MSD board approves rate hikes for 2008

Rate panel could recommend bond issue to voters next year

By BURKE WASSON

As the Metropolitan St. Louis Sewer District now has raised customers’ wastewater and stormwater rates beginning in 2008, district officials also could ask voters to reduce future wastewater rates through a bond issue.

The MSD Board of Trustees voted 5-1 last week to raise wastewater rates by 15 percent beginning Jan. 1 and increase stormwater rates from a flat 24-cent monthly fee to a new system based on a customer’s impervious — or non-absorbent— property effective March 1.

Board member Dee Joyce-Hayes voted “no” on each proposal.

While the rate increases will provide additional funding for needed projects, MSD could ask voters in 2008 to approve a $275 million bond issue to reduce monthly wastewater rates from now to 2011. If approved by voters, the $275 million bond issue would go toward the $660 million that the district would spend for sewer-system construction and also for higher operating costs.

MSD officials again will submit a revised rate proposal to the district’s Rate Commission that includes consideration of a bond issue. But in two separate votes earlier this year, the Rate Commission recommended that the district not pursue any bonds or debt financing to reduce rates for customers.

The Rate Commission voted 7-4 against pursuing debt financing to reduce next year’s rate hikes and also voted 8-3 in opposition to letting voters decide no later than November 2008 whether they would like the district to use debt financing to reduce those rates.

But MSD Executive Director Jeff Theerman stated in his December report to the board that the district indeed will ask the Rate Commission to reconsider a bond issue to reduce wastewater rates.

“Staff will take a new rate proposal to MSD’s Rate Commission regarding the use of bonds for wastewater and the future structure of the stormwater rate,” Theerman’s report states. “As currently planned, this new proposal will recommend using $275 million in bonds to lessen the impact of wastewater rate increases between now and 2011.”

That modified rate plan comes after County Executive Charlie Dooley and St. Louis Mayor Francis Slay — who each appoint three members to the six-person MSD Board of Trustees — asked the board to reduce the district’s originally proposed rates that were tentatively approved in October by the board.

The MSD Rate Commission, an independent body of officials representing various area groups, voted 7-4 July 19 to recommend that the district’s proposed rate hikes for next year are “fair and reasonable to all classes of ratepayers.”

In two separate votes, the Rate Commission also recommended that the district not pursue any bonding or debt financing to reduce those rates for customers.

As originally proposed earlier this year, MSD customers would have seen a 64-percent increase in wastewater-service rates.

That 64-percent rate hike was slated to be done in incremental increases from 2008 through 2012. But the district’s modified rate plans would drop that increase in stormwater rates to 28 percent by 2011.

The average MSD customer now will pay $25.74 per month in 2008 for wastewater service compared to an average of $22.38 per month in 2007. The increase will go into effect Jan. 1 and will first be seen on customers’ February bills.

And instead of a 24-cent monthly flat fee paid by all district customers for stormwater service, customers now will pay based on the amount of impervious property on an owner’s property. Impervious property includes non-absorbent property like driveways, roofs, garages and parking lots.

The district will begin charging 12 cents for each 100 square feet of impervious property in 2008. District officials estimate that the average single-family residential customer will pay roughly $3 per month for stormwater service.

Theerman also said that while plans to raise stormwater rates over the years re-main intact, the structure of those increases could change.

“Regarding stormwater, the new proposal will still lay out a 29-cents-per-100-square-feet of impervious-area charge by 2014,” Theerman’s report states. “However, the structure of stormwater rate increases between now and then will most likely change versus what the board was originally considering.”

Theerman also stated that the district’s new stormwater-rate system would charge some customers — specifically those who live “outside” the Interstate 270 loop — more than others.

“The implementation of this new stormwater rate will be matched by elimination of the various property taxes that MSD currently raises,” Theerman’s report states. “For many customers — mainly inside (Interstate) 270 — the new stormwater rate will be equal to or less than the 24-cents-per-month charge and property taxes combined.

“For customers living outside of I-270, the new stormwater rate will be higher than what they pay through the 24-cents-per-month charge and property taxes combined. However, these customers have been paying the least amount for stormwater service and receiving the least amount of stormwater service. The new stormwater charges will go into effect on March 1, 2008, and will first be seen on April 2008 bills.”

The rate increases also are a response to a lawsuit filed earlier this year against the district.

The sewer district was sued June 11 by the U.S. government, acting on behalf of the Environmental Protection Agency, and the state of Missouri alleging unlawful dumping of raw sewage into area waters and lands.

The lawsuit alleges that MSD has “discharged pollutants,” including raw sewage, into waters including the Mississippi River, Missouri River, Meramec River, River Des Peres and their associated tributaries, including creeks.