The Newburgh Town Council heard from customers of the town’s sewer utility and gave final approval to a rate increase for the town’s customers.
The council held a public hearing regarding the rate increase and the approved bond for projects ahead of their regular meeting on Wednesday, Sept. 9. In the hearing, Newburgh Town Attorney Chris Wischer said the rate increase will be in four phases over two years with the rates increasing three% in the first two phases and two% in the final two phases for a total of a 10% increase. The increase will mean a $1 increase for in town customers in the first two years and $1.50 in the second two years.
Wischer also reiterated the need for the increase noting the capacity issues in two of the areas with the most growth in the county. However, customers questioned the need for the increase in the hearing arguing that the utility shouldn’t be working to make a return on the investment and that the town shouldn’t have differentiated rates for in-town or out-of-town customers.
Resident David Wessell said he is against the rate hike, but he wants to see more projects to add value at the treatment facilities and more steps to cut costs.
“I’m not hearing what they’re doing to save money out here,” he said.
Resident Kimberly Benson said she hopes the council will consider passing some costs of the upgrades to developers and not only on ratepayers.
“There’s been no discussion of what fees have been charged to builders and developers and what increases they may incur,” she said. “Should current customers bear the financial burden to enrich these developers and builders?”
Baker Tilly CPA Doug Baldessari, who’s firm worked with the town to create the plan for the rate increase, said a return on investment is critical for future maintenance on the utility. He said the town could face a no-win scenario with equipment malfunction in the future if there aren’t funds in place to cover the expenses of maintenance.
“It shouldn’t rely on the town for it to be able to run,” he said. “You want to be able to fix a sewer main if it breaks without running to the bank to get a loan to do that.”
Baldessari also said the rate differential was instituted over a decade ago to account for the cost of expansion that would mainly service growth outside of the town limits. With the upgrades and expansion happening outside of town limits, he said it has been appropriate to charge customers outside of the town with a higher rate.
“It was totally appropriate to create a differential for those customers outside of town that were driving the growth to pay for the expansion of the plant,” he said.
Council member Anne Aurand said customers brought compelling arguments to the hearing and she is glad there is interest and people voiced their concerns, but noted that none of those individuals stayed for the rest of the meeting to hear what happened with the vote or to hear the other business that could have shed some light on the issue.
“I wish they would have stayed to see what happened and also to hear us discuss utility motions that we have on the agenda for tonight that would maybe help give a better understanding of how we handle the utility department,” she said.
Council member Allyson Claybourn said she shares some concerns with customers specifically when it comes to saving costs that will benefit customers in the long run. However, she said most of the ideas weren’t seen as capable as moving forward.
“That can be a very frustrating process and feel like you’re stuck between a rock and a hard place,” she said.
Claybourn said the utility is shouldering the entire cost for new developments, but the town won’t see any benefit in the way of property taxes from the expansion that is happening outside of town limits. She said in other areas there have been partnerships with the county to split the investment since the county is the entity that will be getting the increased property valuation from the development.
Ultimately, Clayborn said there could be other options available to finance projects in the future.
“I don’t disagree that rate increases are necessary, that they have to happen and they should happen in smaller increments on a more regular basis to avoid shock to the ratepayers,” she said. “I just wish there had been an opportunity to know about this sooner and we could potentially be looking at other things.”
Council member Steve Shoemaker said he has reservations about the project relating to the lack of county participation as well. However, he said the alternative would be for the town residents to shoulder the cost through property taxes.
“I’m going to approve this because I don’t want to see the town’s [property tax] rates to go up like they would have to in order to be able to pay off the work that needs to be done,” he said. “I don’t think it’s fair to my constituents in District One or the people who elected me to have their rates go sky high.”
The Newburgh Council approved a $21 million sewer bond and made the first step to introduce the ordinance to increase the sewer rates in their regular meeting on Wednesday, Aug. 12. before the public hearing held in last week’s meeting. The council ultimately approved the increase 3-1 with Claybourn voting against the increase. Council member Carol Schaefer was not present at the meeting.
The council will meet again for their regular meeting on Wednesday, Sept. 23, at 5:30 p.m.