhile, the phasing-in of the new monthly fixed fee, at a $2.50 increase a year for four years, would provide just over $1 million in additional revenue by 2024 through the overall plan to “Modernize a Historic City,” as the proposal was introduced.
Weiss emphasized to City Council at the Monday night (Nov. 11) work session for the 2020 budget that it’s a gradual approach designed to keep Shaker in compliance with unfunded federal and state mandates.
“We’re going to slowly phase in the fees, and we’ll actually be running a slight deficit in the sewer fund for the first couple of years,” Weiss said, adding, “we didn’t get into this problem overnight. We’re not going to get ourselves out of it overnight, either.”
The proposal would also relieve the roughly $2.5 million transferred each year out of the General Fund into sewer capital improvements.
“We’ve essentially been subsidizing our sewer fund every year,” Weiss explained. “And we have been lucky with grants and loans, but nevertheless, costs continue to rise. The system’s getting older and there are no additional revenues.”
$12 million in borrowing proposed
And while the city has spent over $13 million on sewer improvements since a major storm caused widespread flooding in July 2014 -- much of that transferred out of the General Fund -- Shaker’s 10-year sewer capital plan could require more than $36 million more.
"By having a dedicated revenue stream, we can then go to third parties for matching grants," Weiss said of the accompanying $12 million borrowing plan that would be leveraged over the next five years for sewer capital improvements.
The city’s proposal calls for borrowing $6 million next year, then putting $2 million of that each year through 2022 into sewer lining, rehabilitation and replacement of “sanitary sewer overflows (SSOs)” that violate the federal Clean Water Act.
Neighboring Cleveland Heights has been under a federal consent decree since 2017 for violations that went unaddressed in a previous administration, resulting in sewer bills there being nearly quadrupled for a system upgrade to eliminate illegal storm runoff and pollution.
“There is no consent decree, and we want to stay as far away from that as possible,” Weiss said. “But the current cost of our sewer maintenance still exceeds our ability to keep up.”
Once the initial work is done through the first round of proposed borrowing, Shaker would take out another $6 million with a new debt issue in 2023, drawing down $2 million a year again on additional sewer projects through 2025.
Council reaction
The recommendation for the proposed sewer fee ordinance is scheduled to be introduced on first reading by council Monday (Nov. 18), allowing time for public input then, as well as on the second and third readings scheduled for Dec. 2 and Dec. 16.
After hearing the sewer presentation at the Nov. 11 budget work session, Vice Mayor Anne Williams noted that "the numbers have shifted to considerably less than what we were talking about. You could say the fee is modest in the first year."
To the extent that the city would be able to "phase in" any increase, Williams added that the proposal will "provide a cushion for people to plan ahead."
In the interest of further transparency, city officials are also planning a publicity campaign, including an online “Mayor’s Report” in which Weiss explains the situation.
Councilwoman Julianna Johnston Senturia pointed out earlier that that city’s projected $17.6 million General Fund cash reserve could also be examined as a future funding source, since it now adds up to almost 34 percent of the proposed 2020 operating budget -- well over the 25 percent threshold set by council.
“It seems quite modest at the beginning,” Senturia said, recommending further discussion in the community. “There are a lot of unknowns, and it has to be spread out.”
Councilman Earl Williams said cities should continue to lobby the state and federal governments to institute programs and funding initiatives to replace aging systems and infrastructure, given the pressure that is continually applied on entities such as the Northeast Ohio Regional Sewer District.
"I would agree with you in theory, but I am somewhat less optimistic (about that prospect)," Weiss told Williams, referring to "overlapping governmental authorities."
Councilwoman Nancy Moore applauded "the administration's attempt to estimate the revenues that we need," but at the same time noted the difficulty of going back to residents if more money is needed in the future.
Anthony Moore, a citizen member of the city’s Finance Committee, suggested putting in the proposed ordinance “some guidance as to when we will revisit” the recommended fee schedule.
As the proposal currently stands, Councilwoman-elect Carmella Williams said she feels it is a “balanced approach that will acknowledge the varying household budgets within the city."
A collection of “frequently-asked questions” about the proposal has now been posted on the city’s website at https://www.shakeronline.com/faq.aspx?TID=65.
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