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The City would like to increase water rates to Evanstonians by 10 percent per year each of the next three years to cover the costs of water main replacements and other capital projects, according to a staff presentation delivered to the Administration and Public Works Committee on July 22. City Council took no action one way or the other after the presentation.
The proposed rate increase was presented by Director of Utilities Dave Stoneback to a largely silent committee. Evanston’s water rates remain on the low end compared to neighboring communities, but he admitted that the City’s sewer rates are the highest of those same communities. After the proposed rate increases, according to the presentation, the City’s combined water and sewer rates would be in the higher third of the comparison group.
As has been a theme with the water department in recent years, Mr. Stoneback spoke of the possibility of selling water to nearby communities as a way to raise additional money. Lincolnwood is next in line, he said, and water sales could begin there as soon as next year. Other, larger customers remain a possibility as well.
Selling water to other communities could involve substantial capital outlays.
How much the City could realize from such water sales has never been discussed by the City. Current customer Skokie pays the City of Evanston $0.98 per 1,000 gallons under a 20-year contract that runs through 2017. The Northwest Water Commission pays Evanston only $0.60 per 1,000 gallons, but they maintain their own pipes and infrastructure.
Evanston residents currently pay $2.41 per 1,000 gallons, after a 3 percent increase that went into effect this year, or almost two and a half times Skokie’s rate. After the three 10 percent increases, if they are approved, Evanston’s rates would jump to $3.21 per 1,000 gallons in 2016, a year in which Skokie will still be paying just $0.98 per 1,000 gallons. Skokie also tacks on its own water-distribution charge.
On an annual basis, when water and sewer costs are added together, Evanston residents currently pay on average $645 per year. After the increases, that number will jump to $709. A Skokie resident, according to the report, pays on average $374 per year for water and sewer combined.
The increases are needed in order to meet capital-funding needs over the next 20 years. Mr. Stoneback said the City estimates a need of, on average, $5 million per year in water bonds.
Even after years of work to replace water mains and sewers that are in many cases 100 years old or older, more than seven miles of large-diameter sewer pipes and more water mains need replacement, he said.
Raising rates so that the water department comes close to balancing its budget – taking debt-service payments into consideration – helps with the City’s bond rating, said Assistant City Manager Marty Lyons. “Moody’s and the like take note,” he said.
The problem is exacerbated, he said, by a steady decrease in water consumption over the past several years. Water sales have dropped from almost 4.5 million 100 cubic feet units in 1999 to about 3.5 million units in 2012, but have remained steady since 2008 according to a chart in the presentation. This has the effect of reducing revenues needed to cover expenses to treat and distribute water.
Alderman Ann Rainey, 8th Ward, pointed out that the decrease in water consumption might have been caused in part by the decision to raise water rates. Mr. Stoneback pointed instead to increased water conservation and more efficient appliances, both initiatives that have been championed by the City.
No action was requested of the City Council Monday night. The matter may well return as part of the upcoming budget season, however, with a 10 percent increase as part of the request. Residents may wish to be alert for it.