However, the directors persevered and as their first act of business, swore in new director Michael McKaskle. This brings the board up to four members, with the fifth seat, just vacated by Mike Abshire, still vacant.
The main item on their agenda was the continuing discussion of the district's rate structure review. Rising costs combined with increased reporting requirements to the regulatory agencies mean that the district must increase its income to be able to continue to provide services to its customers. The need to raise rates for both water and sewer has been a topic of discussion for several meetings, as the directors struggle with a way to make the rate increases equitable.
Business Manager Troy Harrington-Dean had prepared a report proposing a 10% across the board rate
Along with the septic dumping service to increase income, Harrington-Dean and Operations Manager Ken Dean have made efforts to keep their operating costs in check. She said that the district's budget has been balanced mainly due to the income from septic dumping and from deferred maintenance, the latter something that can't be put off indefinitely if the system is to continue to function.
Ken Dean said that the situation is getting worse, in that the cost of all the chemicals and supplies needed for wastewater keep going up and that delivery surcharges are now being added. He said that expenses are up 20% over 2003.
Besides these ongoing costs, the district needs to create a capital improvement fund to begin replacing the aging infrastructure of the drinking water delivery system.
”We don't have as much money as we could be spending on the infrastructure,” Harrington-Dean said, “so leaks are happening.”
Harrington-Dean said she presented the 10% hike proposal because she thought the district “needed to raise rates immediately” and that this was the quickest, simplest and fairest way to do that.
Also looming on the budget horizon, since Redway is an enterprise district, it is likely that the state will seize the district's portion of property taxes to make up the state deficit, leaving the district with even less income.
”We receive a portion of our funds from property tax,” Chair Virginia Graziani said. “We're entitled to the tax share but we have to face that we might lose it.”
”They're going to steal our taxes and make people pay more,” director Fred Green commented.
In the long and sometimes agonized discussion of the proposal, several directors questioned whether 10% would be adequate. Green said that if they asked for too much, they “might get their hands slapped.”
”Will we need another increase next year?” director John Rogers asked.
”With the volatility of gas prices, there's no way to know,” Harrington-Dean said.
”If it's not going to be the only increase, then we need to give people a heads-up,” Rogers said.
McKaskle said he agreed with Green and proposed they make it a 12% increase. However, he couldn't get a second for that motion, and the discussion continued.
Rogers noted that, from the data provided by Harrington-Dean, the rate of increases in costs has been accelerating and suggested that ought to be taken into account Rogers also noted that income was falling two to three percent a year below expenses and he wondered if they ought to go for a four percent annual increase.
McKaskle then tried another motion for a 10% annual increase with an additional three percent increase for the following three years. Once again no one was willing to second the motion.
The sticking point was the reaction of the ratepayers. Green said that the rate hike would probably create a firestorm.
”People are intelligent enough to figure out we're in a volatile economy,” Harrington-Dean said.
”Whether people like this or not is not my concern,” Graziani said. “My concern is that we continue to operate and provide safe water and sanitation. We have an obligation to do that.”
Rogers agreed.
”It won't do anybody any good if we crash and burn,” he said.
Nevertheless, the directors felt it was important to accompany the rate hike proposal with an explanation as to why it was necessary, and also to alert the ratepayers to the district's need to stay solvent in the current economic climate.
Rogers moved that the district raise rates across the board by 10% and this time, McKaskle provided the second. The measure passed unanimously.
A second motion authorized the Chair and Harrington-Dean to draft a letter to the ratepayers about the rate hike and informing them that a public hearing on the proposal will be held at the next regular RCSD meeting in July. At that time, residents of Redway will be able to comment on the proposal and offer their own recommendations to modify the proposal. The rate hike will not be voted on until the August meeting.
In other business, Dean presented the directors with a capital improvement proposal for the wastewater treatment plant. Dean also informed the directors that the district had completed its wastewater compliance project. The original estimate on that project had been $98,000, but by doing much of the work in-house, Dean was able to bring it in under budget at a total cost of $42,000. This represents a savings of $53,000 to the district's reserve fund. He was congratulated on this achievement.
The district also received a letter from the regional water board acknowledging completion of the project and rescinding the $14,000 penalty imposed for the violations that led to the need for the compliance project.
The district also hired a new operator to replace the retiring Mike Dunphy. Scott Rose, a resident of Redcrest, was selected from a field of candidates for the position. He is already onboard and spent the week of June 16 becoming oriented to the district's systems.
Lastly, the board appointed John Rogers as its representative on the Redwood Region Economic Development Council.
The next regularly scheduled meeting of the board will take place on July 16.
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