May 10 Public Meeting On Plan To Increase Water/Sewer Rates After No Hikes For Half A Decade

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Photo: Water rates will be heading upward if the Select Board approves a five-year plan by a consultant Raftelis

After five years where residents saw their water rates stay constant – and six years for sewer rates – the Select Board will hold a hybrid public forum on water and sewer rates on Wednesday, May 10, to discuss the likely acceptance of a consultant’s recommendation in which water and sewer bills will increase by four percent annually over the next five years.

Join the Zoom Meeting here Webinar ID: 895 3117 9431 

At the request of the Department of Public Works, the town hired Raftelis, a national management consulting firm focusing on municipal government and utilities, to conduct a five-year rate study. The goal is to “establish financial sufficiency and viability” for the town’s water and sewer enterprise by determining the revenue needed to meet the operating expenses while retaining a healthy reserve.

Ratepayers will be facing steady rate hikes for the foreseeable future, said Raftelis vice president David Fox who told the Select Board Belmont “is very much not alone in this boat.” Nationally, water rates have been increasing by five percent and sewer by six percent for the past decade due to a litany of reasons, from inflationary pressures, repairing aging infrastructure, and declining consumption which results in a fall in revenue for municipalities and their utilities.

Even if costs were stable and you didn’t need to reinvest in the infrastructure, “you already would be facing an uphill battle with a declining revenue base” due to conservation measures and just a general drop off in usage, especially after the pandemic.

And for those communities that have been “kicking the can down the road” on rate increases, “eventually you’re going to get to a position where [Raftelis] will be meeting with a community where they are looking at a 35 percent year-to-year rate increase.

During most of the 2010s, Belmont’s water and sewer bills were some of the highest among its peer communities. With that knowledge, town officials began relying on retained earnings to keep rates unchanged to align charges with neighboring cities and towns.

But relying on reserves to subsidize residential water rates is no longer viable. In its analysis of water consumption and the expected increase in the assessments from the Massachusetts Water Resources Authority, which supplies water to Belmont, Fox said the water fund’s retained earnings account is scheduled to run empty by the end of fiscal ’26.

Keeping the ratepayers in their mind

While it’s a simple equation to determine how high new rates should rise by understanding how much revenue is generated and what is needed to cover expected costs, “we don’t ever want to overshoot the rated and have the rates be artificially high,” said Fox. “We have to keep the burden of the ratepayers in the back of our mind.”

One area of importance when calculating the new rate is maintaining a healthy retainer, the equivalent of a savings account, said Fox. The account is necessary to weather the financial storm of reduced consumption when there is a cool, wet spring or summer or a sudden capital demand on the infrastructure.

Raftelis forecast water and sewer operations and maintenance costs to increase three percent annually, with just over half of the water portion coming from MWRA assessments, while 71 percent of the sewer increase results from MWRA pricing.

With yearly capital improvements expenditures expected at $1.36 million for water and $1.1 million for sewer and with both fund’s retained earnings line items heading towards zero in the next few years, “[a]dditional revenue is needed immediately in [fiscal ’24] to ensure [adequate] financial [growth],” wrote Fox for both water and sewer funds.

According to Fox, Belmont’s water rates should increase by four percent annually for five years. Raftelis recommends an eight percent increase in sewer rates in fiscal ’24 and ’25 before reverting to three percent increases in the remaining three years.

While rates are heading upward, the impact on residential users’ bills will be small under the Fox recommendations. The typical single-family household in the first year of the plan using approximately 200 cubic feet of water a month – the equivalent of 1,496 gallons – its annual combined water and sewer bill will increase by 4.5 percent, or $27.84, from $624.99 in fiscal ’23 to $652.84 in fiscal ’24.

A two-family structure would see its bill rise by 5.8 percent ($76.77), and an apartment complex 6.3 percent ($158.33). The big jumps will be seen in the typical commercial site using approximately 7,500 gallons a month, where the average annual bill increases by $1,302.44 to $13,505.44. High-volume commercial users (15,000 gallons a month) can expect a $6,820.40 year-over-year hike.

When asked what conditions would be after the five years, Fox said if he was a betting man, “I’d say you’d still be looking at probably at a three percent increase every year.” With inflation to be around for longer than most people think and infrastructure needs always in the forefront of concerns, “I don’t think you’re going to get to a period after this five years whey you just don’t have an increase,” said Fox.

DPW: At First Glance, No Increase In Water, Sewer Rates for Fiscal ‘23

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Photo: Water and sewer rates are likely to stay where they are into fiscal ‘23.

While inflation has reached seven percent over the past 12 months, Belmont property owners will likely have some good news when it comes to the water and sewer rates for the next fiscal year. And that change is no change for the fourth year – as the Director of the Department of Public Work reported to the Select Board on Monday, Jan. 24.

DPW head Jay Marcotte told the board based on discussions with Town Administrator Patrice Garvin and Town Accountant Glen Castro and the current view of the budgets and the level of retained earnings, “we’re potentially looking at another zero percent for [water and] sewer rates.”

The water and sewer rates are traditionally voted on by the Select Board in late March or April when each line item is based on hard and true numbers, said Belmont Select Board Chair Adam Dash.

In terms of the water budget as of the last week in January, the department’s biggest expense – the Massachusetts Water Resources Authority assessment to the town for supplying water which accounts for 43 percent of the budget – is anticipated to fall by approximately five percent from last year’s $3,336,000 valuation, a marked reduction from the nearly 10 percent increase for fiscal ‘22.

”It’s not official yet we are still waiting on the official document [which is delivered in early March] … but from circles of people we know at the MWRA, that’s the estimated number,” said Marcotte. In addition, there is a reduction of $62,850 in MWRA loan payments – now at $854,200 – as the town continues to pay down that line item.

