MSD Rate Commission slated to study $275 million bond issue

Sewer-district leaders hope to ask voters this year

By BURKE WASSON

A Metropolitan St. Louis Sewer District proposal that would ask voters to approve a $275 million bond issue to reduce wastewater rates and slow an increase in stormwater rates is set to be studied this week.

The MSD Rate Commission tentatively is scheduled to meet at 2 p.m. Friday at district headquarters, 2350 Market St.

The Board of Trustees already has raised wastewater rates by 15 percent this year and upped 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.

While those rate increases will provide additional funding for needed projects, MSD could ask voters this year to approve the $275 million bond issue to reduce monthly wastewater rates from now through 2012. Voter approval of the bond issue would go toward the $660 million that the district would spend for sewer-system construction and also for increased operating costs.

The district again will submit a revised rate proposal to the Rate Commission to consider the bond issue. But in two separate votes last year, Rate Commission members had recommended that the district not pursue any bonding or debt financing to reduce those rates for customers.

The Rate Commission voted 7-4 against pursuing debt financing to reduce the 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 spokesman Lance LeComb said last week that largely because of concerns expressed last fall over the originally proposed rate increases from a number of citizens groups, the district has elected to consider a bond is-sue to reduce those rates.

“Very late in the Rate Commission setting process, a coalition of community groups, business organizations and other concerned parties came forward to bring their concerns to us about not using bonding,” he said. “Now this is a coalition that came to us very late in the process. The normal time for that would have been much earlier over the summer. And that’s when that public input would have normally been heard and when it would have been utilized by the Rate Commission before they took their votes.

“That being said, MSD as a whole is a public body representing the public’s interest. And it is our responsibility to be responsive to the public. And what we are doing as staff, as an organization, as a whole by taking this proposal back to the Rate Commission, this bonding question, we are being directly responsive to the public’s concerns,” LeComb added. “Again, even though they came to us very late in the process, they came to us in enough time that we could do this. And again, it’s about being responsive to the public and accountable to them.”

MSD Executive Director Jeff Theerman said the restructured rate proposal involving debt financing through a bond issue would not change rates already approved by the Board of Trustees for this year.

“This proposal provides for voter determination and the use of debt financing to help reduce the increase in wastewater rates over the period between fiscal 2008 and 2012,” Theerman said. “It also proposes a more gradual escalation of stormwater rates in the next few years. The proposals will not affect the rates put in place by the board this past December. Both pertain to rate changes that would be required in later years.”

However, because the Rate Commission voted last year not to pursue a voter-approved bond issue and the district already funded an extensive review by that commission last year, St. Louis resident and longtime MSD critic Tom Sullivan last week told the Board of Trustees that the commission is nothing more than a “sham.”

“The Rate Commission, you might recall on numerous occasions, I’ve kind of made fun of it saying that it’s basically a rubber-stamp commission,” he said. “And now we’ve had a situation where they’ve done all this studying and I guess thousands of hours of MSD employees have been involved.

“Hundreds of thousands of dollars, I imagine … I haven’t checked recently. But I can remember before you were paying hundreds of thousands of dollars for legal services and all sorts of studies and all this. Finally, they come in with their proposal and the district says: ‘No, we don’t want that. We want this. And now we’re going to go back and say: ‘Here’s what we want. This is what you’ll like …’ I think this Rate Commission was a bad idea to begin with …”

“Tom, may I interrupt you for a second?” Board of Trustees Chairman David Rosenberg said. “You’ve been at the last couple of meetings. You’ve heard the public comments from individuals who have come. I understand what you’re saying. But bottom line, this Board of Trustees has elected to go this route. And that’s the direction we’re going, so …”

“Well, that’s not what I’m saying,” Sullivan said. “You’re missing my point. My point is if you’re going to go through that, why bother to go through this Rate Commission? As I said, I think the whole idea is a bad one. I think the board should decide. Not only that, but there’s certain procedures in the (MSD) Charter that everybody’s just sort of forgotten about. I mentioned it at the last meeting that you have to either accept (the Rate Commission’s recommendations) or you have to list the reasons why you’re not accepting it.

“And I see the letter from Jeff Theerman to the commission. It doesn’t really spell that out. It just says: ‘Here’s what we want to do.’ I’ll just say again that this whole thing is just a sham.”

As originally proposed in 2007, 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 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 went into effect Jan. 1 and will be seen on customers’ February bills. And instead of a 24-cent monthly flat fee paid by all district customers for stormwater service, customers will now pay based on the amount of impervious property on an owner’s property. Impervious property includes such non-absorbent surfaces as driveways, roofs, garages and parking lots.

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

The rate increases also are a response to legal action filed against MSD last year. The sewer district was sued June 11 by the U.S. government, acting on behalf of the Environ-mental Protection Agency, and the state of Missouri alleging unlawful dumping of raw sewage into area waters and lands.