As for the Water Department’s big ticket items in the coming year, the department will spend $250,000 to continue its multi-decade water main project while parceling out $169,000 for equipment replacement.

At the end of January, the water department fiscal ‘23 budget grand total comes in at $7,838,000, up by 1 percent with the department using last year’s MWRA assessment as a placeholder.

”So basically the water budget’s flat when you do all the pluses and minuses,” said Select Board Chair Adam Dash.

Unlike the water budget, sewer “is a different animal … with a variety of pressures,” said Marcotte, including a higher MWRA assessment, larger debt load and far more regulations that puts pressured on expenses.

“There are just more costs associated with sewer,” said Marcotte, pointing to the department needing to transfer $600,000 to the Community Development Office allocated for the town’s sewer and stormwater improvement plan so the town remains in compliance with the federal and state departments of environmental protection.

The MWRA’s sewer assessment is expected to increase by 4.5 percent, said Marcotte. The grand total for sewer in fiscal ‘23 is currently $10,806,000, an increase of $356,500 or 3.8 percent.

The saving grace for residents is the significant level of retained earning for both entities enterprise funds: Marcotte reported that certified retained earning for water is $2,810,724 and $2,894,974 for sewer.

”We try every year to balance the retained earnings and how much we use … to offset rates and that’s why we’ve been lucky enough for the last four years to not have a rate increase,” said Marcotte.

A definition of retained earnings is below:

Massachusetts Department of Revenue

No Increase In Belmont Water, Sewer Rates … Again

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Photo: Water main on Brighton being repaired

The annual adjustment of the Belmont water and sewer rates was no adjustment at all as both will remain unchanged from the previous fiscal year. This marks the third consecutive year for water and fourth for sewer where rates remained flat, said Jay Marcotte, director of the Department of Public Works who announced the report at the Select Board’s virtual meeting held Monday, May 10.

The average Belmont homeowner will see its monthly bill remain at approximately $140 for fiscal 2022 beginning July 1.

“It’s surprisingly good news for the ratepayers. I wasn’t expecting it to be this good,” said Select Board Chair Adam Dash.

The zero rate comes as the Massachusetts Water Resources Authority imposed a whopping 9.7 percent increase in Belmont’s assessment, up from the one percent hike in 2020. “This year my eyes popped out of my head when we got the increase,” said Marcotte, as it represented a $296,000 jump from 2021. The MWRA sewer assessment came in at a more typical 3.6 percent.

As with last year, planned use of retained earnings was used to offset the MWRA increase. “We’ve been purposely drawing down [earnings] to basically stabilize rates and not have any impact to our [customers],” said Marcotte.

Marcotte told the board the DPW will continue its quarter-century water improvement program in which all of Belmont’s pre-1928 cast iron mains – which makes up 42 percent or 38 miles of the town’s total – will be replaced. This year, about 6,970 linear feet of pipe will be removed resulting in 31.4 miles of the pre-1928 mains now replaced with the program 83 percent complete.

On the sewer side of the ledger, the town will replace two existing pump stations and start a new one in the Winn Brook neighborhood while budgeting $450,000 for sewer and storm drain main repairs and upgrades.

In addition, $150,000 from both water and sewer capital will go to the installation of fuel tanks at the DPW Yard.

No Increase In Water,Sewer Rates (Again) As Monthly Billing Coming By Jan. 1

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Photo: Water main being replaced by Belmont DPW

Belmont water and sewer customers will receive a nice surprise as rates for those services will remain steady for the upcoming 2021 fiscal year. This marks consecutive years for water and the third year in which sewer rates will not increase year over year.

And by the new year, customers will be paying those charges monthly as every customer has been fitted with an electronic measuring device.

Department of Public Works Director Jay Marcotte presented the rate proposal before the Select Board at its virtual meeting held Monday, May 11.

Marcotte noted the major cost driver pushing rates higher is due to the annual assessment of the Massachusetts Water Resources Authority, which supplies the town with water and takes its sewage. The MWRA’s water and sewer assessment for fiscal ’21 increased by 1 percent, with most of that growth due to debt held by the agency. Nearly 48.3 percent of Belmont ratepayers water bill comes from the MWRA’s assessment, and 62.7 percent of the sewer payment. 

With the planned use of retained earnings to offset the increase, the rates will remain where they are for another year, said Marcotte. The average Belmont homeowner who uses about 3,000 cubic feet of water will see their quarterly bill remain at approximately $440 for fiscal 2021 that begins July 1, 2020.

And by January 2021, that bill will be coming to customers 12 times a year as opposed to quarterly. With the Smartmeter installation program now 99 percent complete, the department can institute monthly billing.

“We’re working with Belmont Light … to streamline and have one bill” going to customers both departments. While moving from a quarterly to monthly payment will likely increase the cost of mailing it out, “monthly billing is our number one ask by customers” as it will be easier for them in their own budgeting.

Marcotte told the board the DPW will continue its quarter-century water improvement program in which all of Belmont’s pre-1928 cast iron mains – which makes up 42 percent or 38 miles of the town’s total – will be replaced.

This year, about 6,970 linear feet of pipe will be removed which will be 31.4 miles of the pre-1928 mains replaced which will result in the program being 82.8 percent complete. Those streets include Chester, Hammond, Fletcher, Van Ness and Gorham.

With the town expected to transfer all its nearly $2 million pavement management line item for fiscal ’21 to balance the town-wide budget, Marcotte said his department will place a more durable temporary asphalt “patch” on the roadway.

The sewer budget will focus on water quality improvement, system upgrades and replacing two pump stations and a new station in the Winn Brook neighborhood with surcharge mitigation improvements.